Registered Number: 08754680 BRAVE BISON GROUP PLC ANNUAL REPORT FOR THE YEAR ENDED 31 December 2021 BRAVE BISON GROUP PLC INDEX TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Company information Strategic report Chairman’s report CFO’s report Risks and Uncertainties Report of the Directors Statement on Directors’ responsibilities Statement on Corporate Governance Directors’ remuneration report Report of the Independent Auditor Consolidated income statement and consolidated statement of comprehensive income Consolidated statement of financial position Consolidated statement of cash flows Consolidated statement of changes in equity Notes to the financial statements Company balance sheet Company statement of changes in equity Notes to the company financial statements Pages 1 2-3 4-7 8-10 11-13 14 15-19 20-23 24-33 34 35 36 37 38-68 69 70 71-75 BRAVE BISON GROUP PLC FINANCIAL AND OPERATIONAL HIGHLIGHTS For the year ended 31 December 2021 The Board of Directors Oliver Green Philippa Norridge Matthew Law Theodore Green (appointed 6 May 2021) Company secretary Philippa Norridge Registered office Company number Auditors Solicitors Nominated Adviser and Broker The Varnish Works 3 Bravingtons Walk London N1 9AJ 08754680 Moore Kingston Smith LLP Devonshire House 60 Goswell Road London EC1M 7AD Memery Crystal LLP 165 Fleet Street London EC4A 2DY Cenkos Securities Plc 6.7.8 Tokenhouse Yard London EC2R 7AS 1 BRAVE BISON GROUP PLC CHAIRMAN’S REPORT For the year ended 31 December 2021 Chairman’s Report 2021 was a transformational year for Brave Bison. During the period we almost doubled gross profit, made a highly accretive and strategic acquisition, delivered a maiden statutory profit and generated a significant amount of cash. We moved into new London headquarters in King’s Cross and bolstered our management team with a number of key senior hires across our media network and digital advertising agency. Brave Bison now has four business pillars: • Brave Bison Performance: performance media and search engine optimisation (SEO) • Brave Bison Social & Influencer: social advertising • Brave Bison Commerce: transactional websites and platforms • Brave Bison Media Network: portfolio of owned and operated social channels. Through these four pillars, Brave Bison is both a digital media owner and a digital advertising agency. We act as a broadcaster for the digital age: publishing content on our own channels like The Hook (on Instagram), The Wave House (on TikTok) and Slick (on Snapchat), and on behalf of our channel partners like PGA Tour and US Open (on YouTube). We also buy media across advertising platforms like Google, Facebook, as well as directly from creators, and manage transactional platforms for our customers. Current partners include global enterprises such as Reckitt Benckiser, Panasonic, Vodafone and New Balance. Year in Review Brave Bison saw considerable growth in the first half of the year with revenues of £7.3m in H1, up 32% over the prior period earlier despite what was still a challenging global environment with lockdowns in place in the UK and Singapore. Careful management of operating expenses and cashflow saw an Adjusted EBITDA of £0.5m and cash increase by £0.8m during the half-year period. At an operating level, the processes we put in place during 2020 meant that, despite the restrictions, our teams were still able to work productively. Rather than only hire talent in London and Singapore we began to recruit both nationally and internationally which allowed us to hire from a much broader, and more diverse pool of talent. As the world emerges from the pandemic, we are keen to maintain flexible and hybrid working for our teams as we believe it will remain an attractive feature in the continued retention and attraction of high quality talent and will also enable us to reduce property costs in the medium term. In April 2021, we launched The Wave House Season 2: a first of its kind production that saw us rent a mansion in the English countryside in which six social media stars were tasked with the aim of making original content for the likes of TikTok, Snapchat, Facebook and YouTube. After garnering over 100m views on social platforms and coverage in the likes of the Daily Mail, Vice and BBC we negotiated sponsorship from one of the world’s largest music companies and agreed an exclusive edit for Snapchat. Our YouTube network continues to go from strength to strength. In 2021 our channels generated average monthly views of 566m and we signed contract renewals with some of our largest partners including the PGA Tour, United States Tennis Association (USTA) and Newsflare. Our proposition around channel management for third parties is focused on helping our partners grow views, engagement, subscribers and ultimately revenue across the platform. Existing partners include a roster of sports federations, media and music companies and creators. During the period we signed agreements with a number of new partners including Ryder Cup, CPLT20, Scandinavian talk show Skavlan and creators such as Adolofo Loro, DJ Scuff and El Open Mic. Since 2 BRAVE BISON GROUP PLC CHAIRMAN’S REPORT For the year ended 31 December 2021 the year end we were delighted to confirm continued momentum in the winning of new clients with the addition of Le Mans Endurance Management as a client of the Group. On Snapchat we launched a slate of new programming across content verticals such as fitness, food and entertainment. One of our new shows, The Sip, is centred around pop culture and celebrity news with a millennial and gen z focus. We launched a number of new shows on Snapchat under The Hook brand which we acquired mid-2020, including collaborations with well-known comedy influencers Josh & Archie and JOLLY. Our Social & Influencer business has continued to thrive. Engagements with the likes of Vodafone and Panasonic were renewed and we signed new agreements with BBC, Suntory and a global real estate company. We were especially pleased to be ranked 2nd in The Drum’s Elite Agency Census cementing our position as one of the most respected social advertising outfits in the UK. In September, we completed the acquisition of Greenlight Digital and Greenlight Commerce (together ‘Greenlight’), a London-based digital advertising and technology business. After an oversubscribed fundraising of £6.2m pursuant to which we welcomed a number of new institutional investors to our shareholder register, we added Performance and Commerce to our existing Social & Influencer and Media Network business units. Greenlight works with a roster of global clients including New Balance, ASUS and Reckitt Benckiser and in Q4 2021 we set about integrating the operations of both businesses. By the end of the year, we had moved all of the Brave Bison team into Greenlight’s offices in King’s Cross and had implemented new processes to integrate the group and ensure that we run the business as one company. Streamlined operations now include a single P&L, one leadership team, a company-wide monthly townhall, weekly updates and shared functions across IT, HR, Finance and Marketing. The final part of the integration will happen towards the end of H1 2022 when we launch a revised brand for Brave Bison including a new service offering that combines Brave Bison’s existing expertise in social advertising and our media network with our newly acquired performance media and commerce capabilities. With revenue for the full year up 50% at £21.7m and gross profit up almost 100% at £7.8m we are pleased to see our business expand in the UK as well as overseas. Adjusted EBITDA was up 1,225% at £1.8m and we were delighted to report Brave Bison’s first ever statutory profit before tax of £0.5m. Our balance sheet remains strong with £5.9m of gross cash at year end, an increase of £3.2m in 2021 despite the proceeds of the share placing being fully utilised in connection with the acquisition of Greenlight. We remain on the lookout for further transformational acquisitions that will continue to drive scale and reach on a global level but we remain well positioned to make smaller, bolt-on acquisitions from existing resources. Brave Bison is an exciting company in an exciting space. We are unique in that we blend an owned and operated digital media network with a suite of digital-only advertising services. Our platform is profitable, cash generative and growing organically. We have an ambitious management team with a clear plan to scale our existing business, develop new revenue streams and make tactical and accretive acquisitions. We look forward to updating shareholders with progress over the remainder of the coming year and beyond. Oliver Green Executive Chairman, Brave Bison Group plc 27 April 2022 3 BRAVE BISON GROUP PLC CFO’S REPORT For the year ended 31 December 2021 CFO’s Report Brave Bison’s primary activity is that of digital media and advertising services. Within this we recognise two main revenue streams. Firstly, there is advertising revenue generated from our digital media network, across platforms including YouTube, Facebook and Snapchat. Secondly, there is fee-based revenue from providing advertising and technology services. Following the acquisition of Greenlight during the year, the fee based revenue stream can be split between our social advertising agency, our performance agency, and our commerce agency. 2021 has been an exciting year for Brave Bison. We were able to build on the work done to restructure the business in 2020 to deliver organic growth, and profitability in the existing business, while also completing a transformational acquisition. Overall our revenue increased by 50% to £21.7 million (2020: £14.5 million). Organic growth made up £1.4 million of this growth. The majority of this came from our advertising revenue which grew by 9.4% to £14.3 million (2020: £13.1 million) during 2021. This was a result of both adding new channels and shows to our media network across multiple platforms, and also growing the existing channels within our network. We were able to deepen our relationships with some key clients, by offering new services such as enhanced in-tournament support for sporting clients, which in turn drove increased revenue and views for both us and them. Our social and influencer fee based revenue grew by £0.1 million during the year. APAC continued to be impacted by restrictions as a result of the pandemic, which had a particular impact on a number of our clients in the travel industry. We did see traction in the UK with our social media consultancy and influencer offering, and we have invested in talent in this area to drive growth in 2022. The remaining £5.8 million growth in revenue came from the acquisition of Greenlight from September. Greenlight has both in-demand and high growth capabilities such as performance marketing and commerce. It brings in new clients, talent, services and opportunities to the group, and gives the combined group a unique offering across the digital and social media space. There have also been some cost synergies as a result of the acquisition – most notably in the area of property costs. All of the UK operations were moved into the Greenlight offices in King’s Cross from the end of September when the lease in Borough concluded. Gross profit has increased by 96% (£3.8 million) to £7.8 million (2020: £3.9 million). The gross profit margin has increased, primarily because a higher proportion of the revenue is fee based, which has higher gross profit margins than the advertising revenue from platforms. The Group has incurred restructuring costs during the year of £0.2 million (2020: £0.7 million), predominantly as a result of changes in executive staffing. Administration costs increased to £7.1 million from £5.2 million, which was driven by the acquisition which brought in £3.3 million of additional administration costs, which was offset by £1.4 million of cost savings and synergies. As a result of these improvements in revenue and cost savings the Group is pleased to report a profit before tax for the year of £0.5 million (2020: loss of £2.3 million), despite acquisition costs of £0.7 million (2020: £nil). The Group’s adjusted operating profit for the year was £1.4 million (2020: loss of £1.5 million). 4 BRAVE BISON GROUP PLC CFO’S REPORT For the year ended 31 December 2021 Adjusted EBITDA Finance costs Finance income Impairment charge Depreciation Amortisation Adjusted Operating Profit / (loss) Restructuring costs Acquisition costs Equity settled share based payments Profit / (loss) before tax 2021 2020 £000’s £000’s 1,762 (67) - - (279) (34) 1,382 (176) (686) (62) 458 133 (61) 4 (248) (527) (848) (1,547) (718) - 7 (2,258) Adjusted EBITDA is a non-IFRS measure that the Group uses to measure its performance and is defined as earnings before interest, taxation, depreciation and amortisation and after add back of costs related to restructuring, acquisitions and share based payments. It should be noted that a portion of the property costs in both 2021 and 2020 fall into the finance costs and depreciation lines as a result of the introduction of IFRS 16 ‘Leases’. As a result, the Group has also started to use Adjusted Operating Profit as a measure of performance, which is stated after add back of costs related to restructuring, acquisitions, share based payments and impairments, but which is after the deduction of costs associated with property leases. Statement of Financial Position The Group ended the year with £5.9 million in cash and cash equivalents (2020: £2.8 million). The Group had cash inflow of £3.2 million in 2021 (2020: £1.5 million outflow), and expects to maintain positive cash inflow throughout 2022. The Group had net cash of £4.7 million at the end of the year after deducting government backed bank loans and deferred consideration. The Group is carrying intangible assets of £6.3 million (2020: £0.1 million). Based on an interim fair value exercise the Group capitalised goodwill of £6.2 million (2020: £0.2 million) on the purchase of Greenlight. Key performance indicators Revenue Gross Profit Adjusted EBITDA Adjusted Operating Profit / (loss) Adjusted Operating Profit / (loss) per ordinary share (pence) Profit / (loss) before tax Gross Cash Net Cash 2021 £000’s 21,660 7,806 1,762 1,382 0.18 458 5,906 4,740 2020 £000’s 14,486 3,976 133 (1,547) (0.25) (2,258) 2,754 2,704 The movements in these key performance indicators are discussed above, and in the Chairman’s report. 5 BRAVE BISON GROUP PLC CFO’S REPORT For the year ended 31 December 2021 Employees Headcount at year-end including contractors increased to 146 (2020: 44). Of these 79 were male and 67 were female. Of the senior members of management, 5 were male and 3 were female. Section 172 compliance Section 172 of the Companies Act 2006 requires the Directors to act in a way that they consider would be most likely to promote the success of the Group for the benefit of its members as a whole, and in doing so have regard to the various stakeholders. Our key stakeholders, and the way in which we engage with them are set out below. Investors The Board value regular dialogue with all our shareholders, and place great importance in our relationship with them. We have regular conversations with all major shareholders, and the Company’s Annual General Meeting is open to all shareholders. We use the Investor Meet Company platform to deliver presentations which are accessible to all shareholders in order to better inform them around our financial performance, and our long term strategy for the Group. We also communicate via RNS and RNS Reach announcements, and regularly update our website. Further details of our approach towards investor relations are set out in the Statement of Corporate Governance. Employees We encourage openness and communication throughout the Group, and are committed to being a responsible employer. We hold monthly meetings for all employees where we communicate key events and decisions, as well as updating employees on work from around the group. We offer regular training for employees, including unlimited online coaching for all staff. All staff have clear objectives and regular meetings with their line manager, as well as a performance appraisal process. We also conduct regular employee surveys in order to gather feedback from our employees and assess what is working or where we need to improve. We are an equal opportunities employer, and are committed to furthering diversity and inclusion throughout the Group. Platforms We have a dedicated member of staff to manage our relationships with the various social media platforms that we work with. We have regular meetings with them, and have adapted in response to any shifts in their policies. Clients We work closely with all our clients. Feedback and collaboration is continual and ongoing, however we also conduct more formal quarterly business reviews, as well as regular client surveys. Suppliers We are committed to treating our suppliers fairly and conducting business in an ethical fashion. We ensure clear scopes of work and parameters are in place with our suppliers to ensure optimal coordination and communication. 