Annual Report and Financial Statements 2021 Who we are Bonhill Group plc is a leading global media company, delivering cutting-edge analysis, insight, networking and data for Financial Services and Business Solutions communities. We offer forward-thinking products and provide high-quality information that leads to better, and informed, decisions. We bring trusted news and updates to two core markets Read more on our journey on pages 02 and 03 Read more on how we define ourselves on pages 04 and 05 Read more on our brands on pages 06 and 07 Financial Services Underpinned by strong governance Business Solutions Driven by our new values 01 Respect for everyone 02 Act with integrity 03Promote excellence Stay up to date with all the latest on our website: www.bonhillplc.com BUILDING AN INTERNATIONAL INSIGHT NETWORK Annual Report and Financial Statements 2021 – Bonhill Group plc Contents: Inside this report Welcome to our Annual Report and Accounts 2021. This has been a busy year for us at Bonhill and we are excited to share our journey with you. Overview Our new identity How we define ourselves The Bonhill network Chairman’s statement Our stakeholders Strategic Report Business model and strategy Our global platform Our markets Our offering Our approach to sustainability Interim Chief Executive’s review Interim Chief Financial Officer’s review Principal risks and uncertainties Governance Corporate Governance statement Board of Directors Audit Committee report Nomination Committee report Remuneration Committee report Directors’ report Directors’ responsibilities in the preparation of financial statements 02 04 06 08 09 10 12 14 16 20 22 26 30 34 36 38 40 42 44 45 53 46 54 Financial Statements 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 56 Company statement of changes in equity 57 58 Consolidated statement of cash flows 59 Company statement of cash flows 60 Notes to the cash flow statement 61 Notes to the financial statements 95 Directors and advisers 55 01 BUILDING AN INTERNATIONAL INSIGHT NETWORK Bonhill Group plc – Annual Report and Financial Statements 2021 How we got here The past three years have seen the unification of three businesses: Bonhill, Last Word Media and InvestmentNews. During the pandemic, these businesses have worked harder and closer together and, as a result, we made the strategic decision to formalise that global collaboration with a corporate rebranding. We are confident that this has helped us to emerge from these challenging conditions as a more defined entity with a clear purpose. The Company now has two operating divisions: Financial Services and Business Solutions, and governance now runs as a theme throughout these two areas. The Last Word Media company name has also been removed to allow for greater consistency and collaboration across our new global financial services offering. Where we are now Key acquisitions along the way Where we were Our new identity: Ready for the future We took the step last year to overhaul our identity, listening to our people’s voices as the driving force to create a brand that resonated with everyone and better reflected our business. We identified a combination of external and internal factors that we wanted to address with the rebranding: External • Needed a clear narrative and identity to differentiate ourselves from competitors • Recognised significant value in having a global Financial Services channel • Partners and audiences needed to be aware of everything we do • Found value in aligning existing global brands and products e.g. ESG Clarity, Bonhill Create and Bonhill Intelligence • Desire to act on shareholder feedback Internal • Complex history of acquisitions and multiple business restructuring • Lack of internal cohesion • Limited understanding of ‘Bonhill’ as a brand • Confused identities and loyalties • Missing a ‘Bonhill’ voice Taking these into account, and analysing data from employee surveys and focus groups, we then developed five key goals to achieve: Goals • Build a strong, identifiable and reputable Bonhill brand • Provide clarity on messaging and company identity, both internally and externally • Streamline our business structure • Unify our business channels and geographies • Cement employee loyalty to the brand and passion for our values It is important to note that the rebranding stretches much further than a new logo. It is an attitude, a consistent expression of who we are as an organisation and something that is reflected in our people, our products and our work. 02 Annual Report and Financial Statements 2021 – Bonhill Group plc Powered by our people Global collaboration continues to be a core focus and, with the new company structure, we have further facilitated Group-wide communications. By combining the best talent across the business and hosting cross-border meetings, we are building new forums for brainstorming and idea generation which have, undoubtedly, had a positive effect on the development and execution of new (and existing) revenue streams. Read more on pages 12 and 13 Our culture and values The new brand has been developed from staff feedback on what they value, what they believe the Company stands for, and the culture they have observed at Bonhill. It was important that the new brand reflected our business strengths, and our people, to ensure it is familiar, genuine, and inclusive. This continued transformation of Bonhill Group has strengthened alignment with our values and we have further honed these in accordance with employee feedback. Respect for everyone • Welcome everyone’s differences by embracing diversity, ideas and experiences • Foster inclusion where everyone is visible and their authentic selves • Express kindness and compassion to all Act with integrity • Speak the truth, be honest and trustworthy • Be open, unambiguous, and transparent in all ways of working • Give everyone a voice, the opportunity to contribute, and listen Promote excellence • Empower our people to try new things and push boundaries • Drive autonomy, flexibility and be accountable for our actions • Make clear, agile and nimble strategic decisions • Celebrate success no matter how small 03 Employees 133 2021 2020 Live events held in 2021 20 Read more about our global platform on pages 12 and 13 133 134 2021 2020 20 14 Virtual events held in 2021 Cash 88 2021 2020 £1.4m 88 102 2021 2020 £1.4m £1.3m Bonhill Group plc – Annual Report and Financial Statements 2021 How we define ourselves: Our unified approach WE ARE... 04 TRUSTEDINNOVATIVECONNECTEDAnnual Report and Financial Statements 2021 – Bonhill Group plc WE ARE... Our business principles Our business principles are the things that we do: the five commitments that drive our business forward and have been identified as paramount to success. The five business principles that we follow are: 1. Embrace editorial excellence as the core of our business 2. Build and nurture strong relationships with our customers and partners 3. Use our creativity to innovate and grow 4. Identify trends and opportunities through data and technology 5. Drive a sustainable culture and hold ourselves accountable In addition to these, our core values are applied as the way in which we do these things: the three standards by which we approach our work and have been identified as conducive to a healthy working environment. What it means to be trusted We are trusted; known for our editorial excellence. We communicate with authority, integrity and passion, and are proud to be experts in our chosen fields. This is often showcased in our market-leading editorial titles, and we are proud of our suite of award-winning journalists. Read more on pages 10 and 11 What it means to be innovative We are innovative; known for our creative approach. We communicate with originality and are confident in challenging the status quo in the pursuit of brilliance. Not only do we apply this innovation to our own business processes and strategy, but also in the services we offer our clients via our range of partner solutions in advertising, event sponsorship, custom and research. Read more on pages 16 and 17 What it means to be connected We are connected; known for our strong relationships. We communicate with honesty and consideration to all of our communities. We are committed to engaging with stakeholders across all areas of our business, including our external audiences and commercial partners. We are heavily focused on establishing and maintaining strong bonds, internally and externally, and see this as core to the success of our company. Read more on pages 18 and 19 Total employees 133 Leading brands 11 05 TRUSTEDINNOVATIVECONNECTEDBonhill Group plc – Annual Report and Financial Statements 2021 The Bonhill network: Bringing our customers the best of the best Business Solutions Helping businesses to build, grow and thrive successfully. Read more on pages 16 and 17 Financial Services Providing insight and analysis to ensure that our audiences can make informed decisions. Read more on pages 18 and 19 DiversityQ provides cross-industry advice on building a diverse and inclusive workforce for board members, HR directors, senior leadership and diversity, equity and inclusion professionals. Taking diversity and inclusion beyond lip service to drive organisational change, and attract inclusive minded talent, requires strategic re-thinking and collaboration. DiversityQ shares DEI practices across the globe to support those who are making these changes, as well as inclusion advice for under-represented groups. We serve this audience through interactive events, weekly newsletters, interviews, educational guides and regular news updates. Interest in ESG and responsible investing has exploded in recent years and is increasingly being embedded into mainstream investing. ESG Clarity provides insights and analysis through an array of multi-media that informs and educates fund selectors and buyers around the world in this fast-evolving space of the investment industry. We serve asset owners, discretionary fund managers, multi- managers and financial advisers globally through daily newsletters, a bi-monthly digital magazine and our website which houses articles, videos and our podcast series, ESG Out Loud. Portfolio construction is as much art as it is science, so Expert Investor delivers a weekly, regionally targeted bulletin to ensure pan-European fund buyers and asset allocators are up to date with the latest views on asset classes, economic developments, M&A deals, fund launches and expert views. In addition to our editorial website and newsletters, we host a comprehensive series of events where we bring together local fund selectors with some of the biggest names in investment and asset management. www.diversityq.com www.esgclarity.com www.expertinvestoreurope.com The leading brand for financial advisers, wealth managers and intermediaries who use cross-border insurance, pension, banking and investment products for their high and ultra-high net worth clients. International Adviser delivers news, views, insights, expert commentary, awards and events and is dedicated to keeping financial advisers across the globe abreast of the latest regulatory developments, M&A deals, product launches and expert insights so that they can give better informed advice to their clients. The trusted resource for financial advisers, InvestmentNews provides must-have insights to financial advisers, registered investment advisers and the extended financial advice community. InvestmentNews’ platforms include a premium magazine, digital solutions, lead generation, events, research, video, podcasts, and newsletters. In addition, we have a number of targeted microsites including RPA Convergence, ESG Clarity, and Fintech for Advisers. Covering the breadth of the market, we monitor the evolution of traditional advisory market topics, as well as the new trends driving the next generation of financial advice. Portfolio Adviser is the leading information source for wealth managers, discretionary portfolio managers, private bankers and advisers specialising in investments across the UK. Our news bulletins, monthly print magazine and comprehensive schedule of educational guides, deliver news, insights, commentary and analysis to the UK’s fund buyers, asset allocators and portfolio constructors. Our audience relies on Portfolio Adviser for updates on asset allocation, fund selection, portfolio construction, the latest investment ideas and best practice, product launches, macroeconomic views and industry strategic developments. www.international-adviser.com www.investmentnews.com www.portfolio-adviser.com 06 Annual Report and Financial Statements 2021 – Bonhill Group plc The emergence of new themes is a constant feature of the investment environment. Fund Selector Asia provides wealth managers and product distributors with news, insights, and analysis of the most important developments to help them generate better returns and build more resilient portfolios for their investors. A daily newsletter and editorial website provide analysis of product launches, industry trends, strategy views, fund flows, ESG developments, people and business moves, and regulatory changes. There are thousands of high-growth businesses in the UK which need finance to match their ambition. But where do they turn to for funding advice? Growth Business is the go-to guide for those looking to raise capital for their fast-growth businesses. We serve the scale-ups turbocharging Britain’s future economy, with a focus on digital technology businesses. On the fundraising side, Growth Business provides breaking news, how-to features and expert commentary from financiers, accountants and lawyers on how to bring in outside investment. The junction where business and technology meet is a challenging landscape for leaders to navigate. At Information Age, we support CTOs, CIOs and other technology leaders in managing this junction and the business- critical issues both today and in the future, as well as provide general intelligence for technologists in the information age. Information Age serves our audience through bi-weekly newsletters, regular webinars and roundtables, and our editorial website to keep them up to date on industry trends, emerging technologies and how to implement the technology and maximise return on investment. www.fundselectorasia.com www.growthbusiness.co.uk www.information-age.com Most small businesses are run by one person alone, with no time to keep abreast of the latest news which affects their company. Small Business helps to keep owner- managers up to date on how to run their business. We serve our microbusiness owner audience through twice-weekly newsletters and our daily blog, which covers news, the latest accounting information, and financial and legal changes. Our monthly podcast features tycoons who are often in the public eye, as well as TV personalities, including judges from Dragons’ Den. What Investment is the UK’s oldest monthly personal investing title and has been helping investors to build long-term wealth since 1982. It is aimed at those who actively engage in managing their and their families’ investments held in pensions and investment wrappers, as well as individual equities and property. The magazine and website provide comprehensive analysis and performance statistics on investment funds such as investment trusts, unit trusts and exchange traded funds for anyone who takes an active interest in accumulating and maintaining a pot of long-term savings. www.smallbusiness.co.uk www.whatinvestment.co.uk 07 Bonhill Group plc – Annual Report and Financial Statements 2021 Chairman’s statement Dear Shareholder Since joining the Bonhill Group in late May 2021, it has been a year of surprises. One of these was how well the Group did to navigate the unexpected challenge of a period of extended lockdown in the UK and US which continued to disrupt its global events business. But despite a relatively stable first half and confidence for the year, the final quarter had two major disappointments with a poor performance from the US digital business and then a weaker than expected performance from events, which had moved back to in-person in the UK, but not to the level of expectations. The weak performance in the USA has meant we have had to take an impairment charge of £6.2 million in relation to the purchase of InvestmentNews. In this context, I have welcomed the opportunity to work with new leaders in our two biggest territories – in the USA, where John French joined us in October 2021 - and globally with Patrick Ponsford, who stepped up to lead the global business on an interim basis on 7 April 2022 while we look for a permanent successor to Simon Stilwell as Chief Executive of the Group. Patrick is very experienced in B2B publishing and events management across many industry sectors. He brings an in- depth knowledge of the Bonhill business and global financial services. He was the prime mover behind the growth in our ESG services, which we wish to expand globally. During the year we saw the benefit of the reduction in our operating costs, down £3.9 million on the prior year, and we continue to target efficiencies in all areas so that we can continue to deliver the very best service on a global basis from an appropriate cost base. 08 As a practical first step, the annual report includes our Gender Pay Gap survey results. This demonstrates our commitment to practising what we publish. The results compare reasonably well with the rest of the media sector, but we have no cause for complacency and the report itemises some of the actions we are taking. Our staff have excelled themselves through their commitment and flexibility as they continue to navigate the everchanging landscape. They continue to work successfully remotely and, with a new global flexible working policy in place, we continue to deliver for our client base. We worked hard in the year to create the optimal conditions for our staff and have provided a high level of support and training to enhance and preserve their well-being and mental health. We have surveyed our staff regularly through the year which, when combined with a new HR system and a hugely successful employee recognition programme, demonstrates our commitment to continue to put our people first. We were delighted to welcome two new Non-executive Directors in the year. We were joined by Richard Staveley as a non- independent Non-executive Director on 16 December 2021 and, post year end, we have been joined by Laurie Benson who replaced Anne Donoghue who left on 30 September 2021 as an independent Non-executive Director (appointed 18 January 2022). Finally, on 7 April 2022, we announced the resignation of Simon Stilwell as Chief Executive after 4½ years with the Group. I would like to thank our shareholders for their continued support and our broad customer base for their continued support and engagement. The fully-underwritten fundraising announced separately today provides us with a good level of working capital to take advantage of the big increase in events we are undertaking this year. We are also actively reviewing our product portfolio to ensure areas of growth are supported appropriately so that they can grow to their full potential. Jonathan Glasspool Interim Executive Chairman 19 April 2022 The Company’s successful rebranding in the summer of last year was our first step towards becoming a global financial services service provider. Our deep subject matter knowledge and creative approach is a clear point of difference in the marketplace and one which we can build on in the future. Our main aims for 2022 include the continued development of our global offering, the establishment of ESG Clarity as the leading ESG brand globally and improving our US digital offering and that region’s profitability. Other areas of focus are the development of our lead generation and content based marketing products in our Business Solutions division, and the launch of a new subscription-based platform for DiversityQ. With one global identity and a changing internal approach to selling the Group’s services, I believe we can establish a leadership position in the coming years and become the preferred global partner for asset managers and financial advisors. As a Group, we managed an ever-changing event backdrop with 88 virtual events held in the year and 20 in-person events held in the final months. The concentration of events in the final quarter was a hangover from the postponement of events in 2020 into 2021 and we now have a much more balanced distribution of events in 2022. This, combined with the development of our non-event activities, should lead to a more evenly balanced revenue split in the current year. The move back to in-person events led to a reduced gross margin for the year (75.2% (2020: 80.2%)) and as we continue to plan for more in-person events in 2022, I would expect that margin to fall further. The fundraising announced separately today will enable us to invest in a full programme of live events throughout the year. ESG remains the dominant theme across our business both internally and externally and was a significant contributor to new business in the year. It is great to see ESG Clarity operating as a global platform with plenty of potential in the US. COP26 was a key event for the Group, and we created a range of activities, events and content around this important global conference. We will continue to run activities around key industry events and seek to broaden the knowledge of sustainable investing across all elements of the investment community. I am also pleased that we established our internal ESG Committee, that I chair, with full staff participation. This has resulted in a multi-year plan to measure, monitor, and improve both our internal ESG activities and those within our broader stakeholder group. Annual Report and Financial Statements 2021 – Bonhill Group plc Our stakeholders: Section 172(1) statement The Board recognises its duty to consider the needs and concerns of the Group’s key stakeholders during its discussions and decision-making. In accordance with Provision 5 of the 2018 UK Corporate Governance Code, we set out below how the Group engages with its key stakeholders. More information on how the Directors have discharged their duties under section 172 (1) of the Companies Act 2006 is also available in the rest of this Strategic Report and the Corporate Governance Report. The Directors have ongoing engagement with all our key stakeholders: Our People, Our Investors, Our Partners and Our Communities. The Directors continually review the impact that any decisions will have on these key stakeholders. Stakeholders Our People Our Investors Our Partners Engagement During this time of remote working, we have ongoing engagement with our people through a variety of means including employee surveys, staff meetings, quarterly Company updates, knowledge sharing and open-door leadership. Particularly in 2021 we have introduced Bonhill Talks, weekly emails and a fully flexible working policy that encourages in-person meetings where safe and possible to enhance support and motivation. We have also introduced performance assessment reporting and employee goals in Bamboo (our new HR system) as well as training some employees as mental health first aiders to aid general people well- being. We will continue to enhance the engagement with our staff through the work being done by our internal ESG Committee. Executive Directors hold regular dialogue with key shareholders. Presentations are given to investors, analysts and sales teams at the interim and full year report releases. The Board receives investor feedback post the investor roadshows. We held a virtual AGM in 2021 but are hopeful for ʻin-personʼ in 2022. The Group’s Annual Report and Accounts is made available to all shareholders both online and in hard copy where requested. We updated our corporate website in 2021 alongside the rebranding to give clearer information about the business to our investors, both current and prospective. We have ongoing engagement with our customers and have regular catch ups with key partners across the world. Our partners are kept up to date via emails, social media and newsletters, which update on new products and events. We also provide post-event feedback reports for sponsors. Our Communities Our communities are at the centre of everything that we do as a business. As part of the internal ESG Committee that was introduced in 2021, social responsibility is taken very seriously and we are working on a roadmap to improving and contributing more to our communities and the environment. 09 Bonhill Group plc – Annual Report and Financial Statements 2021 Business model and strategy: Globalisation of product, centralisation of process Business strategy Our overall short and medium- term strategy is to focus on our existing sectors and segments, delivering our users and readers trusted, authoritative analysis that helps them work more effectively, and focusing on taking our existing strong brands and propositions from their local markets across the Group to a global audience. Focusing on customers and clients We focus on the needs of our customers and clients, using our widely respected brands and our industry specialists and writers to develop clear, practical and insightful updates, guides, and research. Read more on pages 14 and 15 A global technology platform All our brands are delivered through a global technology platform with unified data enabled with features and functionality that help our teams optimise how and to whom we deliver our products and solutions. Read more on pages 12 and 13 Partner of choice Our partners trust our brands, our content and our unrivalled global reach into our core sectors to help them grow their businesses, extend their marketing campaigns and develop their own brands and message. Read more on pages 16 to 19 Our business model Our outputs Partnership offering Data Events Digital Business Solutions Financial Services Magazines A winning offering What drives us OUR CORE PURPOSE AND VALUES Quality of people Effective leadership Quality of platform Clear risk management What underpins us 10 Annual Report and Financial Statements 2021 – Bonhill Group plc What we create We are proud of the part we play in helping our clients grow their businesses; in providing our readers with analysis and guidance to work more effectively; and in keeping our professional customers networked, informed and updated. We deliver our expert analysis, updates, guides and research to our customers and clients in the formats that fit best with their workflow. Our platforms and teams have proven expertise in delivering information via websites, email, video, at live and virtual events, in print and via social media. For our readers For our readers, we provide content and research: • Analysis and updates are available to subscribers on websites with alerts by email • Research and insights are available to subscribers on websites with in-depth panel sessions on webinars • Topical subject coverage is provided to professional audiences at live events, over interactive virtual events and on supporting websites For our clients For our clients where we provide custom marketing solutions: • Customer generation provides potential buyers of their services • Live events across the globe with interactive virtual events provide forums for expert speakers • Advertising and email marketing helps deliver messages direct to potential customers How we will grow Our growth over the coming short and medium term is driven by four main initiatives: Maximising our global reach Our portfolio is filled with respected and trusted brands in local markets; by starting to replicate these across our geographic coverage, our commercial teams can work with established brands to broaden their sector coverage with an appealing global offering to clients. Helping our clients grow Accelerating our successful customer generation services and implementing it across our portfolio; our proven ability to deliver in this format in the Business Solutions portfolio gives us the confidence to add this to our Financial Services portfolio on a global basis to help our client businesses grow by providing access to qualified customers who are interested in services and products. On trend, insightful coverage of niche topics Accelerating our global focus on niche topic areas within our sectors, such as ESG, Diversity, and Investment Strategy. Our award-winning editorial teams deliver expert analysis and insight to our readers and the commercial teams grow our business through subscriptions and customer content solutions. Leveraging data and technology Our use of the data and technology investments that allow Bonhill to deliver clients with optimised campaigns that range from providing persona-based marketing solutions, to delivering advertising with the latest targeting technologies. We believe this mix provides real potential for strong and continuing growth across multiple sectors and customer profiles. By leveraging our proven expertise and operational capabilities, this delivers revenue growth without intensive resource and capital risk that comes with breaking into new markets. Read more on pages 12 to 19 How we generate value Bonhill revenue is generated from three key areas: 1. Subscriptions From business users who subscribe to our insights, updates and guides through regular monthly and annual subscriptions across our two divisions and from companies looking to gain insight into their sector or segment with subscription-based access to our unique research products and analysis. 2. Customer generation From clients looking to grow their businesses using our customer generation services which provide qualified potential customers interested in their services. 3. Marketing We help our partners with their marketing aims as they look to reach their customers with innovative custom content and brand marketing across formats including events, advertising and content publication. Together these three streams provide stable revenue from subscriptions to our analysis and research products, along with the exciting growth potential driven by our customer generation products and our core portfolio of respected, high-value events and advertising led brands. 11 Bonhill Group plc – Annual Report and Financial Statements 2021 Our global platform: The core of our business A connected team Global collaboration has been a key focus and has underpinned our rebranding and business restructuring. We have continued our commitment to knowledge sharing across geographies and markets and have pinpointed areas where we can centralise departments. London New York Washington DC Hong Kong Singapore Staff 133 New York Washington DC London Hong Kong Singapore 35 1 87 8 2 ESG Clarity ESG Clarity has recently unified the US, Asia and European branches of the brand under a single global website. With responsible investing touted as the future of the investment industry, investors globally can now access industry leading ESG insights and expert content from our partners, via targeted regional streams. ESG Clarity was an early entrant into the responsible investing publishing space, launching in Europe in 2018. In 2020, the brand was refreshed to meet the increasingly fast-paced demand for news, analysis and commentary on the growing industry. In the same year, ESG Clarity was also launched in Asia, powered by Fund Selector Asia, and in the US, powered by InvestmentNews. All three regional websites have proven extremely popular with readers and partners, prompting the launch of more global ESG initiatives, such as our Global ESG Summits. Following client and audience feedback the next logical step was to create a single platform for all of our globally sourced content, where readers can access our in-house news, analysis and research relevant to the region where they are based. Likewise, clients can seamlessly distribute their topical ESG content to a targeted global audience. In addition to housing our current content suite of exclusive news, deep dive analysis, expert opinion, video interviews, podcasts and digital magazines, the new global site also has a sleek new look and exciting features including galleries, streams and easier ways to view our multi-media content. As a result, we now have a global research business, Bonhill Intelligence, and a global content marketing business, Bonhill Create. With team members for each of these based across our international offices we are delighted to see employees working and operating as a truly global business. Not only does this globalisation give us access to the best minds but it also allows us to approach our clients with an even more compelling proposition that better reflects their business needs. We have seen numerous case studies where this new, global thinking has allowed us to maximise revenue opportunities. 