Final Results

24 March 2021

Bonhill Group plc

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

FINAL RESULTS

Bonhill Group Plc (AIM: BONH), a leading B2B media business specialising in three key areas: Business Information, Events and Data & Analytics, announces its audited final results for the year ended 31 December 2020.

Financial Highlights

Operational Highlights

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

"After a strong start to 2020, COVID-19 forced the Company to take swift and decisive action to address the changing operating environment. These dynamic changes will have a lasting positive impact on the Group as we become an increasingly digital-first business. Our successful transition into the virtual events arena and the shared brands, product and revenue opportunities across the Group are testament to the power of collaboration and innovation.

"We are confident of revenue growth of approximately 12% in 2021 and to report EBITDA of approximately £1.2 million, excluding any Government support. We have had a promising start to 2021 and entered the year with an optimised operating model, strong customer relationships and some clear areas for growth."

A presentation on the full year results for 2020 is available at the following link: http://bit.ly/BONH_FY20_presentation

-ends-

For further enquiries please contact:

About Bonhill Group plc 

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

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

For more information visit www.bonhillplc.com 

-

Chairman's Statement

2020 was the most challenging year in the Group's history. The business was severely impacted by the global pandemic and had to reorganise and refinance to withstand the impact on revenues, particularly in the Events business which saw a 37% reduction year-on-year.

It is a credit to the staff that we ended the year at a near breakeven adjusted EBITDA position in line with our expectations at the time of the fundraising in April 2020, although the path to that point had many twists and turns with the extended periods of lockdown and changes in government guidance. Our investment in technology improvements enabled us to move quickly and respond to our customers.

The Company was reorganised midway through the year with a new executive committee to drive through the necessary change in the business model, revenue streams and customer offering in light of the restrictions placed on the global events market and advertising spend in the face of global uncertainty.

Across the Group, year-on-year, Business Information revenues fell by 21%, Events by 37% and Data and Insight by 17%, resulting in overall Group revenues being down by 27% compared with 2020. The impact of the successful switch to virtual events and other Group initiatives saw an improvement in gross margins by 13% in the year to 80%. Operating loss increased by £7m to £(10.7)m largely reflecting the goodwill write down of £6.6m at the half year.

Cash conservation was key in the year and a combination of the fundraising in April, raising £2.25m net of expenses, and a focus on working capital management and cost saving initiatives in all areas led to a year-end cash position of £1.3m (2019: £1.9m). As at 28 February 2021, cash was £1.6 million.

During the year, the Company also took advantage of the various government initiatives to support the business and utilised the Paycheck Protection Program (PPP) in the US, receiving a grant of £0.8m, furloughing in the UK amounting to £0.186m, as well as Bounce Back Loans (BBL) totalling £0.1m.

In the year, there were two changes to the board, with Fraser Gray being replaced in late June by Jon Kempster as a Non-Executive Director and chair of the Audit Committee and Sarah Thompson was appointed as Chief Financial Officer in September, after David Brown stood down in July 2020. We thank Fraser and David for their contributions to the Company.

I am particularly proud of the way that the organisation has responded to these challenging times. Despite all of the disruptions, our employees have excelled in constantly finding creative solutions to problems, in adopting high standards in new areas and creating new products to replace lost revenues. Their commitment and positivity during lockdown, remote working and beyond in all areas has been outstanding.

The completion of our technology projects in the year enabled us to work remotely very successfully and the platform we have built leaves us in a strong position going forward. We are already seeing the benefit of the new platform with the speed of new product development and enhancements to our product set.

Finally, I would like to thank our staff across the international borders for their resilience and hard work, our shareholders for their support, in particular at the time of the fundraising, and our broad customer base for its continued support whilst they have faced their own business challenges.

We are now set up to make 2021 a year of delivery for shareholders after the challenges of 2019 and the turmoil of 2020. The extensive changes made in the year position us well to achieve that.

Neil Sachdev

Chairman

23 March 2021 

Chief Executive's review

Introduction

2020 was an extremely challenging year for the Group, but one which we have weathered well, overcoming many obstacles along the way and emerging well organised and equipped to deal with the evolving environment ahead. Despite the impact of the global pandemic, we managed to complete the year in a robust position with a refined business model, improved propositions for customers, successful completion of our technology investment programme, greater global collaboration and a stronger Group identity.