6 BRAVE BISON GROUP PLC CFO’S REPORT For the year ended 31 December 2021 Social and Environment As far as the directors of the Group are aware, the Group’s business does not cause a disproportionately adverse impact on the environment. Further details of our social and environmental initiatives are set out within the Company’s Statement of Corporate Governance. Philippa Norridge Chief Financial Officer, Brave Bison Group plc 27 April 2022 7 BRAVE BISON GROUP PLC RISKS AND UNCERTAINTIES For the year ended 31 December 2021 Principal risks and uncertainties Industry risk The Group operates within competitive markets. The Board believes that it has adopted a competitive business strategy. However, the Group’s business, results, operations and financial condition could be materially adversely affected by the actions of its competitors and suppliers. The Group’s competitors could bring superior scale, better known brands, deeper experience or more compelling products to bear against the Group’s existing and potential business. Intense competition could increase pricing pressure in the market, manifested, for example, through declining revenue shares, or increased reliance on the payment of advances ahead of commercial deals. If the Group is not able to compete successfully against existing or future competitors, its competitive position, business, financial condition and results of operations may be adversely affected. The Group operates parts of its business using large international technology platforms that it does not own and which are subject to external factors beyond its control. Advertising revenues from these platforms represents 66% of total revenues, which is a reduction from 90% in 2020, however the Group remains vulnerable to such industry risks. In order to mitigate these risks, the Group is diversifying across a number of different platforms and maintaining close relationships with the platforms, as well as growing its non-platform revenues. Technological innovation is progressing quickly and the Group may fail to keep pace or make the wrong choices Customer preferences across the breadth of the Group’s platform and commercial offerings are subject to fast and relatively unpredictable change, as advances in technology progress. Recent changes have included proliferation of device types, operating systems, video formats and delivery methods. Further changes are difficult to predict. If the Group fails to adapt sufficiently quickly to any changes, there is a risk that revenue will be lost and ultimately that its proposition will become less competitive in the market. Technology may progress to the point that in-house bespoke solutions become so efficient to build and adapt that the Group’s proposition may become obsolete, which would materially adversely affect the Group’s business, financial condition and/or operating results. Failure to retain key executives, officers, managers and technical personnel could adversely affect the Group’s operating and financial performance Retaining and motivating technical and managerial personnel is a critical component of the future success of the Group’s business. The departure of, or inability to replace quickly, any of the Group’s relatively small number of executive officers or other key employees could have a negative impact on its operations. In the event that future departures of employees occur, the Group’s ability to execute its business strategy successfully, or to continue to provide services to its customers and users or attract new customers and users, could be adversely affected. The performance of the Group depends, to a significant extent, upon the abilities and continued efforts of its senior management. The loss of the services of any of the key management personnel or the failure to retain key employees could adversely affect the Group’s ability to maintain and/or improve its operating and financial performance. The Group cannot be certain that it will maintain operating cashflow generation Any adverse events relating to the Group’s business, a significant delay in the introduction of anticipated new revenue streams, or a shortfall in such revenue streams in relation to the Group’s expectations, would have an immediate adverse effect on the Group’s business, operating results and financial condition. Whilst the Group has made significant progress and generated positive cashflow of £3.2 million during 2021, there can be no assurance that the Group will be able to maintain this in the event of a revenue downturn to generate positive cashflows in any future period. The Group is subject to the risks inherent in the operation of a small and evolving business. It may not be able to successfully address these risks. 8 BRAVE BISON GROUP PLC RISKS AND UNCERTAINTIES For the year ended 31 December 2021 Intellectual property risk The Group’s ability to compete effectively is highly dependent on its ability to protect its software, commercial offerings and trade secrets from unauthorised use. Brave Bison believes that it has taken appropriate measures to protect itself to date (including copyrights, trademarks, non-disclosure agreements, etc.). However, the protection provided by these intellectual property rights, confidentiality and contractual restrictions is limited and varies between the UK and other countries. There can be no guarantee that these protections may be adequate to prevent competitors from taking commercial advantage of unauthorised disclosure of the Group’s sensitive business information. Similarly, these protections may not prevent competitors from copying, reverse engineering or independently re-creating the Group’s products, services and technologies to create similar offerings. In addition, as the volume of content that the Group distributes increases, claims relating to ownership of content may increase. Any claims, regardless of their merit, could be expensive and time-consuming to defend. Since its inception, the Group has prioritised protection of its Intellectual Property (“IP”), primarily that generated by its staff. Robust employment contracts protect internally generated IP whilst commercial contracts as well as non-disclosure contracts protect the Group’s IP from external parties. The Group does not sell or distribute its software, thereby making reverse engineering more difficult. Brexit There remains uncertainty around the impact of Brexit now the transition period is over. This could adversely impact the United Kingdom’s economy and make it harder to attract skilled workers from the European Union. The Group is partially insulated against any downturn in the United Kingdom advertising market by the fact that the majority of the Group’s Facebook and YouTube views are from outside of the United Kingdom. Coronavirus The outbreak of the Coronavirus globally may continue to have an adverse impact on revenues. This could be either due to delays to production of branded content, or as a result of it impacting on our clients’ and advertiser’s marketing budgets. We continue to monitor and update forecasts constantly as the situation develops. There is also the risk of disruption if there are any employees who are taken sick, or as a result of lockdowns. There are business continuity plans in place and being continually updated as a result of the latest guidance and developments. We have shown that we can manage content production despite lockdowns, and as a business we are able to function effectively with all employees working from home. Financial risk management The Group’s financial instruments comprise cash and liquid resources and various items, such as trade receivables and trade payables that arise directly from its operations. The principal financial risks faced by the Group are foreign currency, credit and liquidity risks. The policies and strategies for managing these risks are summarised below. Foreign currency risk Transactional foreign currency exposures arise from both the export of services from the UK to overseas clients, and from the import of services directly sourced from overseas suppliers. The Group is primarily exposed to foreign exchange in relation to movements in sterling against the US Dollar, Singapore Dollar and Euro. The Group does not use derivatives to hedge translation exposures. All gains and losses are recognised in the income statement on translation at the reporting date. 9 BRAVE BISON GROUP PLC RISKS AND UNCERTAINTIES For the year ended 31 December 2021 Credit risk The Group's principal financial assets are cash and cash equivalents and trade and other receivables. Whilst the Group had two clients during 2021 whose revenue accounted for over 10% of total revenue these self-bill and pay monthly which limits the credit risk. The Group, by policy, routinely assesses the financial strength of its clients. The Group has no significant concentration of credit risk at the balance sheet date and continues to monitor and manage its exposure. The maximum exposure to credit risk is that shown within the balance sheet. All amounts are short term and management consider the amounts to be of good credit quality. Liquidity / funding risk The Group’s funding strategy is to ensure a mix of funding sources offering flexibility and cost effectiveness to match the requirements of the Group. Operating subsidiaries are financed by the Group. The Group is primarily funded through equity finance provided by the shareholders. The Strategic Report was authorised for issue by the Board of Directors on 27 April 2022 and was signed on its behalf by: Oliver Green Executive Chairman, Brave Bison Group plc 10 BRAVE BISON GROUP PLC REPORT OF THE DIRECTORS For the year ended 31 December 2021 Report of the Directors The directors are pleased to present their report to shareholders and the audited financial statements for the year ended 31 December 2021. The preparation of the Group’s financial statements is in compliance with UK adopted IFRS and gives a true and fair view of the assets, liabilities, financial position and loss of the Group. The Group financial statements consolidate the financial statements of Brave Bison Group plc and its subsidiaries. Results and dividends The results for 2021 are set out in the consolidated income statement and consolidated statement of comprehensive income. The directors do not propose payment of a dividend for 2021 (2020: £nil). Review of the period A comprehensive analysis of the Group’s progress and development is set out in the Strategic Report. This analysis includes comments on the position of the Group at the end of the financial period. Significant events Theodore Green was appointed as a director on 6 May 2021. Significant shareholdings As at 31 December 2021, the following investors held more than 3% of the issued shares in the capital of Brave Bison Group Plc: 11 BRAVE BISON GROUP PLC REPORT OF THE DIRECTORS For the year ended 31 December 2021 Shareholder Number of Shares % of Total Issued Share Capital Oliver Green and Theodore Green * 241,468,473 22.34% CIP Merchant Capital Limited 164,346,407 15.21% Lombard Odier 151,698,240 14.03% James Russell DeLeon+ Simon Davies Trium Capital 97,132,017 64,941,559 33,333,000 8.99% 6.01% 3.08% * Of these Shares, 240,416,059 are held by Tangent Marketing Services Limited, and 1,052,414 are held by Oliver Green (director and shareholder of Tangent Marketing Services Limited). + Of these Shares, 30,000,000 are held in James Russell DeLeon’s own name, 56,014,648 are held by Vesuvius Limited and 11,117,369 are held by Plum Tree Limited. James Russell DeLeon is the ultimate controlling party of Vesuvius Limited and Plum Tree Limited. The directors’ interests are shown in the remuneration report. Related party transactions Details of all related party transactions are set out in Note 27 to the consolidated financial statements. Corporate governance The Directors’ statement on Corporate Governance is set out on pages 15 to 19 and forms part of this report. Going concern assessment The consolidated financial statements have been prepared on the going concern basis on the assumption that the Group continues in operational existence for the foreseeable future. The Directors have prepared detailed cash flow projections for at least twelve months from the date of approval of these consolidated financial statements, which are based on their current expectations of trading prospects, and accordingly the Directors have concluded that it is appropriate to continue to adopt the going concern basis in preparing these consolidated financial statements. Further information is provided in Note 2.1 of these consolidated financial statements. The Directors are confident that the Group’s forecasts are achievable, and are committed to taking any actions available to them to ensure that any shortfall in forecast revenues is mitigated by cost savings. 12 BRAVE BISON GROUP PLC REPORT OF THE DIRECTORS For the year ended 31 December 2021 Accordingly the going concern basis of accounting has been adopted in preparing these consolidated financial statements. Strategic outlook The Board believes that Brave Bison is in an exciting space, and is unique in blending a digital media network with a suite of digital-only advertising services. We have an ambitious management team with a clear plan to scale our existing business, develop new revenue streams and make accretive acquisitions. Directors The directors, who served during the year, were as follows: Oliver Green Philippa Norridge Matthew Law Theodore Green (appointed 6 May 2021) At the year end, three of the Company’s Directors are male and one is female. Statement as to disclosure of information to auditors So far as the Directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the Group's auditor is unaware, and each Director has taken all the steps that he or she ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Group's auditor is aware of that information. Auditors Moore Kingston Smith LLP having expressed their willingness to continue in office, will be proposed for reappointment at the forthcoming Annual General Meeting in accordance with section 489 of the Companies Act 2006. On behalf of the Board Oliver Green Executive Chairman, Brave Bison Group plc 27 April 2022 13 BRAVE BISON GROUP PLC STATEMENT OF DIRECTORS’ RESPONSIBILITIES For the year ended 31 December 2021 Statement of Directors’ Responsibilities The Directors are responsible for preparing the Strategic Report, the Report of the Directors 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 prepared the Group financial statements in accordance with UK adopted International Financial Reporting Standards (‘IFRS’) and elected to prepare the parent company financial statements in accordance with the FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland. 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 Company and Group and of the profit or loss of the Company and Group for that period. In preparing these financial statements, the Directors are required to: • • select suitable accounting policies and then apply them consistently; state whether applicable IFRS/UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; • make judgements and accounting estimates that are reasonable and prudent; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and, hence, for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors confirm that: • • so far as each director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of that information. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Oliver Green Executive Chairman, Brave Bison Group plc 27 April 2022 14 BRAVE BISON GROUP PLC STATEMENT ON CORPORATE GOVERNANCE For the year ended 31 December 2021 Statement on Corporate Governance Brave Bison Group plc formally adopted the Quoted Companies Alliance Corporate Governance Code (the Code) in July 2018. The Company is committed to maintaining and promoting robust corporate governance structures and processes to support its long-term success. The statement set out below describes the corporate governance principles applied by the Group. The Board constitution and procedures As at 31 December 2021, the Board comprised the following: (i) the Executive Chairman, Oliver Green who was appointed as a Non-Executive Director on 20 December 2019, interim Chairman from 31 December 2019, and Executive Chairman from 11 June 2020; (ii) the Chief Financial Officer, Philippa Norridge, who was appointed as interim Chief Financial Officer on the 5 February 2020 and who became permanent on 1 May 2020; (iii) the Chief Growth Officer, Theodore Green, who was appointed as Chief Growth Officer on 28 June 2020, and appointed as a director of the Company on 6 May 2021; (iv) a Non-Executive Director Matthew Law, who was appointed on 17 February 2020. Matthew Law is considered to be an independent Non-Executive Director. As previously stated Brave Bison intends to appoint a further independent Non-Executive Director in due course. The Group’s Chief Financial Officer Philippa Norridge has served as the Group’s Company Secretary since 4 September 2020. Oliver Green is serving as Executive Chairman. Executive Chairman The Executive Chairman provides leadership to the Board. Working together with the Company Secretary, the Executive Chairman is responsible for setting the agenda for Board meetings, ensuring that the Board receives the information that it needs to properly participate in Board meetings in a timely and user-friendly fashion and that the Board has sufficient time to discuss issues on the agenda. The Executive Chairman is also responsible for leadership of the Company’s senior management team and its employees on a day to day basis. In conjunction with senior management, the Executive Chairman is responsible for the execution of strategy approved by the Board and the implementation of Board decisions. How the Board functions The Board is collectively responsible for the long-term success of the Group. The Board provides entrepreneurial leadership for Brave Bison within a framework of prudent and effective controls which enables risk to be assessed and managed. The Board considers the management team’s proposals for strategy and, following a consideration of those proposals, determines Brave Bison’s strategy and ensures that the necessary resources are in place for management to execute that strategy. Further details on Brave Bison’s business model and strategy can be found within the Strategic Report on pages 2 – 8 of this document. An important part of the Board’s role is the review of management performance. The Company’s process for evaluating the effectiveness of the Board and Directors’ performance comprises annual internal reviews of executive and non-executive directors’ performance. The results of such reviews are used to determine whether any alterations are needed or whether any additional training would be beneficial. 