12 Annual Report and Financial Statements 2021 – Bonhill Group plc Additionally, the Responsible Ratings Index, created by ESG Clarity and Bonhill Intelligence to identify the top-rated ESG funds in the universe, has been given a new look and interactive table where users can filter by brand, fund name and much more. Investment manager partners also have their own improved ESG Profile section, with information on their ESG integration, processes and fund manager views. We have been greatly encouraged by the successful globalisation of the ESG Clarity brand and expect this expansion to act as a blueprint for other areas of the business. Global ESG Summit The ESG Global Summit series was launched in May 2021 with the second event running in early December 2021. The event series was developed in response to the successful globalisation of the ESG Clarity brand and made possible through the strategic push for brands to work together more collaboratively. The events were conducted virtually and live, running back- to-back across UK, Europe, Asia and US times zones. We were delighted to partner with the UN on the event series and incorporate high-profile keynote speakers alongside industry leaders from product providers. This combination of keynote speakers, presentations and panel discussions proved a highly successful format that resonated with both sponsors and delegates and has now given us a template of how to offer a truly global initiative to our global clients. The summits have established an identity of their own and a clear market presence. Moving forwards, we are aiming to run two summits annually and to transition from a fully virtual model to a hybrid model as physical event restrictions ease. As client (and audience) ESG objectives continue to drive the investment industry, we expect these summits to solidify themselves as engaging forums for education and discussion on the most pressing issues facing investors. Event operations One of the positive effects of the pandemic has been the acceleration of global collaboration, something that has also influenced our event operations. This journey started with the review of the existing event technology in place and deciding how this could, and would, shape the virtual events running under our global suite of brands. One global event platform was developed, ensuring that our event output was of the highest quality, consistent across markets and, operationally, positioned to achieve a substantial cost saving. This centralisation occurred across our whole business, unifying the operations within both our Financial Services and Business Solutions channels. We followed this approach when selecting a broadcast partner and their global reach has also helped us to deliver excellent customer service and audience experience in what was a turbulent time for many. The development of this centralised virtual event offering has also opened up a new revenue stream as our content marketing solutions business, Bonhill Create, now offers bespoke virtual events for clients. One of the positive effects of the pandemic has been the acceleration of global collaboration, something that has also influenced our event operations. Our global event teams are constantly in contact, sharing new ideas, client feedback and suggested suppliers. Linking up teams across UK, Europe, Asia and US not only gives us greater buying power and the potential for cost savings, but it has also led to the sharing of best practice, more local knowledge and a stronger event offering. Future Flows Future Flows was first launched a decade ago to track the forward-looking investment strategies of fund selectors across the UK and Europe. Following great success in these markets, the geographical reach has expanded and Future Flows now tracks fund buyer sentiments across Asia, Middle East, South Africa and, most recently, the US. The formal branding of our global research business, Bonhill Intelligence, has contributed to this cross- border collaboration and research teams in both London and New York now frequently meet to share expertise, best practice and compare the geographical nuances between data sets. As a truly global brand, Bonhill Intelligence is able to carry out research across a wide range of regions, and Future Flows is a key component of the research portfolio. Future Flows continues to be an important tool, both internally for editorial, audience development and sales teams, and externally as an invaluable sentiment tracker for our asset management partners. Due to the success of Future Flows, Bonhill Intelligence has managed to work closely with other companies on independent research projects, covering a range of topics, and across various regions across the globe. 13 Read more in the Interim CEO's review on pages 22 to 25 Read more in the Interim CFO’s review on pages 26 to 29 Read more on our approach to sustainability on pages 20 and 21 Bonhill Group plc – Annual Report and Financial Statements 2021 Our markets: Maximising our network to realise our potential In a media world where trust is at a premium, Bonhill is relied upon by finance and business professionals globally to deliver timely, accurate and actionable insights. Market update We have continued to build on our strategy of transitioning to long-term, ‘must-have’, recurring revenue streams as well as expanding into international territories. Our core focus now is to leverage existing sectors and segments and deliver our product range to a global audience. Centralisation of process and globalisation of product are key to our short- and medium- term strategy and our streamlined, global technology platform has enabled us to optimise the growth of our offerings. Our investment in technology reflects both our commitment to digital and data becoming a more significant part of our business and the development of our business model to generate revenue from subscriptions, customer generation and marketing. As our knowledge-sharing increases across global markets and business channels we are spending more time assessing which areas have driven success and what opportunities lie ahead for us to extend this approach in new markets. This may include replicating respected and trusted brands across geographies, as we have done with ESG Clarity, or implementing existing client offerings into new channels, as we are doing with our customer generation services. Read more on pages 12 and 13 Cross-selling opportunities Not only does this strategy give us greater market reach but, by centralising processes and globalising product suites, we have unlocked the opportunity for greater cross- selling. Our commercial teams are working closer than ever on global packages to better reflect the global structure of our clients’ business, especially in our Financial Services business. This approach allows us to identify and action previously unavailable opportunities with minimal risk and little need for new investment. Read more on pages 18 and 19 14 Key Markets Format Circle size indicates impact on revenue UK Europe DiversityQ ESG Clarity Expert Investor Fund Selector Asia Growth Business Information Age International Adviser InvestmentNews Portfolio Adviser Small Business What Investment Asia US Middle East/South Africa Digital Events Magazines Data Annual Report and Financial Statements 2021 – Bonhill Group plc DiversityQ ESG Clarity Expert Investor Fund Selector Asia Growth Business Information Age International Adviser InvestmentNews Portfolio Adviser Small Business What Investment UK Europe Asia US All of this has been made possible by the commitment and flexibility of our employees. Effects of the “new normal” The challenging impact of Covid-19 has accelerated business innovation and spurred us to be nimbler than ever before. We have shifted exceptionally quickly and successfully from in-person to virtual events and, as in-person events resume, we continue to offer virtual opportunities as a new and complementary product stream. With a focus on quality of platform and quality of people we have embraced the opportunity to improve our proposition and drive towards digital-first following an overhaul of our technology platforms. All of this has been made possible by the commitment and flexibility of our employees and we continue to develop our global collaborative approach and strong sense of community. Despite the transition to more flexible working arrangements, we have managed to create an environment where our people can flourish, explore their potential, and enhance their skills and capabilities, irrespective of where they are physically based. Communication has been key in navigating the pandemic and this increase in cross-border collaboration has only strengthened us as a business. Looking forward, we will continue to combine the best talent across the business with greater knowledge sharing and idea generation across markets. Read more on page 25 Middle East/South Africa Digital Events Geographical shift 1. Magazines Data 3. 2. 1. Europe: 2. Asia: 3. US: £7,727m (2020: £7,880m) £1,256m (2020: £903m) £7,377m (2020: £9,029m) 15 Bonhill Group plc – Annual Report and Financial Statements 2021 Our offering: Business Solutions Our Business Solutions brands service a range of business professionals from technology leaders to DEI specialists. Across our channels we offer insight and analysis to ensure that our audiences can make informed decisions. INNOVATIVE Audiences Senior technology leaders Information Age informs CTOs, CIOs and other senior to mid-level technology leaders on business-critical technology intelligence. Small business owners Most small businesses are run by one person and our Small Business channel targets these microbusiness owners across the UK. Scale-up businesses Growth Business serves scale-up business owners looking to raise capital for their fast-growth businesses and network with like-minded entrepreneurs. Senior D&I business professionals Through DiversityQ we support board members, senior leadership, HR directors and DEI professionals to create D&I best practices, attract and retain talent and build inclusive workforces. We help businesses to grow and thrive by delivering advice on best practice, technology guidance and corporate governance as well as being vocal advocates for building an inclusive workplace. Business Solutions update The Business Solutions group is comprised of four websites and several event-based brand extensions covering the practical issues faced by professional audiences. The group had another strong year of revenue growth in 2021, up 21% year-on-year. That growth was driven by further product diversification, the implementation of improved AdTech delivering new revenues, and a much broader customer base. An important focus during 2021 has been to improve and scale lead-generation capabilities and revenues, developing market-leading solutions for our customers. In late 2021 the group launched a new customer generation platform which is already facilitating further growth in revenues and diversification. 16 The group had another strong year of revenue growth in 2021, up 21% year-on-year. In the first six months of the year Small Business.co.uk had 1.65 million visitors and, by year end, the brand had seen 31% year-on-year growth in revenues, following a 36% growth in revenues in the previous year. The editorial strategy of timely coverage and support for businesses ensured that the website performed well in terms of engagement throughout the year as the audience adapted to changing government Covid restrictions. As we emerge from the pandemic, Small Business is well positioned to continue to help business owners to start, manage and grow their businesses. The second half of the year saw Small Business. co.uk relaunch with an improved technology-stack and user experience. The other two sites in the portfolio (Information Age and Growth Business) will follow, with upgrades planned during 2022. Annual Report and Financial Statements 2021 – Bonhill Group plc INNOVATIVE Q&A with Timothy Adler, Editor, Small Business Whilst the core of these events is focused on the Women in IT, Women in Finance and Women in Asset Management series of summits and awards, 2021 saw the group continue to expand on exploring much wider themes including ESG in technology and more content focused on general diversity issues, with the website DiversityQ perfectly positioned to lead the delivery. We are planning to relaunch DiversityQ.com, with the ‘Women in’ programmes finding their home on the site, along with a subscription-based content hub delivering an always- on solution for both our sponsors and our audiences. We are pleased to hear from Tim Adler, Group Editor of Small Business, Growth Business and Information Age. Talking about the exciting developments within that division. What are the biggest issues facing owners of small businesses right now? Where do you start? Small businesses are facing a perfect storm. Difficulty recruiting staff is the number one problem facing businesses, combined with skyrocketing energy and product costs, increased National Insurance payments for employers, plus all the added red tape and lumpy logistics post-Brexit. Our fourth website and editorial brand in the Business Solutions group, DiversityQ, along with its corresponding suite of events, DiversityQ Presents, aims to tackle the practical issues surrounding diversity with a particular focus on the IT, finance, and asset management industries. Progressive businesses understand the issues around diversity but are now looking for practical solutions and guidance to create a truly diverse working environment. Our brands support organisations in creating an inclusive and diverse workforce, working environment and business culture, and maximise the benefits of diversity through increased productivity, improved staff satisfaction, creating a more sustainable business model and consequently enhancing corporate returns. Against a backdrop of Covid-19 restrictions on live events, revenues were broadly flat in 2021 from 2020 DiversityQ Presents delivered 25 virtual events, and one in-person awards gala dinner in November 2021. Looking forward, we expect a more substantial return to live events whilst still maximising the benefits of satellite virtual events to build our global audiences and deliver data-led information. How does Small Business serve the UK’s owner-managers of small businesses? Most of our traffic comes from people typing questions, that we answer within our editorial, into search engines. ‘Where can I find funding?’, ‘How can I navigate post- Brexit export changes to the EU?’, and generic ‘HR issues’ are perennial favourites. But we also carry timely news and exclusive interviews with industry leaders including the stars of TV's Dragons’ Den and even the Chancellor of the Exchequer. In addition, we frequently run product guides to help owners with some of the more basic business decisions such as choosing the best bank account or the right payment system. It’s a complex world to navigate and we’re proud to be able to equip small business owners with the knowledge and insights they need to succeed. What new features will Small Business offer its audience this year? One thing we’re exploring is turning our popular Start a New Business section into an online learning course with instruction videos and downloadable bullet-point PDFs. The course will also be hosted by a celebrity well- known to our readers so we’re very excited about this launch – watch this space! 17 Bonhill Group plc – Annual Report and Financial Statements 2021 Our offering cont: Financial Services Across our range of Financial Services editorial titles, we provide vital insights and analysis that both professional and personal investors can use to make better, and more informed, investment decisions. CONNECTED We continue to grow our portfolio of products in the booming ESG space, both in the UK and internationally, with products that use business intelligence to generate recurring revenues. We saw an increase in web traffic across our editorial brands and our bespoke content business continued to perform well. We also saw a strong return to growth from our Asia business as it rebounded first from Covid restrictions. We continue to grow our portfolio of products in the booming ESG space, both in the UK and internationally, with products that use business intelligence to generate recurring revenues. 2021 saw the transition to a single global platform allowing us to grow primarily in the US but also to be recognised as the primary ESG insight channel for the global asset manager space. The business is now, operationally, more efficient, with greatly improved margins. Signs are very positive for 2022 with flagship live events already sold out in the UK and forward bookings in all areas tracking ahead of expectations. We share industry news and views, financial planning guidance and regulatory updates to keep investors abreast of the latest trends and developments. Financial Services update (UK, EMEA & Asia) This division is made up of media, events, content, and research serving the fund selection and financial advice communities across the UK, Europe, Middle East, South Africa, and Asia. Its primary function is to enhance the interaction of asset managers with their wholesale distributors. 2021 was a year of both challenges and opportunities. Face-to-face events were historically the largest part of the business and, unfortunately, Covid-19 meant that nearly all of these events were affected despite optimism at the start of the year that we would transition back to face to face. The business had adapted to a new virtual format and was well placed to run a full agenda both virtual and face to face where possible. Despite the challenges around events the business still grew revenue and margin, benefitting from historical cost reduction activity. Audiences Fund selectors & wealth managers Our Portfolio Adviser, Expert Investor and Fund Selector Asia channels target key decision makers in fund selection and fund buying across UK, Europe and Asia respectively. The insight and analysis they receive from our editorial helps them with their allocation decisions for high- net-worth clients. Financial advisers InvestmentNews reaches US-based financial advisers who focus on retirement planning, ESG, tax & inheritance planning for the clients. Our International Adviser brand targets the global adviser market (ex-US) and those intermediaries that use cross-border insurance, investment and pension products on behalf of their high-net- worth clients. Private investors What Investment equips personal investors with the latest news and information to help them manage their wealth, pensions and investments as well as individual equities and property. ESG-conscious investors Our global ESG Clarity channel is dedicated to investment professionals who incorporate ESG thinking into their workflow and strategies. Fund selectors, wealth managers, private bankers and financial advisers all look to ESG Clarity for education on this fast-evolving space of the investment industry. 18 Annual Report and Financial Statements 2021 – Bonhill Group plc CONNECTED Financial Services update (USA) We’re delighted to welcome John French who joined us in October 2021 as our new CEO for InvestmentNews. We spoke to John about his first impressions and his exciting plans for the brand. Why have you joined InvestmentNews? For me, there were two key attractions for joining InvestmentNews: the brand and the team. I’ve been in this industry for a number of years and one of the things I have learned is that there is always a content leader, and, for me, this has always been InvestmentNews. The strong brand coupled with a fantastic team of people meant that, when the opportunity arose for me to join the business, I was immediately on board. What have been your first impressions? One of the things that has really stood out to me was the depth and the quality of the content team. I had no idea quite how much work happens behind the scenes to deliver editorial across such a breadth of formats. I’ve really enjoyed getting to know our team of reporters and learning more about their individual areas of expertise and, honestly, the quality of editorial is the highest I’ve seen in my career in B2B publishing. So far, what are the main changes that you’ve seen? The biggest change so far has been revamping and enhancing our online presence and, specifically, consolidating our websites into one centralised platform. InvestmentNews is the mothership and so we’re focusing on making sure that everything we do services this core brand. We’ve seen great success in creating off-shoots and sub-brands, powered by InvestmentNews, but I want to make sure that we’re always boosting our core proposition rather than creating satellite operations. Looking to the future, what plans do you have for the brand? We have two significant product launches that we are focusing on: ESG Global and Investment Strategy. The ESG wave has firmly arrived in the US, and we want InvestmentNews to own the ESG position in this market. Investment Strategy is a high- end content vehicle for advisers with significant assets under management, designed to help guide them in the construction of client portfolios. Honestly, the quality of editorial is the highest I’ve seen in my career in B2B publishing. This subscription-based community provides a platform for asset managers to serve content to sophisticated financial advisers. Both our expansion into ESG and the launch of Investment Strategy have been made possible by the support of the wider Bonhill business and we’re delighted to be able to leverage existing products in new geographies. We’re no longer just a brand in the US – we’re a strong brand in the US, with an even stronger global presence in Bonhill. It has only been three months since I’ve joined, but a lot has been achieved, and a lot more will be achieved in 2022. 19 Bonhill Group plc – Annual Report and Financial Statements 2021 Our approach to sustainability: Building a more sustainable future inside and out Our Board is trusted to deliver good governance and drive a top-down commitment to integrating ESG credentials throughout the business. We remain committed to our sustainability journey and developing our environmental, social and governance efforts. In light of the pandemic, we have placed great emphasis on the ‘social’ aspect and have continued with our internal talks on personal development and employee engagement surveys, as well as introducing a new peer recognition scheme, Bonhill All Stars, and completing our mental health first aider training. We have developed our company values as part of the rebrand project, founding these on employee feedback to better reflect our business culture, and are proud to promote these at all levels of the business. At the start of 2021, five Bonhill brands, DiversityQ, ESG Clarity, Expert Investor, International Adviser and Portfolio Adviser, banded together to launch the Campaign for Better Governance by investment professionals, and for the greater benefit of their businesses and those they serve. The ongoing aims of the campaign are to showcase examples of good governance; hold to account companies that fail to meet the levels of governance their stakeholders have the right to expect of them; and highlight examples both of best practice and where there may be room for improvement. Led by a monthly newsletter offering coverage on governance inside and outside of the investment industry, the campaign has received good support from individuals and businesses across the financial services sector. On the environmental side, we have continued to deliver in-person events in a sustainable manner by partnering with climate-friendly venues (e.g. LED lighting, paperless), offsetting travel carbon footprints with myclimate.org and, in the UK, reducing food and beverage waste via the Olio charity. Our hybrid-working policy has also lessened our carbon footprint as travel has been greatly reduced and we are now looking ahead to become a fully carbon-neutral business. We understand that the drive towards sustainability is a journey and, whilst we are proud of the progress that we have made so far, we are dedicated to continuing on this path to further hone our environmental, social and governance credentials. We published our first Gender Pay Gap report this year. 20 Gender pay gap reporting The year, as part of our commitment to DE&I and ESG, we have chosen to analyse our gender pay gap. Gender pay gap reporting shows the difference in the average hourly rate of pay between all male and female employees in an organisation. This is different to equal pay which, under the Equality Act, is the legal requirement to pay men and women the same for equal work. Reporting on pay helps us identify how we will create and support a diverse workforce, an inclusive culture and provide equality of opportunity to develop and progress. Our Pay Gap Report On 5 April 2021, Bonhill employed more women (55%) than men (45%). The following tables show the mean and median gender pay gap, represented as the percentage that women are paid lower than men, i.e. the median hourly rate for female employees in the Group is 13.6% lower than the median hourly rate for male employees. What initiatives are currently in place to combat gender pay gaps? • Trained senior members of our global team in DE&I; • Established employee-led ESG committees; • Improved our performance assessment process enabling more frequent performance feedback; • Established a new set of core values for the Group via employee focus groups. What else are we planning in response to this report? Recruitment: We are reviewing how we advertise and promote opportunities to ensure we are attracting a diverse range of candidates; providing more DEI-related training and support to those involved in interviews and making decisions about recruitment; and examining how the application, interview and selection processes work to identify and remove any barriers to inclusion. Progression: We are reviewing our approach to employee development from a DEI perspective; continuing diversity training for our people; assessing how we can support and retain our people including training and development, and mentoring; and providing opportunities for women in middle management to develop their capabilities to become senior managers. Leadership & Culture: Our Executive Committee is committed to encouraging and nurturing a positive and inclusive work culture through our core values by running effective meetings; communicating clearly; encouraging open feedback and dialogue; and by prioritising wellbeing. We confirm that the data within this report is accurate and in line with the UK Government’s Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. Jonathan Glasspool Interim Executive Chairman 19 April 2022 Group UK US Median 13.6 8.47 4.9 Mean 17.67 23.64 -5.58 The mean and median pay gaps in hourly rate of pay are primarily driven by the representation of men and women in the lower and upper quartiles. We would anticipate median pay gap data being more stable year-to-year as in a smaller company like ours, the mean percentage differences can be disproportionately affected by one or two individuals, particularly at a senior level. Representation across the Company The following chart represents our employees divided into four quartiles based on the hourly rate of pay (shown above). Upper Upper middle Middle Lower Male Female 57% 46% 46% 33% 54% 54% 54% 67% As can be seen, the greatest imbalance is in the lower quartile where we have 67% women, meaning we hire a high proportion of women into entry-level and junior roles. The lower middle, upper middle and upper are more balanced, with more women in the middle and upper middle quartile. We do have near equal percentage of women in more senior roles, below the Executive Committee. Annual Report and Financial Statements 2021 – Bonhill Group plc Environmental Social Governance WHERE WE’RE GOING Carbon-neutral commitment Volunteering programme rolled out in UK ESG analysis and reporting WHERE WE ARE Event playbook – standardised policy Gender pay gap analysis and reporting ESG Committee created New US print supplier with more long-term sustainable credentials Committing to paperless events Creation of company values Mental health awareness programmes and mental health first aider training completed 2021 staff surveys x 3 to keep in touch with themes and trends and staff attitudes Financial literacy training in UK Working with sustainable event venues Regular Bonhill talks to highlight key social issues Standardised benefits across the UK Volunteering programme in the US Employee recognition scheme, Bonhill All Stars, launched Board members attend regular ‘creativity workshops’ with employees Hybrid working policy based off company survey on working practices Wellness week to highlight health in the workplace Deep-dive Board ‘information sessions’ to manage threats and opportunities Bamboo satisfaction survey as part of reviews Partnering with Olio charity in UK for leftover event F&B Standardised UK policies on maternity and parental leave Regular meetings of audit, nomination, remuneration & risk committees WHERE WE’VE COME FROM 21 Bonhill Group plc – Annual Report and Financial Statements 2021 Interim Chief Executive’s review Dear Shareholder 2021 was as challenging a year as 2020, not only with the ongoing trading conditions caused by the pandemic, but also with a disappointing end to the year with a poor performance particularly in the US digital business and a lower-than-expected level of event contribution in the UK in the fourth quarter. These, combined with campaign cancellation and postponement, meant that a year that was on track until October to meet market expectations ended delivering £16.4 million of revenue (2020: £17.8 million) and breakeven EBITDA (2020 restated loss: £0.4 million). Thankfully, our actions in prior years to reduce the Group’s operating costs have helped to mitigate the above while allowing us to end the year with our cash position flat on 2020. In response to the poor performance in the final quarter, we have a new management team in the US and some clear priorities in the early months of 2022 to resolve the US digital issues. We have made continued progress in our ESG activities globally as well as content marketing offering, both of which diversify our revenue streams and better align us to the core asset management and financial advisor market. Positively, Asia had a strong performance after some difficult years, and we also successfully moved back to the live event environment in the final quarter of the year which should help rephase the revenues in 2022 away from the prior year’s fourth quarter concentration. Financial performance Revenues for the year ended 31 December 2021 (the ‘Year’) were £16.4 million (2020: £17.8 million). The Company delivered a stronger second half of the Year (‘H2’) with £9.6 million of revenue, compared to £6.8 million reported in the first half (‘H1’), and EBITDA for the Year of breakeven (2020 restated: £0.4 million loss). This was a result mostly of the actions taken in 2020 and the constant reshaping of the business in 2021 to reflect the changing backdrop. These revenue numbers exclude any UK Government support. After several years of adjusting items, it is pleasing to report that there were no adjustments in 2021. Overall, the Group saw gross margins at 75%, a 5% reduction on last year, reflecting the fall off in US digital activity. This margin remains relatively high reflecting the nine months of virtual event activity and it is likely that if in person events dominate for 2022 then this is likely to fall back further. In the Year, our Business Solutions division grew revenues by 3.6% to £2.65 million (2020: £2.55 million) and maintained its 64% gross margin. UK, EMEA and Asia Financial Services grew revenues by 1.7% to £6.34 million (2020: £6.23 million) with an 80% gross margin (2020: 82%) whilst US Financial Services saw revenues fall by 18.3% to £7.4 million (2020: £9.0 million) and gross margins fell to 75% (2020: 84%). Revenue by activity saw Business Information fall by 4% to £10.3 million (2020: £10.7 million), the fall in US digital being partially offset by good growth in our content marketing business and ESG Clarity. Events revenues fell by 13% from £6.1 million to £5.3 million reflecting the late switch back to in person events in the fourth quarter of the Year and the poor performance in late November and December as a result of the Omicron variant. Data and Insight revenue was down year-on-year by 22% from £1.0 million to £0.8 million reflecting the postponement of a research project. We participated in the US Small Business Administration's second Paycheck Protection Program (‘PPP2’) which is part of the Coronavirus Aid Relief and Economic Security Act (‘CARES Act’) and received loans totalling $1.3 million (£0.9 million) in March 2021. As was the case with the first PPP loan of $1.1 million received by the Group in May 2020 (‘PPP1’),as announced on 5 November 2021, the PPP2 loan was forgiven in full. The final payment due to Crain Communications under the vendor loan agreement entered into in August 2018 as part of the consideration payable for the Company’s acquisition of InvestmentNews was made in August 2021 which completes all of the Company’s 2018 post-acquisition commitments. 