TIDMBIDS
RNS Number : 7415L
Bidstack Group PLC
04 May 2020
4 May 2020
Certain information contained within this Announcement is deemed
by the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon
publication of this Announcement, this information is now
considered to be in the public domain.
Bidstack Group Plc
("Bidstack" or the "Company")
Preliminary Results for the year ended 31 December 2019
Bidstack Group Plc (LON: BIDS), the native in-game advertising
group, announces its audited results for the year ended 31 December
2019.
Financial Performance
-- Turnover of approx. GBP140,000 (FY 2018: GBP316,000)
reflecting the strategic decision to focus on significant
development work
-- Cash balance at 31 December 2019 of GBP3.1m (31 Dec 2018: GBP2.1m)
-- Adjusted loss before tax of GBP5.3m (FY 2018: GBP1.2m)
Operational Performance
-- Successful oversubscribed Placing in May 2019 raising GBP5.0m
-- Acquisition of Pubguard in August 2019 to protect Bidstack's
gaming inventory and enhance its SDK
-- Strategic partnership agreement signed with Dentsu Aegis Network in September 2019
-- Exclusive Rights secured over various titles including
Codemasters DiRT Rally 2 and Grid titles and Sports Interactive's
Football Manager 2020
-- Two-year trading agreement agreed in December 2019 with global marketing services group
-- Contracts signed with Xandr Invest (formerly AppNexus) and The Trade Desk
-- Agreement with Epic Games to make Bidstack's SDK available
for games using Unreal Games Engine
-- Working with the Internet Advertising Bureau (IAB) so that
programmatic advertisers will be able to use "in-game advertising"
on a self-serve basis in the same way they currently access display
and video inventory
-- Strengthened Board with appointment of Mike Hayes and Derek Wise as Non-Executive Directors
-- Established an Advisory Committee of leading individuals in
the video games and programmatic advertising industries
Post Period-end Highlights
-- Further exclusive agreement with Codemasters for upcoming
2020 title and appointment of industry gaming veteran, Andrew
House, to Advisory Committee
-- Lumen Research, an attention technology company that has
developed eye-tracking technology to help companies understand how
consumers interact with their products, was commissioned on behalf
of an automotive brand to better understand how in-game adverts
performed versus traditional advertising channels such as desktop
display, out of home and mobile display.
James Draper, CEO of Bidstack, said:
"In 2019 we have completed significant development work to
ensure Bidstack and our partners are able to make the most out of
the significant opportunities that lie ahead. New console launches,
the continued evolution of cloud computing and the phenomenal
growth in e-sports all provide strong tailwinds and are clear
indicators of a healthy, vibrant market. We remain absolutely
focused on our mission to become one of the world's foremost
advertising network for games, as we pioneer a new category of
'native in-game' advertising.
The Company continues with its strategy of prioritising
investment, in order to build a strong foundation on which to grow
and to create value for our shareholders.
We have successfully secured increasing demand side interest
from ad agencies and are focused on bolstering our supply side
through further agreements with content developers, like the
fantastic agreement recently announced with Codemasters.
COVID-19 disruption to the advertising industry, particularly in
the out of home and live sports segments, is leading media buyers
to seek digital alternatives for their brands. Our technology
enables them to do that and we are working closely with agency
groups to help them test, report and activate larger campaigns
across our growing portfolio of titles through this period.
We are confident that we are approaching this balance in the
right way which will lead to material revenues in the second half
of 2020."
The Company's Annual Report and Accounts for the year ended 31
December 2019 will be published today on the Company's website -
www.bidstackgroup.com . Copies will also be posted today to those
shareholders who have opted to receive physical copies.
Bidstack's Annual General Meeting will be held at Plexal, 14
East Bay Lane, The Press Centre, Here East, Queen Elizabeth Olympic
Park, Stratford, London on 28 May 2020 at 11:00 a.m.
Contacts
Bidstack Group Plc
James Draper, CEO via Buchanan
SPARK Advisory Partners Limited (Nomad) +44 (0) 203 368
Mark Brady / Neil Baldwin / James Keeshan 3550
Stifel Nicholas Europe Limited (Broker) +44 (0) 20 7710
Fred Walsh 7600
Buchanan Communications Limited
Chris Lane / Stephanie Watson / Kim
van Beeck +44 (0) 20 7466
bidstack@buchanan.uk.com 5000
Notes to editors
Bidstack is an advertising technology company which provides
dynamic, targeted and automated native in-game advertising for the
global video games industry across multiple platforms. Its
proprietary technology is capable of inserting adverts into natural
advertising space within video games across multiple video games
platforms (mobile, PC and console).