15 BRAVE BISON GROUP PLC STATEMENT ON CORPORATE GOVERNANCE For the year ended 31 December 2021 During 2021 the Board met on 6 occasions, the Remuneration Committee met on 2 occasions and the Audit Committee met on 1 occasion. Non-Executive Directors are required to devote at least 2 days (on average) per month to their directors’ duties whereas Executive Directors are full time employees of the Company. The table below shows the number of meetings attended by each director during 2021. Director Oliver Green Philippa Norridge Matthew Law Theodore Green* * Appointed 6 May 2021 Board Meetings Remuneration Committee Meetings 1 6 Audit Committee Meetings 1 6 6 5 1 2 1 1 1 0 Board meetings are usually held at Brave Bison’s registered office. Directors are provided with comprehensive background information for each meeting and all directors have been able to participate fully and on an informed basis in the Board decisions. Any specific actions arising during meetings are agreed by the Board and followed up and reviewed at subsequent Board meetings to ensure their completion. During the year, the Board has not sought external advice on any significant matters, however the Board has advisors at its disposal should such matters arise, including, without limit, the Company’s nominated adviser and broker, lawyers and other professional advisors. Responsibility and delegation The Board has specifically reserved a number of matters for its consideration and approval. These include: ● Overall leadership of Brave Bison and setting Brave Bison’s values and standards ● Approval of Brave Bison’s long-term objectives and commercial strategy ● Approval of the annual operating and capital expenditure budgets and any changes to them ● Major investments or capital projects ● The extension of Brave Bison’s activities into any new business or geographic areas ● Any decision to cease any material operations ● Changes in Brave Bison’s capital structure or management and control structure ● Approval of the annual report and accounts and preliminary and half-yearly financial statements ● Approval of treasury policies, including foreign currency exposures and use of financial derivatives ● Ensuring the maintenance of a sound system of internal control and risk management (further details of which are included in the Risks and Uncertainties section of the Strategic Report on pages 8-10 of this document) 16 BRAVE BISON GROUP PLC STATEMENT ON CORPORATE GOVERNANCE For the year ended 31 December 2021 ● The entering into of agreements that are not in the ordinary course of business or material strategically or by reason of their size ● Changes to the size, composition or structure of the Board and its committees The Board has delegated certain of its responsibilities to committees. During the year under review the committees were constituted as follows: ● The Audit Committee, comprising Matthew Law (Committee Chair); and ● The Remuneration Committee, comprising Matthew Law (Committee Chair). The Terms of Reference for each of the committees are available to view on Brave Bison’s website: www.bravebison.com/investors/corporate-governance. Owing to the size and business of the Company, the Board does not consider it appropriate or beneficial to shareholders to include an Audit Committee report in this document. The report from the Remuneration Committee can be found on pages 20 – 23 of this document. Board tenure Oliver Green was re-appointed as a director of Brave Bison Group plc at the 2020 AGM which was held on 17 June 2020. Philippa Norridge was re-appointed as a director of Brave Bison Group plc at the 2020 AGM which was held on 17 June 2020. Matthew Law was re-appointed as a director of Brave Bison Group plc at the 2020 AGM which was held on 17 June 2020. Theodore Green was re-appointed as a director of Brave Bison Group plc at the 2021 AGM which was held on 27 May 2021. Insurance and indemnity In accordance with Article 54 of the Brave Bison’s articles of association, Brave Bison’s directors and officers are entitled to an indemnity from Brave Bison against liabilities incurred by them in the actual or purported exercise of their duties, or exercise of their powers including liability incurred in defending any proceedings (whether civil or criminal) which relate to anything done or omitted to be done and in which judgment is given in his favour, or in which he is acquitted, or which are otherwise disposed of. In addition, Brave Bison has purchased and maintains directors’ and officers’ liability insurance cover against certain legal liabilities and costs for claims incurred in respect of any act or omission in the execution of their duties and which has been in place throughout the year. Board balance The Board comprises individuals with wide business experience gained in various industry sectors related to Brave Bison’s business and it is the intention of the Board to ensure that the balance of the directors reflects the changing needs of that business. The Board considers that it is of a size and has the balance of skills, knowledge, experience and independence that is appropriate for Brave Bison’s business. While not having a specific policy regarding the constitution and balance of the Board, potential new directors are considered on their own merits with regards to their skills, knowledge, experience and credentials. Female candidates or candidates from any particular ethnic or national background would each be considered equally. 17 BRAVE BISON GROUP PLC STATEMENT ON CORPORATE GOVERNANCE For the year ended 31 December 2021 The Non-Executive Director contributes his considerable experience and wide-ranging skills to the Board and provide a valuable independent perspective; where necessary constructively challenging proposals, policy and practices of executive management. In addition, the Non-Executive Director has assisted in formulating Brave Bison’s strategy from an independent perspective. Oliver Green (Executive Chairman) has worked in digital marketing and technology for the last nine years across a range of sectors including FMCG, Technology, B2B and Automotive. Oliver most recently worked as Chief Executive Officer at Tangent Marketing Services Limited, a Top 100 digital marketing agency. Clients have included Amazon, Sky, PepsiCo, SAP, IWG, Carlsberg and Group PSA. Oliver has advised on strategy across projects such as digital transformation, conversion rate optimisation and social marketing. Oliver was listed on Campaign US’ annual #MediaWeek 30 under 30 for 2020. Philippa Norridge (CFO and Executive Director) has a wealth of relevant experience, having spent the last 17 years working in the media and marketing services sector. After graduating from Oxford University, Philippa went on to qualify as a chartered accountant with Kingston Smith (now Moore Kingston Smith), leading audits and projects in their specialist media and marketing division. Philippa has since held senior finance roles at a number of marketing services firms, including Finance Director at leading independent agency Albion Brand Communications, global agency group MullenLowe Profero, and Tangent Marketing Services Limited, a Top 100 digital marketing agency. Matthew Law (Non-Executive Director) has 21 years' experience working in brand marketing and advertising, with a particular focus on the use of emerging digital technology. Matt is currently a partner and Chief Operating Officer of Outlier Ventures which focuses on assisting business founders in the digital services sector, providing specialist advice on business strategy and continuing and maintaining growth. Prior to this, Matt worked as Global Chief Operating Officer at independent agency network AnalogFolk, which assists companies in using digital technology to advance their brands. Whilst at AnalogFolk, Matt developed the content marketing business, leading to the agency winning awards with the Webby's, Drum Content Awards, Cannes among others. He was responsible for business planning, growth, talent and expansion strategy for the network, including the launch of a new subsidiary and office in Shanghai. Matt has worked with clients including the Guardian, BBC, Vodafone, HSBC, Nike, Unilever, Pernod Ricard and Sainsbury's. Theodore Green (Chief Growth Officer and Executive Director) has broad experience across digital media and marketing, as well as acquisitions and capital markets. Theodore worked alongside Oliver at Tangent Marketing Services Limited, a Top 100 digital marketing agency, and prior to that Theodore held a number of roles at Brockton Capital, a UK-focused private equity firm with gross assets of £1.5bn. Relationship with shareholders Primary responsibility for effective communication with shareholders lies with the Executive Chairman, but all Brave Bison’s directors are available to meet with shareholders throughout the year. The Executive Chairman, Chief Growth Officer and Chief Financial Officer have been active in meeting with and preparing presentations for analysts and institutional investors. Brave Bison endeavours to answer all queries raised by shareholders promptly, where appropriate to do so. Investor relations (IR) and communications Brave Bison’s Executive Chairman has attended a number of industry conferences and regularly meets or is in contact with existing and potential institutional investors. Whenever required, the Executive Directors and the Chairman communicate with Brave Bison’s brokers to confirm shareholder sentiment and to consult on particular governance issues. 18 BRAVE BISON GROUP PLC STATEMENT ON CORPORATE GOVERNANCE For the year ended 31 December 2021 In the period since Brave Bison’s admission to AIM, regulatory announcements have been released informing the market of certain Company matters. Copies of these announcements, together with other IR information and documents, are available on Brave Bison’s website: www.bravebison.com. Environmental and social governance The Company seeks to achieve the highest ethical standards and behaviours in conducting its business, with integrity, openness, diversity and inclusiveness being high priority from the Board to senior management and throughout the workforce. The Company has adopted a formal equal opportunities policy which is contained in our employee handbook. The aim of the policy is to ensure no job applicant, employee or worker is discriminated against either directly or indirectly on the grounds of race, sex, disability, sexual orientation, gender reassignment; marriage or civil partnership; pregnancy or maternity; religion or belief or age. In conducting our business and developing strategy we have placed greater emphasis on social and environmental considerations, embarking on a number initiatives including: running diversity and inclusion and unconscious bias training for all staff; • • monthly ‘Lunch & Learn’ sessions where we have guest speakers from various sectors and backgrounds; • • partnering with Tree Nation to plant 20 trees for every new campaign we launch. encouraging employees to take two paid days to volunteer in the local community; and Greenlight has been a carbon negative business since 2018, and this has been extended across the entire Brave Bison Group in 2021. Summary In presenting this report the Board is confident that it has presented a balanced and understandable assessment of Brave Bison’s position and prospects. Oliver Green Executive Chairman, Brave Bison Group plc 27 April 2022 19 BRAVE BISON GROUP PLC DIRECTORS’ REMUNERATION REPORT For the year ended 31 December 2021 Directors’ Remuneration Report Brave Bison has an established remuneration committee, chaired by the Non-Executive Director. The Committee is responsible for the consideration and approval of the terms of service, remuneration, bonuses, share-based incentives, and other benefits of the Executive Directors. All decisions made are after giving due consideration to the size and nature of the business and the importance of retaining and motivating management. The Committee held two meetings during the year, both chaired by Matthew Law. The members of the Committee have no personal interest in the outcome of their decisions and give due regard to the interests of shareholders and to the continuing financial and commercial health of the business. Executive Director Service Contracts The Executive Directors have all entered into service contracts with the Company. The terms of these contracts provide for customary restrictive covenants as appropriate. Details of the service contracts are shown below: Oliver Green Theodore Green Philippa Norridge Executive Director Emoluments Date of Contract February 2021 February 2021 May 2020 Notice Period 12 months 12 months 6 months The remuneration of the Executive Directors for 2021 is detailed in the table below: Oliver Green Theodore Green Philippa Norridge Salary, pension and healthcare £000’s 60 60 133 Compensation for loss of office £000’s - - - Bonus £000’s - - 20 Aggregate Emoluments £000’s 60 60 153 Oliver Green and Theodore Green each received no salary from Brave Bison in 2020. From February 2021, Oliver Green and Theodore Green each received a basic salary of £50,000 per annum, rising to £100,000 per annum from November 2021. Philippa Norridge’s salary increased from £120,000 per annum to £150,000 per annum from November 2021. Oliver Green and Theodore Green have opted to cap their basic salaries at £125,000 per annum and remove themselves from any company bonus scheme, in favour of the Long-Term Incentive Plan detailed herein. Non-Executive Director Appointment Letter Non-Executive Directors are paid fees and the Company shall reimburse their reasonable, authorised and properly documented expenses that are incurred in the performance of their duties. The Non-Executive Director may be removed as a Director at any time in accordance with the Articles or the Companies Act (for example, by a valid resolution of the Shareholders). The Company may terminate the appointment immediately in certain circumstances, such as if a material breach of obligations is committed by the Non-Executive Director. 20 BRAVE BISON GROUP PLC DIRECTORS’ REMUNERATION REPORT For the year ended 31 December 2021 Non-Executive Directors The Non-Executive Directors serve under Contracts, and have received fees in 2021, as detailed in the table below: Matthew Law Share Options Fees £000’s 30 Under the group’s share option scheme that was introduced in September 2013, employees and Directors may be awarded share options. In November 2017 the group introduced a new Restricted Share Unit (“RSU”) plan under the existing EMI share option scheme. The vesting of awards is between two and four years from the date of grant, depending on the agreement. The interests of the Executive Directors in Ordinary Shares subject to awards under this plan as at 31 December 2021 were as follows: Granted during the year Exercised during the year Lapsed in the year Outstanding as at 31 December 2021 Exercise prices Vesting Dates Philippa Norridge 12,256,424 - - 12,256,424 0.1p May 2020–May 2023 None of the Non-Executive Directors had any interests in Ordinary Shares subject to awards under this plan as at 31 December 2021. Philippa Norridge’s options granted during the year were committed to in 2020 and the charge was recognised accordingly. Long Term Incentive Plan During the year Brave Bison announced the adoption of a Long Term Incentive Plan (“LTIP”) for Oliver Green and Theodore Green. In structuring the LTIP, the Brave Bison Remuneration Committee was advised by remuneration consultants h2glenfem and consulted with the Company’s major shareholders representing 69% of the Company’s issued share capital, inclusive of the Directors and their connected persons. Pursuant to the LTIP, Oliver Green and Theodore Green, Executive Chairman and Chief Growth Officer respectively (the “LTIP Executives”) have agreed to subscribe for non-voting subordinate shares in a wholly owned subsidiary of the Company (“B Shares”). Subject to the achievement of performance conditions under the LTIP set out below, the B Shares can be redeemed by the LTIP Executives, who are participating equally in the LTIP on a 50:50 basis, in exchange for new ordinary shares in the Company (“Ordinary Shares”). Redemptions of B Shares under the LTIP may occur at any time from the third anniversary of the adoption of the LTIP (the “First Redemption Date”) until the sixth anniversary of the adoption of the LTIP (the “Final Redemption Date”). 21 BRAVE BISON GROUP PLC DIRECTORS’ REMUNERATION REPORT For the year ended 31 December 2021 In the event that the mid-market closing price per Ordinary Share exceeds 3.0 pence on the date(s) of redemption(s), the B Shares will be capable of redemption by the LTIP Executives at any time with an aggregate value equal to 15% of value created for the Company’s shareholders from the adoption of the LTIP to redemption(s) of the B Shares, calculated as: a) The market value of all Ordinary Shares in issue on redemption of B Shares, less b) The market value of the 1,080,816,000 Ordinary Shares currently in issue on redemption based on an opening share price of 1.425 pence per Ordinary Share, indexed at a compounding annualised growth rate of 8%, less c) The issue value of any additional new Ordinary Shares issued following adoption of the LTIP and prior to redemption(s) of the B Shares, indexed at a compounding annualised growth rate of 8%, plus d) The value of any dividends, share buy backs or any other distributions to shareholders following the implementation of the LTIP and prior to the redemption(s) of the B Shares the “Redemption Value”. In calculating the number of new Ordinary Shares to be issued to the LTIP Executives on redemption(s), the Redemption Value will be divided by the prevailing mid-market closing price per Ordinary Share over the previous ten business days prior to Redemption, subject to the total number of Ordinary Shares capable of issue under the LTIP in no circumstances exceeding 12.5% of the Company’s issued ordinary share capital. Furthermore, redemption(s) of the B Shares is restricted such that the aggregate shareholdings of the LTIP Executives and their connected persons does not exceed 29.9% of the Company’s share capital. The B Shares will also become eligible for redemption in the event of the sale of the Company, the sale of more than 51% of the Company to an unconnected party or the winding up of the Company. Any new Ordinary Shares issued pursuant to a redemption of B Shares under the LTIP are required to be held for a minimum period of 12 months, with a carve out for settling tax liabilities due on redemption, and the awards under the LTIP are subject to customary malus provisions. Directors’ Interests The interests of the Directors in the issued Ordinary Shares as at 31 December 2021 are as follows: Director Oliver and Theodore Green* Philippa Norridge** Matthew Law Number of Ordinary Shares 241,468,473 740,000 nil * Of these shares 240,416,059 are owned by Tangent Marketing Services Limited. Oliver Green owns a further 1,052,414 shares personally. 22 BRAVE BISON GROUP PLC DIRECTORS’ REMUNERATION REPORT For the year ended 31 December 2021 ** Philippa Norridge has been granted options over 12,256,424 Ordinary Shares with an exercise price of 0.1p, vesting annually between May 2020 and May 2023. These options are held in addition to the 740,000 Ordinary Shares already owned. Matthew Law Chair of the Remuneration Committee, Brave Bison Group plc 27 April 2022 23 BRAVE BISON GROUP PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BRAVE BISON GROUP PLC For the year ended 31 December 2021 Independent auditor’s report to the members of Brave Bison Group plc We have audited the financial statements of Brave Bison Group plc for the year ended 31 December 2021 which comprises the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Balance Sheet, the Company Statement of Changes in Equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and UK adopted International Financial Reporting Standards (IFRSs). The financial reporting framework that has been applied in preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice). 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 profit 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 United Kingdom Generally Accepted Accounting Practice; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. • • • Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs(UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the audit of the financial statements section of our report. We are independent of the group 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. An overview of the scope of our audit Our audit approach was a risk-based approach founded on a thorough understanding of the group’s business, its environment and risk profile. We conducted substantive audit procedures and evaluated the group’s internal control environment. The components of the group were evaluated by the group audit team based on a measure of materiality, considering each component as a percentage of the group’s total assets, current assets, revenue and gross profit, which allowed the group audit team to assess the significance of each component and determine the planned audit response. For those components that were evaluated as significant components, either a full scope or specified audit approach was determined based on their relative materiality to the group and our assessment of the audit risk. For significant components requiring a full scope approach, we evaluated controls by performing walkthroughs over the financial reporting systems identified as part of our risk assessment, reviewed the accounts production process and addressed critical accounting matters. We then undertook substantive testing on significant transactions and material account balances. In order to address the audit risks identified during our planning procedures, we performed a full scope audit of the financial statements of the parent company and of the financial information of Brave Bison Limited and Greenlight Digital Limited. We performed specified audit procedures over the other components in the UK, including Greenlight Commerce Limited, and Singapore and dormant entities. 