2021 was as challenging a year as 2020 not only with the ongoing trading conditions caused by the pandemic, but also with a disappointing end to the year with a poor performance particularly in the US digital business and a lower-than-expected level of event contribution in the UK in the fourth quarter. 22 Annual Report and Financial Statements 2021 – Bonhill Group plc Covid-19 impact The impact of Covid-19 was felt in our events business, with the continued restrictions in the first three quarters of 2021 preventing the hosting of any live events in all regions (H1 2020: 16). The final six weeks of the Year were impacted by Omicron which dented sponsor and attendee appetite. With the proliferation of events in the final quarter of the Year, this led to full year event revenues being £0.8 million lower than for the comparable period in 2020 at £5.3 million (2020: £6.1 million). 17 in person events were held in the final quarter, mainly in the UK. The event calendar for 2022 is more balanced between the halves and has started well with event bookings being up 42% on 2021. During 2021, the Company utilised a range of measures to help navigate the Covid-19 operating environment. After the restructuring in 2020, and the implementation of a new divisional structure, external support included PPP2 in the US and two Bounce Back loans totalling £100,000 in the UK. No staff members were on furlough during the Year and headcount across the Group at the end of the Year was 133 (31 December 2020: 136). All outstanding VAT and PAYE deferrals were paid in the Year and there are no ongoing liabilities outside the ordinary course of business. During 2021, we saw additional savings from supplier agreements, including print, IT suppliers and services, and reduced rental costs, both from the new lease in the US and from exiting the Company's head office, Fleet House, in May 2021. The Group continues successfully to operate with a global hybrid working model and approximately 15% of the workforce are in the office at any given time. This policy is reviewed quarterly. Bonhill – Be Informed The Group undertook a rebranding exercise to consolidate and define its identity following a period of acquisition and integration as one global brand with two divisions – Bonhill Financial Services and Bonhill Business Solutions. This launch not only features a new visual identity, but also a simplification of the Group structure and a new offering across our global Financial Services business. The last three years have seen the unification of three businesses and, having worked harder and closer together during the pandemic, it seemed right to formalise that global collaboration and emerge from these challenging conditions as a more defined entity. We are looking to achieve three things with this rebranding: • to make our broadest possible offering available to our global client base; • to deliver the highest level of service and experience to our clients; • to establish an inclusive, open-minded working environment creating a true platform for opportunity. In addition to this external rebranding, we have streamlined the Company structure with the closure of the Growth Company Investor and Information Age statutory entities (Information Age continues as a brand under Business Solutions). With effect from January 2022 all UK trading activities have been combined into one legal entity, Bonhill Media UK Limited. The rebranding is working well and the next phase will see an emphasis on selling more Group products internationally. Two of the key objectives in 2022 are to sell on a global basis and move ESG Clarity to a global site. In 2022, we have already seen the benefit of this approach with an increase in sales of global packages and a change in the working practices of the sales teams to offer more Group services to clients. The ESG Clarity team was in the US in February 2022 to create content for the site but also to promote the positioning of this core ESG brand to the fast-growing US ESG market. Business Solutions Our Business Solutions division saw a strong media performance in the Year, with revenues up 21% on 2020 from £0.9 million to £1.2 million. The core Small Business and Growth Business sites saw a tail off in traffic in the final quarter as the UK SMEs searched less for Government support and information dealing with the pandemic. This, coupled with the planned relaunch in September 2021, made for a difficult final quarter of the Year, but pleasingly the business delivered ahead of budget. The diversity events portfolio had a modest return to live events in the final quarter with one held. This led to a 9% reduction in revenue vs 2020 which had live event activity in the first quarter. A successful virtual event model was operating for most of the Year, but we are planning on running most events in person in 2022 starting with the Women in IT – London which was successfully held on 28 February 2022 with 650 people in attendance. There has been a focus on marketing and our extensive data base in the Year. This exercise included data de-duplication and the enhancement and cleansing of all divisional data. The result has seen a 55% increase in the ‘Women In...’ database. This process of data enhancement will continue into 2022. The outlook for the division is positive in 2022 with a full year of live event activity planned, the return of some key initiatives for the small business community that were mothballed during the pandemic, the continued development of lead generation products, a broadening of the offering away from core advertising and broadening the client base. Financial Services Financial Services UK (Last Word Media) traded well, with a 1.7% increase in revenues despite an uncertain events outlook. ESG Clarity has been the stand-out performer alongside Bonhill Create, our content marketing business, both of which are now being sold globally. Asia has seen a strong performance across media and events after a difficult couple of years and has been a key contributor to our global ESG series. Business information revenues grew by 27% in the Year reflecting the growth of non-event activity. Live event activity restarted in the second half of 2021, specifically from September in the UK and Asia, reflecting the easing of Covid-19 restrictions. Event revenues were down 20% in the Year with the lack of live events mitigated by the launch of some new Global ESG summits. COP26 was an important event in the Year for the Group which created a full set of virtual events, content packages and marketing aligned to the event for a range of global asset managers. 2022 has started positively and the live event calendar is booking well with our congress activity better distributed throughout the Year. We continue to see good growth in our content marketing business with some interesting new ESG related events sold out already for July. 23 Bonhill Group plc – Annual Report and Financial Statements 2021 Interim Chief Executive’s review cont. Financial Services US (InvestmentNews) had a weaker year where digital sales were down 15% compared to 2020. The first half was impacted by a shift in market messaging by customers following the election of President Biden and US financial advice firms reducing advertising budget to rebuild profitability while there was some disruption from M&A activity. Unfortunately, the new initiatives put in place to mitigate that fall did not have any meaningful impact in the second half of the Year. Various steps have been taken to address the situation with a change of management and a staged digital remediation programme now in place that should address the issues. Digital sales in the first quarter are up on last year by 9%. Print revenue declined in the Year by 20% on 2020 from £2.3 million to £1.8 million. We were delighted that InvestmentNews won a prestigious Neal Award for business journalism, considered the highest editorial honour in the field of business-to- business journalism in the US. In addition, InvestmentNews was a finalist in five other categories, including best media brand/ overall editorial excellence and best Covid-19 industry coverage. We have continued to see a strong performance in print in the US in 2022 and our recent content survey highlights the role print plays for the core US financial adviser market. The in-person event market in the US was impacted by Covid-19 and the Delta variant in the third quarter and Omicron in the fourth quarter. This backdrop necessitated last minute event changes from in person back to virtual and undermined the short-term planning for the events business. Importantly despite this environment event revenue was only down 3% in the Year. We have reviewed the event schedule for 2022 and this will involve holding fewer events and a greater focus on profitability. The US financial advice market still holds enormous potential for the Group and the work we have done on rebranding, global collaboration and becoming one global financial service offering, should allow us to target a broader audience with our content and data led strategy. One of the delays in the fourth quarter was the launch of Investment Strategy. This new initiative for the US asset management community seeks to replicate several of the Group’s existing products that have been successful in the UK, Europe and Asia. The site was launched on 15 March 2022 and is a good example of our focus on a global offering. Internal ESG Committee Reflecting the importance of ESG to the Group, we convened an internal ESG Committee, involving 32 employees from across the business to look at the three strands. This team has created a multi-year project to assess, monitor, set benchmarks and measure progress in key areas. With the new management team in place in the US, we are already seeing the benefits of this greater global unity in both sales, account management and best practice across the Group. ESG We continue to see sustained interest in ESG-related topics from customers across the Group. This has been particularly strong in the UK and Asia and is building momentum in the US. We have seen continued growth of our core brand, ESG Clarity, which moved onto one global platform in late September 2021. Our wider group ESG platform includes ESG Clarity, our 'Women In…' series, DiversityQ, InvestmentNews' Women Adviser Summit series, Diversity, Equity and Inclusion awards and the US Sustainable Development Goals podcast series and Bonhill Intelligence, our research business. In addition, Bonhill Create, our content marketing business, co-ordinated the two global ESG events held in conjunction with the United Nations. COP26 was a highlight of the Year and a range of events and marketing initiatives were conducted globally and we have plans for several other global and regional activities helping clients promote their credentials. In May, we were delighted to host our inaugural Global ESG Summit, in partnership with the United Nations Capital Development Fund, a flagship event for the Group, that further establishes our credentials in this area of critical importance to our customer base. The event had over 1,000 registered attendees and was streamed live across Asia, the UK, Europe and the US. Our second global ESG event was held in December 2021, just after COP26, and again brought together a global audience to see what direct action fund groups were taking in tackling climate change. We have plans for continued growth in this area, utilising our deep subject knowledge, audience reach and innovative solutions to highlight fund group credentials and providing key data and information to all parts of the investment community. We expect to broaden our reach outside of the core audience with planned activities for the wider adviser market. Key achievements include: • The creation of new company values, gender pay gap analysis and reporting • Mental health awareness programmes and mental health first aider training completed • Standardised benefits across the UK • Hybrid working policy based off company survey on working practices • Bamboo satisfaction survey as part of reviews (data in HR board pack) % of supportive employees • Regular Bonhill talks to highlight key social issues • Wellness week in February to highlight health in the workplace • Financial literacy training in the UK • 2021 staff surveys to keep in touch with themes and trends and staff attitudes • Bonhill All Stars – employee recognition programme • Standardised UK policies on maternity and parental leave • Event playbook – standardised policy • Launch of the campaign for better governance • The impact of DiversityQ and ESG Clarity Operations The Group is creating efficiencies and costs savings through the development of group central services, across technology, finance, HR and Ad operations, with production and marketing planned as next steps. The successful completion of the UK office move resulted in significant cash benefits in H2 2021 and the new US office lease delivered cost and cash savings with a six-month rent-free period. We believe that we have the right mix of space and flexibility to support our global flexible hybrid working policy. 24 Annual Report and Financial Statements 2021 – Bonhill Group plc Our people Our people and the values which the Company espouses are paramount to our success. They have been fundamental to the development of the Group's recent rebranding, which is a true reflection of the evolved culture and operational style of Bonhill. We are grateful for the commitment of our employees during the pandemic and our ongoing response to the challenges it presents has been successful largely due to their positive approach and determination. Remote working has been a success and we have recently implemented a flexible working policy to continue this and better support the wellbeing of all our employees. Our working practices will continue to be shaped across all regions by the continuous engagement with our people and an assessment of the changing work environment to ensure that we maintain the balance between meeting the needs of our clients and the safety of our employees. We have also focused on initiatives for staff retention, enhanced benefits and additional training, as well as the Bonhill All Stars employee recognition programme. The wellbeing of our employees is critical to the success of the Group, and we have now implemented our own team of trained mental health first aiders, run five days of awareness during Mental Health Week, provided wellbeing talks and training and support to ensure our employees are fully supported in their working lives and beyond. We have extensively surveyed our employees to ensure that we are alive to any changes in circumstances, trends or feelings when they are working remotely. Technology Our historic investment in creating a global technology platform is paying dividends with the creation of a global data lake, global ESG platform and global website standards. In addition, we continue to invest in Search Engine Optimisation (SEO) and Data & Analytics to further improve our audience knowledge and propositions. We are making continual improvements to online advertising formats, reducing invalid traffic for better client campaign success as well as creating customer personas through data enrichment to provide a better customer experience, more accurate marketing, and new sales opportunities. This greater customer insight has been enhanced with the first phase of the implementation of our global data lake to store all our key data elements and support improved analytics and reporting. The release of our first major website using our global framework has also improved website performance, allowed new features to be deployed faster, and reduced the total cost of ownership. Dividend Considering the prevailing operating environment, and the Company's financial situation, we will not be recommending the payment of a final dividend for the year ended 31 December 2021. It is very much the Board's intention that the Company should return to paying a dividend when it is appropriate to do so. Summary 2021 was a year of surprises and constant change for the Group, but one which we have managed to navigate, while improving our overall offering and remaining an important partner to our clients. For nine months of the Year, we continued to deliver virtual events, far longer than ever envisaged at the start of the Year and in person events only really hit their stride in the final two months of the Year. While the all-important final quarter was impacted by weaker than anticipated sales in the US, we managed to complete the Year with a positive EBITDA contribution on an unadjusted basis and had some real successes despite the overall outturn not being as positive as originally expected. The Group rebranding provides a strong platform for us to move forward and I firmly believe that a global Financial Services business with a leading position in ESG is an achievable objective for 2022. Outlook Our aim in 2022 is to further develop our position as a global partner for asset managers and financial advisors. A focus on a global offering, resolving our US digital issues and benefitting from improved operations and business efficiencies should lead to a better performance in 2022 and we have already seen a strong start to our revenues which are ahead of the prior year by 10% in Q1. We have the opportunity to establish a global market leadership position with ESG Clarity and with an improved events backdrop we should see a return to growth in this area. We have worked hard to rephase our revenues so that we are not so reliant on the fourth quarter and would expect to see a more balanced 45%/55% (2020: 32%/68%) split in revenues half year on half year. Over the course of the year, the year-end cash position should increase with no major capex projects, the end of the Crain loan repayments in 2021 and an improved operating performance. With a strengthened balance sheet following completion of the fundraising announced separately today, an operating environment that allows us to hold in person events and a delivery of the turnaround in fortunes in the US business together with the various initiatives we have started across our portfolio of products we are confident that 2022 will be a much-improved year for Bonhill. Patrick Ponsford Interim Chief Executive Officer 19 April 2022 25 Bonhill Group plc – Annual Report and Financial Statements 2021 Interim Chief Financial Officer’s review Dear Shareholder Following the IFRS Interpretations Committee (IFRIC) Agenda Decision on IAS 38 ‘Intangible Assets’ which determined that configuration and customisation of Software as a Service (SaaS) solutions should be expensed rather than capitalised unless they meet the definition of separate intangible assets, the Group has reviewed its treatment of its SaaS costs. The new treatment is applicable immediately and retrospectively. At a Group level in 2021 the new treatment results in a net charge of £90k to the income statement and a reduction in adjusted operating profit and adjusted profit before tax, reflecting the reversal of in-year capitalised expense of £98k partly offset by lower in-year amortisation of £8k. Free cash flow is not affected by the change. The impact of this accounting policy change on the Group’s 2019 and 2020 income statements are shown in table B. 2021 started with optimism and positivity and was a welcome relief after the turbulence of 2020. However, as the year progressed, there were two areas of the business that did not see the bounce back that we had originally expected. The return to live events in the summer was a sign that things might be returning to normal and, whilst the appetite, attendance and feedback from clients were positive, ultimately the revenue was not as high as forecast due to last minute cancellations from sponsors and delegates. InvestmentNews’ digital advertising was the other area that did not return to previous levels as hoped; this has resulted in the Board making a further £6.2 million impairment charge (2020: £6.6 million) to reflect the reduction in value of the assets held in our US operations. With the change in administration in the United States and the emergence of new Covid-19 variants, advertising spend was much reduced in the first half as key clients were waiting for stability before rolling out their advertising campaigns. Still, there is much to be positive about and we achieved much during the Year. Financially, these include: • Paying back deferred VAT of £0.4 million from 2020 • Final payment made of the $6 million vendor loan from Crain, the previous owner of InvestmentNews • New office lease for New York office, including a six-month rent-free period • Office move in the UK, downsizing whilst realising flexible working during these uncertain times • Second PPP loan received and fully forgiven in the year • Two successful R&D tax credit claims amounting to £0.5 million received for FY19 and FY20 • No adjusting items as post-acquisition integration all complete • Continued evolution and improvement of financial control processes, policies and procedures to comply with best practice • Forward-looking focus on ESG and how we can ensure this is at the heart of what we do every day Financially, our key focus is on long-term liquidity and how our day-to-day operations can support the business into long-term steady growth. Revenue and gross margin Revenue reduced year-on-year by £1.4 million (8%) to £16.4 million with the movements being felt across both Business Information and Events. Business Information revenue reduced year-on-year by 4% in 2021 to £10.3 million and, within this, there is a continued reduction in print revenue of £0.7 million, as we see the effects of the migration from traditional print magazines to our digital offerings. Digital revenue increased by £0.3 million year on year. As noted above in earlier sections, digital revenue (particularly in the US) was much slower than forecast, mostly due to ongoing socio-economic factors affecting our customers’ appetite to spend. Following the IFRS Interpretations Committee (IFRIC) Agenda Decision on IAS 38 ‘Intangible Assets’ which determined that configuration and customisation of Software as a Service (SaaS) solutions should be expensed rather than capitalised unless they meet the definition of separate intangible assets, the Group has reviewed its treatment of its SaaS costs. 26 Annual Report and Financial Statements 2021 – Bonhill Group plc Table A Key Financials (£’ks) Revenue Gross profit Gross Margin Adjusted EBITDA* Adjusted operating loss Statutory operating loss Cash Adjusted basic (loss) per share Statutory basic (loss) per share Year ended 31 December 2021 Restated Year ended 31 December 2020 16,360 12,296 75% 23 (8,329) (8,329) 1,372 (8.2p) (8.2p) 17,812 14,334 80% (387) (8,441) (10,758) 1,343 (10.50p) (13.33p) Change £ Change % (1,452) (2,038) – 410 122 2,429 29 (8)% (14)% (5)% 106% 1% 23% 2% * Adjusted EBITDA does not include the impact of share-based payments. As outlined in note 1 to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. As a result of this accounting policy change some costs previously capitalised have now been expensed to the income Statement. 2019 2020 Table B Consolidated Income Statement 2019 Reported £’000 Adjustment £’000 2019 Restated £’000 2020 Reported £’000 Adjustment £’000 Adjusted EBITDA Operating Loss Tax Expense Adjusted Basic EPS Diluted EPS 2,312 (3,655) – 2.24p (9.28p) (589) (572) 109 (1.03p) (1.04p) 1,7323 (4,227) 109 1.21p (10.32p) (146) (10,660) (3) (10.41p) (11.26p) (241) (98) 21 (0.09p) (0.08p) 2020 Restated £’000 (387) (10,758) 18 (10.50p) (11.34p) Table C Revenue Business Information Events Data & Insight Total Table D Gross margin Business Information Events Data & Insight Total Year ended 31 December 2021 BSG £’ks LWM £’ks IN £’ks Group £’ks Year ended 31 December 2020 1,432 1,215 – 3,882 2,220 234 4,957 10,271 5,272 1,837 817 583 2,647 6,336 7,377 16,360 10,695 6,074 1,043 17,812 Year ended 31 December 2021 BSG LWM IN Group 66% 93% 81% 83% 66% 60% 57% 60% 63% 83% 71% – 64% 80% 75% 75% Year ended 31 December 2020 86% 71% 81% 80% BSG – Business Solutions and Governance, LWM – Last Word Media, IN – Investment News Table E Revenue Print Digital Events Other Total Year ended 31 December 2021 FS £’ks BS £’ks Group £’ks Year ended 31 December 2020 2,343 6,779 4,057 817 13,996 – 1,149 1,215 – 2,364 2,343 7,928 5,272 817 3,061 7,634 6,074 1,043 16,360 17,812 Change % (4)% (13)% (22)% (8)% Change % (3)% (11)% (10)% (5)% Change % (23)% 4% (13)% (22)% (8)% Overall, events revenue reduced by £0.8 million year on year with Covid-19 restrictions resulting in a continued virtual offering for the first six months. In the second half of the year, there was a return to live events, but ongoing uncertainty and change in government guidance with the rise of the Omicron variant in the UK led to last minute sponsor cancellation and reduced delegate attendance. The Events margin reduced from 71% to 60% which is reflective of the change in mix of the portfolio with more live events held in 2021 than in 2020. Data & Insight saw a reduction in revenue of 22% to £0.8 million in 2021, mainly due to ongoing reductions in customer spending. See tables C and D. As has been explained in the earlier sections, we have rebranded and restructured the Company so that in future, both financial and operational performance will be measured in terms of Financial Services (FS) and Business Solutions (BS). Additionally, to give greater clarity on product areas, we will further split out the propositions. To help aid comparison, the above revenue and gross margin tables have been restated to reflect this revised structure in tables E to the left and F on the next page. Operating costs (excl. depreciation, amortisation, lease payments under IFRS 16 and share-based payments) We have continued to build on the work done in 2020 to right-size the cost base and we can see the impact of this work in the below table. As mentioned last year, all adjusting items were closed off in 2020 signifying the end of the historic acquisition and integration projects and I am pleased to report that there were no adjusting items in 2021. The reduction in the ‘other costs’ line shows the annualised impact of the cuts to discretionary spend that were started last year and demonstrates the better cost management controls that we have implemented in the business. Year-on-year, the underlying cost base of the business has reduced by £3.9 million. 