The biggest direct impact of COVID-19 on the Group was the loss of revenue from live events due to cancellations and postponements, showing a 37% reduction in Events revenue in 2020 compared with 2019. Despite this, overall Group revenue in the year was only down 27% against the previous year. Additionally, gross margin increased by 13% to 80% compared to the preceding year as the Company continued its transition to a more digital-first product offering.

COVID-19 required a wholesale change to our Events proposition. Initially, we had to postpone and then, in the vast majority of cases, cancel all of our global live events and then convert our offering to virtual which saw excellent support from both attendees and sponsors. The net result is that the Group's Events revenue, which was £9.6m (representing 39% of total revenue) in the year ended 31 December 2019, delivered £6.1m in the year ended 31 December 2020 ("FY 2020" or the "Year"), of which £1.5m was from live events held pre-pandemic and £4.6m from the 102 virtual events run between March 2020 and December 2020.

Our work on re-engineering the Group helped us counter this reduction in revenue and we also developed new product pipelines. We delivered a range of new products in our various titles and saw good growth with new products in SmallBusiness.co.uk, part of our re-branded Business Solutions division, in our Fintech offering in the US, as part of InvestmentNews ("IN"), and in our Content Marketing business, Last Word Create, that was only launched in January 2020. ESG Clarity, a UK and European proposition, was successfully launched in both the US and Asia in the year. These activities reflect the ongoing need to provide solutions for clients and are testament to the strength of our brands and relationships with clients, which have enabled us to be innovative. Global uncertainty means clients are seeking to better understand their communities and to find more effective ways to communicate with them. We are continuing to develop new products in 2021 and have six global initiatives running to help rebuild our revenues. One of which, Fintech for Advisers, has already been launched in the US, and ESG Clarity, which now operates on a global basis, has launched its first global ESG event in May 2021.

Financial information

Revenues for the Year were £17.8 million (2019: £24.4 million). The Company delivered a strong second half of the Year ("H2") with £10.1 million of revenue, compared to £7.7 million reported in the first half ("H1"), and adjusted EBITDA of approximately £1.55 million (H1: £1.69 million loss). This was a result of the swift and positive action taken during the early months of the pandemic. These revenue numbers exclude UK Government support of approximately £1.0 million which has been presented as part of the net operating expenses in the income statement. Adjusted EBITDA for the Year was £0.1 million (2019: £2.3 million), prior to an adverse year end foreign exchange movement of £0.2 million.

The result for the Year is in line with the Company's expectations based on the assumptions made in its announcement of the placing of new shares on 9 April 2020. It is important to recognise that this is a significant achievement given the protracted periods of lockdown during the Year and the uncertainty around the return of live events. Cash at 31 December 2020 was higher than expected at £1.3 million (2019: £1.9 million), although this does include the impact of deferring the £0.3m VAT payment into 2021. As at 28 February 2021, cash was £1.6 million.

The Group incurred exceptional integration and restructuring costs in the Year totalling £1.4 million (2019: £3.6 million), mainly due to the final integration into the Group of each of InvestmentNews and Last Word Media ("LWM"), which were acquired by the Company in August 2018 and April 2019 respectively, as well as other restructuring costs relating to COVID-19 in all of the Group's businesses and the fundraising in April 2020. With all of the integration and restructuring now complete, we would not expect to see any adjusting items in the current year.

Strategic review

COVID-19 forced us to look at every aspect of the business and reinforced our view that we need to build a business of balance between revenue streams and a refocus on recurring revenue. We remain focused on the provision of Business Information, Events and Data & Insight in our chosen sectors and with a growing geographic reach. We aspire to build, manage and own market-leading brands with 'must have' products, that provide greater financial visibility via recurring revenue streams and strong cash generation. We have reorganised into two clearly defined global business sectors: Financial Services, and Business Solutions and Governance. Both of these divisions serve growing and constantly evolving markets and are extremely complementary. Increasingly, we have seen a sharp focus on Environmental, Social and Governance (ESG), both in the investment community, but also within the wider business community we serve. We believe this theme will be a core element of our offering across all of our communities and so we will develop products and offerings to reflect that change. ESG Clarity was developed into a global brand to reflect this theme and the launch of our global ESG task force in January 2021 and the launch of our inaugural global ESG event in May 2021, in conjunction with the UN, highlights how we are servicing this fast-growing area.