24 BRAVE BISON GROUP PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BRAVE BISON GROUP PLC For the year ended 31 December 2021 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) 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 - Group Incorrect revenue recognition Revenue is a significant item in the consolidated income statement and impacts a number of management’s key judgements, performance indicators and key strategic indicators. There is a risk of incorrect revenue recognition due to fraud or error, arising from: - recognition of revenue in the wrong period; - revenue not being recognised in accordance with IFRS 15 ‘Revenue from Contracts with Customers’; and - manipulation of revenues around the year-end through management override. We therefore identified incorrect revenue recognition as a significant risk. How the matter was addressed in the audit - Group Our audit work included, but was not restricted to: - Evaluating the group’s revenue recognition accounting policy to check compliance with IFRS 15, which included assessing the treatment of each revenue stream under the principal versus agent criteria to test appropriate gross versus net presentation. - Performing substantive testing on a sample of individual revenue transactions throughout the year across the significant revenue streams to evaluate whether revenue is recognised in accordance with the contract terms, having considered the principles of IFRS 15 and the commercial substance of the contracts. - Testing procedures included agreeing revenue transactions selected for testing through to supporting evidence including sales invoice, contracts and cash receipts. - Testing a sample of self-billing sales transactions to ensure that the revenue recognition was correct. - Reviewing material credit notes, invoices and receipts post year end. Performing sales cut off tests to ensure revenue had been recognised in the correct period. In addition, we reviewed the adequacy of the disclosures under IFRS15. Key observations Based on our audit testing we did not identify any material misstatements of revenue. 25 BRAVE BISON GROUP PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BRAVE BISON GROUP PLC For the year ended 31 December 2021 Key Audit Matter - Group Valuation of goodwill The directors are required to make an assessment to determine whether there are impairment indicators relating to the group's goodwill and other intangible assets. The total net book value of the intangible assets at the year end was £6.265m including goodwill of £6.155m as detailed in note 13. The process for assessing whether impairment exists under International Accounting Standard (IAS) 36 ‘Impairment of Assets’ is complex. The process of determining the value in use, through forecasting cash flows related to each asset and the determination of the appropriate discount rate and other assumptions to be applied, can be highly judgemental and can significantly impact the results of the impairment review. Based on the judgemental nature of an impairment review and significant impairment adjustments in prior periods, we identified impairment of intangible assets as a significant risk. How the matter was addressed in the audit - Group Our audit work included, but was not restricted to: - Critically assessing management’s assertion that at the interim valuation management had not been able to reliably estimate the fair value of acquired intangible assets in respect of the acquisition of Greenlight Digital Limited and Greenlight Commerce Limited in the year; - Obtaining management’s analysis of their assessment of whether there were any indicators of impairment. - Critically assessing the assumptions underpinning the valuation of online channel content and customer relationship intangible assets. - Evaluating the accounting policy and detailed disclosures to check whether information provided in the financial statements is compliant with the requirements of IAS 36 and consistent with the results of the impairment review. - We considered the appropriateness of the amortisation policy for all non-goodwill intangible assets. Key observations Based on our audit work, we concluded that the group’s intangible assets including goodwill arising on the acquisition of Greenlight Digital limited and Greenlight Commerce Limited are not materially misstated as the year-end and that management’s impairment assessment and reassessment of useful economic life is appropriate. 26 BRAVE BISON GROUP PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BRAVE BISON GROUP PLC For the year ended 31 December 2021 Key Audit Matter - Group Acquisition accounting The directors are required to make an assessment of the applicable accounting treatment of the acquisition of Greenlight Digital Limited and Greenlight Commerce Limited as detailed in note 29. Due to the complex nature of this process, we identified the accounting for the acquisition of Greenlight Digital Limited and Greenlight Commerce Limited as a significant risk. How the matter was addressed in the audit - Company Our audit work included, but was not restricted to: - Obtaining and critically assessing management’s accounting entries in respect of the acquisition in the consolidated financial statements; - Obtaining and reviewing the Sales and Purchase Agreement and agreeing the relevant accounting entries; - Reperforming management’s goodwill calculation and critically assessing the underlying assumptions; - Critically assessing management’s assertion that at the interim valuation management had not been able to reliably estimate the fair value of acquired intangible assets and that at the interim valuation no fair value adjustments were required in respect of the acquisition. This included critically assessing management’s assertion that no separate intangible assets were required to be recognised in respect of the acquisition; - Reviewing management’s assessment of the pro- rated profit and loss figures since acquisition included within the consolidated financial statements; - Performing specific audit procedures including cut off testing to ensure the material accuracy of the figures of the acquired entities included within the consolidated financial statements; and - Evaluating the accounting policy and detailed disclosures to check whether information provided in the financial statements is compliant with the requirements of International Financial Reporting Standard 3 Business Combinations. Key observations Based on our audit work, we concluded that acquisition accounting has been correctly applied in accordance with the requirements of IFRS 3 and that management’s year-end impairment assessment is appropriate. 27 BRAVE BISON GROUP PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BRAVE BISON GROUP PLC For the year ended 31 December 2021 Key Audit Matter - Company How the matter was addressed in the audit - Company Impairment of investments The directors are required to make an assessment to determine whether the carrying value of the parent company’s investments in subsidiaries of £17.635m, as detailed in note 32 is recoverable. The process for assessing whether impairment exists under Financial Reporting Standard (FRS) 102 is complex. The process of determining the value in use through forecasting cash flows and the determination of the appropriate discount rate and other assumptions to be applied can be highly judgemental and can significantly impact the results of the impairment review. Due to the complex nature of this process, we identified impairment of investments as a significant risk. Our audit work included, but was not restricted to: - Obtaining and recalculating management's cash flow forecasts utilised in the impairment assessment; - Reviewing the board minutes, and holding discussions with management to understand the strategy for the investments and expectations going forward; - Challenging management’s assumptions utilised in the impairment models, including cash flow forecasts, growth rates and discount rates; - Performing a sensitivity analysis to check whether management’s forecasts would leave positive headroom if the assumptions of values increased or decreased; - Comparing the calculated value in use for the investment to the carrying value of its net assets to check that is not impaired; and - Evaluating the accounting policy and detailed disclosures to check whether information provided in the financial statements is compliant with the requirements of FRS 102 and consistent with the results of the impairment review. Key observations Based on our audit work, we concluded that the carrying value of the company’s investments is not materially misstated at the year-end and that management’s impairment assessment is appropriate. 28 BRAVE BISON GROUP PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BRAVE BISON GROUP PLC For the year ended 31 December 2021 Key Audit Matter - Group How the matter was addressed in the audit - Group Going concern The global impact of the ongoing COVID-19 pandemic has led to unprecedented levels of uncertainty of outcomes, with the full range of possible effects unknown. Given the historic trading performance and the continued impact of COVID 19, going concern is considered to be a key risk area. Our audit work included, but was not restricted to: - Critically assessing the cashflow projections and profit and loss forecasts prepared by the directors and the assumptions underlying them; - Considering sensitivities over the level of available financial resources indicated by the Group’s financial forecasts taking account of reasonably possible adverse effects that could arise from these risks individually and collectively. This included critically assessing and challenging the sensitivities applied and the mitigating actions applied by management; - Reviewing post year end management accounts in comparison to the cashflow projections and profit and loss forecasts prepared by the directors; and - Reviewing the going concern disclosures included within the financial statements and considering whether they are appropriate. Key observations Based on our audit work, we concluded that there was no material uncertainty in relation to going concern and the disclosures made in the financial statements provide sufficient information in this area. 29 BRAVE BISON GROUP PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BRAVE BISON GROUP PLC For the year ended 31 December 2021 Our application of materiality The scope and focus of our audit was influenced by our assessment and application of materiality. We define materiality as the magnitude of misstatement that could reasonably be expected to influence the readers and the economic decisions of the users of the financial statements. We use materiality to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the financial statements as a whole. Due to the nature of the Group we considered revenue to be the main focus for the readers of the financial statements, accordingly this consideration influenced our judgement of materiality. Based on our professional judgement, we determined materiality for the Group to be £153,885, based on a percentage of revenue. On the basis of our risk assessment, together with our assessment of the overall control environment, our judgement was that performance materiality (i.e. our tolerance for misstatement in an individual account or balance) for the Group was 50% of materiality, namely £76,943. We agreed to report to the Audit Committee all audit differences in excess of £7,694, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also reported to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements. Conclusions relating to going concern In auditing the financial statements, we have concluded that the 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 entity’s ability to continue to adopt the going concern basis of accounting included a critical assessment of the detailed cash flow projections prepared by the directors, which are based on their current expectations of trading prospects, and obtaining an understanding of all relevant uncertainties, including those arising as a result of the ongoing COVID-19 pandemic and the measures taken by the UK and overseas governments to contain it. We have factored the ongoing impact of COVID-19 into our analysis of the risks affecting the ability of the group to continue to trade and meet its liabilities as they fall due for at least twelve months from the date of approval of the financial statements. The group achieved a positive cashflow in the year of £3.2m including the costs of the acquisition in the year and the cash raised from the related share issue. The cash flow projections to 30 June 2023 prepared by the directors indicate that the group will continue to achieve positive cash inflows throughout 2022 and into 2023. Furthermore, the directors are confident that the group’s cash flow projections and profit and loss forecasts are achievable, and the directors are committed to taking any actions available to them to ensure that any shortfall in forecast revenues is mitigated by cost savings. As stated above we have critically assessed the projections and the assumptions underlying them in conducting our work in this area. 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 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. 30 BRAVE BISON GROUP PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BRAVE BISON GROUP PLC For the year ended 31 December 2021 Other information The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: • the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the parent company financial statements; and the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the group and 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 where the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or • the financial statements are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. Responsibilities of directors As explained more fully in the directors’ responsibilities statement set out on page 14, 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. 31 BRAVE BISON GROUP PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BRAVE BISON GROUP PLC For the year ended 31 December 2021 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. further description A responsibilities https://wwww.frc.org.uk/auditors/auditor-assurance/auditor-s-responsibilities-for-the-audit-of-the- fi/description-of-the-auditor's-responsibilities-for available our on of is the FRC’s website at This description forms part of our auditor’s report. Explanation as to what extent the audit was considered 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. The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the group and the parent company. Our approach was as follows: • We obtained an understanding of the legal and regulatory requirements applicable to the group and the parent company and considered that the most significant are the Companies Act 2006, UK adopted International Financial Reporting Standards (IFRSs), UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation. • We obtained an understanding of how the group and the parent company complies with these requirements by discussions with management and those charged with governance. • We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance. • We inquired of management and those charged with governance as to any known instances of non- compliance or suspected non-compliance with laws and regulations. • Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required. There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher 32 BRAVE BISON GROUP PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BRAVE BISON GROUP PLC For the year ended 31 December 2021 than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion’ Use of our report This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken for no purpose other than to draw to the attention of the company’s members those matters which we are required to include in an auditor’s report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the company and company’s members as a body, for our work, for this report, or for the opinions we have formed. Matthew Banton (Senior Statutory Auditor) for and on behalf of Moore Kingston Smith LLP ………………….. Chartered Accountants Statutory Auditor Devonshire House 60 Goswell Road London EC1M 7AD 33 BRAVE BISON GROUP PLC CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2021 Revenue Cost of sales Gross profit Administration expenses Restructuring costs Impairment charge Operating profit/(loss) Finance income Finance costs Profit/(loss) before tax Analysed as Adjusted EBITDA Finance costs Finance income Impairment charge Depreciation Amortisation Adjusted Operating Profit/(loss) Restructuring costs Acquisition costs Equity settled share based payments Profit/(loss) before tax Income tax credit Profit/(loss) attributable to equity holders of the parent Statement of Comprehensive Income Profit/(loss) for the year Items that may be reclassified subsequently to profit or loss Exchange (loss)/gain on translation of foreign subsidiaries Total comprehensive profit/(loss) for the year attributable to owners of the parent 31 December 2021 31 December 2020 Note £000’s £000’s 6 8 15 7 9 9 7 9 9 15 14 13 8 29 24 10 21,660 (13,854) 7,806 (7,105) (176) - 525 - (67) 458 1,762 (67) - - (279) (34) 1,382 (176) (686) (62) 458 14,486 (10,510) 3,976 (5,211) (718) (248) (2,201) 4 (61) (2,258) 133 (61) 4 (248) (527) (848) (1,547) (718) - 7 (2,258) - 227 458 (2,031) 458 (7) 451 (2,031) 2 (2,029) Profit/(loss) per share (basic and diluted) Basic and diluted profit/(loss) per ordinary share (pence) 11 0.06p (0.33p) All transactions arise from continuing operations. 