27 Bonhill Group plc – Annual Report and Financial Statements 2021 Interim Chief Financial Officer’s review cont. Table F Gross margin Print Digital Events Other* Total Year ended 31 December 2021 FS BS Group – 86% 96% 92% 58% 66% 21% (100)% 77% 66% 86% 82% 60% (26)% 75% Year ended 31 December 2020 89% 85% 71% 81% 80% Change % (3)% (3)% (11)% (107)% (5)% * Other Gross Margin includes cost of sales that are not directly attributable to a proposition e.g. direct marketing and platform/hosting costs. Table G Operating costs Staff costs IT Legal & professional T&E Office costs (excl. IFRS 16 rent) Other costs Total operating costs excl. adjusting items Adjusting items Total operating costs Table H Headcount1 Opening (restated) Starters Leavers Closing Year ended 31 December 2021 Year ended 31 December 2020 Change £ Change % 11,540 523 410 72 213 265 13,023 – 13,0123 BUK2 47 22 (18) 51 12,472 974 610 115 327 1,007 15,505 1,429 16,934 LWM 45 11 (10) 46 (932) (451) (200) (43) (114) (742) (2,482) (1,429) (3,911) IN 44 12 (20) 36 (7)% (46)% (33)% (38)% (35)% (74)% (16)% (100)% (23)% Group 136 45 (48) 133 1 Defined as number of people paid via monthly payroll 2 BUK equates to Business Solutions & Governance plus centralised, Group functions. Table I Cash and net debt Cash Borrowings Lease liabilities under IFRS 16 Net cash/(debt) Table J Trade debtors Current/not due 30-60 days past due 60-120 days past due 120+ days past due Gross trade receivables Provisions Net trade receivables Net trade receivables as a % of revenue Year ended 31 December 2021 Year ended 31 December 2020 1,372 (100) (2,305) (1,033) 1,343 (1,060) (184) 99 Year ended 31 December 2021 Year ended 31 December 2020 1,063 1,059 427 211 2,761 (160) 2,601 16% 1,862 404 332 769 3,367 (440) 2,927 16% As can be seen in table G, the biggest area of cost reduction has been in staff costs where the full year cost is £0.9 million lower than in the prior year. Whilst overall headcount (shown in table H) has only reduced by three across the year, where leavers have been in senior roles, we have looked to promote internally, realising savings. Additionally, where possible, we have looked to harness opportunities that arose through natural attrition, creating global roles where possible rather than just backfilling every role directly. Cash flow As with in 2020, the biggest focus within Finance throughout 2021 was cash management. Cash has remained tight, yet stable, across the year with the 2020 year- end balance being £1.3 million, the interim 2021 balance also being £1.3 million and the final year-end balance for 2021 being £1.4 million. The key items that helped to maintain our cash position over and above day-to-day working capital management include: • Further progressing credit control processes and procedures to keep our debtor days as low as possible • Second US Paycheck Protection Programme loan (and subsequent grant) of £0.9 million • New NY and London office leases which resulted in cash savings of £0.5 million year on year • Final payment made on the US vendor loan in August, freeing up $0.7 million in the second half of the year • Two successful R&D tax credit claims for FY19 and FY20 totalling £0.5 million. All of these actions combined resulted in a cash balance at 31 December 2021 of £1.4 million (2020: £1.3 million). Cash and net debt At the year end, we had a net debt position of £1.0 million (shown in table I), including IFRS 16 lease liabilities (2020: net cash £0.1 million). The biggest movement is the recognition of the lease liabilities on the new offices, particularly in New York which has a lease period until January 2028. The overall net trade receivables balance has reduced by 11% year-on-year, and the percentage of gross debt greater than 60 days past due has further reduced this year to 23% (2020: 33%). Shown in table J. 28 Annual Report and Financial Statements 2021 – Bonhill Group plc Going concern The Group’s business activities, together with the risk factors likely to affect its future development, performance and position, are set out in the Chairman’s statement and the Interim Chief Executive’s review. The Directors regularly review detailed forecasts of sales, costs and cash flows, and project forward 12 months or more. The assumptions underlying these forecasts are challenged, varied and tested to establish the likelihood of a range of possible outcomes, including reasonable cash flow sensitivities. The expected figures are carefully monitored against actual outcomes each month and variances are highlighted and discussed at Board level. The Group’s trading has continued to be affected by the Covid-19 pandemic as described in the Interim Chief Executive’s review. Given the disruption to trading, the Directors have completed a comprehensive going concern review and, in adopting the going concern basis for preparing the financial statements, the Directors have considered the future trading prospects of the Group’s businesses, the Group’s available liquidity alongside the Group’s principal risks as set out in ‘Our approach to risk and risk management’. The Group meets its day-to-day financing and working capital requirements through ongoing operating cash flows and available cash. The Group’s forecasts and projections, taking account of possible changes in trading performance, show that the Group will be able to continue to operate in this way. Cash flows have been modelled in both base case forecast and downside scenarios. In the downside scenario, certain mitigating actions will be required to ensure that the Company can continue to operate as a going concern. The base case scenario presumes an improvement in trading conditions during 2022 and into 2023 compared to 2021, with revenue projected to grow by 20% from 2021 to 2022, and by 6% from 2022 into 2023. The Directors anticipate a stronger performance in 2022 and into 2023 on the assumption that there will not be another full Covid-19-related lockdown. The Group expects to run a full calendar of events during 2022 along with expected new business wins and confirmed bookings; bookings for 2022 are promising and ahead of the same period in 2021. The downside scenario assumes a reduction in revenues of 16% compared with the base case. The downside scenario would deliver revenue at the same level as 2021, which in effect reduces events revenue by £2.4 million to £5.6 million and other revenue by £0.8 million to £11.1 million. A drop in events revenue would have a corresponding reduction in costs; if this scenario were to happen, then the Directors would look at making cost savings where possible, primarily focused on staff costs. This would be achieved by a mixture of freezing any active recruitment and reducing the number of current employees. For the reasons noted above, the Directors do anticipate some growth, hence the downside scenario modelled is considered to be at the bottom end of expectations and an extremely remote possibility. Cash Cash levels are stable due to managing the cash position tightly during 2020 and 2021 and during the period under review cash balances remain at adequate levels to fund the Group’s planned activities. The Group has also undertaken a reverse stress test exercise to consider the circumstances under which the Group would run out of cash and therefore not be able to pay creditors as they fall due. If revenues fell 7% below the downside scenarios in the going concern period and no further cost mitigations were put in place, then the Group could potentially run out of cash in Q2 of 2023. In light of current trading, and considering the Group already has £9.4 million of contracted bookings for 2022, the Directors feel this scenario is highly unlikely. These levels of revenue would be lower than 2021 which was the Group’s worst ever year. The Group is now able to run live in person events, which were predominantly virtual in 2021. Whilst the costs incurred in live events are significantly more than virtual events, the revenue and profit from such events are also much higher. Additionally, the expected media revenue growth in 2022 is mainly driven by our US business, and whilst this is growth on 2021, it is not against 2019/2020 levels; it is felt this is achievable with new management in place along with new product offerings. Accordingly, the Board considers this scenario is extreme in nature and very unlikely to occur. On 7 April 2022, the Company announced that, at the same time as these results are released, it proposed to raise approximately £1.1 million for working capital purposes, using its existing share authorities, by way of a firm placing and open offer to qualifying shareholders through the issue of new ordinary shares at an issue price of 5.5 pence per share which represents a discount of approximately 18.5% to the closing mid-market price of a Bonhill share on 6 April 2022. The Company has received written commitments from two of its largest institutional shareholders and a letter of intent from a third to subscribe for new ordinary shares in the placing and effectively to underwrite the open offer for, in aggregate, the requisite £1.1 million. Going concern basis The Directors recognise the low level of liquidity and headroom that would result from the downside scenarios or other economic disruption or uncertainty. The proposed fundraising serves to protect the business from such shocks and disruption and provides additional working capital to support growth initiatives where possible. The continued impact of Covid-19 is uncertain and the Directors acknowledge that, whilst they are comfortable that uncertainties in respect of cash flows referred to above are not material uncertainties which may cast significant doubt about the ability of the Company to continue as a going concern, the impact of the pandemic on trading conditions could be more prolonged or severe than currently forecast by the Directors. If this were to prove to be the case, the Group may need to implement additional operational or financial measures to ensure that the Group is prevented from running out of cash and continues to pay its creditors as they fall due. Based on the scenarios modelled and the underwritten £1.1 million equity fundraising referred to above, the Directors believe that the Group is well placed to manage its financing and other business risks satisfactorily and have been able to form a reasonable expectation that the Group has adequate cash resources to continue in operation for at least 12 months from the signing of these consolidated financial statements. The Directors therefore consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements. Simon Bullock Interim Chief Financial Officer 19 April 2022 29 Bonhill Group plc – Annual Report and Financial Statements 2021 Principal risks and uncertainties: Effective management of risk 1. Covid-19 pandemic 2. Cyber security and technology risk 3. Financial, capital and liquidity Change Change Change Impact There has been a steep rise in instances of cyber/phishing attacks across the world over the past few years and this continues to be a major risk for the Group. A cyber security breach could lead to the prolonged loss of critical systems and could inhibit the ability to deliver websites, publish magazines and/or hold events potentially leading to lost revenue/increased costs, regulatory fines and/ or adversely affecting the Group's reputation. Another key technology risk is around reliance on Google algorithms for SEO and website traffic. Changes to the algorithm could result in lower traffic and therefore reduce the ability to meet customer- required levels of impressions. Mitigation The Group runs regular third- party audits and tests of our cyber security setup to ensure we continue to use best- practice to protect our users and data across our email, websites and data solutions. Additionally, the Group is insured specifically against cyber and phishing attacks. Impact The continued impact of Covid-19 on the business is still deemed to be high risk due to the ongoing development of variants and the unknown impact these may have on global operations. There is still uncertainty going into 2022 as to the scale of a live event bounceback and the ongoing changeability to customer appetite both for attending and sponsoring these events. Whilst the vast majority of our customers have weathered the last two years well, there is always a risk of them going into administration or having further restrictions on third-party spending, thereby reducing our revenue potential. Mitigation Over the past two years the Group has made many changes to the way the business operates. There is a strategic focus on creating recurring revenues and a better balance in revenue streams, plus the Group's ability to quickly pivot between live, virtual and hybrid event formats helps remove some of the risk. New customers are credit checked to reduce exposure to bad debt and slow cash collection, plus we receive alerts if any customer's financial situation changes. Impact Any one of the risks listed here could put pressure on our working capital and reduce our ability to collect cash in a timely manner and pay key suppliers to terms. With no current debt facility, the cash flow is linked directly to the phasing of the P&L performance of the business. Having access to additional, flexible funding would allow the Company to keep trading as usual, should anything unexpected happen. Increase to inflation rates into 2022 could also put pressure on our bottom line and free cash flow. Mitigation Regular conversations are held with the banks and advisors to ensure they are kept up to date with the financial and operational status of the Company. Having robust budgeting and monitoring processes in place allows early sight of potential future issues so that there is time to address any issues in a timely fashion. If inflationary rises are materially felt, product pricing will need to be reviewed in order to maintain liquidity. The Company has also announced a fundraise supported by our largest three shareholders. Our approach to risk and risk management The Board has overall responsibility for ensuring that there is a robust assessment of the principal risks facing the Group. The Audit Committee, which has delegated responsibility for reviewing the effectiveness of the Group’s risk management processes, reviews the risk management processes for the business, reviewing presentations from management and challenging their analyses. Executive Directors and other senior management are responsible for the implementation of risk management and internal control systems. They maintain, review and regularly update a risk register to assist in this process. Given that some risks are external and not fully within our control, the risk management processes are designed to manage risks which may have a material impact on our business, rather than to fully mitigate all risks. The Board sets out below the principal risks and uncertainties that the Directors consider could impact the business. The Board continually reviews the potential risks facing the Group and the controls in place to mitigate any potential adverse impact. The Board also recognises that the nature and scope of risks can change and that there may be other risks to which the Group is exposed and so the list is not intended to be exhaustive. 30 Annual Report and Financial Statements 2021 – Bonhill Group plc Risk change key: Increase Stable Decrease 4. Recruitment and retention of key staff 5. Environmental, Social and Governance (ESG) incl. climate change 6. Product risk 7. Exchange rate risk Change Change Change Change Impact As a key supporter of ESG initiatives and in particular diversity in the workplace, the Group needs to ensure we uphold the highest standards in both our approach to HR and our products. Failure to do so could lead to a loss in confidence from our staff and commercial partners in our ability to deliver market- leading products in this space. Impact Customer demand for the Group's products and services is affected by competition and the business may not be able to develop products, services and brands to ensure that they remain relevant to customers. Customers have been able to launch their own virtual events and webinars and are not as reliant on third parties. Impact With approximately half of operations being undertaken in USD, ongoing instability in the GBP/USD rate could erode the value of net assets held in the US upon translation, as well as reducing the GBP equivalent of P&L performance and the cash flows arising from our US operations. Impact The ‘great resignation’ has been felt in 2021 following increased competition and pandemic related work/life balance re-assessment by some employees. Continuation of this runs the risk of losing key members of the team who are critical to business performance. It is important to ensure key employees are retained and new employees are sufficiently experienced to manage continued specialist operations. There has been no great impact on the business of IR35 practices since its introduction in 2021. Mitigation Currently we have decided not to hedge our overseas funds for translation. Mitigation The Remuneration Committee has implemented a management incentive strategy to incentivise key members of staff to drive performance and aid retention. KPIs have been implemented and new recruitment, employee development and compensation & benefits guidelines enhance our employee proposition. A new performance appraisal process has been introduced to facilitate ongoing conversations with management, motivation and recognition. Mitigation The Group introduced new values and code of conduct in 2021 and it constantly monitors its adherences to the highest standards. Internal workshops and regular staff training ensure the highest possible level of understanding of diversity and inclusion for the workplace, as well as in the application to our products. An internal ESG Committee has been introduced in 2021 which focuses on how the Group can enhance all its operations to align to high ESG standards including a roadmap to being Carbon-Zero by 2030. Mitigation The Group has invested in senior management capabilities and market leading tech platforms that meet changing customer requirements. The Group has developed a diverse client base so no one competitor is an undue threat. Stronger customer relationships through consultative selling create a better understanding of market changes. We remain focused on evaluating platforms, products and people that can deliver results. Excellent customer service and value for money are essential. 31 Bonhill Group plc – Annual Report and Financial Statements 2021 Principal risks and uncertainties cont. 8. Economic/market environment 9. Breach of data protection legislation 10. Intellectual property (copyright, libel) 11. Brexit Change Change Change Change Impact UK. Equity and bond market volatility may affect discretionary marketing spend from our customer base. At a micro level mergers and acquisitions can impact our client base. Impact Customer data held for our online titles, other data held for customers, suppliers and employees may be inadequately protected or inappropriately used, in breach of legislation. This could lead to fines, customer dissatisfaction and reputational damage. Impact Challenges to valuable IP, breaches to copyright and libel associated with content production leading to reputational and/or financial penalties. Impact Brexit and the resultant changes to immigration rules/ limit to freedom of movement may affect our ability to hire candidates from outside the UK if needed for European or outside Europe events/ sales roles. Existing trading relationships are unlikely to see changes to tariffs, taxes and conditions. Mitigation All staff to undertake mandatory GDPR training on an annual basis and GDPR awareness is part of ongoing business as usual activities. Additional training to be given in light of fully flexible working policy to ensure adherence to GDPR policies when not in the office. Mitigation Staff awareness of IP protection where possible. Aggressive resolution on copyright issues. Editorial oversight. Mitigation The impact of Brexit has had limited impact on the operational performance of the business and its ability to recruit/retain employees from outside the UK. Mitigation The Group services three significant, high growth and global sectors. It is in the process of continuing to strengthen its brands and improving and broadening its suite of products and is expanding its presence overseas into Europe and the Far East. Strategic focus on developing must-have brands and recurring multiyear revenue streams. Focus on launching new products and brands in key market segments. 32 Annual Report and Financial Statements 2021 – Bonhill Group plc 12. Regulatory change 13. Major incidents Change Change Impact The Group is at risk of any regulatory change which affects the financial services industry. Impact Major incidents could cause harm and injury to people, venues and premises and/or severely interrupt business. If the Group's response is not adequate, this could cause reputational damage. These are most likely to occur in the workplace or at a venue during an event. Mitigation The Group regularly monitors upcoming regulation changes. Regulatory change is a key subject for our financial titles. Mitigation The Group has successfully migrated to a remote working environment and a fully flexible working policy. As such, the impact on business continuity of a major incident is low. The Group has a crisis management policy which is reviewed annually as well as localised plans for live events which include detailed risk assessments. The Group maintains comprehensive, up to date, insurance. Risk change key: Increase Stable Decrease 33 Bonhill Group plc – Annual Report and Financial Statements 2021 Corporate Governance statement The Board considers that all Directors other than Richard Staveley are independent, in character and in judgement, and have no business relationships which impact on their independence. Richard Staveley is considered to be non-independent as a result of his relationship with Harwood Capital LLP. In making these judgements the Board took into account Directors’ shareholdings. Board effectiveness The skills and experience of the Board are set out in their biographical details on pages 36 and 37. The experience and knowledge of each of the Directors gives them the ability to constructively challenge strategy and to scrutinise performance. How the Board operates The Board is responsible for the Group’s strategy and for its overall management. The operation of the Board is documented in a formal schedule of matters reserved for its approval, which is reviewed annually. These include matters relating to: • The Group’s strategic aims and objectives • The structure and capital of the Group • Financial reporting, financial controls and dividend policy • Internal control, risk and the Group’s risk appetite • Raising new capital, budgets and granting of security over material Group assets • The approval of significant contracts and expenditure • Effective communication with shareholders • Any changes to Board membership or structure • Delegation of authority and establishing Board Committees and receiving reports from the Board Committees In this section of our report we have set out our approach to governance and provided further information on how the Board and its Committees operate. QCA Code compliance The Board continues its adoption of, and compliance with, the Corporate Governance Guidelines for Smaller Quoted Companies published in 2018 by the Quoted Companies Alliance (the ‘QCA Code’) and the Company has continued to be compliant with the QCA Code since publishing the statement. The Directors recognise the value and importance of high standards of corporate governance and anticipate that the Company will continue to comply with the QCA Code. Given the Group’s size and plans for the future, it will also endeavour to have regard to the provisions of the UK Corporate Governance Code as best practice guidance to the extent appropriate for a company of its size and nature. Outlined in this report are the 10 key governance principles as defined in the QCA Code. The composition of the Board The Board is responsible to the shareholders and sets the Group’s strategy for achieving long-term success. It is also ultimately responsible for the management, governance, controls, risk management, direction and performance of the Group. The Board consists of four Non-executive Directors and two Executive Directors. There were a few changes in Board composition in 2021. Firstly, Neil Sachdev resigned from his roles as Non-executive Chairman and Chair of the Nomination Committee in May 2021 and was replaced immediately in both roles by Jonathan Glasspool. Secondly, Anne Donoghue resigned from her roles as a Non-executive Director and Chair of the Remuneration Committee in September 2021 and it was announced on 17 January 2022, that she will be replaced in both roles by Laurie Benson. Richard Staveley joined the Board as a non-independent, Non-executive Director from December 2021. Finally the resignation of Simon Stilwell was announced on 7 April 2022; concurrent Jonathan Glasspool took up the position of Interim Executive Chairman to support the senior management of the Group. 10 Principles of corporate governance Deliver growth 1. Establish a strategy and business model which promote long-term value for shareholders. 2. Seek to understand and meet shareholder needs and expectations. 3. Take into account wider stakeholder and social responsibilities and their implications for longer-term success. 4. Embed effective risk management, considering both opportunities and threats, throughout the organisation. Maintain a dynamic management framework 5. Maintain the Board as a well- functioning, balanced team led by the Chair. 6. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities. 7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement. 8. Promote a corporate culture that is based on ethical values and behaviours. 9. Maintain governance structures and processes. Build trust 10. Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders. 34 Annual Report and Financial Statements 2021 – Bonhill Group plc How the Board operates Jonathan Glasspool Nomination Committee Page 40 Patrick Ponsford Audit Committee Page 38 Laurie Benson The Board Page 36 Richard Staveley Remuneration Committee Page 42 Jon Kempster Sarah Thompson Simon Bullock Corporate governance Board decisions and activity during the period The Board has a schedule of regular business, financial and operational matters, and each Board Committee has compiled a schedule of work, to ensure that all areas for which the Board has responsibility are addressed and reviewed during the course of the year. The Chairman is responsible for ensuring that the Directors receive accurate and timely information and ensures that any feedback or suggestions for improvement on Board papers are fed back to management. Minutes of each meeting are produced and circulated. Each Director is aware of the right to have any concerns minuted. Board Committees The Board has delegated specific responsibilities to the Audit, Remuneration and Nomination Committees, details of which are set out below. Each Committee reports back to the Board and has written terms of reference setting out its duties, authority and reporting responsibilities. Copies of all the Committee terms of reference are available on the Company’s website www.bonhillplc.com or on request from the Company Secretary. The terms of reference of each Committee have already been reviewed by the Board during the year and it is intended that these will be kept under continuous review to ensure they remain appropriate and reflect any changes in legislation, regulation or best- practice. Each Committee is comprised of Non-executive Directors of the Company. Board meetings The Board held 11 meetings and had five additional meetings during the year to 31 December 2021. Non-executive Directors communicate directly with Executive Directors and senior management between formal Board meetings. Directors are expected to attend all meetings of the Board, and the Committees on which they sit, and to devote sufficient time to the Group’s affairs to enable them to fulfil their duties as Directors. In the event that Directors are unable to attend a meeting, their comments on papers to be considered at the meeting will be discussed in advance with the Chairman so that their contribution can be included in the wider Board discussion. The following shows Directors’ attendance at scheduled Board meetings during the year. Board meeting attendance Jonathan Glasspool Jonathan Glasspool was appointed in May 2021 and has attended all Board meetings and Committee meetings since then. Neil Sachdev Neil Sachdev attended all Board meetings and Committee meetings until his resignation in May 2021. Simon Stilwell Simon Stilwell attended all Board meetings. He also attended Committee meetings by invitation. Sarah Thompson Sarah Thompson attended all Board meetings. She also attended Committee meetings by invitation. Jon Kempster Jon Kempster has attended all Board and Committee meetings in 2021. Richard Staveley Richard Staveley was appointed in December 2021 and attended the Board meeting that month. Anne Donoghue Anne Donoghue attended all Board meetings and Committee meetings before her resignation in September 2021. 6/6 5/5 11/11 11/11 11/11 1/1 8/8 35 Bonhill Group plc – Annual Report and Financial Statements 2021 Board of Directors: Trusted and experienced leadership Jonathan Glasspool Interim Executive Chairman Sarah Thompson Chief Financial Officer Jon Kempster Non-executive Director Experience: Jonathan is a very experienced executive and non-executive Director, with highly relevant expertise across digital and subscription revenues and in corporate strategy, M&A, international operations, corporate governance and corporate development. Until July 2020, Jonathan was Executive Director of Bloomsbury Publishing Plc, Managing Director at Bloomsbury’s non-consumer division and President of Bloomsbury USA and India. He was instrumental in founding and building Bloomsbury Academic and Professional. Other appointments: He is Chair of Governors of Bath Spa University; Chair of Mall Galleries; Non-executive Director of Edinburgh University Press and Chair of the Industry Advisory Board at Oxford Brookes University. Experience: Sarah joined the Group in May 2020 and joined the Board as Chief Financial Officer in September 2020. Sarah previously held senior finance positions at Escada SE and Redcentric Plc. Prior to this, she held various finance positions at Hallmark Cards UK, Homeloan Management Limited and Barclays Plc. Sarah is an associate of the Chartered Institute of Management Accountants and graduated with a First-Class Degree in Accounting and Finance from Lancaster University. Experience: Jon joined the Group in June 2020 as a Non-executive Director and the Chair of the Audit Committee. He is also a member of the Remuneration and Nomination Committees. Jon’s career has included Board positions at Delta plc, Fii Group plc, Linden plc, Low & Bonar plc, Frasers Group plc, Utilitywise plc and Wincanton plc. He is also currently a Non- executive Director and Audit Committee Chair at Ted Baker plc and Serinus Energy plc and a Non-executive Director at Redcentric plc and FireAngel Safety Technology plc. Jon is also a Trustee of the Delta plc pension scheme. Jon qualified as a Chartered Accountant with PricewaterhouseCoopers in 1990 and has a BA (Hons) in Business Studies from the University of Liverpool. A R N 36 A R N Annual Report and Financial Statements 2021 – Bonhill Group plc Senior Management – profiles Patrick Ponsford Interim Chief Executive Officer Patrick joined the Group in 2019 following its acquisition of Last Word Media (UK) Limited and was most recently MD of the UK and EMEA Financial Services business unit prior to his appointment as Interim CEO in April 2022. Patrick brings over 30 years’ experience in B2B media and events, primarily within financial services to the Group. Simon Bullock Interim Chief Financial Officer Simon joined in January 2022 as Interim CFO covering for Sarah Thompson and brings over 25 years’ senior level finance experience including CFO roles in media, financial services, retail, telecoms & software and was most recently CFO of Merit Group plc, an AIM listed data and intelligence business. Simon is a Chartered Management Accountant having qualified during his early career with Mars and GE. Committee membership A Audit Committee R Remuneration Committee N Nomination Committee Member Chair Richard Staveley Non-independent, Non-executive Director Laurie Benson Non-executive Director Experience: Richard is a consultant to Harwood Capital LLP, the investment manager of Gresham House Strategic plc, which holds 14.6% of the Company’s issued share capital; Richard joined the Board in December 2021. Having qualified as a Chartered Accountant at PricewaterhouseCoopers, Richard has worked in a senior capacity and fund manager at a number of successful fund management businesses, including Majedie Asset Management and was a co-founder of River and Mercantile Asset Management. He is a Chartered Financial Analyst (CFA) Charterholder and holds a Bachelor of Arts degree in Politics from the University of Newcastle. Laurie joined the Group in January 2022 as a Non-executive Director and the Chair of the Remuneration Committee. She is also a member of the Audit and Nomination Committees. Experience: Laurie, who was formerly an MD of Bloomberg Media EMEA, now advises boards on transforming their organisations and exploiting the benefits of digital technology. She brings a mix of private and public sector executive and board experience. She is currently a Non-executive Director of The Intellectual Property Office of the UK and a Trustee of The Royal Air Force Museum. Formerly, she has held roles as a Non- executive Director and Audit Chair of AIM quoted Christie Group Plc, an independent Non-Executive Director and Remcom Chair of Grant Thornton LLP, a Non-executive Director of The Medical Algorithms Company, and a Commissioner at The Charity Commission for England and Wales. A R N 37 Bonhill Group plc – Annual Report and Financial Statements 2021 Audit Committee report The Audit Committee is chaired by Jon Kempster, its other members are Jonathan Glasspool and Laurie Benson. During the year Anne Donoghue served on the Committee prior to her resignation from the Group in September 2021. 