Bidstack's customers are games publishers and developers (on the
supply side), and advertising agencies, brands and programmatic
advertising platforms (on the demand side). Bidstack contracts
exclusive access to the native in-game advertising space within
video games from their developers or publishers and sells that
advertising space either direct to specific brands and their
agencies or through programmatic advertising platforms.
Chairman's statement
Introduction
2019 was a year of considerable progress towards Bidstack's goal
of becoming a leading platform to deliver in-game advertising in
video games. Some of the highlights of the year included Mike
Hayes, former CEO of SEGA Europe and America, joining the board in
April; an oversubscribed placing to raise GBP5 million in May;
Derek Wise, former CTO of Grapeshot and VP of Contextual
Intelligence with Oracle Data Cloud, joining the Board in July; our
first acquisition in August, on-line brand safety business
Minimised Media Limited (trading as Pubguard), signing our first
significant engagement with a major global advertising agency in
September and ending the year with a two year advertising trading
agreement.
Although the Company failed to meet its revenue targets for the
year, 2019 has been spent ensuring the foundations of the business
are sufficiently robust to achieve meaningful future growth. With
the strength of our Board and Advisory Committee, the engagement we
have achieved with leading international advertising agencies and
their clients, our ability to provide end-to-end programmatic
advertising with some of the world's largest demand-side platforms
("DSPs") and the growth of our team from 17 on 31 December 2018 to
49 at the
period end, the Board is content with Bidstack's evolution through the period under review.
During the current period, the unprecedented Covid-19 global
pandemic has caused some disruption to the business, primarily due
to a number of trade shows having been cancelled. This has clearly
had an impact on the face-to-face meetings that had been scheduled
to take place during those events. Despite this, the systems and
procedures we have in place, along with our technology-based
platform, are ensuring that, from an operational standpoint,
Bidstack's business is largely able to proceed as normally as
possible with our staff working remotely.
Background
Bidstack and its partners are in the forefront of the creation
of in-game advertising as a new advertising category which comes
with many technical, regulatory and commercial hurdles.
Bidstack's software facilitates the insertion of adverts into
natural advertising space (e.g. billboards) in video games. The
advertising is dynamic, targeted and automated, and works globally
across multiple platforms (PC, mobile and console). The key benefit
of native in-game advertising over non-native variants (e.g. video
rolls and banner ads) is that it appears authentic and "natural" to
the environment of the game and does not impact the gamer's
experience and cannot be excluded with ad-blocking software.
Advertisers can target the users they want to reach based on
age, gender and location and the software is able to display
different advertisements to different users playing the same game
so that adverts can be delivered to the players most relevant to a
particular brand.
Progress during 2019
As we stated in our unaudited interim results for the six months
ended 30 June 2019, during 2019 we made the strategic decision not
to prioritise the acquisition of new games and additional
advertising inventory in order to give our technical development
and product teams the freedom they needed to carry out significant
development work. In addition, we were not disappointing major
video games developers and publishers by having to hold off filling
their advertising inventory while necessary development work took
place.
In early August 2019, Bidstack completed its purchase of
Minimised Media Limited, trading as "Pubguard" for GBP300,000
satisfied by the issue of Bidstack shares. Pubguard reviews in-app
and mobile advertisements and desktop web content for offensive,
malicious, illegal ad content and malware. This software is being
used to protect Bidstack's gaming inventory and to enhance its
Software Development Kit ("SDK").
In late August we appointed Stifel Nicolaus Europe Limited
("Stifel") as our corporate broker to support our growth. Stifel is
an NYSE-listed full-service investment bank with a 100-person
global technology & internet banking team and offices across
the US, Europe and Asia. Stifel commenced research coverage of the
Company in March 2020.
In late September we entered into a strategic partnership
agreement with Dentsu Aegis Network ("DAN") encompassing a
partnership framework allowing DAN to scale access to Bidstack's
in-game inventory on a programmatic basis globally, giving video
game publishers frictionless access to one of the world's largest
agency holding groups.
On 18 December, following several months' work by the team, we
signed a two-year trading agreement with a global marketing
services group to assist brands embrace the full potential of
Bidstack's disruptive technology. The Board believes this level of
engagement represents a significant shift in approach from a major
advertiser looking to engage with an affluent, diverse and growing
gaming and esports audience on a larger scale.
For more information on the Group's technical and commercial
progress in 2019 please refer to the Chief Executive's Statement
set out below.
Board Appointments and Advisory Committee
During 2019 we added two talented and well connected new
Non-Executive Directors, Mike Hayes (formerly of SEGA, Codemasters
and Nintendo) and Derek Wise (Oracle Data Cloud, formerly of
Grapeshot and Jagex) who are bringing their skills and experience
to the business and are making a considerable impact.