New divisional structure

Mid-year we made wholesale changes to the Group's model and operating structure to deliver cost savings, improved efficiencies and clear business unit ownership.

We remain focused on Financial Services with our strong presence in the UK, US and Asia. InvestmentNews is run by Christine Shaw and, in July 2020, Patrick Ponsford took over responsibility for Last Word Media in the UK, Europe and Asia, allowing me to concentrate on being Chief Executive of the Group.

Our previously known Technology business, led by Jon Seymour, which principally comprised Information Age, has been combined with Small Business, Growth Business and What Investment and rebranded as Business Solutions.

The newly formed Governance business (formerly Diversity), also led by Jon Seymour, is based on our leading Gender Diversity franchise the 'Women in…' series and the website DiversityQ. We have broadened our activities to include all aspects of governance and put them under the DiversityQ brand.

The leaders of these businesses are joined on the Group's executive committee by Sarah Thompson, Chief Financial Officer, Suzanne Tomlinson, Head of HR, and Simon Collin, Chief Technology Officer/Chief Product Officer.

This newly constructed team has been tasked with a number of key items and reportable KPIs:

- Change the business mix to replace lost event revenue with a growing level of subscription or recurring revenues;

- Increase the business areas' operating margin to achieve a blended Group operating margin (before depreciation and amortisation) of 15% by the end of 2023;

- Create a more stable employee base and recruit high quality individuals while retaining and developing existing staff; and

- Create engaging content that keeps us at the heart of our communities.

A new LTIP was put in place to incentivise this core team, details of which were announced in October 2020, and are contained in the remuneration committee report of the full annual Report and Accounts.

COVID 19 response

During 2020, the Company utilised a range of measures to navigate the COVID-19 operating environment. Self-help measures included restructuring and the implementation of a new divisional structure, new KPIs and incentives to focus on an increased level of recurring revenue, and new product development. External support included the Paycheck Protection Program ("PPP") in the US and the UK Government's Coronavirus Job Retention Scheme. There are currently no staff members on furlough and headcount across the Group at the end of the Year was 136 (31 December 2019: 162).

During 2021, the Company expects to see additional savings from supplier agreements including print, IT and services and reduced rental costs, both from the renegotiated lease in the US and from exiting the Company's head office, Fleet House, in May 2021. The Group continues successfully to operate remotely and although it is currently looking for a new head office, it will be at a reduced annual cost.

Financial services

InvestmentNews

During the Year, InvestmentNews focused primarily on driving recurring revenue through increasing subscriptions and building a broader customer base through key vertical market segments, as well as continuing to develop its core offering to the US financial advisor market. It has launched three new products since June 2020: ESG Clarity US, a website focused on ESG investing; a FinTech virtual event; and RPA Convergence, a website focused on retirement planners. This has continued in 2021 with Fintech for Advisers. The speed at which new products can be launched is a reflection of the return on investment in the platform.

In the Year, revenues were down 35% year-on-year, principally due to the lack of live event activity and pressures on print advertising as a result of stopping the weekly print title for three months. Most events were rescheduled into a virtual format and were successfully run in the second half.

During the Year, there was encouraging growth in digital activity as a result of the investment in the website and enhancements to core offerings. Digital revenues were in line with the Board's pre-COVID expectations and we continue to see progress into 2021.

Of total revenues generated by InvestmentNews in the Year, Business Information accounted for 71%, Events 22% and Data & Insight 7%.

The decision to stop production of InvestmentNews' weekly print magazine and replace it with a digital version was taken in March 2020. Overall, there were £0.3m of savings from reduced print production and postage in the Year. Due to customer demand, a print version was restarted in July 2020 and is selling well in 2021. A new print contract was signed in February 2021 producing an 8% saving with a supplier with strong sustainability characteristics.