38 Dear Shareholder I am writing to you in my second year with the Group as Chairman of the Audit Committee. Whilst the headlines have remained primarily about Covid-19, I am pleased to say that the work and actions from 2020 have carried the business forward successfully into 2021. Our people, processes and systems have performed as expected during another year of remote and hybrid working. During the final quarter of the year we highlighted weaker US digital sales in 2021 compared with 2020. Despite some new initiatives being implemented, and a focus on the wider digital, multimedia and custom offering in the US, InvestmentNews, the Group’s US business, had not seen a significant improvement in order to meet the Group’s full year revenue expectations. InvestmentNews had a planned launch of Investment Strategy in Q4 2021, which went live last month, and the global ESG Clarity, although live, will not now generate meaningful revenues until 2022. This, combined with event cancellation, reformatting of events from live to digital and the postponement of a research project, resulted in a reduction in US revenue against the Board’s previous expectations. The Group also announced that Christine Shaw, the CEO of InvestmentNews, left the Group and was replaced by the Chairman of Bonhill Group Inc, John French, an experienced leader of US B2B media businesses. In 2022 as we emerge from the widespread impact of the pandemic which has created difficult trading conditions, management are tasked with creating more leading indicators and early warning mechanisms in order to minimise the inaccuracies that materialised in the US forecasts. This will be aided by the more normal trading environment we are witnessing in the UK in the early part of 2022. The disappointing US performance has resulted in the need to further impair the carrying value of our investment in the US operations, more below. The Board believes that the current members have sufficient skill, qualifications and experience to discharge their duties in accordance with the Committee’s terms of reference and, as a Committee, have the competence in the sector within which the Company operates. New terms of reference for the Committee were adopted on 27 June 2018; these terms of reference were reviewed during the year and were deemed to still be appropriate for the Committee’s role and responsibilities. The Committee met three times between the start of the year and the signing of this report. I, as Chair of the Audit Committee, have also met with the external auditors without Executive Directors or management present. The Committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Group is properly measured and reported. It receives and reviews reports from the Group’s management and auditor relating to the annual accounts and the accounting and internal control systems in use throughout the Group. We continue to drive improvements in reporting across the Group and the separate divisions and geographies. It is considered that there are adequate controls and segregation of duties in place and the Committee is satisfied that the internal control systems in place are significantly robust and operating effectively. The risk register was reviewed and updated to reflect the main risks presently facing the Group. Early in 2022 Sarah Thompson went on maternity leave and we appointed Simon Bullock as interim Group CFO to support us through Sarah’s maternity leave period. Simon is a seasoned CFO with experience in our sector and with AIM listed companies. The Group does not have an internal audit function, and this is reviewed annually. The Committee also advises the Board on the appointment of the auditor, reviews its fees and discusses the nature, scope and results of the audit with the auditor. The Audit Committee meets at least three times a year and has unrestricted access to the Group’s auditor. The Interim Chief Executive and the Interim Chief Financial Officer attend the Audit Committee meetings by invitation to ensure the Committee is fully informed of material events within the business. The Committee monitors the nature and extent of non-audit services provided by the external auditor. A summary of the remuneration paid to BDO LLP for audit and non-audit services appears in note 3 to the financial statements. Having reviewed the auditor’s independence and performance, the Audit Committee recommends that BDO LLP be re-appointed. Annual Report and Financial Statements 2021 – Bonhill Group plc Whistleblowing The Audit Committee is responsible for the review of the Group’s procedures for responding to the allegations of whistle- blowers and the arrangements by which staff may raise concerns in confidence. It is hoped that this service will encourage individuals to speak out without fear of reprisal. Jon Kempster Chair of Audit Committee 19 April 2022 3) Going Concern The Committee has reviewed the Group’s assessment of going concern over a period greater than 12 months. The Group’s trading has continued to be affected by the Covid-19 pandemic; given the disruption to trading the Directors have completed a comprehensive going concern review and have modelled a base case forecast and downside scenarios. The Group has also undertaken a reverse stress test exercise to consider the circumstances under which the Group would run out of cash and therefore not be able to pay creditors as they fall due. The Committee has concluded that the assumptions considered in the various scenarios are appropriate when assessing the Group’s going concern status. The Committee has also reviewed the Group’s reverse stress test scenario. In addition, the Committee has reviewed this with senior management and is satisfied that this is appropriate in supporting the Group as a going concern. 4) Control Environment Management confirmed to the Audit Committee that it was not aware of any material misstatements or immaterial misstatements made intentionally to achieve a particular presentation. In addition, management have provided the Audit Committee with confidence that through the preparation of the year end accounts, the financial control environment was found to be adequate. The external auditors reported the misstatements to the Audit Committee and no material amounts remain unadjusted. After reviewing and challenging the presentations and reports from management and consulting where necessary with the external auditors, the Audit Committee is satisfied that the financial statements appropriately address the critical judgements and key estimates (both in respect to the amounts reported and the disclosures). The Audit Committee is also satisfied that the significant assumptions used for determining the value of assets and liabilities have been appropriately scrutinised, challenged and are sufficiently robust. Significant Issues The Audit Committee received and reviewed reports from management and the external auditors setting out the areas of significant judgement within the financial statements for the period. These areas are related to the accounting treatment for customised Software as a Service (SaaS), impairment of goodwill and intangible assets, the going concern concept and the overall control environment with specific focus on the ability of management override. These areas were discussed and challenged with management during the period. They were also discussed with the external auditors at the conclusion of the audit of the financial statements for the period. 1) Implementation of IAS 38 Following the IFRS Interpretations Committee (IFRIC) Agenda Decision on IAS 38 ‘Intangible Assets’ which determined that configuration and customisation of Software as a Service (SaaS) solutions should be expensed rather than capitalised unless they meet the definition of separate intangible assets, the Group has reviewed its treatment of its SaaS costs. The new treatment is applicable immediately and retrospectively. At a Group level in 2021 the new treatment results in a net charge of £90k to the income statement and a reduction in adjusted operating profit and adjusted profit before tax, reflecting the reversal of in-year capitalised expense of £98k partly offset by lower in-year amortisation of £8k. Free cash flow is not affected by the change. 2) Impairment of Goodwill and Intangible Fixed Assets An annual impairment review was undertaken over the goodwill and intangible assets to show they are not carried at more than their recoverable amount. This compares the present value of future cash flows against the current assets held by the Group. The key indicator of impairment for the Group was that there has been a significant decline in the market value of the entity and the carrying amount of the entity’s net assets was more than its market capitalisation. The impact of Covid-19 in 2021 and the drop in performance of our US operations during Q4 have had a significant effect on the profitability of the Group and forecasts for the business were prepared to test the carrying value. The resulting Impairment charge of £6.2 million has been recorded in the 31 December 2021 financial statements. 39 Bonhill Group plc – Annual Report and Financial Statements 2021 Nomination Committee report Dear Shareholder The Nomination Committee is responsible for reviewing the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and making recommendations to the Board with regard to any changes. The Committee considered succession planning, taking into account the challenges and opportunities facing the Group and the skills and expertise needed on the Board in the future, in addition to the leadership needs of the organisation, especially following the acquisition of InvestmentNews. The Committee adopted new terms of reference on 27 June 2018 and under these terms of reference, the Committee met formally once during the year. Time commitments All Directors have been advised of the time required to fulfil the role prior to appointment and were asked to confirm that they can make the required commitment before they were appointed. This requirement is also included in their letters of appointment. The Board is satisfied that the Chairman and each of the Non-executive Directors are able to devote sufficient time to the Group’s business. There has been no significant change in the Chairman’s other time commitments since his appointment. Evaluation An internal Board evaluation was conducted in February 2021 by way of a questionnaire and interviews. In addition, the Non-executive Directors met, without the Chairman present, to evaluate his performance. The Board was satisfied that it was well run, whilst acknowledging areas for improvement as a Board and as individuals. Part of the questionnaire asked about the strategic direction of the Group and the Company Secretary ensured these items were taken forward to the agenda for the next Board strategy day. The Board considers that the use of external consultants to facilitate the Board evaluation process is likely to be of significant benefit to the process, and this is planned to take place every three years. The first such external evaluation was planned to take place during the year ending 31 December 2021, however, has been rearranged to take place during 2022. Development The Company Secretary ensures that all Directors are kept abreast of changes in relevant legislation and regulations, with the assistance of the Company’s advisers where appropriate, and it is a standing item on the Board’s agenda. Executive Directors are subject to the Company’s performance development review process through which their performance against pre-determined objectives is reviewed and their personal and professional development needs considered. Non-executive Directors are encouraged to raise any personal development or training needs with the Chairman. External appointments In the appropriate circumstances, the Board may authorise Executive Directors to take non-executive positions in other companies and organisations, provided the time commitment does not conflict with the Director’s duties to the Company, since such appointments should broaden their experience. The acceptance of appointment to such positions is subject to the approval of the Chairman. Conflicts of interest At each meeting the Board considers Directors’ conflicts of interest. The Company’s Articles of Association provide for the Board to authorise any actual or potential conflicts of interest. Independent professional advice Directors have access to independent professional advice at the Company’s expense. In addition, they have access to the advice and services of the Company Secretary who is responsible for advice on corporate governance matters to the Board. Directors’ and officers’ liability insurance The Company has purchased Directors’ and officers’ liability insurance during the period as allowed by the Company’s Articles. Election of Directors In accordance with the provisions of the Code, Jonathan Glasspool, Richard Staveley and Laurie Benson (as new appointments) will stand for election at the Annual General Meeting. The Nomination Committee is chaired by Jonathan Glasspool and its other member is Jon Kempster. 40 Annual Report and Financial Statements 2021 – Bonhill Group plc The Board is satisfied that effective risk management is embedded in the Group’s business and effective risk management and related control systems are in place. The Board has ultimate responsibility for the Group’s system of internal control and for reviewing its effectiveness. However, any such system of internal control can provide only reasonable, but not absolute, assurance against material misstatement or loss. The Board considers that the internal controls in place are appropriate for the size, complexity and risk profile of the Group. The principal elements of the Group’s internal control system include: • A schedule of matters reserved for the Board; • Close management of the day-to-day activities of the Group by the Executive Directors and other members of senior management; • Monthly reports to the Board; • An organisational structure with defined levels of responsibility, which promotes entrepreneurial decision making and rapid implementation whilst minimising risks; • A comprehensive annual budgeting process producing a detailed integrated profit and loss, balance sheet and cash flow, which is approved by the Board; • Detailed monthly reporting of performance against budget; and • Central control over key areas such as capital expenditure authorisation and banking facilities. The Group continues to review its system of internal control to ensure compliance with best practice, whilst also having regard to its size and the resources available. The Board considers that the introduction of an internal audit function is not appropriate at this juncture. Relations with shareholders The Directors seek to develop their understanding of the expectations and motivations of the Company’s shareholders through effective communication with them. The Board encourages regular interaction and communication with both private and institutional shareholders and responds to shareholder queries in a timely manner. The Group maintains communication with institutional shareholders through individual meetings with Executive Directors, particularly following publication of the Group’s interim and full year results. Private shareholders are encouraged to attend the Annual General Meeting at which the Group’s activities are considered and questions answered. General information about the Group is also available on the Group’s website (www.bonhillplc. com). This includes an overview of activities of the Group and details of all recent Group announcements. Where voting decisions are not in line with the Company’s expectations, the Board will engage with those shareholders to understand and address any issues. The Company Secretary is the main point of contact for such matters and the Interim Chief Executive Officer is principally responsible for such communication. The Chairman and independent Non-executive Directors are available to discuss any matter stakeholders might wish to raise, and the Chairman and independent Non-executive Directors will attend meetings with investors and analysts as required. Investor relations activity and a review of the share register are standing items on the Board’s agenda. Jonathan Glasspool Chair of Nomination Committee 19 April 2022 Promotion of a corporate culture that is based on ethical values and behaviours The Board monitors and promotes a healthy corporate culture and has considered how the culture is consistent with the Company’s objectives, strategy and business model and with the description of principal risks and uncertainties. The Board has considered and assessed the culture as being inclusive, transparent and collaborative with appropriate behaviours. The Board is satisfied that the Company has a ‘speak up’ culture and the Directors have observed this occurring in practice during the year ended 31 December 2021. The Group has a Code of Conduct, an Anti-bribery and Corruption policy, a Modern Slavery Statement and policies and procedures relating to whistleblowing stating the Company’s commitment to conducting its business with honesty and integrity, its expectation that staff will maintain high standards, and encouraging prompt disclosure of any suspected wrongdoing. The terms of reference of the Audit Committee include reviewing the adequacy and security of the Company's arrangements for its employees and contractors to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters and keeping under review the Company's procedures for handling allegations from whistleblowers. The Directors follow the guidance set out by Rule 21 of the AIM Rules relating to dealings by Directors in the Company’s securities and, to this end, the Company has adopted an appropriate share dealing code. Risk management and internal control The Board is responsible for determining the nature and extent of significant risks that have an impact on the Group’s operations, and for maintaining a risk management framework and internal control system. The Board is responsible for the management of risk and has carried out a robust assessment of the principal risks and uncertainties affecting the Group’s business, discussed how these affect operations, performance and solvency and what mitigating actions, if any, can be taken. During the year the Audit Chair carried out a risk workshop to evaluate and understand all the risks and uncertainties faced by the business. Further discussion on the principal risks relating to the Group is detailed on pages 30 to 33. 41 Bonhill Group plc – Annual Report and Financial Statements 2021 Remuneration Committee report Executive reward scheme The reward scheme for the Company is designed to be performance focused, whereby management’s objectives are fully aligned to shareholders’ interests in achieving growth and shareholder value. The reward scheme aspires to attract and retain the highest quality individuals who will contribute fully to the success of the Group. The scheme includes salary, bonus and participation in the share option scheme. Reflecting Company performance, the threshold performance targets were not met and no bonus was payable for the year to 31 December 2021. Share Option Scheme No new share options were granted in the year to 31 December 2021 as the Long- Term Incentive Plan implemented in 2020 for Executive Directors and members of the senior management team is still active. Details of Directors’ interests in share options are presented in note 6 to the financial statements. Directors’ remuneration in the year to 31 December 2021 The table below sets out the single figure for the total remuneration received by the Executive Directors and Non-executive Directors who served in the year. No Director participated in any discussion or decision on their own remuneration. Laurie Benson Chair of Remuneration Committee 19 April 2022 Dear Shareholder Committee terms of reference Having been appointed Chair of the Committee on 18 January 2022, the report below reflects the work of the Committee during the prior year under the stewardship of Anne Donoghue. Under the terms of reference adopted on 27 June 2018, the Committee meets at least twice a year. The Remuneration Committee has responsibility for making recommendations to the Board on the Company’s policy on the remuneration of the Company’s Chief Executive, Executive Directors and for the determination, within agreed terms of reference, of specific remuneration packages for each of the Executive Directors. The remuneration and terms and conditions of appointment of the Non-executive Directors of the Company is set by the Chairman and the Executive Directors. The terms of reference of the Committee cover such issues as membership and frequency of meetings, together with the role of the Company Secretary and the requirements of notice of, and quorum for, and the right to attend, meetings, including the ability of the Committee to invite non-members to attend meetings of the Committee, and, if considered appropriate, the appointment of independent remuneration consultants. The duties of the Remuneration Committee include determining and monitoring policy on, and setting levels of, remuneration, contracts of employment, early termination, performance-related pay and bonuses, pension arrangements, share incentive schemes, grants of awards under any share option scheme adopted by the Company, reporting and disclosure. The terms of reference also set out the reporting responsibilities and the authority of the Committee to exercise its duties. The Committee is required to conduct an annual assessment of its compliance with its terms of reference and of its effectiveness. The annual report sets out the remuneration paid to Directors, including bonus payments and long-term incentives during the year ending 31 December 2021, in note 6 to the financial statements. The Remuneration Committee is chaired by Laurie Benson; its other members are Jon Kempster and Jonathan Glasspool. 42 Annual Report and Financial Statements 2021 – Bonhill Group plc Basic salary (£’000) Bonus (£’000) Pension (£’000) Total (£’000) Year ended 31 December 2021 Year ended 31 December 2020 Year ended 31 December 2021 Year ended 31 December 2020 Year ended 31 December 2021 Year ended 31 December 2020 Year ended 31 December 2021 Year ended 31 December 2020 Role Executive Directors Non- executive Directors Simon Stillwell* Sarah Thompson Jonathan Glasspool Neil Sachdev Jon Kempster Anne Donoghue 195 147 30 20 30 23 195 40 – 50 15 30 Total 445 330 * Simon Stilwell receives cash in lieu of pension contributions. – – – – – – – – – – – – – – 20 17 – – – – 20 2 – – – – 215 164 30 20 30 23 215 42 – 50 15 30 37 22 482 352 43 Bonhill Group plc – Annual Report and Financial Statements 2021 Directors’ report The Directors submit their report and the audited financial statements of Bonhill Group plc for the year ended 31 December 2021. Results and dividends The results for the year are set out on page 53. The Directors do not recommend the payment of a dividend. Future developments Future developments of the Group are disclosed in the Strategic Report on pages 2 to 33. Financial risk management Financial risks are considered and disclosed earlier in this report. Directors The following Directors have held office since 1 January 2021: Jonathan Glasspool, Interim Executive Chairman Neil Sachdev, Non-executive Chairman Jon Kempster, Non-executive Director Anne Donoghue, Non-executive Director (resigned 30 September 2021) Richard Staveley, Non-independent Non-executive Director (appointed 16 December 2021) Laurie Benson, Non-executive Director Simon Stilwell, Chief Executive Sarah Thompson, Chief Financial Officer (appointed 18 January 2022) (resigned 6 April 2022) (appointed Non-executive Chairman on 27 May 2021; appointed Interim Executive Chairman on 7 April 2022) (resigned 27 May 2021) Capital structure Refer to note 18 of the accounts for details on the capital structure of the Company. Directors’ interests in ordinary shares Interests of Directors who held office as at 31 December 2021 in the ordinary shares of the Company were as follows: J Glasspool J Kempster S Stilwell As at 31 December 2021 Ordinary shares of 1p each Number As at 31 December 2020 Ordinary shares of 1p each Number 382,857 68,986 3,185,500 – – 2,865,500 Employees The Group recognises the importance of its employees and encourages internal communications with all staff. The Group has regular updates to advise employees regarding the Group’s objectives and performance. The Group operates an open-door policy to encourage all staff to discuss with management any concerns they may have relating to the business. Corporate governance The Corporate Governance statement is set out on page 34. Directors’ and officers’ liability insurance The Group maintains liability insurance covering the Directors and officers of the Company. Statement as to disclosure of information to the auditor So far as the Directors are aware, there is no relevant audit information of which the Company’s auditor is unaware, and each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of that information. Auditor The auditor, BDO LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006. On behalf of the Board Jonathan Glasspool Director 19 April 2022 44 Annual Report and Financial Statements 2021 – Bonhill Group plc Directors’ responsibilities in the preparation of the financial statements The Directors are responsible for preparing the annual 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 United Kingdom. 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 judgements and accounting estimates that are reasonable and prudent; • state whether they have been prepared in accordance with IFRSs as adopted by the United Kingdom, subject to any material departures disclosed and explained in the financial statements; 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 requirements of 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. Website publication The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein. 45 Bonhill Group plc – Annual Report and Financial Statements 2021 Independent auditor’s report to the members of Bonhill Group plc Opinion on the financial statements 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 2021 and of the Group’s loss for the year then ended; • the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards; • the Parent Company financial statements have been properly prepared in accordance with UK adopted international accounting standards as applied in accordance with the provisions of the Companies Act 2006; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements of Bonhill Group Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended 31 December 2021 which comprise the 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 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 UK adopted international accounting and as regards the Parent Company financial statements, as applied in accordance with the provisions 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remain independent of the Group and the Parent Company 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. Conclusions relating to going concern In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis of accounting is included in the key audit matters section. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. Overview Coverage1 Key audit matters 93% (2020: 89%) of Group revenue 72% (2020: 75%) of Group total assets 77% (2020: 96%) of Group loss before tax Impairment of goodwill, intangible assets and investments Revenue recognition Classification of exceptional items 2021 2020 N N N N N N Revenue recognition is no longer considered a KAM as there are no significant judgements or complexities in the accounting of any of the revenue streams. Materiality Group financial statements as a whole £220,000 (2020: £222,000) based on 1.35% (2020: 1.25%) of group revenue. 