During the period we also established an Advisory Committee
which has allowed Bidstack to engage with leading individuals in
the video games and programmatic advertising industries. More
information about the Advisory Committee is set out in the Chief
Executive's Statement below.
Financial Summary
The summary income results for the Company for the year under
review are as follows:
12 months ended 31 December 2019 2018
GBP000 GBP000
Sales 140 316
Gross profit 34 76
Total overheads 5,353 1,263
Adjusted (loss) before tax* (5,319) (1,187)
*Adjusted for transaction costs (2019: GBP0.04m) and RTO charges
(2018: GBP0.7 million) and the deemed cost of acquisition (2018:
GBP1.4 million)
The Company raised GBP5.0m in May 2019 as a result of a placing
of 40 million new ordinary shares with institutional and other
investors at 12.5 pence per share. In addition, the Company
received a further GBP0.7m following the exercise of 4,375,616
warrants issued in November 2017 at an exercise price of 20 pence
per warrant.
The Company ended 2019 with cash reserves of GBP3.1 million
(2018: GBP2.1 million). Cash management is a key focus within the
business. We expect to continue to have negative cash flows in
2020, as our strategic focus remains on the development of our
software platform alongside our product offering.
Outlook and Prospects
Although the Company has achieved significant engagement with
major global advertising agencies, including Dentsu Aegis, giving
the world's leading advertising agencies the comfort to buy and
report on native in-game advertising takes time and the Board
believes further building blocks are still required before those
revenues can be fully exploited.
The Board believes that the addressable market for video game
advertising will go through a period of substantial change over the
next three to five years, which Bidstack is well placed to take
advantage of. We believe that new console launches, the growth of
cloud-gaming and e-sports, coupled with legislative restrictions
affecting targeting via app and web-based advertising, should all
work in Bidstack's favour.
2020 will see a new generation of hardware launched into the
gaming market not least because both Microsoft and Sony have
announced plans to launch new consoles this year. The next
generation of Xbox, codenamed "Project Scarlett," is scheduled to
arrive this year, as is the Sony PlayStation 5.
The Company continues to work with some of the largest game
publishers in the world to make more inventory available to
advertisers and some of these games are currently at integration or
beta testing phase. However, the Company's focus continues to be on
games with higher user statistics, rather than on sheer numbers of
games, in order to maximise advertisers' access to targeted
demographics. The Board will update the market on significant new
games when it is able to do so.
Bidstack is also continuing its work with the Internet
Advertising Bureau ("IAB"), the trade group which sets technical
standards and best practices for the digital advertising industry,
to create a recognised advertising category for native in-game
advertising. When this work is completed, programmatic advertisers
will be able to use "in-game advertising" on a self-serve basis in
the same way they currently access display and video inventory.
With the connections Bidstack has made through the Advisory
Committee and Board members, the Directors believe the Company is
well-positioned strategically to capitalise on the commercial and
technical opportunities ahead. Bidstack will continue to add high
calibre individuals to the Advisory Committee to assist the Company
and the team on its stated goals.
As a result of the experience gained in 2019, the Board believes
that Bidstack's medium and longer term interests require the
Company to continue with its strategy of prioritising technical
investment over seeking short term revenues in order to take full
advantage of the potentially significant shifts in technology and
media planning capabilities which are underway. While we are
working hard to increase the breadth of our inventory of games in
H1 2020 and with some success, the Board continues to expect that
revenues in H1 2020, although higher than total revenues for 2019,
will continue to be minor and that material revenues for 2020 will
start to occur only in the second half.
On 6 April we were pleased to confirm that, as announced by the
Department for Digital, Culture, Media and Sport ("DCMS"), Bidstack
provided its technology to insert the important message "Stay Home
Save Lives" within Codemasters DiRT Rally 2.
The video games industry is currently witnessing record numbers
of daily active users and hours played ; concurrently Bidstack is
experiencing high levels of inbound demand from advertising
agencies and others. Nevertheless, in its planning for 2020 the
Board has taken a highly conservative view on revenue prospects and
believes it is right to do so, particularly given the currently
unknown duration and impact of Covid-19 related restrictions on
movement and face to face meetings. For 2020 Bidstack's focus
remains on securing significant commercial and technological deals
that will position the Company well for growth in the medium
term.
In the meantime we remain focussed on careful management of our
existing cash resources and expected trading and non-trading cash
receipts as we continue to grow the business.
Donald Stewart
Chairman
4 May 2020
Chief Executive's report
Introduction
This is my second report as Chief Executive of Bidstack Group
Plc.