34 BRAVE BISON GROUP PLC CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2021 Non-current assets Intangible assets Property, plant and equipment Current assets Trade and other receivables Deferred tax asset Cash and cash equivalents Current liabilities Trade and other payables Bank Loans <1 year Lease Liabilities Non-current liabilities Lease Liabilities Bank loans >1 year Provisions for liabilities Net Assets Equity Share capital Share premium Capital redemption reserve Merger reserve Merger relief reserve Retained deficit Translation reserve Total equity At 31 At 31 December December 2020 2021 Note 13 14 17 16 18 20 19 19 20 21 22 6,265 672 6,937 6,636 135 5,906 12,677 144 151 295 3,036 - 2,754 5,790 (10,528) (108) (629) (11,265) (4,859) - (416) (5,275) (393) (308) (118) (819) 7,530 - (50) - (50) 760 1,081 84,551 6,660 (24,060) 62,624 (123,468) 142 7,530 613 78,762 6,660 (24,060) 62,624 (123,988) 149 760 The financial statements on pages 34 to 68 were authorised for issue by the Board of Directors on 27 April 2022 and were signed on its behalf by Philippa Norridge Chief Financial Officer 35 BRAVE BISON GROUP PLC CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2021 Operating activities Profit/(loss) before tax Adjustments: Depreciation, amortisation and impairment Finance income Finance costs Share based payment charges Decrease / (increase) in trade and other receivables Increase in trade and other payables Tax received Cash inflow / (outflow) from operating activities Investing activities Acquisition of subsidiaries Net cash acquired on acquisition Purchase of property plant and equipment Purchase of intangible assets Interest received Interest paid Cash outflow from investing activities Cash flows from financing activities Issue of share capital Proceeds from borrowings Repayment of borrowings Repayment of lease liability Cash inflow / (outflow) from financing activities 2021 £000’s 2020 £000’s 458 (2,258) 57 - 67 62 1,314 2,033 - 3,991 (7,735) 1,451 (34) - - (5) (6,323) 6,257 - (36) (730) 5,491 1,623 (4) 61 (7) (425) 101 85 (824) - - - (166) 4 - (162) 1 50 - (562) (511) Net increase/(decrease) in cash and cash equivalents 3,159 (1,497) Movement in net cash Cash and cash equivalents, beginning of year Increase/(decrease) in cash and cash equivalents Movement in foreign exchange Cash and cash equivalents, end of year 2,754 3,159 (7) 5,906 4,249 (1,497) 2 2,754 36 BRAVE BISON GROUP PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2021 Share Capital £000’s Share premium £000’s Capital redemption Reserve £000’s Merger Reserve £000’s Merger relief Reserve £000’s Translation Reserve £000’s Retained deficit £000’s Total Equity £000’s At 1 January 2020 612 78,762 6,660 (24,060) 62,624 147 (121,950) 2,795 Shares issued during the year Equity settled share based payments Transactions with owners Other comprehensive income Loss and total comprehensive income for the year At 31 December 2020 Shares issued during the year Equity settled share based payments Transactions with owners 1 - 1 - 613 468 - 468 Other Comprehensive income Profit and total comprehensive income for the year - - - - - - - - - - - - - - - - - - - - - (7) (7) 1 (7) (6) 2 (2,031) (2,029) 78,762 6,660 (24,060) 62,624 149 (123,988) 5,789 - 5,789 - - - - - - - - - - - - - - - - - 62 62 760 6,257 62 6,319 (7) 458 451 At 31 December 2021 1,081 84,551 6,660 (24,060) 62,624 142 (123,468) 7,530 37 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 1 Brave Bison Brave Bison Group plc (“the Company”) (formerly Rightster Group plc) was incorporated in England and Wales on 30 October 2013 under the Companies Act 2006 (registration number 08754680) and its registered address is The Varnish Works, 3 Bravingtons Walk, London, N1 9AJ. On 12 November 2013 the Company entered into share exchange agreements to acquire 100% of the issued share capital of Brave Bison Limited, a company incorporated in England and Wales on 16 May 2011 and registered at the same address. On 12 November 2013 the Company was admitted to the Alternative Investment Market (AIM) where its ordinary shares are traded. The consolidated financial statements of the Group for the year ended 31 December 2021 comprise the Company and its subsidiaries (together referred to as the “Group”). The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the CFO’s Report on pages 4-7, and Risks and Uncertainties on pages 8-10. In addition, Note 26 to the financial statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to credit risk and liquidity risk. 2 Basis of preparation 2.1. Going Concern The consolidated financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet its liabilities as they fall due for the foreseeable future, and at least for 12 months from the date of approval of the consolidated financial statements. The Group is dependent for its working capital requirements on cash generated from operations, and cash holdings. The cash holdings of the Group at 31 December 2021 were £5.9 million (2020: £2.8 million). The Group made a profit before tax of £0.5 million for the year ended 31 December 2021 (2020: loss of £2.3 million), and generated an increase in cash and cash equivalents in 2021 of £3.2 million (2020: decrease of £1.5 million). The Group has net assets of £7.5 million (2020: £0.8 million). During the year the Group raised £6.2 million of cash from an equity raise, which was used for the acquisition of Greenlight. The Directors have prepared detailed cash flow projections for the period to 31 December 2022 and for the following 6 month period to 30 June 2023 which are based on their current expectations of trading prospects. The Group achieved positive cashflow of £2.9 million in H2 2021, and the Board forecasts that the Group will continue to achieve positive cash inflows in 2022 due to both the cost savings that have already been made, and the expected revenue growth. The Directors are confident that the Group’s cash flow projections are achievable, and are committed to taking any actions available to them to ensure that any shortfall in forecast revenues receipts is mitigated by cost savings. The Directors also continue to monitor the impact of the ongoing COVID-19 pandemic, and maintain rolling forecasts which are regularly updated. The Directors remain confident that the Group has sufficient cash resources for a period of at least twelve months from the date of approval of these consolidated financial statements despite the impact of the pandemic and accordingly, the Directors have concluded that it is appropriate to continue to adopt the going concern basis in preparing these consolidated financial statements. 38 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Basis of consolidation The consolidated financial statements consolidate the financial statements of Brave Bison Group plc and all its subsidiary undertakings up to 31 December 2021, with comparative information presented for the year ended 31 December 2020. No profit and loss account is presented for Brave Bison Group plc as permitted by section 408 of the Companies Act 2006. Subsidiaries are all entities over which the Group has the power to control the financial and operating policies and is exposed to or has rights over variable returns from its involvements with the investee and has the power to affect returns. Brave Bison Group plc obtains and exercises control through more than half of the voting rights for all its subsidiaries. All subsidiaries have a reporting date of 31 December and are consolidated from the acquisition date, which is the date from which control passes to Brave Bison Group plc. Entities other than subsidiaries or joint ventures, in which the Group has a participating interest and over whose operating and financial policies the Group exercises significant influence, are treated as associates. The results of associate undertakings are consolidated under the equity method of accounting. The Group applies uniform accounting policies and all intra-group transactions, balances, income and expenses are eliminated on consolidation. Unrealised gains and losses on transactions between Group companies are eliminated. Where recognised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a Group perspective. Business combinations are accounted for using the acquisition method. The acquisition method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated statement of financial position at their fair values, which are also used as the basis for subsequent measurement in accordance with the Group accounting policies. Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair value of the Group’s share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. 2.2. Adoption of new and revised standards The Group has chosen to adopt the amendment to IFRS 16 “Leases” early, and has applied this during the year: Update to IFRS 16 “Leases” The changes in COVID-19-Related Rent Concessions (Amendment to IFRS 16) amend IFRS 16 to:- • provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a • • • lease modification; require lessees that apply the exemption to account for COVID-19-related rent concessions as if they were not lease modifications; require lessees that apply the exemption to disclose that fact; and require lessees to apply the exemption retrospectively in accordance with IAS 8, but not require them to restate prior period figures. Other Standards and amendments that are not yet effective and have not been adopted early by the Company include: • Amendments to IAS 1 - Classification of Liabilities as Current or Non-current; 39 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 • Amendments to IAS8 - Accounting Policies, Changes in Accounting Estimates and Errors; • Amendments to IAS 16 - Property, Plant and Equipment: Proceeds before intended use; • Amendments to IFRS 3 - Reference to the Conceptual Framework; • Amendments to IAS 37 - Onerous Contracts – Cost of Fulfilling a Contract; • Annual Improvements to IFRS Standards 2018–2020; • Amendments to IFRS 10 and IAS 28 - Sale or contribution of assets between an investor and its associate or joint venture; and • Amendments to IFRS 4, IFRS 7, IFRS 9, IFRS 16 & IAS 39 - Interest Rate Benchmark Reform – Phase 2. 3 Statement of compliance The financial statements have been prepared in accordance with the accounting policies and presentation required by UK adopted International Financial Reporting Standards (IFRS), and International Financial Reporting Interpretations Committee (“IFRIC”) Interpretations as endorsed for use in the UK. They are presented in pounds sterling. The financial statements have also been prepared in accordance with those parts of the Companies Act 2006 that are relevant to companies that prepare financial statements in accordance with UK adopted IFRS. 4 Summary of accounting policies The Group’s presentation and functional currency is £ (Sterling). The financial statements are presented in thousands of pounds (£000’s) unless otherwise stated. 4.1. Revenue Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts and sales related taxes. Revenue is recognised when the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity, the costs incurred or to be incurred can be measured reliably, and when the criteria for each of the Group’s different activities has been met. The determination of whether the Group is acting as a principal or an agent in a transaction involves judgment and is based on an assessment of who controls a specified good or service before it is transferred to a customer. Significant contracts are reviewed for the indicators of control. The Group is deemed to be acting as a principal in all significant contracts. Where the Group’s contractual performance obligations have been satisfied in advance of invoicing the client then unbilled income is recognised on the balance sheet. Where the Group’s contractual performance obligations have been satisfied less than amounts invoiced then a contract liability is recognised. The accounting policies specific to the Group’s key operating revenue categories are outlined below: Advertising revenue: • Ad-funded YouTube channel management of third party content owners’ videos. Revenue is recognised at the point in time when the performance obligation of delivering monetised views occurs; and • Monetisation of the Group’s owned and operated brands and videos via platforms such as Facebook and Snapchat. Revenue is recognised at the point in time when the performance obligation of delivering monetised views occurs. 40 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Fee Based Service revenue: • Branded Content. Managing the creation of commissioned content and being responsible for procuring the talent and the associated production costs. The Group recognises revenue in line with the contractual obligation to deliver a completed episode. Revenue is recognised at the point in time when each completed episode is delivered. Production costs are deferred on the balance sheet as contract assets until each completed episode is delivered; • Managing customer content on platforms such as Facebook and YouTube including rights management and audience development. Revenue from providing these services is recognised over the time that the performance obligation to provide services are satisfied; • License fee revenues for the Group’s own content and third parties’ content are recognised at the point in time when the performance obligation of delivering the content is satisfied; • Performance marketing services. Revenue from providing these services is recognised over the time that the performance obligation to provide services are satisfied; and • E-commerce web build. Revenue from providing these services is recognised over the time that the performance obligation to provide services are satisfied. 4.2. Interest and dividend income Interest income and expenses are reported on an accrual basis using the effective interest method. Dividend income, other than from investments in associates, is recognised at the time the right to receive payment is established. 4.3. Government grants Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received. A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability. Government grants are presented as a deduction from the related expense. 4.4. Foreign currency translation Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Non-monetary items that are measured at historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognised in the profit or loss in the period in which they arise. The assets and liabilities in the financial statements of foreign subsidiaries and related goodwill are translated at the rate of exchange ruling at the balance sheet date. Income and expenses are translated at the actual rate on the date of transaction. The exchange differences arising from the retranslation of the opening net investment in subsidiaries and on income and expenses during the year are recognised in other comprehensive income and 41 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 taken to the “translation reserve” in equity. On disposal of a foreign operation the cumulative translation differences (including, if applicable, gains and losses on related hedges) are transferred to the income statement as part of the gain or loss on disposal. 4.5. Segment reporting IFRS 8 Operating Segments requires operating segments to be identified on the same basis as is used internally for the review of performance and allocation of resources by the Group Chief Executive (chief operating decision maker – CODM). The Board has reviewed the Group and all revenues are functional activities of a digital media and marketing group, and these activities take place on an integrated basis. The senior executive team review the financial information on an integrated basis for the Group as a whole, with respective heads of business who are geographically located and in accordance with IFRS 8 Operating Segments, the Group will be providing a geographical split. The Group will also be providing a split between the Advertising and Fee based services. Segmental information is presented in accordance with IFRS 8 for all periods presented within Note 6. 4.6. Leasing For any new contracts entered into on or after 1 January 2019, the Group considers whether a contract is, or contains a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an assed (the underlying asset) for a period of time in exchange for consideration’. To apply this definition the Group assesses whether the contract meets three key evaluations which are whether: • The contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group; • The Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract; and • The Group has the right to direct the use of the identified asset throughout the period of use. The Group assess whether it has the right to direct ‘how and for what purpose’ the asset is used throughout the period of use. At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received). The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist. At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. 42 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use is already reduced to zero. The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in the profit or loss on a straight-line basis over the lease term. On the statement of financial position, right-of-use assets have been included in property, plant and equipment and lease liabilities have been included in trade and other payables. 4.7. Property, plant and equipment Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment. Depreciation is calculated to write down the cost less estimated residual value of all property, plant and equipment by equal annual instalments over their expected useful lives less estimated residual values, using the straight line method. The rates generally applicable are: • Fixtures & Fittings – 3 years or over remaining lease term • Computer Equipment – 3 years The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss. The assets’ residual value and useful lives are reviewed, and adjusted if required, at each balance sheet date. The carrying amount of an asset is written down immediately to its recoverable amount if the carrying amount is greater than its estimated recoverable amount. The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist. 4.8. Impairment of property, plant and equipment At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss. 43 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 4.9. Intangible assets An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to the extent that it is probable that the expected future economic benefits attributable to the asset will flow to the Group and that its cost can be measured reliably. The asset is deemed to be identifiable when it is separable or when it arises from contractual or other legal rights. Intangible assets acquired as part of a business combination, are shown at fair value at the date of the acquisition less accumulated amortisation. Amortisation is charged on a straight line basis to profit or loss. The rates applicable, which represent the Directors’ best estimate of the useful economic life, are: • Customer relationships - 5 years • Online channel content – 3 to 5 years • Brands – 3 years • Technology – 1 to 5 years For customer relationships the estimate of useful economic life was revised from 10 years to 5 years during the prior year as the Directors felt this was a more accurate reflection of the average length of a customer relationship in our industry. 