1 These are areas which have been subject to a full scope audit by the group engagement team 46 Annual Report and Financial Statements 2021 – Bonhill Group plc An overview of the scope of our audit Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. In approaching the audit, we considered how the group is organised and managed. We assessed there to be three significant components being Bonhill Group Plc (parent company), Investment News LLC and Last Word Media UK Limited. All the significant components have been audited by the group auditor. The group audit team also performed audit procedures over the significant risk areas and the consolidation. The remaining non-significant subsidiaries of the group were subject to analytical review procedures by the group audit team. Key audit matters Key audit matters are those matters that, in our professional judgement, 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) that 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. Key audit matter Impairment of Goodwill, intangible assets and investments Management considered the value in use model in assessing the carrying value of the investments in the group subsidiaries carried on the Parent Company balance sheet. Accounting policy: Note 1 Intangible assets: Note 10 Investments: Note 12 For goodwill, management are required to test annually for impairment, or more frequently if there are indications that goodwill might be impaired. Determining if an impairment charge is required for goodwill, intangible assets and investments involves significant judgements about the future results and cash flows of the business, and we therefore considered this to be a key audit matter. How the scope of our audit addressed the key audit matter We have considered whether management’s impairment review methodology is compliant with IAS 36 impairments of assets. As part of our work, we have challenged Management’s value in use determined for each CGU within the model prepared, including the assumptions underpinning the model as follows: • Testing of the arithmetic accuracy of the model used by Management; • agreeing the underlying cash flow projections for each CGU to Board approved forecasts; • Compared the current year performance against prior year budgets including the impact of COVID19 to assess the accuracy of the budgeting process; • Considering the appropriateness of the CGUs identified by management and the allocation of the assets on these; • Tested a sample of corporate costs allocation to specific CGUs; • With the assistance of our BDO valuations team reviewed the discount rate used by management, against their independent calculation; • Tested long term growth rates against independent market data; and • Conducted a range of sensitivity tests on discount rate, revenue growth as well as the expenditure to assess the sensitivity of the model to changes in the underlying assumptions. Key observations: We found that the assumptions used in the impairment model were reasonable following updates made by management and that there are no further indications of impairment at the balance sheet date, other than the impairment already accounted for. 47 Bonhill Group plc – Annual Report and Financial Statements 2021 Independent auditor’s report cont. to the members of Bonhill Group plc Key audit matter Going concern Accounting policy: Note 1 The operations of the Group continued to be significantly impacted by Covid 19, as a result of varying local restrictions on business events and international travel constraints. This has caused significant disruption and economic uncertainty globally and has had an impact on the Group’s future expected cash flows, with a consequent impact on going concern. Because of the judgements made by management, and the significance of this area, we have determined Going Concern to be a key area of focus for the audit and therefore considered a key audit matter. How the scope of our audit addressed the key audit matter We performed the following procedures in respect of this key audit matter: • Discussed with the Directors their assessment of the Group’s ability to continue as a going concern; • Evaluated each revenue steam projection within the underlying model with reference to market information, actual results to 31 March 2022 as well as past performance of the Group • Evaluated the related costs projections underlying the model with reference to the market performance of the Group as well as past performance of the Group; • Agreed the bank statements as at 31 March 2022 in order to corroborate the actual cash at bank balances to compare against the projected cash on this date; • Reviewed the reasonableness of the projected cash flows and working capital assumptions i.e. revenue, gross margins and other measures in light of our knowledge of the business. • Assessed the forecasted improvement in the performance of the business following the impact of Covid 19 as well as the assumptions and sensitivities related to this. These were challenged based on our expectations and corroborated to supporting evidence; • Reviewed the near term 13-week cash flow to assess how the expected cash position has been tracking compared to the actual weekly cash balances; and • We considered directors’ judgement that they had a reasonable expectation of securing additional financing to meet future working capital requirements following the announcement that was made by the directors. In doing so, we made specific inquiries of the Board and the nominated advisor, considered the history of successful fundraising and reviewed supporting documentation relating to the legally binding commitments made by the shareholders. Further to this we considered whether the proposed fundraising is adequate or not, to assist with the working capital requirements over the next 12 months. Key observations: Our observations in respect of going concern are included within the “Conclusions relating to going concern” section of this report. 48 Annual Report and Financial Statements 2021 – Bonhill Group plc Our application of materiality We apply the concept of materiality both in planning and performing our audit, and 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 on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows: Group financial statements Parent company financial statements 2021 £ 2020 £ Materiality 222,000 222,000 Basis for determining materiality Rationale for the benchmark applied 1.35% of revenue 1.25% of revenue We considered revenue to be the financial measure of most relevance to the users of the financial statements in assessing the performance of the Group. The focus of the group has been on growing over the last few years as such revenue is a key growth driver for the business. 2021 £ 104,000 67.5% of group materiality 2020 £ 155,400 70% of group materiality The company is primarily a holding company for its subsidiaries and we have therefore used a percentage of Group materiality for our audit work. Performance materiality 165,000 166,000 78,000 116,500 Basis for determining performance materiality 75% of materiality based on our assessment of the overall control environment. We have also considered anticipated errors which were expected to be minimal based on previous audits, and management’s attitude to proposed audit adjustments. Component materiality We set materiality for each component of the Group based on a percentage of between 40% and 70% (2020: 50% to 70%) of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged from £104,000 to £148,000. In the audit of each component, we further applied performance materiality levels of 75% (2020: 75%) of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated. Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £11,000 (2020: £11,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds. 49 Bonhill Group plc – Annual Report and Financial Statements 2021 Independent auditor’s report cont. to the members of Bonhill Group plc 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. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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. Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. Strategic report and Directors’ report Matters on which we are required to report by exception 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. In the light of the knowledge and understanding of the Group and 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, 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. 50 Annual Report and Financial Statements 2021 – Bonhill Group plc 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. Extent to which the audit was capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting journal entries to increase revenue or profits, and management bias in accounting estimates including those relating to key audit matters outlined above. In order to address the risk of material misstatement associated with fraud we performed the following procedures: • We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most significant frameworks which are directly relevant to specific assertions in the financial statements are those that relate to the reporting framework, rules of the London Stock Exchange for companies trading securities on AIM, the Companies Act 2006 and relevant tax compliance regulations; • We understood how the Group is complying with those frameworks by making enquiries of management, those responsible for legal and compliance procedures and the Company Secretary. We corroborated our enquiries through our review of board minutes and papers provided to the Audit Committee; • We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur, by meeting with management from across the Group to understand where they considered there was a susceptibility to fraud; • Our audit planning identified fraud risks in relation to management override of controls and inappropriate or incorrect recognition of revenue (revenue recognition assessed for each stream regardless of materiality). We reviewed the revenue recognition process per stream and identified potential gaps in the process to identify what could go wrong and how it could result in incorrect revenue recognition. We obtained and understanding of the processes and controls that the Group has established to address risks identified, or that otherwise prevent, deter and detect fraud; and how management monitors that processes and controls; and • With regards to the fraud risk in management override, our procedures included journal transaction testing, with a focus on large or unusual transactions based on our knowledge of the business. We also performed an assessment on the appropriateness of key judgements and estimates, for example Management’s impairment assessment (the risks associated with the impairment of goodwill, intangible assets and impairment has been assessed as a Key Audit Matter above), which are subject to managements’ judgement and estimation, and could be subject to potential bias. • We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. 51 Bonhill Group plc – Annual Report and Financial Statements 2021 Independent auditor’s report cont. to the members of Bonhill Group plc Use of our report This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Andrew Viner (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor London 19 April 2022 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). 52 Annual Report and Financial Statements 2021 – Bonhill Group plc Consolidated statement of comprehensive income: for the year ended 31 December 2021 Year ended 31 December 2021 Restated Year ended 31 December 2020 Adjusted results £’000 Adjusting items £’000 Statutory results £’000 Adjusted results £’000 Adjusting items £’000 Statutory results £’000 Notes Revenue 2 16,360 Net operating expenses Impairment relating to expected credit losses Depreciation Amortisation and impairment 3 17 11 10, 15 Net operating loss Finance costs Loss before tax Tax Loss for the period Other comprehensive income: Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Total comprehensive loss for the year Basic loss per share attributable to the owners of the parent Diluted loss per share attributable to the owners of the parent 4 7 8 9 9 (16,264) (160) (130) (8,135) (8,329) (146) (8,475) 395 (8,080) 129 (7,951) (8.2p) – – – – – – – – – – – – 16,360 17,812 – 17,812 (16,264) (160) (130) (8,135) (17,741) (440) (153) (7,919) (1,429) – – (888) (19,170) (440) (153) (8,807) (8,329) (8,441) (2,317) (10,758) (146) (211) (5) (216) (8,475) 395 (8,080) (8,652) 18 (8,634) (2,322) – (2,322) (10,974) 18 (10,956) 129 (251) – (251) (7,951) (8,885) (2,322) (11,207) (8.2p) (10.50p) (7.24p) (13.33p) (11.34p) As outlined in note 1 to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. As a result of this accounting policy change some costs previously capitalised have now been expensed to the income Statement. The results above are derived from continued operations. The notes on pages 61 to 94 form an integral part of these financial statements. 53 Bonhill Group plc – Annual Report and Financial Statements 2021 Consolidated statement of financial position: as at 31 December 2021 Non-current assets Goodwill Other intangible assets Property, plant and equipment Deferred tax asset Right-of-use asset Current assets Trade and other receivables Cash and cash equivalents Total assets Non-current liabilities Deferred tax liability Borrowings Lease financial liability Current liabilities Trade and other payables Borrowings Lease financial liability Current tax liability Total liabilities Net assets Equity Share capital Share premium account Share-based payment reserve Merger reserve Other reserves Retained earnings Foreign exchange reserve 31 December 2021 £’000 Notes Restated 31 December 2020 £’000 Restated 31 December 2019 £’000 10 10 11 8 15 13 8 16 15 14 16 15 8 18 18 19 4,810 6,624 103 292 2,140 10,760 7,941 190 316 158 17,109 9,820 343 459 1,493 13,969 19,365 29,224 3,288 1,372 4,660 4,596 1,343 5,939 8,070 1,891 9,961 18,629 25,304 39,185 (348) (81) (1,686) (2,115) (3,366) (19) (619) (1) (4,005) (297) (50) – (347) (3,354) (1,010) (184) – (4,548) (355) (1,046) (712) (2,113) (5,265) (1,568) (888) (23) (7,744) (6,120) (4,895) (9,857) 12,509 20,409 29,328 986 1,759 346 1,976 104 7,881 (543) 986 1,759 245 1,976 104 16,011 (672) 486 – 217 1,976 104 26,966 (421) Total equity attributable to owners of the parent 12,509 20,409 29,328 As outlined in note 1 to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. As a result of this accounting policy change some costs previously capitalised have now been expensed to the income Statement. The notes on pages 61 to 94 form an integral part of these financial statements. The financial statements on pages 53 to 59 were approved and authorised to issue by the Board and signed on its behalf on 19 April 2022. Jon Kempster Director 19 April 2022 54 Annual Report and Financial Statements 2021 – Bonhill Group plc Company statement of financial position: as at 31 December 2021 31 December 2021 £’000 Notes Restated 31 December 2020 £’000 Restated 31 December 2019 £’000 Non-current assets Other intangible assets Property, plant and equipment Deferred tax asset Right-of-use asset Investment in subsidiaries Current assets Trade and other receivables Cash and cash equivalents Total assets Non-current liabilities Borrowings Deferred tax liability Current liabilities Trade and other payables Borrowings Lease finance liability Total liabilities Net assets Equity Share capital Share premium account Share-based payment reserve Merger reserve Other reserves Retained earnings 10 11 8 15 12 13 16 8 14 16 15 18 18 19 – 62 34 330 11,139 11,565 1,385 187 1,572 79 85 1 – 18,562 18,727 3,024 148 3,172 253 159 194 261 26,445 27,312 3,026 290 3,316 13,137 21,899 30,628 (40) – (40) (1,802) (10) (300) (2,112) (50) – (50) (6,281) – – (6,281) – – – (3,724) – (260) (3,984) (2,152) (6,331) (3,984) 10,985 15,568 26,644 986 1,759 346 1,976 104 5,814 986 1,759 245 1,976 104 10,498 486 – 217 1,976 104 23,861 26,644 Total equity attributable to owners of the parent 10,985 15,568 As outlined in note 1 to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. As a result of this accounting policy change some costs previously capitalised have now been expensed to the income Statement. The financial statements consolidate the accounts of Bonhill Group plc and all of its subsidiary undertakings (‘subsidiaries’). Intra-group sales and profits are eliminated fully on consolidation. The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the Company statement of comprehensive income. The loss for the parent Company for the year was £4.7 million (31 December 2020: £13.4 million). The notes on pages 61 to 94 form an integral part of these financial statements. The financial statements on pages 53 to 59 were approved and authorised to issue by the Board and signed on its behalf on 19 April 2022. Jon Kempster Director 19 April 2022 55 Bonhill Group plc – Annual Report and Financial Statements 2021 Consolidated statement of changes in equity: for the year ended 31 December 2021 Balance as at 31 December 2019 (reported) Restatement (note 1) Balance as at 31 December 2019 (restated) Loss for the period Other comprehensive income Total comprehensive loss for the period Transactions with owners in their capacity as owners: Issue of share capital Share issue costs Share option charge Other movements Balance as at 31 December 2020 (restated) Loss for the year Other comprehensive income Total comprehensive loss for the year Transactions with owners in their capacity as owners: Issue of share capital Share issue costs Share option charge Other movements Share capital £’000 Share premium £’000 Share- based payment reserve £’000 Merger reserve £’000 Other reserves £’000 Retained earnings £’000 Foreign exchange reserve £’000 Total £’000 486 – 486 – – – 500 – – – – – – – – – 2,000 (241) – – 217 – 1,976 – 104 – 27,429 (463) (421) – 29,791 (463) 217 1,976 104 26,966 (421) 29,328 – – – – – 28 – – – – – – – – – – – – – – – (10,956) – – (251) (10,956) (251) (10,956) (251) (11,207) – – – 1 – – – – 2,500 (241) 28 1 986 1,759 245 1,976 104 16,011 (672) 20,409 – – – – – – – – – – – – – – – – – – – 101 – 346 – – – – – – – – – – – – – – (8,080) – (8,080) – 129 129 (8,080) 129 (7,951) – – – (50) – – – – – – 101 (50) 1,976 104 7,881 (543) 12,509 Balance as at 31 December 2021 986 1,759 As outlined in note 1 to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. As a result of this accounting policy change some costs previously capitalised have now been expensed to the income Statement. 56 Annual Report and Financial Statements 2021 – Bonhill Group plc Company statement of changes in equity: for the year ended 31 December 2021 Share capital £’000 Share premium £’000 Share- based payment reserve £’000 Merger reserve £’000 Other reserves £’000 Retained earnings £’000 Foreign exchange reserve £’000 Balance as at 31 December 2019 (reported) Restatement (note 1) Balance as at 31 December 2019 (restated) Loss for the period Other comprehensive income Total comprehensive loss for the period Transactions with owners in their capacity as owners: Issue of share capital Share issue costs Share option charge Other movements Balance as at 31 December 2020 (restated) Profit/(loss) for the year Other movements Total comprehensive loss for the year Transactions with owners in their capacity as owners: Issue of share capital Share issue costs Share option charge 486 – 486 – – – 500 – – – – – – – – – 2,000 (241) – – 217 – 1,976 – 104 – 24,324 (463) 217 1,976 104 23,861 – – – – – 28 – – – – – – – – – – – – – – – (13,352) – (13,352) – – – (11) 986 1,759 245 1,976 104 10,498 – – – – – – – – – – – – – – – – – 101 346 – – – – – – – – – – – – (4,687) 3 (4,684) – – – 1,976 104 5,814 Total £’000 27,107 (463) 26,644 (13,352) – (13,352) 2,500 (241) 28 (11) 15,568 (4,687) 3 (4,684) – – 101 10,985 – – – – – – – – – – – – – – – – – – Balance as at 31 December 2021 986 1,759 As outlined in note 1 to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. As a result of this accounting policy change some costs previously capitalised have now been expensed to the income Statement. 57 Bonhill Group plc – Annual Report and Financial Statements 2021 Consolidated statement of cash flows: for the year ended 31 December 2021 Cash generated from operations Interest (paid) Taxation received Integration costs Net cash generated from/(used in) operating activities Investing activities Purchases of property, plant and equipment Purchases of intangible assets Net cash used in investing activities Financing activities Proceeds from issue of ordinary shares Repayment of borrowings Lease repayments Government (C-19 & PPP) funding received Bank borrowing drawn Net cash (used in)/generated from financing activities Foreign exchange revaluation loss Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period Year ended 31 December 2021 £’000 Restated Year ended 31 December 2020 £’000 426 (123) 476 – 779 (49) (24) (73) – (988) (629) 920 50 (647) (30) 29 1,343 1,372 699 (243) – (1,627) (1,171) (35) (58) (93) 2,259 (1,604) (860) 939 50 784 (68) (548) 1,891 1,343 As outlined in note 1 to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. As a result of this accounting policy change some costs previously capitalised have now been expensed to the income Statement. The Group consists of entities with functional currencies of GBP, USD, SGD and HKD. 58 Annual Report and Financial Statements 2021 – Bonhill Group plc Company statement of cash flows: for the year ended 31 December 2021 Cash used in operations Interest (paid)/received Taxation received Net cash generated from/(used) in operating activities Investing activities Purchases of property, plant and equipment Purchases of intangible assets Other exceptional costs Net cash used in investing activities Financing activities Proceeds from issue of ordinary shares Receipt of borrowings Repayment of lease liability Net cash (used in)/generated from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period Year ended 31 December 2021 £’000 Restated Year ended 31 December 2020 £’000 (127) (11) 476 338 (48) (5) – (53) – – (246) (246) 39 148 187 (1,222) 6 – (1,216) (32) (49) (1,014) (1,095) 2,259 50 (140) 2,169 (142) 290 148 As outlined in note 1 to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. As a result of this accounting policy change some costs previously capitalised have now been expensed to the income Statement. 59 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the cash flow statement (a) Reconciliation of loss after tax to cash flows used in operations Loss after tax Adjustments for: Tax Finance costs Amortisation and impairment Depreciation of property, plant and equipment Share-based payment charge PPP loan forgiveness Other exceptional costs Operating cash flows before movements in working capital Movement in receivables Movement in payables Cash flows generated from/(used) in operations Group Company Year ended 31 December 2021 £’000 Year ended 31 December 2020 £’000 Year ended 31 December 2021 £’000 Year ended 31 December 2020 £’000 (8,080) (10,956) (4,687) (13,352) (395) 146 8,135 130 101 (931) – (894) 1,308 12 426 (18) 216 8,807 153 (18) (863) 1,429 (509) 19 7,717 71 101 – – 194 2 8,249 67 (18) 824 (1,250) 2,712 (4,034) 3,784 (1,835) 699 1,640 (4,479) (4) 2,816 (127) (1,222) As outlined in note 1 to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. As a result of this accounting policy change some costs previously capitalised have now been expensed to the income Statement. (b) Reconciliation of liabilities arising from financing activities Group – year ended 31 December 2021 Non-cash changes 31 December 2020 £’000 50 1,010 – 184 Cash flows £’000 Loan forgiveness £’000 Recognition of leases £’000 Non-cash movement £’000 Items reclassified from non-current to current during the period £’000 31 December 2021 £’000 50 (988) 920 (565) – – (931) – – – – 2,573 – (22) 11 113 (19) 19 – – 81 19 – 2,305 1,244 (583) (931) 2,573 102 – 2,405 Group Long-term borrowings Short-term borrowings Government funding Lease liabilities Total liabilities from financing activities Group – year ended 31 December 2020 Non-cash changes 31 December 2019 £’000 1,046 1,568 – 1,600 Cash flows £’000 Loan forgiveness £’000 New leases £’000 Non-cash movement £’000 Items reclassified from non-current to current during the period £’000 31 December 2020 £’000 50 (1,604) 939 (860) – – (863) – – – – (508) (36) 36 (76) (48) (1,010) 1,010 – – 50 1,010 – 184 4,214 (1,475) (863) (508) (124) – 1,244 Group Long-term borrowings Short-term borrowings Government funding Lease liabilities Total liabilities from financing activities 60 Annual Report and Financial Statements 2021 – Bonhill Group plc Notes to the financial statements: for the Year ended 31 December 2021 Bonhill Group plc is a public limited company incorporated in the United Kingdom, whose shares are publicly traded on the AIM market. The Company is registered and domiciled in England and its principal place of business is 29 Clerkenwell Road, London EC1M 5RN. 1. Significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated. The consolidated financial statements are presented in GBP, which is also the Group’s presentational currency. Amounts are rounded to the nearest thousand, unless otherwise stated. In March 2021, IFRIC issued an agenda decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. In response to the IFRIC update the Group’s accounting policy on intangible assets has been updated, specifically to disallow the capitalisation of costs incurred in the implementation of ‘Software as a Service’ (SaaS) solutions. International Financial Reporting Interpretations Committee (IFRIC) agenda decision on IAS 38 ‘Intangible Assets’ relating to configuration and customisation costs in a cloud computing arrangement. This interpretation has a material impact on the Consolidated Financial Statements as disclosed on pages 53 to 59. This change in accounting policy is applied retrospectively and the impact on the Group’s financial statements is summarised below: 2019 2020 2019 Reported £’000 Adjustment £’000 2019 Restated £’000 2020 Reported £’000 Adjustment £’000 2020 Restated £’000 Consolidated Income Statement Consolidated Statement of Financial Position Consolidated Statement of Cash Flows Adjusted EBITDA Operating Loss Tax Expense Adjusted Basic EPS Diluted EPS Other Intangible Assets Deferred Tax Assets Deferred Tax Liability Retained Earnings Loss after Tax Tax Expense Amortisation and Impairment Purchase of Intangible Assets 2,312 (3,655) – 2.24p (9.28p) 10,392 459 (464) 27,429 (4,146) – 2,077 (689) (589) (572) 109 (1.03p) (1.04p) (572) – 109 (463) (463) (109) (17) 571 1,7323 (4,227) 109 1.21p (10.32p) 9,820 459 (355) 26,966 (4,609) (109) 2,060 (118) (146) (10,660) (3) (10.41p) (11.26p) 8,622 315 (426) 16,562 (10,879) 3 8,950 (299) (241) (98) 21 (0.09p) (0.08p) (681) 1 129 (551) (77) (21) (143) 241 (387) (10,758) 18 (10.50p) (11.34p) 7,941 316 (297) 16,011 (10,956) (18) 8,807 (58) Basis of preparation The financial statements of Bonhill Group plc have been prepared in accordance with International Financial Reporting Standards as adopted by the United Kingdom and IFRIC interpretations (IFRS) and the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies. The auditor’s reports on the accounts for the year ended 31 December 2021 and for the year ended 31 December 2020 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. 61 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 1. Significant accounting policies cont. Going concern The Group’s business activities, together with the risk factors likely to affect its future development, performance and position, are set out in the Chairman’s statement and the Interim Chief Executive’s review. The Directors regularly review detailed forecasts of sales, costs and cash flows, and project forward 12 months or more. The assumptions underlying these forecasts are challenged, varied and tested to establish the likelihood of a range of possible outcomes, including reasonable cash flow sensitivities. The expected figures are carefully monitored against actual outcomes each month and variances are highlighted and discussed at Board level. The Group’s trading has continued to be affected by the Covid-19 pandemic as described in the Interim Chief Executive’s review. Given the disruption to trading, the Directors have completed a comprehensive going concern review and, in adopting the going concern basis for preparing the financial statements, the Directors have considered the future trading prospects of the Group’s businesses, the Group’s available liquidity alongside the Group’s principal risks as set out in the ‘Our approach to risk and risk management’ report. The Group meets its day-to-day financing and working capital requirements through ongoing operating cash flows and available cash. The Group’s forecasts and projections, taking account of possible changes in trading performance, show that the Group will be able to continue to operate in this way. Cash flows have been modelled in both base case forecast and downside scenarios. In the downside scenario, certain mitigating actions will be required to ensure that the Company can continue to operate as a going concern. The base case scenario presumes an improvement in trading conditions during 2022 and into 2023 compared to 2021, with revenue projected to grow by 20% from 2021 to 2022, and by 6% from 2022 into 2023. The Directors anticipate a stronger performance in 2022 and into 2023 on the assumption that there will not be another full Covid-19-related lockdown. The Group expects to run a full calendar of events during 2022 along with expected new business wins and confirmed bookings; bookings for 2022 are promising and ahead of the same period in 2021. The downside scenario assumes a reduction in revenues of 16% compared with the base case. The downside scenario would deliver revenue at the same level as 2021, which in effect reduces events revenue by £2.4 million to £5.6 million and other revenue by £0.8 million to £11.1 million. A drop in events revenue would have a corresponding reduction in costs; if this scenario were to happen, then the Directors would look at making cost savings where possible, primarily focused on staff costs. This would be achieved by a mixture of freezing any active recruitment and reducing the number of current employees. For the reasons noted above, the Directors do anticipate some growth, hence the downside scenario modelled is considered to be at the bottom end of expectations and an extremely remote possibility. Cash Cash levels are stable due to managing the cash position tightly during 2020 and 2021 and during the period under review cash balances remain at adequate levels to fund the Group’s planned activities. The Group has also undertaken a reverse stress test exercise to consider the circumstances under which the Group would run out of cash and therefore not be able to pay creditors as they fall due. If revenues fell 7% below the downside scenarios in the going concern period and no further cost mitigations were put in place, then the Group could potentially run out of cash in Q2 of 2023. In light of current trading, and considering the Group already has £9.4 million of contracted bookings for 2022, the Directors feels this scenario is highly unlikely. These levels of revenue would be lower than 2021 which was the Group’s worst ever year. The Group is now able to run live in person events, which were predominantly virtual in 2021. Whilst the costs incurred in live events are significantly more than virtual events, the revenue and profit from such events is also much higher. Additionally, the expected media revenue growth in 2022 is mainly driven by our US business, and whilst this is growth on 2021, it is not against 2019/2020 levels; it is felt this is achievable with new management in place along with new product offerings. Accordingly, the Board considers this scenario is extreme in nature and very unlikely to occur. On 7 April 2022, the Company announced that, at the same time as these results are released, it proposes to raise approximately £1.1 million for working capital purposes, using its existing share authorities, by way of a firm placing and open offer to qualifying shareholders through the issue of new ordinary shares at an issue price of 5.5 pence per share which represents a discount of approximately 18.5% to the closing mid-market price of a Bonhill share on 6 April 2022. The Company has received written commitments from two of its largest institutional shareholders and a letter of intent from a third to subscribe for new ordinary shares in the placing and effectively to underwrite the open offer for, in aggregate, the requisite £1.1 million. 62 Annual Report and Financial Statements 2021 – Bonhill Group plc 1. Significant accounting policies cont. Going concern cont. Going concern basis The Directors recognise the low level of liquidity and headroom that would result from the downside scenarios or other economic disruption or uncertainty. The proposed fundraising serves to protect the business from such shocks and disruption and provides additional working capital to support growth initiatives where possible. The continued impact of Covid-19 is uncertain and the Directors acknowledge that, whilst they are comfortable that uncertainties in respect of cash flows referred to above are not material uncertainties which may cast significant doubt about the ability of the Company to continue as a going concern, the impact of the pandemic on trading conditions could be more prolonged or severe than currently forecast by the Directors. If this were to prove to be the case, the Group may need to implement additional operational or financial measures to ensure that the Group is prevented from running out of cash and continues to pay its creditors as they fall due. Based on the scenarios modelled and the underwritten £1.1 million equity fundraising referred to above, the Directors believe that the Group is well placed to manage its financing and other business risks satisfactorily and have been able to form a reasonable expectation that the Group has adequate cash resources to continue in operation for at least 12 months from the signing of these consolidated financial statements. The Directors therefore consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements. Consolidation The consolidated financial statements present the results of the Company and its subsidiaries (‘the Group’) as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group. The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases. Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. All subsidiaries have an accounting reference date of 31 December 2021. Subsidiaries Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control. Foreign exchange Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their ‘functional currency’) are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. On consolidation, the results of overseas operations are translated into GBP at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve. 63 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 1. Significant accounting policies cont. Revenue Revenue represents the fair value, net of value added tax, of consideration received or receivable, for goods sold and services provided to customers. There are five income streams recognised within revenue: Advertising (traditional) Revenue is recognised when the relevant publication is printed (performance obligation as defined). Advertising (online) Revenue is recognised over the period over which the campaign runs i.e. over time. Subscriptions Subscription contracts have distinct performance obligations over the period of the subscription. Revenue is therefore recognised evenly on a time basis over the subscription period. Event revenues Event revenue is recognised in the period the events are held. Research Revenue is recognised immediately on purchases or in line with a bespoke contract. In each case, customers may be invoiced in advance of income recognition, in which case the proportion of invoiced income relating to subsequent periods is included in deferred income. Where revenue is recognised on an over time basis, an output method is used to determine the revenue recognised. Point in time performance obligations are determined to be met through either the performance of the agreed service or through online or physical distribution. Where a contract is for multiple revenue streams, the allocation of transaction price is agreed at point of contract. The Group has a policy of 30 day payment terms. For executive management purposes, the business has three reportable segments. Segmental analysis has been performed in note 2. During the period, no individual customer accounted for more than 10% of the reported revenue. Share-based payments The Group issues equity-settled share-based payments to full-time employees. Equity-settled share-based payments are measured at the fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. Where equity instruments are granted to persons other than employees, the consolidated statement of comprehensive income is charged with the fair value of goods and services received. Intangible assets Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the identifiable assets and liabilities of the acquired subsidiary at the date of acquisition. Goodwill, with an indefinite useful life, is tested annually for impairment and carried at cost less accumulated impairment losses. Any impairment charge is recognised in administrative expenses within the statement of comprehensive income in the year in which it occurs. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Publishing rights In accordance with IAS 38 ‘Intangible assets’, publishing rights acquired are capitalised as intangible assets. Amortisation is charged so as to write off the cost of publishing rights over their estimated useful economic lives, using the straight-line method, on the following bases: Publishing rights 20 years straight line 64 Annual Report and Financial Statements 2021 – Bonhill Group plc 1. Significant accounting policies cont. Intangible assets cont. Website development costs Website development costs are accounted for in accordance with IAS 38. Expenditure on internally developed products is capitalised if it can be demonstrated that: • it is technically feasible to develop the product for it to be sold; • adequate resources are available to complete the development; • there is an intention to complete and sell the product; • the Group is able to sell the product; • sale of the product will generate future economic benefits; and • expenditure on the project can be measured reliably. Capitalised development costs are amortised over the periods the Group expects to benefit from selling the products developed. The amortisation expense is included within administrative expenses in the consolidated statement of comprehensive income. Website development costs are amortised over three years. Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the consolidated statement of comprehensive income as incurred. Software The Group only capitalises internally generated costs from the configuration and capitalisation of SaaS projects when it is able to obtain economic benefits from the activities independent from the SaaS solution itself in accordance with IAS 38. Amortisation is charged over their estimated useful economic lives, using the straight-line method: Software 5 years straight line Brand The fair values of identifiable brands are capitalised in accordance with IFRS 3, measured at acquisition fair value. Amortisation is charged over their estimated useful economic lives, using the straight-line method, on the following bases: Brands 10 years straight line Customer relationships The fair values of identifiable customer relationships are capitalised in accordance with IFRS 3, measured at acquisition fair value. Amortisation is charged over their estimated useful economic lives, using the straight-line method: Customer relationships 7 years straight line Impairment of non-current assets excluding deferred tax assets At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in the impairment of intangible assets line in the consolidated statement of comprehensive income as an expense immediately. Investments Investments are stated at cost less any provision for impairment in value. Property, plant and equipment Items of property, plant and equipment are stated at cost of acquisition or production cost less accumulated depreciation and impairment losses. Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using the straight-line method, on the following bases: Fixtures, fittings and equipment 3 years straight line 65 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 1. Significant accounting policies cont. Current and deferred taxation Current tax is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustments to tax payable in respect of previous years. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits (‘temporary differences’) and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences. Where there are taxable temporary differences arising on subsidiaries, deferred tax liabilities are recognised except where the Group is able to control the reversal of temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are generally recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Where there are deductible temporary differences arising on subsidiaries, deferred tax assets are recognised only where it is probable that they will reverse in the foreseeable future and taxable profits will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based upon tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income. After the restatement of the opening balance as a result of additional deferred tax assets arising from the IAS 38 IFRIC restatement (note 1), the movement in the net deferred tax liability largely comprises deferred tax liabilities arising on acquisitions, on unremitted earnings and derecognition of tax losses offset against exchange rate movements. Other deferred tax items include deferred tax assets arising on provisions, accruals, deferred revenue and lease liabilities. The closing deferred tax asset balance is comprised of tax losses, right-of-use assets and lease liabilities. Leased assets and obligations 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 term of 12 months or less. Assets leased for a period of less than a year are not recorded in the statement of financial position. Rental payments are charged directly to profit or loss on a straight-line basis over the lease term. Where assets are leased for a period of more than a year, a right-of-use asset and lease liability are recognised on the statement of financial position. After lease commencement, the right-of-use asset is measured using a cost model at cost less accumulated amortisation. The lease liability is initially measured at the present value of the lease payments payable over the lease term. The present value of the lease payment is determined using the discount rate representing the incremental borrowing rate of the Company. 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 Group’s incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate. On initial recognition, the carrying value of the lease liability also includes: • amounts expected to be payable under any residual value guarantee; • the exercise price of any purchase option granted in favour of the Group if it is reasonably certain to assess that option; • any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of 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 (typically leasehold dilapidations). 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. 66 Annual Report and Financial Statements 2021 – Bonhill Group plc 1. Significant accounting policies cont. Leased assets and obligations cont. When the Group revises its estimate of the term of any lease (because, for example, it reassesses 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. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases 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. Provisions Provisions are recognised when the Group has a present obligation as a result of a past event which it is probable will result in an outflow of economic benefits that can be reliably estimated. Where the effect of the time value of money is material, the provision is based on the present value of future outflows, discontinued at the pre-tax discount rate that reflects the risks specific to the liability. Defined contribution schemes Contributions to defined contribution pension schemes are charged to the consolidated statement of comprehensive income in the year to which they relate. Financial instruments Financial assets and financial liabilities are recognised on the Group’s statement of financial position when the Group has become party to the contractual provisions of the instrument. Trade and other receivables Trade receivables are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and subsequently measured at amortised cost using the effective interest method less provision for impairment. The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables. To measure expected credit losses on a collective basis, trade receivables are grouped based on similar ageing. The Group has determined that trade receivables across different propositions, sectors and countries have similar risk characteristics. The carrying amount of the asset is reduced through the use of a provision account, and the amount of the loss is recognised in the statement of comprehensive income. When a trade receivable is uncollectible, it is written off against the provision account for trade receivables. Subsequent recoveries of amounts previously written off are credited in the statement of comprehensive income. Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, 12 month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised. Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Trade payables Trade payables are initially recognised at cost and subsequently measured at amortised cost using the effective interest method. There is no material variance between book and fair values. Borrowings Borrowings are recorded initially at their fair value, net of direct transaction costs, and finance charges are recognised in profit or loss over the term of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding. Note 16 provides details of the applicable interest rates. There is no material variance between book and fair values. Government funding and grants The Paycheck Protection Programme loan was initially recognised as borrowings on the balance sheet of Bonhill Group Inc and remained as such until the loan was forgiven by the Small Business Administration in the United States. At that point, the loan was written off the balance sheet and recognised as part of net operating expenses in the income statement. The UK Bounceback loans received in December 2020 and January 2021 were recognised on the balance sheet where they will remain until repaid in full. 67 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 1. Significant accounting policies cont. Financial instruments cont. Equity instruments Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Group’s ordinary shares are classified as equity instruments. Equity instruments are recorded at the proceeds received, net of direct issue costs. Reserve Description and purpose Share capital Represents the nominal value of equity shares. Share premium Amount subscribed for share capital in excess of the nominal value. Share option reserve Represents equity-settled share-based employee remuneration until such options are exercised. Other reserve Represents transactions with equity participants. This reserve includes the capital redemption reserve as a result of the cancellation of the deferred shares. Retained earnings All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere. Merger reserve Where the Group has applied merger relief under the UK Companies Act s615. Judgements and estimates The Group makes judgements and assumptions concerning the future that impact the application of policies and reported amounts. The resulting accounting estimates calculated using these judgements and assumptions will, by definition, seldom equal the related actual results but are based on historical experience and expectations of future events. The judgements and key sources of estimation uncertainty that have a significant effect on the amounts recognised in the financial statements are discussed below. Impairment of assets The Group is required to assess whether goodwill has suffered any impairment loss, based on the recoverable amount of its cash generating units (‘CGUs’). The recoverable amount has been determined based on value in use calculations and these calculations require the use of estimates in relation to future cash flows and suitable discount rates as disclosed in note 10. Actual outcomes could vary from these estimates. The Directors will continue to monitor the carrying value of intangible assets and goodwill. Non-financial assets including website development costs and publishing rights are subject to impairment reviews based on whether events and circumstances suggest that their recoverable amount may be less than their carrying value. Recoverable amount is based on the present value of expected future cash flows which include management assumptions and estimates of future performance. Adjusting items Adjusting items are reviewed on a transactional level basis as to their nature and intention. Items which are discrete, time-bound and have arisen as a direct result of a one-off activity, such as the acquisition of a subsidiary company, have been recognised as adjusting. During August 2020 the Transitional Services Agreement with Crain, the former parent of InvestmentNews, finished and triggered the end point of the migration and integration work. From this point onwards there have been no more adjusting items. No adjusting items were recognised in 2021. Deferred tax asset The Group has recognised a deferred tax asset based on temporary timing differences. Expected credit losses The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables. To measure expected credit losses on a collective basis, trade receivables are grouped based on similar ageing. The Group has determined that trade receivables across different propositions, sectors and countries have similar risk characteristics. Share-based payments Share options are recognised as an expense based on their fair value at date of grant. The fair value of the options is estimated through the use of a valuation model – which requires inputs such as the risk-free interest rate, expected dividends, expected volatility and the expected option life – and is expensed over the vesting period. Some of the inputs used to calculate the fair value are not market observable and are based on estimates derived from available data, such as employee exercise behaviour and employee turnover. 68 Annual Report and Financial Statements 2021 – Bonhill Group plc 1. Significant accounting policies cont. Judgements and estimates cont. Valuation of acquired intangible assets The fair value of these acquired intangible assets is based on valuation techniques. The valuation models require input based on assumptions about the future. Management uses its best knowledge to estimate the fair value of acquired intangible assets as of the acquisition date. The value of intangible assets is tested for impairment when there is an indication that they might be impaired. Management also makes assumptions about the useful life of the acquired intangible assets which might be affected by external factors. Should an impairment be made, the corresponding investment in subsidiary is also impaired. Going concern The Group has limited forward visibility and like all organisations, at this stage it is hard to predict the full extent of the ongoing impact of Covid-19. Consequently, there is a high degree of uncertainty in respect of future outcomes, however, the various stress test scenarios indicate that the Group can continue to operate within its banking facilities. In the event that there is a more significant downturn than in the scenarios tested, there are further mitigating actions which could include, but are not limited to, further reductions in non-business critical expenditure as well as the potential for headcount reductions. As a consequence, the Directors have formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence and meet its liabilities as they fall due over the going concern review assessment period. 2. Segmental analysis For executive management purposes, the business has three reportable segments being Bonhill UK, InvestmentNews and Last Word Media. Further analysis of revenue has been performed by core proposition and country. Analysis of revenue by core proposition Business information Live events Data and insight Total Analysis of revenue by country United Kingdom North America Asia Pacific Total Year ended 31 December 2021 £’000 Year ended 31 December 2020 £’000 10,279 5,263 819 16,360 7,727 7,377 1,256 10,695 6,074 1,043 17,812 7,880 9,029 903 16,360 17,812 69 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 2. Segmental analysis cont. Year ended 31 December 2021 Reportable segmental income statement Revenue Adjusted EBITDA Adjusted operating profit/(loss) Statutory operating profit/(loss) Statutory profit/(loss) before tax Year ended 31 December 2020 Reportable segmental income statement Revenue Adjusted EBITDA Adjusted operating loss Statutory operating loss Statutory profit/(loss) before tax Last Word Media £’000 Bonhill UK £’000 InvestmentNews £’000 6,336 566 302 302 299 2,647 (1,107) (1,665) (1,665) (934) 7,377 564 (6,966) (6,966) (7,840) Last Word Media £’000 Bonhill UK £’000 InvestmentNews £’000 6,228 506 47 56 34 2,555 (2,827) (6,362) (7,416) (6,624) 9,029 1,934 (2,126) (3,398) (4,384) Total £’000 16,360 23 (8,329) (8,329) (8,475) Total £’000 17,812 (387) (8,441) (10,758) (10,974) As outlined in note 1 to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. Segmental assets and liabilities Bonhill UK InvestmentNews Last Word Media Total Group Assets 2021 £’000 6,928 9,801 1,900 Liabilities 2021 £’000 (1,947) (2,998) (1,195) Assets (restated) 2020 £’000 6,464 16,572 2,268 18,629 (6,140) 25,304 Liabilities (restated) 2020 £’000 (1,736) (1,771) (1,516) (4,895) As outlined in note 1 to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. In September 2021, the Group announced a Company rebrand which will change the reporting segments from 1 January 2022 to Financial Services and Business Solutions. To aid financial comparison next year, 2021 has been restated into these new segments: Business Solutions £’000 Financial Services £’000 1,463 (1,192) (1,750) (1,750) (1,019) 14,897 1,215 (6,579) (6,579) (7,456) Total £’000 16,360 23 (8,329) (8,329) (8,475) Year ended 31 December 2021 Reportable segmental income statement Revenue Adjusted EBITDA Adjusted operating profit/(loss) Statutory operating profit/(loss) Statutory profit/(loss) before tax 70 Annual Report and Financial Statements 2021 – Bonhill Group plc 3. Operating loss (a) Operating loss for the year has been arrived at after charging the following items: Depreciation of property, plant and equipment Amortisation of purchased or internally generated intangible assets Impairment of intangible assets Lease amortisation Foreign exchange (gain) or loss Operating lease rentals in respect of land and buildings Staff costs Directors’ remuneration Events costs Print/digital related costs Grant income related to Covid-19 Other costs Adjusting operating costs Adjusting items Statutory operating costs Note 11 15 5 6 Year ended 31 December 2021 £’000 Year ended 31 December (restated) 2020 £’000 130 1,271 6,191 673 13 32 9,127 482 2,108 1,717 (931) 3,876 24,689 – 24,689 153 600 6,601 718 180 24 10,012 542 1,769 1,513 (1,025) 5,166 26,253 2,317 28,570 As outlined in note 1 to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. As a result of this accounting policy change some costs previously capitalised have now been expensed to the income Statement. Other costs include freelancers, contractors, distribution costs, technology costs, travel expenses, marketing costs and professional fees. (b) During the year, the following services were obtained from the Group’s auditor as detailed below: Year ended 31 December 2021 £’000 Year ended 31 December 2020 £’000 Audit services – Recurring fees payable to Company auditor for the audit of parent Company and consolidated accounts – Additional fees payable in relation to non-recurring audit work – Fees in connection with prior period Other services Fees payable to the Company’s auditor and its associates for other services: – The audit of Company’s subsidiaries – Advice in connection with Interim results 80 1 – 53 – The disclosure of the auditor’s remuneration stated above relates to the Company’s auditor, BDO LLP, and its associates. 67 20 60 40 3 71 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 3. Operating loss cont. (c) Adjusting items The Group incurred no costs in the year ended 31 December 2021 which the Directors believe should be disclosed as adjusting items (2020: £2.3 million). Adjusted results are prepared to provide additional relevant information on our future or past performance where equivalent information cannot be presented using financial measures under IFRS. Restructuring Integration costs Amortisation of intangibles acquired through business combination Year ended 31 December 2021 £’000 Year ended 31 December 2020 £’000 – – – – 805 624 888 2,317 4. Reconciliation of Adjusted EBITDA to statutory earnings Earnings before interest, tax, depreciation and amortisation (‘EBITDA’) is a measure of earnings and cash generative capacity. Adjusted EBITDA, which excludes non-recurring items, is a non-GAAP financial measure which facilitates an understanding of underlying earnings and cash generative capacity. A reconciliation of Adjusted EBITDA to statutory earnings is set out below. Adjusted EBITDA Adjusting items EBITDA Depreciation Amortisation and impairment Share option (charge)/credit Operating loss Net finance costs Loss before tax Taxation Loss after tax Year ended 31 December 2021 £’000 Year ended 31 December (restated) 2020 £’000 23 – 23 (130) (8,135) (87) (8,329) (146) (8,475) 395 (387) (1,429) (1,816) (153) (8,807) 18 (10,758) (216) (10,974) 18 (8,080) (10,956) As outlined in note 1 to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. As a result of this accounting policy change some costs previously capitalised have now been expensed to the income Statement. 72 Annual Report and Financial Statements 2021 – Bonhill Group plc 5. Staff costs Staff costs (excluding Directors) – Wages and salaries – Social security costs – Share-based payments charge – Pensions Average monthly number of persons employed by the Group: Senior management Finance and administration Editorial/design/events Marketing and sales 6. Directors’ remuneration Group Company Year ended 31 December 2021 £’000 Year ended 31 December 2020 £’000 Year ended 31 December 2021 £’000 Year ended 31 December 2020 £’000 7,935 854 87 251 9,127 8,791 941 10 270 10,012 2,337 343 87 138 2,905 2,153 259 6 125 2,543 Group Company Year ended 31 December 2021 Year ended 31 December 2020 Year ended 31 December 2021 Year ended 31 December 2020 13 17 67 44 141 15 19 70 50 154 9 15 19 11 54 10 16 18 5 49 Base salary Pension Bonus Year ended 31 December 2021 £’000 Year ended 31 December 2020 £’000 Executive: Simon Stilwell* Sarah Thompson (appointed 15 September 2020) David Brown (resigned 21 July 2020) Non-executive: Jonathan Glasspool (appointed 27 May 2021) Neil Sachdev (resigned 27 May 2021) Anne Donoghue (resigned 30 September 2021) Jon Kempster (appointed 29 June 2020) Fraser Gray (resigned 29 June 2020) Richard Staveley (appointed 16 December 2021) 195 147 – 30 20 23 30 – – 20 17 – – – – – – – Total 445 37 * Simon Stilwell receives cash in lieu of pension contributions. No share options were exercised during the period (31 December 2020: nil). – – – – – – – – – – 215 164 – 30 20 23 30 – – 215 42 174 – 50 30 15 16 – 482 542 73 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 6. Directors’ remuneration cont. Directors’ interests in share options The interests of the Directors in office during the year in share options of the Company are set out in the table below. 31 December 2021 Number Granted Number Forfeited/ lapsed Number 31 December 2020 Number Exercise price Pence Exercisable period 7,440 7,441 376,000 376,000 1,802,000 1,802,000 4,370,881 1,000,000 1,000,000 2,000,000 – – – – – – – – – – – – – – – – – – – – 7,440 7,441 376,000 376,000 1,802,000 1,802,000 4,370,881 1,000,000 1,000,000 2,000,000 80.0 80.0 1.0 1.0 1.0 1.0 16/08/2021 to 16/08/2028 16/08/2022 to 16/08/2028 16/08/2021 to 16/02/2022 16/08/2022 to 16/02/2023 25/10/2023 to 25/10/2030 25/10/2024 to 25/10/2030 1.0 1.0 25/10/2023 to 25/10/2030 25/10/2024 to 25/10/2030 Simon Stilwell Sarah Thompson 7. Finance costs Interest payable on bank loan and overdrafts Net interest recognised under IFRS 16 lease liabilities Year ended 31 December 2021 £’000 Year ended 31 December 2020 £’000 (55) (91) (146) (218) 2 (216) 74 Annual Report and Financial Statements 2021 – Bonhill Group plc 8. Income tax US current tax (charge)/credit Receipt of R&D tax credits in respect of prior year Adjustment in respect of prior periods Total current tax Deferred tax on other intangibles Deferred tax on other temporary differences Deferred tax on UK losses Effect of change in tax rates Adjustment in respect of prior periods Total deferred tax Total tax charge Restated Year ended 31 December (restated) 2020 £’000 Year ended 31 December 2021 £’000 (9) 476 1 468 30 242 – (80) (265) (73) 395 (6) – 55 49 307 12 (198) – (152) (31) 18 Corporation tax on UK profits is calculated at 19.00% (31 December 2020: 19.00%) of the estimated assessable profit for the year. Corporation tax on US profits is calculated at 28.41% (31 December 2020: 23.88%) of the estimated assessable profit for the year. The tax charge for the year can be reconciled to the loss before tax per the consolidated statement of comprehensive income as follows: Factors affecting the tax charge for the year: Loss before taxation Year ended 31 December 2021 £’000 Year ended 31 December (restated) 2020 £’000 (8,475) (10,974) Loss before tax multiplied by the standard rate of corporation tax in the UK of 19.00% (1,610) (2,085) Effects of: Profits taxed at US rate of 28.41% (31 December 2020: 23.88%) Other income & expenses not deductible for tax purposes Adjustments to tax charge in respect of prior years Capital allowances Difference in tax rates on deferred tax Tax losses carried forward State taxes Change in valuation allowance/movement in unrecognised deferred tax Other effects including foreign exchange differences Total tax charge (671) (511) (211) 80 – – 2,992 (464) (395) (96) 409 96 – 27 225 – 1,291 115 (18) 75 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 8. Income tax cont. Deferred and current tax assets and liabilities can be reconciled as follows: Deferred tax assets as at 1 January 2021 (restated) Movement in the year Effect of foreign exchange revaluation Deferred tax assets as at 31 December 2021 Deferred tax liabilities as at 1 January 2021 (restated) Movement in the year Effect of foreign exchange revaluation Deferred tax liabilities as at 31 December 2021 Net deferred tax liabilities Current tax (liability)/asset as at 1 January 2021 Adjustment in respect of prior years Current tax charge Received Effect of foreign exchange revaluation Current tax liability as at 31 December 2021 Group £’000 Company £’000 316 (22) (2) 292 1 33 – 34 Group £’000 Company £’000 (297) (51) – (348) (56) – – – – (34) Group £’000 Company £’000 7 476 (9) (476) 1 (1) – 476 – (476) – 7 The Group has recognised deferred tax assets in relation to temporary timing differences arising from cash to accrual adjustments in InvestmentNews. The Group has unrecognised tax losses of £18.7 million (31 December 2020: £11.5 million). After the restatement of the opening balance as a result of additional deferred tax assets arising from the IAS 38 IFRIC restatement (note 1), the movement in the net deferred tax liability largely comprises deferred tax liabilities arising on acquisitions. Other deferred tax items include deferred tax assets arising on provisions, accruals, deferred revenue and lease liabilities. The closing deferred tax asset balance is comprised of temporary timing differences arising from cash to accrual adjustments in InvestmentNews. 76 Annual Report and Financial Statements 2021 – Bonhill Group plc 9. Earnings per share (a) Basic earnings per share Basic loss per share is calculated by dividing the loss attributable to owners of the parent by the weighted average number of ordinary shares in issue during the year. Based on statutory earnings Loss attributable to owners of the parent Weighted average number of ordinary shares in issue Basic loss per share (pence per share) Based on adjusted earnings Loss attributable to owners of the parent Weighted average number of ordinary shares in issue Basic loss per share (pence per share) Year ended 31 December 2021 £’000 Year ended 31 December (restated) 2020 £’000 (8,080) 98,585,692 (8.20p) (10,956) 82,196,705 (13.33p) Year ended 31 December 2021 £’000 Year ended 31 December (restated) 2020 £’000 (8,080) 98,585,692 (8.20p) (8,634) 82,196,705 (10.50p) (b) Diluted earnings per share Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. Based on statutory earnings Loss attributable to owners of the parent Weighted average number of ordinary shares in issue Dilutive effect of ‘in the money’ share options Diluted ordinary shares Diluted loss per share (pence per share) Year ended 31 December 2021 £’000 Year ended 31 December (restated) 2020 £’000 (8,080) 98,585,692 12,951,762 111,537,454 (7.24p) (10,956) 82,196,705 14,451,762 96,648,467 (11.34p) As outlined in note 1 to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. As a result of this accounting policy change some costs previously capitalised have now been expensed to the income Statement. 