In August 2020, the Company exited the Transitional Services Agreement ("TSA") with Crain Communications, Inc ("Crain"), InvestmentNews' former owners, and, as set out above, in December 2020 renegotiated a new lease in the US away from Crain. The final payment to Crain under the vendor loan agreement is due in August 2021 and, as at 31 December 2020, $1.4m was outstanding. As at 24 March 2021, this stands at $0.8m. While the exit from the TSA saw direct costs reduce by $0.2m in H2 2020, the services have been absorbed by the wider Group, including finance, ad ops, technology and associated operations.

With a completed technology investment programme, new enhanced core website, a developing portal strategy and continued strong engagement with a broadening client base, InvestmentNews is well placed to show double digit revenue growth in 2021. 

Last Word Media

Last Word Media saw revenues impacted due to a historic focus on its 'Congress' live event format. Total revenues in the Year were down 36% (on a like-for-like basis) from the previous year reflecting the lack of live event activity between March 2020 and December 2020. The direct impact of COVID-19 saw all of LWM's planned Q2 events move into successful virtual formats in the final quarter of the Year.

In February 2020, and in advance of COVID-19, we took the decision to restructure the European business to better align our product offering to the broad European audience. This reduced headcount by 12, which, combined with the removal of the print version of Expert Investor, created annualised cost savings of £0.7m. Our European content is now focused on three key regions, Nordics, DACH and Southern Europe and with a greatly reduced events calendar.

Another round of restructuring was taken at the half year to reflect the outlook for live events and the originally planned end of furlough which resulted in a further seven redundancies creating annualised cost savings of £0.3m.

The split of revenue by proposition generated by LWM in the Year was Business Information 49%, Events 44% and Data & Insight 7%.

Despite the challenges, LWM is now a much more streamlined business with a better split of revenues and its creativity and solutions mentality is working well. We worked hard to develop innovative formats with virtual events and new business areas. Three notable successes were the global rollout of the sustainability title, ESG Clarity; the commercial success of the launch of the Content Marketing business, LastWord Create; and the development of new products, including ESG MOTs and the Responsible Ratings Index at Last Word research. Last Word Asia's revenue was flat year-on-year at £0.9m, which was a credible performance given the challenges faced in the region and the move to virtual events.

Business Solutions

Our Business Solutions division consists of SmallBusiness.co.uk, GrowthBusiness.co.uk, www.information-age.com and www.whatinvestment.co.uk.

The impact of the new leadership introduced in 2019 was extremely beneficial in preparing the business for the enormous spike in demand in SmallBusiness.co.uk and GrowthBusiness.co.uk during the early days of the pandemic. The audience increased fivefold in the first weeks of lockdown as people sought information on all aspects of the various UK Government initiatives. This continued throughout the Year with the changes in UK Government guidance and various initiatives which were put in place to help UK SMEs. The increase in the number of registered subscribers helped to drive the strong growth seen in digital revenues.

Media performed extremely well, up 43% in the Year compared to the previous year, due mainly to the diversification of revenue streams in the last 18 months and strengthening relationships with key clients. New lead-generation products, content-based partnerships and the growth in registered subscribers were the key drivers of growth.

What Investment had a strong Year with its revenues being 20% higher than those in 2019, driven mainly by the easing of the competitive landscape and the overall growth in personal investing driven by lockdown conditions. The launch of regular supplements and a recent redevelopment of the website and magazine should drive continued growth in 2021.

Information Age also had a strong 2020 with media revenue up 126% from 2019. This is a result of pre-COVID-19 changes feeding through and the broadening of revenue streams to include lead generation products, webinars and premium gated content.

Across Business Solutions and Governance, the combined revenue split by proposition in the Year was Business Information 48%, Events 52% and Data & Insight 0%.

Growth Company Investor ("GCI"), which has published its monthly investment recommendation newsletter for private investors since 1996 and was originally part of Vitesse Media, the predecessor company to Bonhill, was sold to its editor in October 2020 for a nominal consideration. Bonhill Group is focused on the global B2B arena within financial services while GCI, with its B2C focus, was a strategic outlier. In light of the operating environment, the Board made the strategic decision to dispose of GCI. No other Group brands are up for sale.

Governance

Governance (formally known as Diversity) supports organisations with their policies, processes, systems and behaviours to ensure that they align with legislation. Historically, this principally awards-led business has successfully transitioned to both virtual formats and also to a multi-day summit serving multiple geographies.