In the current period COVID-19 has created an unprecedented
economic and social climate. Our first concern has been to ensure
the safety and wellbeing of all our staff, who are now working
safely from home.
That said, I would like to thank all my other directors and
staff at Bidstack for having driven the business forward and
achieved so much during 2019. I would also like to thank our
shareholders and investors.
Progress during 2019
2019 was a year in which Bidstack laid many of the foundations
which will enable us to progress towards our goal of becoming one
of the world's foremost advertising networks for video games,
leading with our native in-game advertising platform. If an
advertiser wants to place their brand in front of an engaged gamer
in a non-intrusive, contextual manner (we call it the native
in-game environment), our technology enables them to do so.
The Company undertook significant strides throughout 2019 in
terms of personnel, infrastructure, market positioning, demand and
supply interest.
As a result, Bidstack's inventory is now available to buy on The
Trade Desk, a huge technological accomplishment which has been made
possible by our impressive technical teams in Riga and London.
Native in-game advertising remains new territory and the work
we've achieved with our launch partners, SEGA and Codemasters,
enabled us, at the tail end of 2019, to secure our first trading
agreement with a global advertising agency group. Not only is this
a huge step for Bidstack and this new industry sector, it is also a
significant third-party endorsement of our technology and
strategy.
While still on a small scale, by the end of 2019 we were running
fully programmatic campaigns on our inventory of games.
As the Company also focused on advancing towards frictionless
scalability during the period under review, we also invested
heavily in our AdConsole, our proprietary adserver and centralised
platform, which allows campaigns to be monitored and reported on
seamlessly to our advertising agency and game developer
clientele.
More detail on our developments in specific areas of the
business are set out below:
Games
We have worked hand in glove with our friends at Codemasters in
2019 to deliver native in-game advertising into their DiRT Rally 2
and Grid titles.
In addition we extended our multi-year partnership with Sports
Interactive, SEGA's world-leading developer of football management
simulations, by a further three years giving Bidstack exclusive
rights to serve native in-game advertising within Football Manager
2020 with Bidstack's Software Development Kit ("SDK"), which was
released in November 2019.
A SDK is a sophisticated set of software tools, libraries, code
samples, processes and components built to incorporate features and
drive user behaviours.
This is the first title on which Bidstack's SDK is running live.
The SDK's functionality includes added brand safety and security
measures and allows game publishers to track the real-time
performance of their in-game inventory through our AdConsole.
Programmatic Advertising
The ability to provide programmatic advertising with related
reporting and analysis is critical to our business because it
unlocks digital advertising spend from the major advertising agency
groups.
During 2019 we delivered on our initial challenge to provide a
working end-to-end programmatic digital advertising platform, first
with demand side platform ("DSP") Avocet Systems Limited, a
significant technical milestone in our development, and then with
Platform 161. DSPs enable advertisers to target advertising
inventory, either direct or via an agency, that fits their campaign
demographics (e.g. age, gender, location etc.) and allows media
buyers to trade and optimise campaigns with real--time
reporting.
Our subsequent relationships with Xandr Invest (formerly known
as AppNexus) and The Trade Desk (Nasdaq: TTO), the operators of two
of the world's largest DSPs, have proven that native in-game
advertising can be traded programmatically. However, as we stated
in our interim results in September 2019, the roll-out of this new
ad format is a complex process but we are pleased that we have
already made strides on the journey.
Proof of our evolution in this area came in September 2019 in
the form of a pioneering agreement with global advertising giant
Dentsu Aegis and, in December, a two-year advertising trading
agreement for 2020 and 2021 with a leading global agency.
Other Technology
In early August 2019, we bought Minimised Media Limited. Under
the trading name "Pubguard" it reviews in-app and mobile
advertisements and desktop web content for offensive, malicious,
illegal ad content and malware.
During 2019 we developed both our proprietary lightweight SDK
and our proprietary adserver and centralised platform, AdConsole
which, as previously noted, enables automatic monitoring and
reporting on digital advertising campaigns . As I mentioned above,
Bidstack's SDK facilitates game publishers to track the real-time
performance of their in-game inventory through our AdConsole and
includes additional functionality for brand safety and security
enhanced by the integration of Pubguard's advertising verification
software.
As we announced in August, Epic Games, the creator of Fortnite,
Unreal, Gears of War, Shadow Complex, and the Infinity Blade series
of games, has agreed to make our SDK available for games built
using their Unreal Games Engine.
Commercial Developments
We have completely revised and rebuilt our web-site,
www.bidstack.com in 2019 to provide a much more informative and
attractive shop window for our industry profile and marketing and
adopted and installed a new CRM system.