4.10. Impairment of intangible assets At each balance sheet date, the Group reviews the carrying amounts of its intangible assets and goodwill to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss. 4.11. Development costs Expenditure on the research phase of an internal project is recognised as an expense in the period in which it is incurred. Development costs incurred on specific projects are capitalised when all the following conditions are satisfied: • Completion of the asset is technically feasible so that it will be available for use or sale; • • The Group intends to complete the asset and use or sell it; The Group has the ability to use or sell the asset and the asset will generate probable future economic benefits (over and above cost); There are adequate technical, financial and other resources to complete the development and to use or sell the asset; and The expenditure attributable to the asset during its development can be measured reliably. • • Development costs not meeting the criteria for capitalisation are expensed as incurred. The cost of an internally generated asset comprises all directly attributable costs necessary to create, produce and prepare the asset to be 44 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 capable of operating in the manner intended by management. Directly attributable costs include employee (other than Director) costs incurred along with third party costs. Judgement by the Directors is applied when deciding whether the recognition requirements for development costs have been met. Judgements are based on the information available at the time when costs are incurred. In addition, all internal activities related to the research and development of new projects is continuously monitored by the Directors. 4.12. Investments in associates and joint ventures Investments in associates and joint ventures are accounted for using the equity method. The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group. 4.13. Taxation Tax expenses recognised in profit or loss comprise the sum of the tax currently payable and deferred tax not recognised in other comprehensive income or directly in equity. Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be recognised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to recognise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset recognised based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. 45 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 4.14. Financial Instruments Recognition and derecognition Financial assets and financial liabilities are recognised with the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. Loan and other receivables The Group accounts for loan and other receivables by recording the loss allowance as lifetime expected credit losses. These are shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. The Group uses its historical experience, external indicators and forward-looking information to calculate expected credit losses. Trade and other payables Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. Contract assets and liabilities The Group does not adjust the promised amount of consideration for the effects of a significant financing component if the entity expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. 4.15. Equity, reserves and dividend payments Share capital Share capital represents the nominal value of shares that have been issued. Share premium Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium arising on those shares, net of any related income tax benefits. Retained deficits Retained deficits include all current and prior period retained profits or losses. It also includes credits arising from share based payment charges. Translation reserve Translation reserve represents the differences arising from translation of investments in overseas subsidiaries. Merger reserve The merger reserve is created when group reconstruction accounting is applied. The difference between the cost of investment and the nominal value of the share capital acquired is recognised in a merger reserve. Merger relief reserve Where the following conditions are met, any excess consideration received over the nominal value of the shares issued is recognised in the merger relief reserve: the consideration for shares in another company includes issued shares; and • • on completion of the transaction, the company issuing the shares will have secured at least a 90% equity holding in the other company. 46 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Capital redemption reserve Where the Company purchases its own equity share capital, on cancellation, the nominal value of the shares cancelled is deducted from share capital and the amount is transferred to the capital redemption reserve. Dividend distributions payable to equity shareholders are included in ‘other liabilities’ when the dividends have been approved in a general meeting prior to the reporting date. 4.16. Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, together with other short-term highly liquid investments that are readily convertible into known amounts of cash having maturities of 3 months or less from inception and which are subject to an insignificant risk of change in value, and bank overdrafts. 4.17. Employee benefits The Group operates two schemes on behalf of its employees, private healthcare and a defined contribution pension plan and amounts due are expensed as they fall due. 4.18. Share based payments Employees (including Directors) of the Group received remuneration in the form of share-based payment transactions, whereby employees render services in exchange for rights over shares (‘equity-settled transactions’). The Group has applied the requirements of IFRS 2 Share-based payments to all grants of equity instruments. The transactions have been treated as equity settled. The cost of equity settled transactions with employees is measured by reference to the fair value at the grant date of the equity instrument granted. The fair value is determined by using the Black-Scholes method. The cost of equity-settled transactions is recognised, together with a corresponding charge to equity, over the period between the date of grant and the end of a vesting period, where relevant employees become fully entitled to the award. The total value of the options has been pro-rated and allocated on a weighted average basis. 4.19. Restructuring Costs Restructuring costs relate to corporate re-organisation activities previously undertaken or announced, as detailed in note 8. 4.20. Provisions The Group has recognised a provision for the costs to restore leased property to its original condition, as required by the terms and conditions of the lease. This is recognised when the obligation is incurred, either at the commencement date or as a consequence of having used the underlying asset during a particular period of the lease, at the directors’ best estimate of the expenditure that would be required to restore the assets. Estimates are regularly reviewed and adjusted as appropriate for new circumstances. 5 Critical accounting judgements and key sources of estimation uncertainty The preparation of financial statements under UK adopted IFRS requires the Group to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and assumptions which have a risk of causing a material adjustment to the carrying amount of assets and liabilities are discussed below. 47 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 5.1. Critical accounting judgements Intangible assets and impairment The Group recognises the intangible assets acquired as part of business combinations at fair value at the date of acquisition. The determination of these fair values is determined by experts engaged by management and based upon management’s and the Directors’ judgement and includes assumptions on the timing and amount of future incremental cash flows generated by the assets and selection of an appropriate discount rate. Furthermore management must estimate the expected useful lives of intangible assets and charge amortisation on these assets accordingly. Included within intangible assets are capitalised customer relationships. These were acquired as part of the acquisitions of Viral Management Limited and Base79 Limited. These assets were fully amortised during the prior period, as detailed in note 13. During 2020 the Group capitalised the costs associated with the acquisition of certain assets of The Hook, which it has estimated have a useful economic life of 5 years. Trade debtors’ recovery Within trade debtors there is a balance of £0.7 million (2020: £0.7 million) which is over one year in age which the Group has judged it not necessary to provide for. This is because it believes it is recoverable, since there is a trade creditor balance of £0.8 million (2020: £0.8 million) with the same company, and the Group is anticipating reaching agreement that these balances may be set off against each other. Treatment of revenue as agent or principal The determination of whether the Group is acting as a principal or an agent in a transaction involves judgment and is based on an assessment of who controls a specified good or service before it is transferred to a customer. Significant contracts are reviewed for the indicators of control. These include if the Group is primarily responsible for fulfilling the promise to provide the good or service, if the Group has inventory risk before the good or services has been transferred to the customer and if the Group has discretion in establishing the price for the good or service. Revenue relating to Snapchat was assessed in the prior year and it was determined that the Group was acting as a principal, therefore the revenue was recognised on a gross basis. This increased the revenue by £1.0 million (2020: £1.3m). Deferred taxation Deferred tax assets are recognised in respect of tax loss carry forwards only to the extent that the realisation of the related tax benefit through future taxable profits is probable. Greenlight acquisition and purchase price allocation The purchase price allocation of the Greenlight acquisition was provisionally assessed, and the Group judged that at the interim valuation stage it was not able to reliably estimate the fair value of acquired intangibles and therefore the excess of consideration over fair value of other assets and liabilities has been allocated to goodwill. Whilst the Greenlight brand is not intended to be used following the planned re-brand in 2022, and the key customer relationships sat with the founders who did not remain with the business post-acquisition, a full valuation exercise will be completed within the one year IFRS3 measurement period from the date of acquisition which may recognise additional intangible assets separately from goodwill. 5.2. Estimates Share based payment charges The Group is required to measure the fair value of its share based payments. The fair value is determined using the Black-Scholes method which requires assumptions regarding exchange rate volatility, the risk free rate, share price volatility and the expected life of the share based payment. Exchange rate volatility is calculated using historic data over the past three years. The volatility of the Group’s share price has been calculated as the average of similar listed companies over the preceding periods. The risk-free rate range used is between 0% and 2.74% and management, including the Directors, have estimated the expected life of most share based payments to be 4 years. 48 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Bad debt provision Recoverability of some receivables may be doubtful although not definitely irrecoverable. Where management feel recoverability is in doubt an appropriate provision is made for the possibility that the amounts may not be recovered in full. Provisions are made using past experience however subjectivity is involved when assessing the level of provision required. 6 Segment Reporting Geographic reporting The Group has identified three geographic areas (United Kingdom & Europe, Asia Pacific and Rest of the world) and the information is presented based on the customers’ location. Revenue United Kingdom & Europe Asia Pacific Rest of the world Total revenue 2021 £000’s 17,548 894 3,218 21,660 2020 £000’s 10,022 881 3,583 14,486 The Group identifies two revenue streams, advertising and fee based services. The analysis of revenue by each stream is detailed below, a detailed overview can be found in the Strategic Report. Revenue Advertising Fee based services Total revenue Gross profit Advertising Fee based services Total gross profit 2021 £000’s 14,329 7,331 21,660 2021 £000’s 3,044 4,762 7,806 2020 £000’s 13,092 1,394 14,486 2020 £000’s 2,962 1,014 3,976 Timing of revenue recognition The following table includes revenue from contracts disaggregated by the timing of recognition. Products and services transferred at a point in time Products and services transferred over time Total revenue 2021 £000’s 14,432 7,228 21,660 2020 £000’s 13,437 1,049 14,486 49 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 7 Operating Profit and Profit/(loss) before taxation The operating profit and the profit/(loss) before taxation are stated after: Auditor’s remuneration: - Audit services - Audit related services - Tax compliance Operating lease rentals – land and buildings on short term leases Depreciation: property, plant and equipment Impairment of right-of-use asset Amortisation Foreign exchange loss 8 Restructuring costs Restructuring costs 2021 2020 £000’s £000’s 80 5 8 56 279 - 34 28 69 5 6 (97) 527 248 848 54 2021 £000’s 176 2020 £000’s 718 Restructuring costs in 2021 relate to corporate reorganisation activities as a result of the acquisition of Greenlight. Restructuring costs in 2020 relate to redundancy payments and associated costs in relation to the Board refresh and corporate re-organisation activities undertaken as a result. 9 Finance income and costs Bank interest received Interest expense for leasing arrangements Interest on bank loans 10 Income tax credit Major components of tax credit: Current tax: UK corporation tax at 19.00% (2020: 19.00%) Research and development tax credits Overseas tax Total current tax 50 2021 £000’s - 2021 £000’s 62 5 67 2020 £000’s 4 2020 £000’s 61 - 61 2021 £000’s 2020 £000’s - - - - - (90) 5 (85) BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 10 Income tax credit (continued) Deferred Tax: Originations and reversal of temporary differences (Note 16) Effect of tax rate change on opening balances Tax charge/(credit) on profit/loss on ordinary activities - - - (142) - (227) UK corporation tax is calculated at 19.00% (2020: 19.00%) of the estimated assessable loss for the year. Taxation for other jurisdictions is calculated at the rates prevailing in those jurisdictions. The credit for the year can be reconciled to the loss per the income statement as follows: Reconciliation of effective tax rate: Profit/(loss) on ordinary activities before tax Income tax using the Company’s domestic tax rate 19.00% (2020: 19.00%) Effect of: Expenses not deductible for tax purposes Fixed asset depreciation allowed under SP3/91 Capital allowances Share scheme deduction under Part 12 CTA 2009 Research & development tax credits Deferred tax movement Unutilised tax losses carried forward Total tax credit for period 11 Profit /(loss) per share 2021 2020 £000’s 458 £000’s (2,258) 87 175 (28) (11) (55) (17) - (151) - (429) 302 (145) (11) (2) (90) (142) 290 (227) Both the basic and diluted profit / (loss) per share have been calculated using the profit / (loss) after tax attributable to shareholders of Brave Bison Group plc as the numerator, i.e. no adjustments to profits / (losses) were necessary in 2020 or 2021. The calculation of the basic profit / (loss) per share is based on the profit / (loss) attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. Share options were anti-dilutive in 2020 but dilutive in 2021. Weighted average number of ordinary shares Dilution due to share options Total weighted average number of ordinary shares Basic profit/(loss) per ordinary share (pence) Diluted profit/(loss) per ordinary share (pence) Adjusted basic operating profit/(loss) per ordinary share (pence) Adjusted diluted operating profit/(loss) per ordinary share (pence) 2021 2020 768,367,147 612,667,036 57,637,981 41,367,914 826,005,128 654,034,950 0.06p 0.06p 0.18p 0.17p (0.33p) (0.33p) (0.25p) (0.25p) 51 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 11 Profit/(loss) per share (continued) Profit/(loss) for the year attributable to ordinary shareholders Equity settled share based payments Restructuring costs Acquisition costs Tax credit Adjusted operating profit / (loss) for the period attributable to the equity shareholders 12 Directors and employees 2021 2020 £000’s 458 £000’s (2,031) 62 176 686 - (7) 718 - (227) 1,382 (1,547) The average number of persons (including Director’s) employed by the Group during the year was: 2021 Number 60 15 75 2020 Number 47 11 58 2021 £000’s 3,558 341 183 4,082 2020 £000’s 2,276 185 172 2,633 2020 £000’s 262 387 649 Sales, production and operations Support services and senior executives The aggregate cost of these employees was: Wages and salaries Payroll taxes Pension contributions Director’s emoluments paid during the period and included in the above figures were: Emoluments (including compensation for loss of office) Compensation for loss of office 2021 £000’s 304 - 304 The highest paid Director received emoluments totalling £0.2 million (2020: £0.3 million). The amount of share based payments credit (see Note 24) which relates to the Directors was £0.1 million. (2020: £0.1 million charge). The key management of the Group are the executive members of Brave Bison Group plc’s Board of Directors. Key management personnel remuneration includes the following expenses: Salaries including bonuses Social security costs Total Emoluments 2021 £000’s 273 38 311 2020 £000’s 649 85 734 52 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 13 Intangible assets Cost At 31 December 2019 Additions At 31 December 2020 Additions At 31 December 2021 Goodwill £000’s 35,075 - 35,075 6,155 41,230 Amortisation and impairment At 31 December 2019 Charge for the year At 31 December 2020 35,075 - 35,075 Charge for the year At 31 December 2021 - 35,075 Net Book Value At 31 December 2019 At 31 December 2020 - - At 31 December 2021 6,155 Online Channel Content Technology £000’s £000’s Customer Relation- ships £000’s Brands £000’s 1,868 166 2,034 - 2,034 1,868 22 1,890 34 1,924 - 144 110 5,213 - 5,213 - 5,213 5,213 - 5,213 - 5,213 - - - 273 - 273 - 273 273 - 273 - 273 - - - 19,332 - 19,332 - 19,332 18,506 826 19,332 - 19,332 826 - - Total £000’s 61,761 166 61,927 6,155 68,082 60,935 848 61,783 34 61,817 826 144 6,265 During the year, the Group acquired Greenlight Digital Limited and Greenlight Commerce Limited and capitalised goodwill of £6.2 million. Goodwill is not amortised, but tested annually for impairment with the recoverable amount being determined from value in use calculations. During 2020 the Group accelerated amortisation relating to customer relationships by £0.6m as the estimate of the useful economic life of these assets was reduced to 5 years rather than 10 years as the Directors felt this was a more accurate reflection of the average length of client relationship in our industry. During 2020 the Group acquired certain assets from The Hook and capitalised costs of £0.2 million. This is included above in Online Channel Content and is being amortised over five years with represents the Directors best estimate of the useful economic life. 53 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 13 Intangible assets (continued) The recoverable amount of the intangible assets has been determined based on value in use. Value in use has been determined based on future cash flows after considering current economic conditions and trends, estimated future operating results, growth rates and anticipated future economic conditions. As at 31 December 2021, the intangible assets were assessed for impairment. The impairment charge was £nil million (2020: £nil). The estimated cash flows for a period of 5 years were developed using internal forecasts, and a pre-tax discount rate of 10%. The cash flows beyond 5 years have been extrapolated assuming nil growth rates. The key assumptions are based on growth of existing and new customers and forecasts, which are determined through a combination of management’s views, market estimates and forecasts and other sector information. 