We restructured the division in order to better align the global events teams, improve efficiencies and share best practice. 

ESG

A strong feature of the Year was the variety of ESG initiatives which the Company developed in response to demand from both investors and providers in the area. We launched ESG Clarity in both the US and Asia and this global platform is well placed for the coming years. Approximately 50% of all current RFPs received by the Company have an ESG component and our events portfolio, research and data offerings and product set have been adjusted to reflect this fast-growing trend.

Technology Infrastructure

With our initial post-acquisition technology investment complete, we are now augmenting that with targeted initiatives as we look to protect and grow revenues as well as to enhance operational efficiency. We have made significant upgrades to key websites and have implemented key changes to our technology to simplify and centralise operations with additional control processes. This includes a shift from using external agencies to FTE resources. We see the benefits of our investment programme in both the speed at which we can launch new products, but also the common standards and practice across the Group which has allowed greater global collaboration and the sharing of best practice.

Dividend

In light of the prevailing operating environment, and the Company's financial situation, the decision was taken not to recommend the payment of a final dividend with the Company's results for the year ended 31 December 2019 and similarly we will not be recommending the payment of a final dividend for the year ended 31 December 2020. It is very much the Board's intention that the Company should return to paying a dividend when it is appropriate to do so. 

Outlook

The impact of COVID-19 forced the Company to take swift and decisive action to address the changing operating environment. These changes brought the Company closer together as it moved successfully into the virtual events arena and shared brands, product and revenue opportunities across the Group. This newfound unity and collaboration will serve us well in the future.

It is our aim to have a year of delivery for shareholders after the challenges of 2019 and the impact of the pandemic in 2020. The new executive committee, KPIs, and divisional structure are all in place to deliver that outcome.

We are constantly assessing the potential for the return of live events which will vary region by region, but the signs for a return of our Congress activities with Last Word Media in the second half of the year are encouraging and we will plan in line with the UK Government's four stage plan. InvestmentNews is exploring live activity in specific US States in line with the vaccine roll out, customer demand and local guidance.

As a result of the actions taken by the Company in 2020 to address its cost base, operating structure and implement a digital-first product set, and in light of the current operating environment, the Board expects to see revenue growth of approximately 12% in 2021 and to report EBITDA of approximately £1.2 million, excluding any Government support. The Board does not anticipate there being any adjusting items this year. The improvement in working capital management seen in H2 2020, strong cash conversion and the better-than-expected Year end cash position should lead to a further strengthening of the Company's balance sheet in 2021.

Summary

2020 was a difficult year for the Group with the impact of COVID-19. I am pleased that the business has responded well with a strong virtual events portfolio and an enhanced digital offering. The pandemic forced a reassessment of the business lines and we enter 2021 with our investment programmes and restructuring complete, improved and more efficient internal processes and strong customer relationships and some clear areas for growth.

We have seen a promising start to 2021 and, with the challenges of 2020 behind us, remain confident that we will deliver an improved financial performance despite the changing landscape for live events.

Simon Stilwell

Chief Executive

23 March 2021

Chief Financial Officer's review

Financial Headlines

2020 was a tumultuous year for Bonhill as it was for many companies both in our industry and beyond. The ongoing revisions to UK Government guidance and the unforeseen protracted length of lockdowns in the UK and the US meant that we were unable to put on any live events from March to December 2020. Whilst the initial shock of the potential to lose up to a third of our revenue was worrying, management and all employees turned their focus to how we could adapt quickly to remain competitive in this environment.

Revenue and gross margin

Revenue reduced year-on-year by £6.6m (-27.1%) to £17.8m as a direct result of COVID-19 impacting the Company's ability to continue with live events as originally planned. However, through a change in product mix as described below, the reduction in gross profit year-on-year was only £1.9m (11.9%) and the overall gross margin actually increased by 13% to 80%.

Business Information revenue reduced year-on-year by 21% in 2020 to £10.7m, but within this, digital revenue remained flat year-on-year at £7.6m, and print revenue declined by 48% to £3.1m. This was a deliberate change in product mix to migrate the business away from reliance on our traditional print magazines. This increase in digital was particularly seen in our Business Solutions business unit, where What Investment increased revenue by 20% from 2019, and our Small Business and Growth Business sites saw a combined increase in revenue of 36%. This shift from print to digital has realised benefits at gross margin across the Group with a combined 11% increase to 86% since 2019.