77 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 10. Intangible assets Group Cost At 1 January 2020 (reported) Restatement (note 1) 1 January 2020 (restated) Additions (external) (reported) Restatement of additions Foreign exchange movement 1 January 2021 Additions (external) Foreign exchange movement 31 December 2021 Amortisation and impairment At 1 January 2020 (reported) Restatement (note 1) 1 January 2020 (restated) Amortisation charge for the year (reported) Restatement of amortisation charge for the year Impairment of intangibles Foreign exchange movement 1 January 2021 Amortisation charge for the year Impairment of intangibles Foreign exchange movement 31 December 2021 NBV Website development costs £’000 Software £’000 Publishing rights £’000 Customer relationships £’000 Brand £’000 Sub-total £’000 Goodwill £’000 Total £’000 766 – 766 56 – (2) 820 24 1 845 600 – 600 68 – – (2) 666 76 103 – 845 – 589 (589) – 241 (241) – – – – – 18 (18) – 143 (143) – – – – – – – – 1,151 – 1,151 – – 1,151 – – 1,151 765 – 765 45 – 329 – 1,139 2 10 – 1,151 – 4,807 – 4,807 – – (119) 4,688 – 18 4,706 544 – 544 455 – – (35) 964 430 – 9 1,403 3,303 6,070 – 6,070 – – (188) 5,882 – 29 13,383 (589) 12,794 297 (241) (309) 12,541 24 48 17,111 – 17,111 – – (103) 17,008 – 147 30,494 (589) 29,905 297 (241) (412) 29,549 24 195 5,911 12,613 17,155 29,768 2 – 2 – – 6,246 – 6,248 – 6,078 19 2,994 (18) 2,976 1,528 (143) 6,601 (114) 10,848 1,271 6,191 24 1,065 – 1,065 2,992 (18) 2,974 817 1,528 (143) 355 (114) 4,600 1,271 113 5 – 26 (77) 1,831 763 – (4) 2,590 3,321 5,989 12,345 18,334 6,624 4,810 11,434 As outlined in note 1 to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. As a result of this accounting policy change some costs previously capitalised have now been expensed to the income Statement. Note that the tax amortisation benefit of the InvestmentNews brand and customer relationships will be amortised over 15 years. 78 Annual Report and Financial Statements 2021 – Bonhill Group plc 10. Intangible assets cont. The breakdown of goodwill, publishing rights, brand and customer relationships intangible asset values by brand are as follows: Goodwill InvestmentNews LLC Last Word Media Publishing rights Information Age Media Ltd Brand InvestmentNews Last Word Media Customer relationships InvestmentNews Last Word Media 31 December 2021 £’000 31 December 2020 £’000 1,262 3,548 4,810 7,212 3,548 10,760 Useful Economic Life (UEL) Remaining UEL 31 December 2021 £’000 31 December 2020 £’000 20 4 – – 12 12 Useful Economic Life (UEL) Remaining UEL 31 December 2021 £’000 31 December 2020 £’000 10 12 6 9 2,298 1,005 3,303 2,611 1,113 3,724 Useful Economic Life (UEL) Remaining UEL 31 December 2021 £’000 31 December 2020 £’000 7 10 3 7 2,938 383 3,321 3,642 409 4,051 The Group tests goodwill for impairment at each reporting date. If there are indicators of impairment, then other intangible assets are also tested. The recoverable amounts are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and direct costs. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the Group. The growth rates are based on a combination of industry growth forecasts and specific business plans for the Group. Changes in direct costs are based on past practices and expectations of future changes. The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for a period of 12 months and extrapolates cash for a further 48 months. Given the reduced revenues achieved in 2021 and the small increase budgeted for 2022 an indicator of impairment was identified in respect of goodwill. As a result, a review for impairment was performed and an impairment of £6.2 million was recognised on a value in use basis (2020: £6.6 million). 79 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 10. Intangible assets cont. The starting point for the impairment review was the approved financial budget for each of its cash-generating units (‘CGUs’). The CGUs are FSUS (formerly known as Investment News), FSUE (formerly known as Last Word Media) and BSG (formerly known as Bonhill). These budgets were then extrapolated out for a further four years. Revenue growth for the future four years past the approved financial budget was as follows: 8.0%, 7.5%, 5.0% and 5.0%, with cost projected to increase at half the rate of revenue growth for each year for all CGUs. The cost of capital rate used to discount the cash flow was 24.3% for the UK dominated CGUs and 22.5% for the US-based CGU taking into account the different tax rates in the different countries. The pre-tax cost of capital was calculated for the Group as a whole and took into consideration the way that the market assesses the specific risks associated with the Group’s estimated cash flows and with reference to the capital structure of comparable peers. A small stock premium has also been included in the calculation. The result of this work indicates an impairment of the assets related to BSG of £0.02 million (2020: £0.3 million) and of £6.17 million for FSUS (2020: £3.4 million). Company Cost At 1 Jan 2020 (reported) Restatement (note 1) 1 January 2020 (restated) Additions (reported) Restatement of additions Write off 1 January 2021 Additions 31 December 2021 Amortisation and impairment At 1 Jan 2020 (reported) Restatement (note 1) 1 January 2020 (restated) Amortisation charge for the year (reported) Restatement of amortisation charge for the year Impairment of intangibles 1 January 2021 Amortisation charge for the year Impairment of intangibles 31 December 2021 NBV Website development costs £’000 Software £’000 Publishing rights £’000 449 – 449 49 – – 498 5 503 392 – 392 27 – – 419 36 48 503 – 589 (589) – 241 (241) – – – – 18 (18) – 143 (143) – – – – – – 626 – 626 – – (165) 461 – 461 430 – 430 31 – – 461 – – 461 – Total £’000 1,664 (589) 1,075 290 (241) (165) 959 5 964 840 (18) 822 201 (143) – 880 36 48 964 – As outlined in v to the Consolidated Financial Statements, the results for the year ended 31 December 2020 have been restated to reflect the impact of the IFRIC decision on configuration and customisation costs in a cloud computing arrangement relating to IAS 38 ‘Intangible Assets’. As a result of this accounting policy change some costs previously capitalised have now been expensed to the income Statement. 80 Annual Report and Financial Statements 2021 – Bonhill Group plc 11. Property, plant and equipment Fixtures, fittings and equipment Group £’000 Company £’000 Cost 1 January 2020 Additions Disposal Foreign exchange movement 1 January 2021 Additions Disposal Foreign exchange movement 31 December 2021 Depreciation 1 January 2020 Charge for the year Disposal Foreign exchange movement 1 January 2021 Charge for the year Prior year adjustment Disposal Foreign exchange movement 31 December 2021 Net book value 31 December 2021 31 December 2020 867 35 (39) (7) 856 49 (12) 1 894 524 153 (5) (6) 666 130 6 (12) 1 791 103 190 234 32 (39) – 227 48 – – 275 75 67 – – 142 71 0 – – 213 62 85 81 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 12. Investments Company Cost 1 January 2020 Additions 31 December 2020 Additions 31 December 2021 Impairment 1 January 2020 Impairment 31 December 2020 Impairment 31 December 2021 Net book value 31 December 2021 31 December 2020 Subsidiary undertakings £’000 26,455 – 26,455 – 26,455 (10) (7,883) (7,893) (7,423) (15,316) 11,139 18,562 During the year, the decision was made to recognise an impairment of £7.4 million against the Company investments in order to better reflect the NBV of the intangible assets held post acquisitions (see note 10 for more information). The Company holds 100% of the issued ordinary share capital and voting rights of the following subsidiary undertakings which have been included in the consolidated accounts. Company Principal activity Incorporated in Registered office Bonhill Finance Limited Financing arm of the Group England and Wales Bonhill Group Inc. Holding company for InvestmentNews LLC USA Bonhill Media UK Limited Online, print publishing & events England and Wales Growth Company Investor Limited* Information Age Media Limited* InvestmentNews LLC Online, print publishing & events for investors and entrepreneurs Monthly publication and events for IT professionals England and Wales England and Wales Online, print publishing & events for US IFAs USA Last Word Media (Asia) PTE Limited** Online, print publishing & events Singapore Last Word Media (HK) Limited*** for investors and entrepreneurs Online, print publishing & events for investors and entrepreneurs Hong Kong 29 Clerkenwell Road, London, EC1M 5RN 685 Third Avenue, New York, 10017 29 Clerkenwell Road, London, EC1M 5RN 29 Clerkenwell Road, London, EC1M 5RN 29 Clerkenwell Road, London, EC1M 5RN 685 Third Avenue, New York, 10017 3 Church Street, #12-02, Samsung Hub, Singapore (049483) 36/F Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong Last Word Media (UK) Limited Online, print publishing & events for investors and entrepreneurs England and Wales 29 Clerkenwell Road, London, EC1M 5RN * Both Growth Company Investor Limited and Information Age Media Limited were dissolved on 4 January 2022. ** Is held 25% by Bonhill Group plc and 75% by Last Word Media (UK) Limited. *** Is held 100% by Last Word Media (Asia) PTE Limited. 82 Annual Report and Financial Statements 2021 – Bonhill Group plc 13. Trade and other receivables Trade receivables Provision for impairment of trade receivables Other receivables* Prepayments and accrued income Deferred expenses Amounts owed from subsidiary undertakings Group Company 31 December 2021 £’000 31 December 2020 £’000 31 December 2021 £’000 31 December 2020 £’000 2,761 (160) 2,601 485 185 17 – 3,288 3,367 (440) 2,927 1,383 261 25 – 4,596 857 (118) 739 184 92 2 368 1,385 527 (137) 390 314 69 – 2,251 3,024 * Other receivables consist of rent deposits and event venue deposits. The Group’s financial assets are short term in nature. In the opinion of the Directors, the carrying values equate to their fair values. Additional information relating to the provision for impairment of trade receivables can be found in note 17. 14. Trade and other payables Trade payables Taxation and social security Other payables Accruals Deferred income Amounts owed to subsidiary undertakings Group Company 31 December 2021 £’000 31 December 2020 £’000 31 December 2021 £’000 31 December 2020 £’000 515 110 838 907 996 – 3,366 697 495 505 1,024 633 – 3,354 221 121 256 325 305 574 1,802 150 – 313 494 65 5,259 6,281 The Group’s financial liabilities are short term in nature. In the opinion of the Directors, the carrying values equate to their fair values. 83 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 15. Right-of-use asset 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 term of 12 months or less. In applying the modified retrospective approach, the Group has taken advantage of the following practical expedients: • Leases with a remaining term of 12 months or less from the date of application have been accounted for as short-term leases (i.e. not recognised on the balance sheet) even though the initial term of the leases from lease commencement date may have been more than 12 months. Group 2021 £’000 158 2,637 (673) – 18 2,140 Group 2021 £’000 184 2,573 91 (565) – 22 2,305 £’000 619 1,686 2,305 2020 £’000 1,493 (2) (820) (508) (5) 158 2020 £’000 1,600 2 3 (902) (508) (11) 184 £’000 184 – 184 Right-of-use asset Carrying value as at start of the period Additions to right-of-use assets Amortisation charged Termination of leases Foreign exchange impact of revaluation Carrying value as at the end of the period Lease liability Carrying value as at start of the period Additions to lease liability Interest charged Repayments made Termination of leases Foreign exchange impact of revaluation Carrying value as at the end of the period Lease liability current/non-current split Current lease liability Non-current lease liability Total lease liability 84 Annual Report and Financial Statements 2021 – Bonhill Group plc 15. Right-of-use asset cont. Right-of-use asset Carrying value as at start of the period Additions to right-of-use assets Amortisation charged Termination of lease Foreign exchange impact of revaluation Carrying value as at the end of the period Lease liability Carrying value as at start of the period Additions to lease liability Interest charged Repayments made Termination of lease Foreign exchange impact of revaluation Carrying value as at the end of the period Lease liability current/non-current split Current lease liability Non-current lease liability Total lease liability Company 2021 £’000 – 537 (207) – – 330 2020 £’000 261 – (185) (76) – – £’000 £’000 – 473 9 (182) – – 300 260 – 3 (156) (107) – – £’000 £’000 300 – 300 – – – During the year the Group signed a new lease for London premises at 29 Clerkenwell Road, London and extended the lease on its office in Hong Kong. 85 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 16. Borrowings Vendor loan UK Bounceback loans UK Bounceback loan Group 31 December 2021 £’000 31 December 2020 £’000 – 100 100 1,010 50 1,060 Company 31 December 2021 £’000 31 December 2020 £’000 50 50 50 50 The vendor loan held with Crain Communications Inc was fully repaid in August 2021. During the year the Group received a loan of $1.3 million under the second US Paycheck Protection Program. This was subsequently fully forgiven in October 2021 and was converted to a grant and recognised in the income statement as part of net operating expenses. The Company took out a UK Bounceback Loan for £50,000 in January 2021, in addition to the one taken in December 2020. Both loans become repayable from January 2022. The interest rate on the loan is fixed at 2.5% per annum and it has a term of 72 months. The interest-bearing loans are repayable as follows: Group 31 December 2021 £’000 31 December 2020 £’000 19 20 60 1 100 1,010 10 30 10 1,060 Company 31 December 2021 £’000 31 December 2020 £’000 10 10 30 – 50 – 10 30 10 50 Within one year Between one and two years Between two and five years Over five years Total Within one year Between one and two years Between two and five years Over five years Total 86 Annual Report and Financial Statements 2021 – Bonhill Group plc 17. Financial risk management The Group’s financial instruments are comprised of cash, borrowings, trade receivables, other receivables, trade payables and other payables. The fair values of these instruments are not materially different to their book values. The objective of holding financial instruments is to raise finance for the Group’s operations and manage related risks. The Group’s activities expose the Group to a number of risks including interest rate risk, credit risk and liquidity risk. The Group manages these risks by regularly monitoring the business and providing ongoing forecasts of the impact on the business. Liquidity risk The Directors closely monitor the Group’s and Company’s financial position to ensure it has sufficient funds to meet its obligations as they fall due. The Group finance function produces regular forecasts that estimate the cash inflows and outflows for the next 12 months, so that management can ensure that sufficient financing is in place as it is required. The Chief Financial Officer models the monthly cash flow on a daily basis to ensure there are no surprises. Management have worked with our key customers and suppliers to ensure that the overall working capital cycle is as smooth as possible. Maturity analysis The table below analyses the Group’s and the Company’s financial liabilities based on the contractual gross undiscounted cash flows for amounts outstanding at the reporting date up to maturity date: Maturity analysis at 31 December 2021 Group Borrowings Lease financial liability Trade and other payables Total liabilities Company Borrowings Lease financial liability Trade and other payables Total liabilities Maturity analysis at 31 December 2020 Group Borrowings Lease financial liability Trade and other payables Total liabilities Company Borrowings Lease financial liability Trade and other payables Total liabilities Less than 6 months £’000 Between 6 months and 1 year £’000 Between 1 year and 5 years £’000 Greater than 5 years £’000 9 336 3,366 3,711 5 178 1,802 1,985 10 283 – 293 5 122 – 127 80 1,298 – 1,378 40 – – 40 1 388 – 389 – – – – Less than 6 months £’000 Between 6 months and 1 year £’000 Between 1 year and 5 years £’000 Greater than 5 years £’000 – – 3,354 3,354 – – 6,281 6,281 1,010 184 – 1,194 – – – – 40 – – 40 40 – – 40 10 – – 10 10 – – 10 Total £’000 100 2,305 3,366 5,771 50 300 1,802 2,152 Total £’000 1,060 184 3,354 4,598 50 – 6,281 6,331 Trade and other payables consist of trade payables, other payables, accruals and amounts owed to subsidiary undertakings as shown in note 14. The Group and Company would normally expect that sufficient cash is generated in the operating cycle to meet the contractual cash flows as disclosed above through effective cash management. 87 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 17. Financial risk management cont. Interest rate risk The Group’s interest rate exposure arises mainly from its interest-bearing borrowings. Contractual agreements entered into at floating rates expose the Group to cash flow risk, while fixed-rate borrowings expose the Group to fair value risk. The Group regularly reviews its funding arrangements to ensure they are competitive with the marketplace. The table below shows the Group’s and Company’s financial assets and liabilities split by those bearing fixed and floating rates and those that are non-interest bearing: Fixed rate £’000 Floating rate £’000 Non-interest bearing £’000 – – – – (100) (2,305) (2,405) Fixed rate £’000 – – – – (50) (300) (350) 1,372 – 1,372 – – – – – 3,299 3,299 (3,366) – – (3,366) Floating rate £’000 Non-interest bearing £’000 187 – 187 – – – – – 1,385 1,385 (1,802) – – (1,802) Total asset £’000 1,372 3,299 4,671 – – – – Total asset £’000 187 1,385 1,572 – – – – Total liability £’000 – – – (3,366) (100) (2,305) (5,771) Total liability £’000 – – – (1,802) (50) (300) (2,152) 31 December 2021 Group Cash and cash equivalents Trade and other receivables Total financial assets Trade and other payables Borrowings Lease financial liability Total liabilities at amortised cost 31 December 2021 Company Cash and cash equivalents Trade and other receivables Total financial assets Trade and other payables Borrowings Lease financial liability Total liabilities at amortised cost 88 Annual Report and Financial Statements 2021 – Bonhill Group plc 17. Financial risk management cont. Interest rate risk cont. 31 December 2020 Group Cash and cash equivalents Trade and other receivables Total financial assets Trade and other payables Borrowings Lease financial liability Total liabilities at amortised cost 31 December 2020 Company Cash and cash equivalents Trade and other receivables Total financial assets Trade and other payables Borrowings Lease financial liability Total liabilities at amortised cost Fixed rate £’000 Floating rate £’000 Non-interest bearing £’000 – – – – (1,060) (184) (1,244) Fixed rate £’000 – – – – – – – 1,343 – 1,343 – – – – – 4,596 4,596 (3,354) – – (3,354) Floating rate £’000 Non-interest bearing £’000 148 – 148 – – – – – 3,024 3,024 (6,281) – – (6,281) Total asset £’000 1,343 4,596 5,939 – – – – Total asset £’000 148 3,024 3,172 – – – – Total liability £’000 – – – (3,354) (1,060) (184) (4,598) Total liability £’000 – – – (6,281) – – (6,281) Credit risk exposure Credit risk predominantly arises from trade receivables, cash and cash equivalents and deposits with banks. Credit risk is managed on a Group basis. External credit checks are obtained for larger customers. In addition, the credit quality of each customer is assessed internally before accepting any terms of trade. Internal procedures take into account the customer’s financial position, their reputation in the industry and past trading experience. As a result, the Group’s and Company’s exposure to bad debts is not significant. Cash and cash equivalents are held with banks with a minimum rating of ‘A’. Financial assets Trade and other receivables* Estimated irrecoverable amounts * Excludes prepayments, accrued income and deferred expenses. Group Company 31 December 2021 £’000 31 December 2020 £’000 31 December 2021 £’000 31 December 2020 £’000 3,246 (160) 3,086 4,750 (440) 4,310 1,041 (118) 923 841 (137) 704 89 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 17. Financial risk management cont. Credit risk exposure cont. Movements on the Group and Company’s provision for impairment of trade receivables: Financial assets As at start of period Addition to provision Utilisation of provision As at end of period Group Company 31 December 2021 £’000 31 December 2020 £’000 31 December 2021 £’000 31 December 2020 £’000 440 80 (360) 160 160 316 (36) 440 137 63 (82) 118 87 55 (5) 137 There has been much work done in 2021 to improve credit control processes, reconcile customer accounts and resolve outstanding queries. The introduction of the Group-wide CRM system has made huge improvements to the invoicing process meaning that invoices are accurate first time and our customers are mostly paying these new invoices to terms. Covid-19 has not heavily impacted our debt collection, and whilst there are a few customers who have gone into administration in 2021, these are identified in the workings and 100% provided for. Any debt more than two years old has been fully provided for. The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss (‘ECL’) provision for trade receivables. To measure expected credit losses on a collective basis, trade receivables are grouped based on similar ageing. The Group has determined that trade receivables across different propositions, sectors and countries have similar risk characteristics. The Group has determined appropriate expected loss rates by considering historical credit losses experienced over a three-year period prior to the period end and adjusting these based on current and forward looking information. The Group has identified political and economic uncertainty in its key operating countries as the key macroeconomic factors affecting its customers. The provision is calculated by management based on their best estimate of recoverability considering the age of the debtor. As at 31 December 2021, the lifetime expected loss provision for trade receivables is as follows: Debtors ‘at risk’ Bonhill InvestmentNews Last Word Media Total debt ‘at risk’ Provision calculation Bonhill InvestmentNews Last Word Media Total credit provision Lifetime ECL 15% 191 31 11 233 29 5 2 36 10% 147 2 121 270 14 – 12 26 1% 282 384 411 1,077 4 4 5 13 50% 100% 46 27 – 73 23 13 – 36 48 1 – 49 48 1 – 49 Total £’000 714 445 543 1,702 118 23 19 160 Capital risk management The Group’s objectives when managing capital (i.e. equity and borrowings) are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. 90 Annual Report and Financial Statements 2021 – Bonhill Group plc 17. Financial risk management cont. Foreign currency risk The Group’s policy is not to use forward contracts and therefore none were outstanding at the year-end (31 December 2020: None). The following table summarises the Group’s sensitivity to translational currency exposures at 31 December 2021. 2021 currency risks expressed in USD/GBP Reasonable shift Impact on loss after tax if USD strengthens against GBP Impact on loss after tax if USD weakens against GBP Impact on equity excluding retained earnings if USD strengthens against GBP Impact on equity excluding retained earnings if USD weakens against GBP As at period end, the Group’s net exposure to foreign exchange risk was as follows: £’000 10% (952) 1,164 436 (532) Net foreign currency financial assets/(liabilities) GBP USD EUR CAD AED SGD Total net exposure 18. Called up share capital Issued and fully paid ordinary shares of 1p each As at 1 January 2020 Shares issued during the year As at 1 January 2021 Shares issued during the year As at 31 December 2021 Functional currency of individual entity GBP USD 31 December 2021 £’000 31 December 2020 £’000 31 December 2021 £’000 31 December 2020 £’000 – 148 3 10 (2) 13 172 – 247 56 12 (1) – 314 (13) – – – – – (13) (7) – – – – – (7) Number £’000 48,585,692 50,000,000 98,585,692 – 98,585,692 486 500 986 – 986 91 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 18. Called up share capital cont. Issue of shares No shares were issued during the year. Rights of shares Dividends and income – Ordinary shares are entitled to receive dividends as approved by the Board of Directors. Voting rights – Ordinary shares are entitled to one share per vote at General Meetings. Deferred shares cannot be transferred. Distribution – Upon liquidation of the Company, once all liabilities have been met, ordinary shareholders will receive the value paid up per share plus £100. The Company has granted options to subscribe for ordinary shares of 1p each, as follows: Grant date 16.08.2018 16.08.2018 16.08.2018 16.08.2018 26.10.2021 26.10.2021 Subscription price per share Period within which options are exercisable 31 December 2021 31 December 2020 Number of shares for which rights are exercisable 80.0p 80.0p 1.0p 1.0p 1.0p 1.0p 16/08/2021 – 16/08/2028 16/08/2022 – 16/08/2028 16/08/2021 – 16/02/2022 16/08/2022 – 16/02/2023 25/10/2023 – 25/10/2030 25/10/2024 – 25/10/2030 14,880 14,882 451,000 451,000 6,010,000 6,010,000 14,880 14,882 451,000 451,000 6,760,000 6,760,000 12,951,762 14,451,762 During the year, 1.5 million share options were forfeited (year ended 31 December 2020: 1,569,996). Share premium The share premium account shows the amount subscribed for share capital in excess of nominal value, net of share issue costs. Share premium as at 31 December 2020 Subscription of share capital in excess of nominal value (net of issue costs) Share premium as at 31 December 2021 £’000 1,759 – 1,759 Merger reserve Consideration for the acquisition of Last Word Media included £2.0 million of shares. The Group applied merger relief under the UK Companies Act s615 and so the value of the shares issued as consideration above their nominal value is included in a merger reserve. 19. Equity-settled share option schemes During the year the Group recognised an expense for the following share-based payments. Year ended 31 December 2021 £’000 Year ended 31 December 2020 £’000 101 (14) – 87 28 4 (50) (18) Share option charge Employer NICs on share options Release of deferred shares from the LWM acquisition 92 Annual Report and Financial Statements 2021 – Bonhill Group plc 19. Equity-settled share option schemes cont. Details of the number of share options and the weighted average exercise price (‘WAEP’) during the period are as follows: Outstanding at the beginning of the year Forfeited during the year Granted during the year Outstanding at the end of the year Exercisable at the end of the year Year ended 31 December 2021 Year ended 31 December 2020 No. WAEP No. WAEP 14,451,762 (1,500,000) – 12,951,762 465,880 1.2p 1.0p – 1.2p 4.0p 3,296,992 (2,365,230) 13,520,000 14,451,762 – 35.7p 48.4p 1.0p 1.2p – The market price of the Company’s shares on 31 December 2021 was 7.5p (31 December 2020: 11.0p). The average remaining contractual life is 6.9 years (31 December 2020: 8.1 years). The outstanding share options have exercise prices between 1.0p and 80.0p. No share options were issued during the year. The Group did not enter into any share-based payment transactions with parties other than employees during the current or previous periods. 20. Related party transactions Group and Company There is no ultimate controlling party. Key management compensation No individuals other than the Directors meet the definition of key management personnel. Details of key management personnel compensation is disclosed in note 6. Transactions/balances with Directors Further details are disclosed in note 6. Company Transactions with subsidiary companies during the Year ended 31 December 2021 and the Year ended 31 December 2020 were as follows: Bonhill Group plc cross charges of costs to InvestmentNews LLC of £1.626 million (31 December 2020: £0.211 million). Bonhill Group plc cross charges of costs to Last Word Media Ltd of £0.854 million (31 December 2020: £0.285 million). At the balance sheet date, the following balances were outstanding: Loans due (to)/from subsidiary companies Growth Company Investor Ltd Information Age Media Ltd Bonhill Finance Ltd Last Word Media (UK) Ltd InvestmentNews LLC (net of provision for non-payment) Year ended 31 December 2021 £’000 Year ended 31 December 2020 £’000 – – 368 (574) – (206) (1,093) (3,516) 368 (311) 1,544 (3,008) 93 Bonhill Group plc – Annual Report and Financial Statements 2021 Notes to the financial statements cont.: for the Year ended 31 December 2021 21. Commitments and contingent liabilities (a) Lease commitments At 31 December 2021, the Group had no total future lease payments under non-cancellable operating leases less than one year being expensed under the short-term lease expedient on transition to IFRS 16 (31 December 2020: £nil). (b) Contingent liabilities There are no contingent liabilities expected to result in a material loss for the Group. The Company is included in a Group registration for VAT purposes and is therefore jointly and severally liable for all other Group companies’ unpaid debt in this connection. (c) Capital commitments There were no material capital commitments as at 31 December 2021 (31 December 2020: £nil). 22. Events after the reporting date On 7 April 2022 the Company announced that it proposes to raise approximately £1.1 million for working capital purposes through the issue of new ordinary shares in the Company at an issue price of 5.5 pence per share, using its existing share authorities, by way of a firm placing and open offer to qualifying shareholders. The issue price represents a discount of approximately 18.5% to the closing mid-market price of a Bonhill share on 6 April 2022, being the business day preceding the date of the announcement. The Company has received written commitments from two of its largest institutional shareholders and a letter of intent from a third to subscribe for new ordinary shares in the placing and effectively to underwrite the open offer for, in aggregate, the requisite £1.1 million. The commitments of the institutional shareholders are conditional on certain events, including the circular relating to the open offer being published not later than 30 April 2022. In addition, the commitment of one of the institutional shareholders is conditional on no adverse trading update announcement being released by the Company prior to the close of the open offer. 94 Annual Report and Financial Statements 2021 – Bonhill Group plc Directors and advisers Directors Jonathan Glasspool Jon Kempster Richard Staveley Laurie Benson Sarah Thompson Secretary Louise Park Registered office 29 Clerkenwell Road, London, EC1M 5RN Company number 02607995 Registrars Share Registrars Limited, 3 The Millennium Centre, Crosby Way, Farnham, Surrey, GU9 7XX Bankers Coutts & Co, 440 Strand, London, WC2R 0QS Auditor BDO LLP, 55 Baker Street, London, W1U 7EU Nominated adviser Shore Capital & Corporate Limited, Cassini House, 57 St James’s Street, London, SW1A 1LD Broker Shore Capital Stockbrokers Limited, Cassini House, 57 St James’s Street, London, SW1A 1LD Design and Production www.carrkamasa.co.uk 95 Bonhill Group plc – Annual Report and Financial Statements 2021 Bonhill Group plc 29 Clerkenwell Road London EC1M 5RN T: 020 7638 6378 www.bonhillplc.com