14 Property, plant and equipment Right of Use asset Leasehold Improvements Computer Equipment Fixtures & Fittings Total £000’s £000’s £000’s £000’s £000’s Cost At 31 December 2019 Additions At 31 December 2020 Additions Acquisition of subsidiary At 31 December 2021 Depreciation and impairment At 31 December 2019 Charge for the year Impairment charge At 31 December 2020 Charge for the year At 31 December 2021 Net Book Value At 31 December 2019 At 31 December 2020 At 31 December 2021 1,018 17 1,035 - 719 1,754 127 514 248 889 256 1,145 891 146 609 - - - - 11 11 - - - - 2 2 - - 9 902 - 902 34 36 972 896 3 - 899 19 918 6 3 54 220 - 220 - - 220 208 10 - 218 2 220 12 2 - 2,140 17 2,157 34 766 2,957 1,231 527 248 2,006 279 2,285 909 151 672 54 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 15 Impairment charge Property, plant and equipment Total impairment charge 16 Deferred taxation assets and liabilities Deferred tax recognised: Deferred tax asset Deferred tax 2021 £000’s - - 2020 £000’s 248 248 2021 £000’s 135 135 2020 £000’s - - Unutilised tax losses carried forward which have not been recognised as a deferred tax asset at 31 December 2021 were £52.4 million (2020: £52.6 million). These have not been recognised due to uncertainty about future consistent taxable profits. Reconciliation of movement in deferred tax As at December 2019 Recognised in the income statement As at 31 December 2020 Addition due to acquisition of Greenlight Recognised in the income statement As at 31 December 2021 Deferred tax on intangible assets £000’s (142) 142 - (135) - (135) This deferred tax asset relates to short term timing differences and has therefore been recognised. 55 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 17 Trade and other receivables Trade receivables Less allowance for credit losses Net trade receivables Unbilled income Other receivables 2021 £000’s 4,258 (559) 3,699 1,964 973 6,636 2020 £000’s 914 (40) 874 1,716 446 3,036 The contractual value of trade receivables is £4.3 million (2020: £0.9 million). Their carrying value is assessed to be £3.7 million (2020: £0.9 million) after assessing recoverability. The contractual value and the carrying value of other receivables are considered to be the same. The Group’s management considers that all financial assets that are not impaired or past due are of good credit quality. The ageing analysis of these trade receivables showing fully performing and past due but not impaired is as follows: Not overdue Not more than three months More than three months but not more than six months More than six months but not more than one year More than one year 2021 £000’s 1,814 786 53 - 1,046 3,699 2020 £000’s 156 3 2 2 711 874 The movement in provision for impairment of trade receivables can be reconciled as follows: Opening provision Provisions from acquisition of Greenlight Receivables provided for during period Reversal of previous provisions 2021 £000’s (40) (500) (40) 21 (559) 2020 £000’s (59) - (40) 59 (40) Provisions are created and released on a specific customer level on a monthly basis when management assesses for possible impairment. At each half year and year end, management will assess for further impairment based upon expected credit loss over and above the specific impairments noted throughout the year. Within trade debtors there is a balance of £0.7m which is over one year in age which the Group has judged it not necessary to provide for. This is because it believes it is recoverable, since there is a similar trade creditor balance with the same company, and the Group is anticipating reaching agreement that these balances may be set off against each other. The other classes within trade and other receivables do not contain impaired assets. 56 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 18 Trade and other payables Trade payables Other payables Other taxation and social security Contract liabilities Deferred consideration Accruals and deferred income 2021 £000’s 2,030 - 1,161 1,277 750 5,310 10,528 2020 £000’s 926 68 60 144 - 3,661 4,859 All amounts are short term and the Directors consider that the carrying value of trade and other payables are considered to be a reasonable approximation of fair value. The average credit period taken for trade purchases was 53 days (2020: 32 days). Contract liabilities are utilised upon satisfaction of the associated contract performance obligations. The 2021 contract liability of £1,277,000 is expected to be utilised in the next reporting periods upon satisfaction of the associated performance obligation. The 2020 contract liability of £144,000 was recognised within revenue during 2021 upon satisfaction of the associated performance obligation. 19 Lease Liabilities Lease liabilities are presented in the statement of financial position as follows: Current Non-current 2021 £000’s 629 393 1,022 2020 £000’s 416 - 416 The Group acquired two office leases with the acquisition of Greenlight which expire in November 2023. With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a corresponding lease liability. 57 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 19 Lease Liabilities (continued) The table below describes the nature of the Group’s leasing activities by type of right-of-use asset recognised in the statement of financial position: No. of right-of- use assets leased Range of remaining term Average remaining lease term Office building 2 2 years 2 years No. of leases with extension options - No. of leases with termination options - The lease liabilities are secured by the related underlying assets. Future minimum lease payments at 31 December 2021 were as follows: Lease payments Finance charges Net present values Within one year One to two years £000’s 408 (15) 393 £000’s 700 (71) 629 Total £000’s 1,108 (86) 1,022 The Group has elected not to recognise a lease liability for short terms leases (leases with an expected term of 12 months or less). Payments made under such leases are expensed on a straight-line basis. The expense relating to payments not included in the measurement of the lease liability is as follows: Short-term leases 2021 £000’s 2020 £000’s - - 28 28 The Group received a COVID-19 related rent concession during the period of £84,000 (2020: £140,400). It has applied the exemption granted by the COVID-19 Related Rent Concessions (Amendment to IFRS 16) and has therefore not assessed this as a lease modification but has included it within administration expenses. At 31 December 2021 the Group had not committed to any leases which had not yet commenced excluding those recognised as a lease liability. 20 Bank loans Loan <1 year Loan >1 year 2021 £000’s 2020 £000’s 108 308 416 - 50 50 The Group has a Bounce Back Loan Agreement which is due to be fully repaid in 2026. The repayment amount and timing of each instalment is based on a fixed interest rate of 2.5% payable on the outstanding principal amount of the loan and applicable until the final repayment date. This loan is unsecured. The Group also has a Coronavirus Business Interruption Loan (“CBIL”) which was acquired as part of the Greenlight acquisition which is due to be fully repaid in 2026. The repayment amount and timing of each instalment is based on a fixed 58 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 interest rate of 4.35% per annum payable on the outstanding principal amount of the loan and applicable until the final repayment date. The CBIL and an unused bank overdraft facility of £500,000 available to the Company’s subsidiary Greenlight Digital Limited are secured by a fixed and floating charge over its assets together with a cross guarantee with Brave Bison Group Plc, Brave Bison Limited and Greenlight Commerce Limited in favour of Barclays Bank, dated 1 September 2021. 21 Provisions for liabilities Dilapidations provision As at 31 December 2020 On acquisition of subsidiary Additional provision in the year As at 31 December 2021 2021 £000’s 118 118 2020 £000’s - - Dilapidation provision £000’s - 113 5 118 The dilapidations provision represents management’s best estimate of the Group’s liability relating to the restoration of the leased property to its original condition at the end of the lease. 22 Share capital Ordinary share capital Ordinary shares of £0.001 At 31 December 2021 £000’s 1,081 Number 1,080,816,000 At 31 December 2020 £000’s 613 Number 612,821,228 Total ordinary share capital of the Company 1,081 613 Rights attributable to ordinary shares The holders of ordinary shares are entitled to receive notice of and attend and vote at any general meeting of the Company. A reconciliation of the movement in share capital during the year is detailed in Note 23. 23 Reconciliation of share capital Opening balance Issue of ordinary shares Closing balance Ordinary Share Capital £000’s 2020 Ordinary Shares Number £0.0000001 Ordinary Share Capital £000’s 613 468 1,081 612,342,970 478,258 612,821,228 612 1 613 2021 Ordinary Shares Number £0.0000001 612,821,228 467,994,772 1,080,816,000 59 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 24 Share options During 2021 Brave Bison Limited granted 26,500,000 RSUs, which vest annually over a 3 year period to senior employees in the business at an exercise price of 1.35 pence. The options were valued using the Black-Scholes valuation model, using the following assumptions. Expected option life Expected volatility Weighted average volatility Risk-free interest rate Expected dividend yield 2021 4 years 50% 50% 0.75% 0% 2020 4 years 50% 50% 0% - 2.74% 0% Within the assumptions above, a 50% share price volatility has been used, the assumption is based on the average volatility of similar listed companies over the preceding periods and reviewed against the actual volatility of the Group during the year. The charge/credit included within the financial statements for share options for the year to 31 December 2021 is a £0.1 million (2020: £0.0 million credit). Details of the options issued under the approved scheme are as follows: Outstanding at the beginning of the year Granted during the year Exercised during the year Cancelled during the year Outstanding at the end of the year Exercisable at the end of the year Number 42,560,773 26,500,000 (5,838,212) (4,391,721) 58,830,840 6,671,999 Weighted average exercise price 0.7p 1.4p (0.3)p (0.8)p 0.8p 1.2p The weighted average share price on the date options were exercised was 1.48p. Share options expire after 10 years, the options above expiring between August 2024 and December 2029. 60 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 25 Undertakings included in the financial statements The consolidated financial statements include: Direct subsidiary Brave Bison 2021 Limited Greenlight Digital Limited Greenlight Commerce Limited Brave Bison Limited Indirect subsidiaries Rightster India LLP Viral Management Limited Base 79 Limited Base 79 Iberia SL Brave Bison Asia Pacific Pte Associates Rebel FC Limited Class of share held Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Country of incorporation Proportion held Nature of business UK UK UK UK Non-trading 100% Performance marketing 100% Commerce agency 100% 100% Online video distribution India UK UK Spain Singapore Non-trading 100% Non-trading 100% Non-trading 100% 100% Non-trading 100% Online video distribution Ordinary UK 30% Liquidated in 2020 Rebel FC Limited was dissolved on the 17 November 2020. All subsidiaries are exempt from an audit with the exception of Brave Bison Limited, Brave Bison Asia Pacific Pte and Greenlight Digital Limited. Greenlight Commerce Limited is taking the s479A exemption from audit. 61 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 26 Financial Instruments Categories of financial instruments Financial assets Trade and other receivables Cash and bank balances Financial liabilities at amortised cost Trade and other payables Lease liabilities As at 31 December 2021 £000’s As at 31 December 2020 £000’s 6,285 5,906 12,191 9,811 1,022 10,833 2,872 2,754 5,626 (4,715) (416) (5,131) Financial risk management The Group’s financial instruments comprise cash and liquid resources and various items, such as trade receivables and trade payables that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Group’s operations. The principal financial risks faced by the Group are liquidity, foreign currency and credit risks. The policies and strategies for managing these risks are summarised as follows: Foreign currency risk Transactional foreign currency exposures arise from both the export of services from the UK to overseas clients, and from the import of services directly sourced from overseas suppliers. The Group is primarily exposed to foreign exchange in relation to movements in sterling against the US Dollar, the Euro and the Singapore Dollar. The Group does not use derivatives to hedge translation exposures. All gains and losses are recognised in profit or loss on translation at the reporting date. The Group’s current exposures in respect of currency risk are as follows: Sterling US Dollar £000’s £000’s 4,452 (2,419) 1,091 (2,552) 2,033 (1,461) 9,297 (8,095) 1,202 2,606 (2,347) 259 Singapore Dollar £000’s Euro Other Total £000’s £000’s £000’s 21 (50) (29) 22 (178) (156) 62 (39) 23 266 (141) 125 - (71) (71) - (72) (72) 5,626 (5,131) 495 12,191 (10,833) 1,358 Financial assets Financial liabilities Total exposure at 31 December 2020 Financial assets Financial liabilities Total exposure at 31 December 2021 62 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 26 Financial Instruments (continued) Sensitivity analysis The table below illustrates the estimated impact on profit or loss as a result of market movements in the US Dollar, Singapore Dollar, Euro and Sterling exchange rate. Impact on loss and equity 10% Increase US Dollars £000’s 10% Decrease US Dollars £000’s 10% Increase Singapore Dollars £000’s 10% Decrease Singapore Dollars £000’s 10% Increase Euro 10% Decrease Euro £000’s £000’s For the year to 31 December 2020 (146) 146 (3) For the year to 31 December 2021 (26) 26 (16) 3 16 2 13 (2) (13) Credit risk The Group’s principal financial assets are cash and cash equivalents and trade and other receivables. The Group has no significant concentration of credit risk. The maximum exposure to credit risk is that shown within the balance sheet. All amounts are short term and management consider the amounts to be of good credit quality. Liquidity/funding risk The Group’s funding strategy is to ensure a mix of funding sources offering flexibility and cost effectiveness to match the requirements of the Group. Contractual maturities The Group manages liquidity risk by maintaining adequate reserves. Interest rate risk The Group holds the majority of its cash and cash equivalents in corporate current accounts. These accounts offer a competitive interest rate with the advantage of quick access to the funds. Capital policy The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain a capital structure that optimises the cost of capital. The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of cash and cash equivalents as disclosed in the statement of financial position and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in the consolidated statement of changes in equity. Debt is defined as long and short-term borrowings (excluding derivatives). Equity includes all capital and reserves of the Group that are managed as capital. 63 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 26 Financial Instruments (continued) Financial instruments measured at fair value Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of fair value hierarchy. This grouping is determined based on the lowest level of significant inputs used in fair value measurement, as follows: • • • level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs). The Group categorises all financial assets and liabilities as level 1. Maturity analysis Set out below is a maturity analysis for non-derivative financial liabilities. The amounts disclosed are based on contractual undiscounted cash flows. The table includes both interest and principal cash flows. The Group had no derivative financial liabilities at either reporting date. As at 31 December 2020 Trade and other payables Leases liabilities As at 31 December 2021 Trade and other payables Lease liabilities Total £000’s Less than 1 Year £000’s 1-3 Years £000’s 3-5 Years £000’s 4,715 416 9,811 1,022 4,715 416 9,811 629 - - - 393 - - - - 64 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 27 Transactions with Directors and other related parties Transactions with associates and related parties during the year were: Recharges to Tangent Marketing Services Limited Recharge for HR related salary Recharge for property related costs Recharge for production related salary Recharges from Tangent Marketing Services Limited Recharge of Philippa Norridge’s salary during the period 5 February 2020 to 30 April 2020 while acting as interim CFO Recharge for IT related salary Recharge for marketing related services Recharge for production related salary Amounts owed to Tangent Marketing Services Limited Amounts owed by Tangent Marketing Services Limited 2021 £000’s 2020 £000’s 24 32 6 62 9 - - 9 2021 £000’s 2020 £000’s - 13 27 4 44 34 3 - - 37 At 31 December 2021 £000’s 5 4 At 31 December 2020 £000’s 3 5 Tangent Marketing Services Limited is a related party by virtue of its shareholding in Brave Bison Group Plc. All of the above transactions were conducted at arms length. There are no related party transactions with any family members of the Directors. 