As would be expected, Events revenue was reduced by the largest amount in 2020 and was down 37% to £6.1m (2019: £9.6m). This conversion of our Events business to a virtual offering has been very successful and has accounted for a large proportion of the overall uplift in Group gross margin as we moved from 54% in 2019 to 71% in 2020. The absolute margin on virtual events is closer to 80%, but this blended margin reflects the 14 live events that took place in Q1 2020.

Data & Insight saw a reduction in revenue of 17% to £1.0m in 2020, mainly due to reduced customer spending, a by-product of COVID-19. However, through an increase in gross margin from 71% to 81%, we have managed to maintain the gross profit figure which was flat on 2019.

3BSG - Business Solutions and Governance, LWM - Last Word Media, IN - InvestmentNews.

Operating costs (excl. depreciation, amortisation, lease payments under IFRS16 and share based payments)

One of the positives to come from 2020 is that we have been able to spend time focusing on fully integrating and improving our back office systems and platforms and finalising the technology work that had been ongoing since 2018. Not only will this reduce costs and drive operational efficiencies, it will also allow management a much clearer view of the financial performance of the business.

To review the underlying cost base of the business, we need to acknowledge two key points. One, that the acquisitions and subsequent integrations of LWM and IN have resulted in one-off costs to the business and two, that we need to include a full year of LWM costs, rather than the 8 months of (post acquisition) costs as reported in the 2019 accounts. The second half of 2020 marked the point at which all the integration and restructuring work was completed and, therefore all future costs were now processed as being purely operational and would no longer be treated as "adjusting".

Year-on-year the underlying cost base of the business has reduced by £2.4m.

4includes a full 12 months of LWM for comparative purposes.

While both staff and IT costs look to have increased year-on-year, these are the two areas that have been most affected by the integration work and therefore are most inter-twined with the adjusting items.

Throughout 2020, there has been a huge amount of change to the employee base as the Company has restructured itself post-acquisitions and post COVID-19 to be better positioned going into 2021. Whilst there is a net headcount reduction of 41, there have been 89 leavers and 48 joiners, bringing in new skills and perspectives as our product offering evolves.

5defined as number of people paid via monthly payroll 6 BUK equates to Business Solutions & Governance plus centralised, Group functions.

Cash flow

The biggest financial focus for 2020 was to conserve cash and manage working capital during a period where the timing of revenue and subsequent cash receipts were uncertain. Whilst the year started off as planned, we soon had to defer some Q1 events and nearly all Q2 events to the last part of the year. As in previous years, a large proportion of our customers had already paid for these events upfront in Q1 2020 or even in Q4 2019, giving us a large deferred income balance to contend with. Whilst we have been very successful at converting our events to a virtual platform, and thereby managed to reduce the value of cash refunds to a minimum, it meant that much of our Q4 revenue was non-cash generative and merely reduced the deferred income.

To help mitigate this, we undertook the following actions and government aid:

· Enhanced credit control processes and procedures to materially reduce our debtor days

· Deferral of £0.3m of Q1 2020 VAT to be repaid in Q2 2021

· Deferral of £0.9m of PAYE payments to HMRC, which were all repaid in full before the year end

· US Paycheck Protection Programme loan (and subsequent grant) of £0.9m

· UK Bounce Back Loan of £0.1m

· UK receipts under the Government job retention scheme of £0.2m. We no longer have any employees on furlough.

All of these actions combined resulted in a cash balance at 31 December 2020 of £1.3m (2019: £1.9m). As at 28 February 2021, cash was £1.6 million.

Cash and net debt

At the year end, we had a net cash position of £0.1m, including IFRS16 lease liabilities. The office lease in New York came to an end and the vendor loan will be fully repaid in August 2021.

Trade debtors

The benefits of the enhanced credit control processes can be seen below where the ageing of the debt has changed significantly year-on-year.

The overall net trade receivables balance has reduced by 44% year-on-year, and the percentage of debt greater than 60 days past due has reduced from being 48% of the gross balance in 2019 to 33% in 2020.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Chairman's statement and the Chief Executive's review.