During the period we commissioned Lumen Research Limited to
carry out studies using their eye tracking attention technology to
measure and predict visual engagement with advertisements across
several of our gaming titles. We were pleased to announce on 24
June 2019 that our ads outperformed online browsing norms across
all the titles tested, in some cases by more than double. In
particular, our ads performed well above industry standards with
gamers who play every day. We believe the findings of this study
demonstrate that Bidstack's in-game format is a powerful way for
brands to reach their target audience and to reach the
"unreachables" in a demonstrable way.
The Digital Trading Standards Group awarded us a Brand Safety
Seal which reassures our clients that we are taking the strongest
possible proactive steps to protect the integrity of the digital
advertising supply chain.
Staffing
Our rapid hiring programme has taken us from 17 employees on 31
December 2018 to 49 at 31 December 2019. The Bidstack team now
comprises many extremely talented and capable people with
impressive backgrounds and experience in related businesses. Senior
hires such as Lewis Sherlock from Verizon, Moritz Natalini from
King, Grace Cooke from Kargo, Adam Fisher from Unity and former
Ubisoft, Sony and Atari sales professional John Koronaios, to name
but a few, have strengthened the core group during the year.
We constituted our Advisory Committee to enable our team to
obtain assistance from an impressive array of industry stalwarts
from the video games and digital marketing industries in relation
to technical and commercial questions. I am grateful to all those
who have agreed to participate and slightly in awe that some of the
biggest names in the world of video games and adtech have publicly
and clearly chosen to associate themselves with Bidstack. With the
committee members we have been able to brainstorm and access major
gaming studios, advertising agency groups, leading technology
companies and gaming and advertising governing bodies. The Advisory
Committee includes luminaries such as Will Kassoy (former SVP of
Publishing at Activision Blizzard and CEO of AdColony) Ian
Hetherington ("Development Legend"), Jon Epstein (former CEO of
GameSpot and Double Fusion), Bryan Neider (former SVP of Electronic
Arts) and, most recently, Andrew House (former Global CEO of Sony
PlayStation).
We believe Bidstack can now access almost any significant
individual in the gaming and advertising worlds through our Board
and Advisory Board members and our management teams are fully
supported by decades worth of experience.
Industry Initiatives
Unlike in-app, TV, digital audio, out of home etc., native
in-game advertising hasn't been a recognised advertising category.
We are working with our partners from game developers, advertising
agencies, researchers and independent third-party verifiers to
assist the Internet Advertising Bureau (IAB) to standardise this
category.
For instance, setting the parameters for how "viewability" is
defined in video games, whether racing, stadium or open world
environment games, is crucial to how agencies can report on their
ad spend and verify impression numbers within an in-game. This has
been a significant technical challenge for our team to
overcome.
The establishment of sector wide standards should unlock
significant revenues. Bidstack has taken huge strides in the
process of standardising definitions for the in-game advertising
category and we will continue to do so through 2020 and beyond.
Other Developments
We are now open for business in the US following the opening of
an office in San Francisco in August and an office in New York in
October. We now have a full-time employee in each location.
Strategy
The Company pushes into 2020 with a clear team management and
organisational structure across the UK, Riga and the US. The
technological, governance, demand and supply teams are working
cohesively and are fully focused on ensuring the Company makes
continued significant strides.
Major technological and governance challenges are being overcome
as we bring the in-game advertising medium to the advertising
community. The Company is in advanced conversations with a number
of AAA game studios and we expect to add further advertising agency
trading agreements to our existing agreement, signed in 2019.
Covid-19 disruption to the advertising industry, particularly in
the out of home and live sports segments, is leading media buyers
to seek digital alternatives for their brands. It's no longer
"business as usual" in these significant areas. Agencies need to
innovate to assist their brand clients to reach targeted audiences.
Bidstack's technology enables them to do that and our team is
working closely with agency groups to help them test, report and
activate larger campaigns across our growing portfolio of titles
through this period.
With 2020 expected to see the launch of the PlayStation 5 and
Xbox's Series X, the focus now is for the Company to position
itself to capitalise on the next generation of hardware and the new
business models these will bring to the video gaming industry. This
approach continues to be the strategy during the current Covid-19
related macro-economic upheaval. As we set out in our update to the
market on 30 March 2020, the gaming sector now provides an
opportunity for brands and advertisers, including governmental
agencies, to target audiences, which are currently not reachable
through other mediums due to the restrictions in place across
multiple markets.