65 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 28 Reconciliation of liabilities arising from financing activities Lease Liabilities Bank loans > 1 year Bank loans < 1 year £000’s £000’s £000’s At 31 December 2020 Cashflows Acquisition of subsidiary At 31 December 2021 416 (730) 1,336 1,022 50 - 258 308 - (36) 144 108 Total £000’s 466 (766) 1,738 1,438 29 Acquisitions On 1 September 2021, the Company acquired the entire issued share capital of Greenlight Digital Limited and Greenlight Commerce Limited. The consideration was financed by a share placing and existing cash balances. Greenlight Digital is a specialist performance marketing agency providing SEO, paid media, paid social, digital public relations and other digital marketing services. The provisional fair value of the assets acquired and liabilities assumed were as follows: Book value Fair value adjustments Fair value Goodwill Tangible Assets Trade and other receivables Cash and cash equivalents Current Liabilities Non-current liabilities Deferred tax The consideration for the acquisition is as follows: Initial cash consideration – paid Initial equity consideration – paid Deferred cash consideration – paid in February 2022 £000’s 5,686 755 3,576 785 (3,679) (722) 133 6,534 £000’s - - - - - - - - £000’s 5,686 755 3,576 785 (3,679) (722) 133 6,534 £000’s 5,887 69 578 6,534 The company acquired the entire issued share capital of Greenlight Digital Limited for a total consideration of £6.5 million. The payment of the deferred consideration was made in February 2022. 66 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 29 Acquisitions (continued) The consolidated Statement of Comprehensive Income includes £0.5 million of acquisition costs. The fair value of the financial assets includes trade and other receivables with a fair value of £3.6 million and a gross contractual value of £4.0 million. The best estimate at acquisition date of the contractual cash flows not to be collected is £0.4 million. The goodwill represents the acquired accumulated workforce and the synergies expected from integrating Greenlight Digital into the Group’s existing business. The Group has carried out an interim fair value adjustment exercise and will be completing a full exercise within the one year measurement period from the date of the acquisition in accordance with IFRS3, and alongside the completion of the integration and the launch of the revised brand. At the interim valuation stage the Group has not been able to reliably estimate the fair value of acquired intangibles and therefore the excess of consideration over fair value of other identifiable assets and liabilities has been allocated to goodwill. Once the full valuation exercise has been completed additional intangible assets may be recognised separately from goodwill. The fair value of the 5,082,770 ordinary shares issued as part of the consideration paid for Greenlight Digital Limited £0.1 million was based on the share price at the date at which the acquisition became unconditional, which was determined to be the placing price the funds were raised at for the purpose of the acquisition. Greenlight Digital Limited contributed £4.5 million revenue and £0.1 million to the Group’s profit for the period between the date of acquisition and the reporting date. Greenlight Commerce Limited specialises in working with blue-chip brands and omni-channel retailers on eCommerce technology systems. The provisional fair value of the assets acquired and liabilities assumed were as follows: Book value Fair value adjustments Fair value Goodwill Tangible Assets Trade and other receivables Cash and cash equivalents Current Liabilities Non-current liabilities Deferred tax The consideration for the acquisition is as follows: Initial cash consideration – paid Initial equity consideration – paid Deferred cash consideration – paid in February 2022 £000’s 469 - 1,338 666 (524) - 2 1,951 £000’s - - - - - - - - £000’s 469 - 1,338 666 (524) - 2 1,951 £000’s 1,759 20 172 1,951 67 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 29 Acquisitions (continued) The company acquired the entire issued share capital of Greenlight Commerce Limited for a total consideration of £2.0 million. The payment of the deferred consideration was made in February 2022. The consolidated Statement of Comprehensive Income includes £0.2 million of acquisition costs. The fair value of the financial assets includes trade and other receivables with a fair value of £1.3 million and a gross contractual value of £1.3 million. The best estimate at acquisition date of the contractual cash flows not to be collected is £0.0 million. The goodwill represents the acquired accumulated workforce and the synergies expected from integrating Greenlight Commerce into the Group’s existing business. The Group has carried out an interim fair value adjustment exercise and will be completing a full exercise within the one year measurement period from the date of the acquisition in accordance with IFRS3, and alongside the completion of the integration and the launch of the revised brand. At the interim valuation stage the Group has not been able to reliably estimate the fair value of acquired intangibles and therefore the excess of consideration over fair value of other identifiable assets and liabilities has been allocated to goodwill. Once the full valuation exercise has been completed additional intangible assets may be recognised separately from goodwill. The fair value of the 1,518,230 ordinary shares issued as part of the consideration paid for Greenlight Commerce Limited £0.0 million was based on the share price at the date at which the acquisition became unconditional, which was determined to be the placing price the funds were raised at for the purpose of the acquisition. Greenlight Commerce Limited contributed £1.3 million revenue and £0.2 million to the Group’s profit for the period between the date of acquisition and the reporting date. If the acquisition of Greenlight Digital Limited and Greenlight Commerce Limited had been completed on the first day of the financial year, Group revenues for the year would have been £31.8 million and Group profit would have been £0.8 million. Deferred consideration disclosed in the Consolidated Statement of Financial Position consists of the following: On acquisition of Greenlight Digital Limited On acquisition of Greenlight Commerce Limited 2021 £000’s 578 172 750 2020 £000’s - - - 30 Post balance sheet events After the year end 100% of the issued share capital in Greenlight Digital Limited, Greenlight Commerce Limited and Brave Bison Limited was transferred to Brave Bison 2021 Limited. Brave Bison 2021 Limited converted its existing £1 ordinary share into 1,000 £0.001 ordinary shares, and issued a further 4,667 £0.001 ordinary shares to Brave Bison Group plc, giving it a total of 5,667 ordinary shares. Brave Bison 2021 Limited also issued 500 £0.001 B shares to Oliver Green and 500 £0.001 B shares to Theodore Green. This was for the purpose of setting up the LTIP which is detailed in the Directors Remuneration Report. 68 BRAVE BISON GROUP PLC (COMPANY NUMBER 08754680) COMPANY BALANCE SHEET As at 31 December 2021 At 31 At 31 December December 2020 2021 Fixed asset investments Investments in subsidiaries Current Assets Debtors Current Liabilities Creditors: amounts falling due within one year Deferred consideration Total assets less current liabilities Capital and reserves Called up share capital Share premium account Capital redemption reserve Merger relief reserve Share options reserve Profit and loss account 32 33 34 34 35 £000’s £000’s 17,635 9,088 - - (2,125) (750) (2,875) 1 1 - - - 14,760 9,089 1,081 84,551 6,660 62,624 7,071 (147,227) 14,760 613 78,762 6,660 62,624 7,009 (146,579) 9,089 The Company did not trade during the year but incurred costs relating to the acquisition of Greenlight amounting to £0.7m (2020: £nil). The financial statements on pages 69 to 75 were authorised for issue by the Board of Directors on 27 April 2022 and were signed on its behalf by Philippa Norridge Chief Financial Officer 69 `BRAVE BISON GROUP PLC COMPANY STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2021 At 1 January 2020 Shares issued during the year Transactions with owners Share Capital £000’s Share Premium £000’s Capital redemption Reserve £000’s Merger relief Reserve £000’s Share options Reserve £000’s Profit and loss account £000’s Total Equity £000’s 612 78,762 6,660 62,624 7,017 (146,579) 9,096 1 1 - - - - - - - - - - - (8) - - - 78,762 6,660 62,624 7,009 (146,579) 1 1 (8) 9,089 6,257 6,257 - - - - - - - - - - 62 (648) (586) Other Comprehensive income Loss and total comprehensive income for the year - At 31 December 2020 Shares issued during the year Transactions with owners 613 468 468 5,789 5,789 Other Comprehensive income Loss and total comprehensive income for the year - - At 31 December 2021 1,081 84,551 6,660 62,624 7,071 (147,227) 14,760 70 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 31 Accounting Policies The financial statements have been prepared in accordance with applicable accounting standards including Financial Reporting Standard 102 The Financial Reporting Standard Applicable in the UK and Republic of Ireland (FRS 102) and the Companies Act 2006. The financial statements have been prepared on a going concern basis under the historical cost convention, modified to include certain items at fair value. The financial statements are prepared in sterling which is the functional currency of the Company. The figures are presented in thousands of pounds (£000’s) unless otherwise stated. Going concern The financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet its liabilities as they fall due for the foreseeable future, and at least for 12 months from the date of approval of the consolidated financial statements. The Group is dependent for its working capital requirements on cash generated from operations, and cash holdings. The cash holdings of the Group at 31 December 2021 were £5.9 million (2020: £2.8 million). The Group made a profit before tax of £0.5 million for the year ended 31 December 2021 (2020: loss of £2.3 million), and generated an increase in cash and cash equivalents in 2021 of £3.2 million (2020: decrease of £1.5 million). The Group has net assets of £7.4 million (2020: £0.8 million). The Directors have prepared detailed cash flow projections for the period to 31 December 2022 and for the following 6 month period to 30 June 2023 which are based on their current expectations of trading prospects. The Group achieved positive cashflow of £2.9 million in H2 2021, and the Board forecasts that the Group will continue to achieve positive cash inflows in 2022 due to both the cost savings that have already been made, and the expected revenue growth. The Directors are confident that the Group’s cash flow projections are achievable, and are committed to taking any actions available to them to ensure that any shortfall in forecast revenues receipts is mitigated by cost savings. The Directors also continue to monitor the impact of the ongoing COVID-19 pandemic, and maintain rolling forecasts which are regularly updated. The Directors remain confident that the Group has sufficient cash resources for a period of at least twelve months from the date of approval of these financial statements despite the impact of the pandemic and accordingly, the Directors have concluded that it is appropriate to continue to adopt the going concern basis in preparing these financial statements. Deferred taxation Deferred tax represents the future tax consequences of transactions and events recognised in the financial statements of current and previous periods. It is recognised in respect of all timing differences, with certain exceptions. Timing differences are differences between taxable profits and total comprehensive income as stated in the financial statements that arise from the inclusion of income and expense in tax assessments in periods different from those in which they are recognised in the financial statements. Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date that are expected to apply to the reversal of timing differences. Deferred tax on revalued non-depreciable tangible fixed assets and investment properties is measured using the rates and allowances that apply to the sale of the asset. 71 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Investments Investments are recognised initially at fair value which is normally the transaction price excluding transaction costs. Subsequently, they are measured at cost less impairment. Debtors Debtors are stated in the balance sheet at estimated net realisable value. Share based payments Employees (including Directors) of the Company received remuneration in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’). The cost of equity settled transactions with employees is recovered by reference to the fair value at the grant date of the equity instrument granted. The fair value is determined by using the Black-Scholes method. The cost of equity-settled transactions are recognised, together with a corresponding credit to equity, over the period between the date of grant and the end of vesting period, where relevant employees become fully entitled to the award. The total value of the options has been pro-rated and allocated on a weighted average basis. Exemptions The Directors have taken advantage of the exemption available under section 408 of the Companies Act 2006 and not presented a profit and loss account for the Company alone. The Company has adopted the disclosure exemption from the requirement to present a statement of cashflows and the related notes, which are instead presented on a consolidated basis. The Company has taken advantage of the FRS 102 exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions between the Company and its wholly owned subsidiaries within the Group. Share capital and reserves Share capital represents the nominal value of shares that have been issued. Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. Profit and loss account includes all current and prior period retained profits or losses. It also includes charges related to share-based employee remuneration. Merger relief reserve – where the following conditions are met any excess consideration received over the nominal value of the shares issued is recognised in the merger relief reserve: the consideration for shares in another company includes issued shares; and • • on completion of the transaction, the company issuing the shares will have secured at least a 90% equity holding in the other company. Where the Company purchases its own equity share capital, on cancellation the nominal value of the shares cancelled is deducted from share capital and the amount is transferred to the capital redemption reserve. Dividend distributions payable to equity shareholders are included in ‘other liabilities’ when the dividends have been approved in a general meeting prior to the reporting date. 72 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 Significant judgements and estimates The Company is required to test, at least annually, whether investments have suffered any impairment. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows attributable to the acquired cash-generating unit and the choice of a suitable discount rate in order to calculate the present value of these cash flows. Actual outcomes could vary. Where the Company has receivables from other Group entities, the recoverability of the receivables is assessed at the end of each accounting period. Where there is doubt in regards to the recoverability, the receivable is considered to be impaired and written down to its recoverable value. This assessment is made using past experience however subjectivity is involved when assessing the level of recoverability and impairment. 32 Investments in subsidiaries and associates Investments Cost of investments brought forward Investment in Greenlight Additions from equity settled share-based payments Reduction from equity settled share-based payments Cost of investment carried forward 2021 2020 £000’s £000’s 9,088 8,485 62 - 17,635 9,096 - (8) 9,088 As at 31 December 2021, investments were assessed for impairment. The management team have re- assessed projected cash flows. The estimated cash flows for a period of 5 years were developed using internal forecasts, and a pre-tax discount rate of 10%. The cash flows beyond 5 years have been extrapolated assuming nil growth rates. The key assumptions are based on growth of existing and new customers and forecasts, which are determined through a combination of management’s views, market estimates and forecasts and other sector information. A sensitivity analysis has also been performed on the projected cash flows. This assessment did not result in an impairment charge for the year ended 31 December 2021. At 31 December 2021 the Company had the following subsidiary undertakings: Class of share held Country of incorporation Proportion held Direct subsidiary Ordinary Brave Bison 2021 Limited Ordinary Brave Bison Limited Ordinary Greenlight Digital Limited Greenlight Commerce Limited Ordinary UK UK UK UK Indirect subsidiaries Rightster India LLP Viral Management Limited Base 79 Limited Base 79 SL Brave Bison Asia Pacific Pte Ordinary Ordinary Ordinary Ordinary Ordinary India UK UK Spain Singapore 100% 100% 100% 100% 100% 100% 100% 100% 100% 73 Nature of business Non-trading Online video distribution Performance marketing Commerce agency Non-trading Non-trading Non-trading Non-trading Online video distribution BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 32 Investments in subsidiaries and associates (continued) Associates Rebel FC Limited Ordinary UK 30% Liquidated in 2020 Rebel FC Limited was dissolved on the 17 November 2020. All subsidiaries are exempt from an audit with the exception of Brave Bison Limited, Brave Bison Asia Pacific Pte and Greenlight Digital Limited. Greenlight Commerce Limited is taking the s479A exemption from audit. 33 Debtors Amounts owed by group undertakings 34 Creditors Amounts owed to group undertakings Deferred consideration 35 Capital and reserves 2021 £000’s - - 2021 £000’s 2,125 750 2,875 2020 £000’s 1 1 2020 £000’s - - - Ordinary share capital Ordinary shares of £0.001 At 31 December 2021 £000’s 1,081 Number 1,080,816,000 At 31 December 2020 £000’s 613 Number 612,821,228 Total ordinary share capital of the Company 1,081 613 Called-up share capital represents the nominal value of shares that have been issued. The movement in share capital can be reconciled as follows: 2021 Ordinary Shares Number £0.0000001 612,821,228 467,994,772 1,080,816,000 Ordinary Share Capital £000’s 2020 Ordinary Shares Number £0.0000001 Ordinary Share Capital £000’s 613 468 1,081 612,342,970 478,258 612,821,228 612 1 613 Opening balance Issue of ordinary shares Closing balance 74 BRAVE BISON GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021 36 Post balance sheet events After the year end 100% of the issued share capital in Greenlight Digital Limited, Greenlight Commerce Limited and Brave Bison Limited was transferred to Brave Bison 2021 Limited. Brave Bison 2021 Limited converted its existing £1 ordinary share into 1,000 £0.001 ordinary shares, and issued a further 4,667 £0.001 ordinary shares to Brave Bison Group plc, giving it a total of 5,667 ordinary shares. Brave Bison 2021 Limited also issued 500 £0.001 B shares to Oliver Green and 500 £0.001 B shares to Theodore Green. This was for the purpose of setting up the LTIP which is detailed in the Directors Remuneration Report. 75
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