The Directors regularly review detailed forecasts of sales, costs and cash flows, and regularly project forwards 12 months ahead or more. The assumptions underlying the budget are challenged, varied and tested to establish the likelihood of a range of possible outcomes, including reasonable cash flow sensitivities. The expected figures are carefully monitored against actual outcomes each month and variances are highlighted and discussed at Board level.

Whilst the global COVID-19 pandemic has had a widespread macro-economic effect, operationally the Group's business was able to transition to remote working seamlessly and has been able to perform very effectively, managing the expectations of clients and delivering a continuous excellent service. 

Nevertheless, the Group's trading in 2020 has been adversely impacted by the COVID-19 pandemic as described in the Group Strategic Report. Given this impact on trading, the Directors have completed a comprehensive going concern review and, in adopting the going concern basis for preparing the financial statements, the Directors have considered the future trading prospects of the Group's businesses, the Group's available liquidity alongside the Group's principal risks as set out in the Strategic Report.

Taking account of the recent announcements of the successful development of a vaccine for COVID-19, and the distribution of the vaccine in 2021, the base case scenario assumes a modest improvement in trading conditions during 2021, building on the momentum that has been seen in the second half of 2020 when compared with the first 3 months of the pandemic. The 2021 projections have been created with most events assumed to be virtual to try and minimise any further impact of COVID and the potential of ongoing local lockdowns. Digital revenue has remained broadly flat from 2019 to 2020 showing its resilience to being adversely affected by the pandemic, and Data & Insight consists mostly of recurring revenue subscriptions which are expected to remain reasonably stable. When comparing these projections to 2019 and 2020, the Directors believe that this is a relatively conservative base case.

The Group meets its day-to-day financing and working capital requirements through ongoing operating cash flows and available cash. The Group's forecasts and projections, taking account of possible changes in trading performance under various scenarios, show that the Group will be able to operate within the level of its current cash until at least 30 June 2022. In addition, the Group has successfully demonstrated in 2020 that it has the ability to take significant additional steps, if required, to mitigate the impact of any further downside scenarios should they occur.

Cash levels are strong and the Group monitors and manages its cashflows regularly and carefully. Over the 15-month period of the scenarios, cash balances are forecast to remain at more than adequate levels to fund the Group's planned activities. While the Group has taken advantage of government schemes to defer its VAT payments from 2020 to 2021, and subsequently result in a cash outflow in 2021, overall net cashflow remains strong and positive for the year.

While the Directors are comfortable that the uncertainties in respect of cash flows referred to above are not material uncertainties that might cast doubt about the Group's ability to continue as a going concern, they acknowledge that the long-term impact of COVID-19 remains complicated and that it is possible that the impact of the pandemic on trading conditions could be more prolonged or severe than currently forecast by the Directors. If this were to prove to be the case, the Group may need to implement further operational or financial measures (including the management of operating costs, working capital, capital expenditure or other similar measures) to ensure that the Group continues to protect the business from such downside risks.

Sarah Thompson

Chief Financial Officer

23 March 2021

Consolidated statement of comprehensive income

for the year ended 31 December 2020

Consolidated statement of financial position

as at 31 December 2020

Consolidated statement of changes in equity

for the year ended 31 December 2020

Consolidated statement of cash flows

for the year ended 31 December 2020

The Group consists of entities with functional currencies of GBP, USD, SGD and HKD.

Notes to the cash flow statement

Reconciliation of loss after tax to cash flows used in operations

Notes to the financial statements

for the year ended 31 December 2020

1. Basis of preparation

The financial statements of Bonhill Group plc have been prepared in accordance with EU Endorsed International Financial Reporting Standards and IFRIC interpretations (IFRS) and the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies.

The financial information for the year ended 31 December 2020 and the year ended 31 December 2019 does not constitute the company's statutory accounts for those years.

Statutory accounts for the year ended 31 December 2019 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2020 will be delivered to the Registrar of Companies in due course.

The auditors' reports on the accounts for 31 December 2020 and 31 December 2019 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006

Going concern

The Group has limited forward visibility and like all organisations, at this stage it is hard to predict the full extent of the impact of COVID-19. Consequently, there is a high degree of uncertainty in respect of future outcomes, however, the various stress test scenarios indicate that the Group can continue to operate within its banking facilities.