In summary, I believe that, while revenues for the first half of
2020 will be better than last year, they will remain low. The
impact of Covid-19 remains impossible to predict and we are taking
a highly conservative view on our revenues for the full year. That
said the work we have done in 2019 positions the business well to
build a highly scalable native in-game platform that can carve out
a significant position within the evolving video game advertising
and communications sector.
I look forward to updating you on further developments in this
exciting journey we find ourselves on as they arise.
James Draper
Chief Executive
4 May 2020
Strategic Report
Principal Activity
Bidstack is an advertising technology company which provides
dynamic, targeted and automated native in-game advertising for the
global video games industry across multiple platforms. Its
proprietary technology is capable of inserting adverts into natural
advertising space within video games across multiple video games
platforms (mobile, PC and console).
Going concern
The Board continues to adopt the going concern basis to the
preparation of the financial statements as is confident of the
Company continuing operations into the foreseeable future. This
assessment has been arrived at after the Board has considered
various alternative operating strategies should these be necessary
in the light of actual trading performance not matching the Group's
forecasts given the current macro-economic conditions, and are
satisfied that such revised operating strategies could be adopted,
if and when necessary. Specific attention needs to be drawn to the
comments made in respect of the impact the COVID-19 pandemic on
Going Concern and the approaches being taken by the Group to manage
and mitigate the additional operational and financial challenges
the environment presents.
The financial statements at 31 December 2019 show that the Group
generated an operating loss for the year of GBP5.2 million (2018:
GBP3.3 million) after accounting for acquisition related costs of
GBP0.045 million (2018: GBP2.1 million); with cash used in
operating activities of GBP4.5 million (2018: GBP2.0 million) and a
net increase in cash and cash equivalents of GBP1.04 million in the
year (2018: increase of GBP2.1 million). Group balance sheet also
showed cash reserves at 31 December 2019 of GBP3.1 million (2018:
GBP2.1 million). The Group is dependent on further equity
fundraising in order to operate as a going concern for at least
twelve months from the date of approval of the financial
statements. Although the entity has had past success in fundraising
and continues to attract interest from investors, making the Board
confident that such fundraising will be available to provide the
required capital, there can be no guarantee that such fundraising
will be available. Accordingly, this constitutes a material
uncertainty over going concern.
Key Performance Indicators
The Board's focus for 2020 is on expanding the number of games
in which its technology is employed, increasing its network of
advertising agency trading agreements and addressing definitional
issues in the sector including 'viewability' and associated third
party verification issues.
The Group's KPIs will provide a critical measure of the Group's
revenue potential and are evolving to reflect the Group's
progressing business model. Available advertising space, our
pipeline of additional future games, the installed base and active
user statistics for individual games and technological developments
with programmatic advertising platforms are all valuable indicators
of potential revenue. Content drives players, who can view our
brand safe advertising in an increasing theatre of distribution,
which ultimately generates advertising revenue.
For forward looking performance measurement, the Board will seek
to assess the Group's various engagements with new business
prospects, and the level and speed of their progress.
Principal risks and uncertainties
The Board places a high emphasis on being risk aware. The model
for the future development of the Group is reliant on its ability
to achieve a critical mass of quality native in-game advertising
inventory and its ability to derive revenue from brand and
advertising agencies who want to access the audience for Bidstack's
inventory.
We track risks and uncertainties that can impact the performance
of the Group, some of which are beyond the control of the Group.
These are reviewed at monthly board meetings where the Company's
performance is assessed against budget. This enables the board to
determine and mitigate the Company's risk environment, which
includes:
Risk: Retention of key staff Mitigation
The Group is dependent on key Bidstack's founders are significant
members of its management team. shareholders. In addition, the
Their services cannot be guaranteed, Group operates a share option
and the loss of their services scheme to incentivise employees
may have a near-term material and enable them and to benefit
effect on the Group's performance. from growth in the business.
There can be no assurance that The Board will continue to ensure
the Group will be able to attract that key personnel are appropriately
and retain all personnel necessary sourced, engaged and incentivised
for the future development and where required.
operation of the business.
Risk: Competition Mitigation
The Group's investment in technology The Directors believe that Bidstack
may be affected by the development has a significant advantage
of more successful technology in terms of its technology,
or applications by competitors products and services over its
who may have greater financial, currently known competitors.
marketing, operational and technological We focus on development progress
resources than the Group. and the strength of our IT team
in order to maintain this advantage
as far as practicable.
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Risk: IT services and infrastructure Mitigation
----------------------------------------
Like every other business dependent The Group's IT infrastructure
on the internet, the Group cannot is distributed across a multiple
guarantee that there will be server network. This ensures
no disruption in the availability that if one were to fail, then
or performance of the Bidstack the Group's architecture and
platform, or the terms on which content could still be accessed
it is made available, which by users via other access points.
could have a material adverse
effect on the business.