In the event that there is a more significant downturn than in the scenarios tested, there are further mitigating actions which could include but are not limited to, further reductions in non-business critical expenditure as well as the potential for headcount reductions. As a consequence, the Directors have formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence and meet its liabilities as they fall due over the going concern review assessment period.

2. Segmental analysis

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

3. Operating loss

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

*Includes £0.2m UK furlough income and £0.9m PPP US funding.

(b) Adjusting items

The Group incurred certain costs in the 12 months ended 31 December 2020 and the 12 month period ended 31 December 2019 which the Directors believe should be disclosed as adjusting items as set out below. Adjusted results are prepared to provide additional relevant information on our future or past performance where equivalent information cannot be presented using financial measures under IFRS.

Adjusting items are reviewed on a transactional level basis as to their nature and intention. Items which are discrete, time-bound and have arisen as a direct result of a one-off activity, such as the acquisition of a subsidiary company have been recognised as adjusting. During August 2020 the Transitional Services Agreement with Crain, the former parent of InvestmentNews, finished and triggered the end point of the migration and integration work. From this point onwards there have been no more adjusting items. Management do not expect to recognise any adjusting items in 2021.

The restructuring costs in the year broadly relate to two key activities. One was the closure of the European sales division of Last Word Media, and the other was in relation to streamlining senior management roles. Post the acquisitions of InvestmentNews and Last Word Media, the decision was made to have a more global senior executive team (as mentioned in the CEO review), and as a result many senior roles across the Group were made redundant.

The integration costs relate to the work undertaken to align the technology systems onto one platform and fully integrate the data and processes across the Group. More detail behind this can be found in the technology report on p7 of the Full Year 2020 Report & Accounts.

4. Reconciliation of Adjusted EBITDA to statutory earnings

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

5. Earnings per share

(a) Basic earnings per share

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

Based on statutory earnings

Based on adjusted earnings

(b) Diluted earnings per share

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.

Based on statutory earnings

6. Right-of-use asset

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

· Leases of low value assets; and

· Leases with a term of 12 months or less.

In applying the modified retrospective approach, the Group has taken advantage of the following practical expedients:

· Leases with a remaining term of 12 months or less from the date of application have been accounted for as short-term leases (i.e. not recognised on the balance sheet) even though the initial term of the leases from lease commencement date may have been more than 12 months.

During 2020 the Group terminated two leases. The first was the former Bonhill office located at New Broad Street, London and the second was ending the original lease acquired under InvestmentNews and owned by the former parent, Crain. A new lease has been secured on the same office, effective from 1 January 2021.

At the balance sheet date, the only remaining leases related to the current Bonhill office in Clerkenwell, London (formerly belonging to Last Word Media) and the office in Hong Kong.

7. Called up share capital

Issued and fully paid ordinary shares of 1p each

Issue of shares

The Company issued 4,858,560 ordinary shares with a par value of 1p per share and for a price per share of 5p on 17/04/2020, and 45,141,440 ordinary shares with a par value of 1p per share and for a price per share of 5p on 01/05/2020.

The total number of authorised shares is equal to the total number of issued shares.

Rights of shares

Dividends and income - Ordinary shares are entitled to receive dividends as approved by the Board of Directors.

Voting rights - Ordinary shares are entitled to one share per vote at General Meetings. Deferred shares cannot be transferred.

Distribution - Upon liquidation of the Company, once all liabilities have been met, ordinary shareholders will receive the value paid up per share plus £100.

The Company has granted options to subscribe for ordinary shares of 1p each, as follows:

During the 12 month period, 1,569,996 share options were forfeited (12 months ended 31 December 2019: 462,498). Another 795,234 share options were waived due to the introduction of the new EMI scheme.

Share premium

The share premium account shows the amount subscribed for share capital in excess of nominal value, net of share issue costs.

Merger reserve

Consideration for the acquisition of Last Word Media included £2.000m of shares. The Group applied merger relief under the UK Companies Act s615 and so the value of the shares issued as consideration above their nominal value is included in a merger reserve.

8. Availability of this announcement

Copies of this announcement are available from the Company's website, www.bonhillplc.com.