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Risk: Liquidity Mitigation
----------------------------------------
The Group's future cash position Management monitors the working
remains subject to the availability capital requirements of the
of funding and continued shareholder business to finance its growth
support. Until the Group reaches plans as part of its day to
a positive cash generative position, day control procedures.
the funding of its costs together The board regularly assesses
with future growth, place sustained cash flow projections to ensure
demand on the Group's overall that appropriate resources are
cash resources. The Group relies available to be drawn on, when
on being able to arrange and necessary.
maintain sufficient financing.
----------------------------------------
Risk: Business Interruption Mitigation
----------------------------------------
Ability to appropriately prepare We acknowledge the importance
for and respond to a crisis of proactively ensuring a consistent
or major disruption to key operations and effective business continuity
either across the Group, in management process across the
a key region/location, or via Group. The shut-down of parts
a critical supplier - such as of the global business world
the Group's business environment due to the virus pandemic presents
being subject to the conditions an environment which can increase
presented by the global impact audiences in the Gaming sector,
of the Coronavirus pandemic. mitigating certain demand-side
risks the Group faces.
----------------------------------------
Risk: Publishing partner growth Mitigation
----------------------------------------
Success of the Group's strategy The Group is in advanced conversations
relies on its on-going ability with number of AAA game studios
to secure additional games with in relation to the provision
appropriate advertising opportunities. of additional games . Games
There can be no assurance that developers and publishers are
the Group will maintain its incentivised to provide advertising
success in this area. in their games by the potential
to generate significant additional
revenues from advertising.
----------------------------------------
Risk: Converting client opportunities Mitigation
----------------------------------------
Success of the Group's strategy Bidstack has already secured
depends on its ability to generate a partnership agreement with
revenues from impressions of Dentsu Aegis, a leading global
advertisements seen by video advertising agency. The growth
game players and other observers of the popularity of video gaming
of the gaming environment. The should ensure that appropriate
major advertising agencies operating brands will want to use native
in the programmatic space have in-game advertising to reach
built up revenues from brands an active audience which, by
over a long period and may have and large, does not watch television
some discretion as to where or engage with other more traditional
advertising budgets are spent. media outlets. The group continues
There can be no assurance that to work with other leading advertising
the Group will be successful agencies to create additional
in persuading brands and agencies advertising trading agreements
that native in-game advertising and frameworks.
is an attractive avenue for
advertising in competition to
better understood and more traditional
alternatives.
----------------------------------------
Risk: Brand Safe Advertising Mitigation
space
----------------------------------------
It is imperative to established Native in-game advertising is
brands and their agencies that possibly the most brand safe
their ads do not appear on a advertising environment there
screen alongside other inappropriate is. Bidstack's platform can
content and advertisements. ensure that content is filtered
In addition, certain products so as not to be seen by those
and product types may not be who are too young or are resident
shown to game players based in territories where relevant
on age or product type restrictions. products are restricted. In
The appearance of ads by quality addition, Bidstack has copy
brands alongside offensive content clearance procedures with the
could result in a loss of trust games publishers to ensure restricted
by brands and agencies which content can be removed. Furthermore,
would have an adverse effect with its acquisition of Pubguard,
on the perception of the Group. Bidstack has enhanced its brand
safety and security features.
----------------------------------------
Employment without discrimination
The Company is committed to employ on the basis of aptitude and
ability. We hire and promote our people regardless of gender,
orientation, origin, creed, disability or any other inappropriate
discrimination.
Environmental and social
In our day-to-day business, we commit to comply with applicable
environmental laws, and the direct impact of our operations is low.
We also look to tread lightly through good housekeeping practices
such as reducing energy consumption, using sustainable resources
and recycling waste.
Directors, senior managers and employees
At 31 December 2019, there were six male directors of the
Company and the Company had twenty-two other employees.
Section 172 Statement
Under section 172 of the Companies Act 2006 ("Section 172"), a
director of a company must act in a way that they consider, in good
faith, and would most likely promote the success of the company for
the benefit of its members as a whole, taking into account the
non-exhaustive list of factors set out in Section 172.
Section 172 also requires directors to take into consideration
the interests of other stakeholders set out in Section 172(1) in
their decision making.
Bidstack Group Plc's ("Bidstack", "Group" or the "Company") key
stakeholders include its investors, employees, regulatory bodies,
suppliers and customers.
The Company's strategy is to expand and further monetise its
digital media platform and/or its associated complementary
technologies. Upon the successful implementation of the Company's
strategy, the Company will have an expanded range of internal and
external stakeholders, relations with which the Board will take
into consideration when making decisions on Company strategy.
Engagement with our members plays an essential role throughout
our business. We are cognisant of fostering an effective and
mutually beneficial relationship with our members. Our
understanding of our members is factored into boardroom discussions
regarding the potential long-term impacts of our strategic
decisions.
Post the reporting period end, the directors of the Company
("Directors") have continued to have regard to the interests of the
Company's stakeholders, including the potential impact of its
future activities on the community, the environment and the
Company's reputation when making decisions. The Directors also
continue to take all necessary measures to ensure the Company is
acting in good faith and fairly between members and is promoting
the success of the Company for its members in the long term.
The table below acts as our Section 172 statement by setting out
the key stakeholder groups, their interests and how the Company
engages with them. Given the importance of stakeholder focus,
long-term strategy and reputation to the Company, these themes are
also discussed throughout this Annual Report.
Stakeholder Why we engage How we engage
Our Investors We maintain and value regular
dialogue with our financial * Regular reports and analysis on investors and
stakeholders throughout shareholders
the year and place great
importance on our relationship
with them. We know that * Annual Report
our investors expect a
comprehensive insight into
the financial performance * Company website
of the Company, and awareness
of long-term strategy and
direction. As such, we * Shareholder circulars
aim to provide high levels
of transparency and clarity
about our results and long-term * AGM
strategy and to build trust
in our future plans.
* RNS announcements
* Press releases
---------------------------------- -----------------------------------------------------------
Our Employees Our people are at the heart
of our business. Effective * Evaluation and feedback processes for employees and
employee engagement leads management
to a happier, healthier
workforce who are invested
in the success of the Group * Competitive rewards packages
and who are all pulling
in the same direction.
Our engagement seeks to * Encouraging employee training and development
address any employee concerns
regarding working conditions,
health and safety, training * Flat structure communication with Board
and development, as well
as workforce diversity.
Engagement with our employees
starts from the top and
is driven effectively throughout
the Group.
---------------------------------- -----------------------------------------------------------
Regulatory The Group's operations
bodies are subject to a wide range * Company website
of laws, regulations, and
listing requirements including
data protection, tax, employment, * RNS announcements
environmental and health
and safety legislation,
along with contractual * Annual Report
terms.
* Direct contact with regulators
* Compliance updates at Board Meetings
* Consistent risk review
Our Customers Our customers have unique
requirements that require * Continual review of feedback from customers to ensure
diligence and trust in satisfaction
our offering. We aim to
listen to and engage with
our customers on a regular * Dedicated team for Client Services and Operations to
basis to ensure that we ensure consumer concerns are addressed
understand their needs
and can provide solutions
that address them. We ensure * Face to face meetings with customers to further
that information is easily develop relationships.
accessible and customer
concerns are dealt with
in a timely and professional * Investment in content control and consumer safety
manner. through acquisition.
------------------------------------ -------------------------------------------------------------
Our Suppliers We have a number of key
partners and suppliers * Building strong partnerships with suppliers through
with whom we have built open two-way dialogue and regular face to face
strong relationships with meetings.
and strongly value. We
establish effective engagement
channels to ensure our * Relationships with suppliers allow the ongoing review
relationships remain collaborative and monitoring of their performance levels
and forward focused , and
to foster relationships
of mutual trust and loyalty.
------------------------------------ -------------------------------------------------------------
The above statement should be read in conjunction with the
Strategic Report and the Company's Corporate Governance
Statement.
The Strategic Report was approved by the Board of Directors on 4
May 2020 and was signed on its behalf by:
James Draper
Chief Executive
4 May 2020
Directors' report
The directors present their report together with the audited
financial statements for the year ended 31 December 2019.
Principal activity
The principal activity of the Group is the provision of native
in-game advertising.
Results and dividends
The results of the Group for the year ended 31 December 2019
show a loss before tax and acquisition related costs for the year
of GBP5,319,681 (2018: loss of GBP1,187,291). The accounting loss
after tax and acquisition related costs was GBP5,364,514 (2018:
loss of GBP3,262,725). The directors do not recommend the payment
of a dividend (2018: GBPNil).
Financial instruments
Details of the use of financial instruments by the Company are
contained in note 23 of the financial statements.
Substantial shareholders
On 31 December 2019 the following shareholders held an interest
of 3% or more of the ordinary share capital of the Company:
Ordinary shares % of issued share
of 0.5p capital
James Draper 39,760,562 16.24
Optiva Securities 15,000,000 6.13
Simon Mitchell 9,979,298 4.08
Courtney Investments Limited 7,666,667 3.13
As at 31 December 2019 no other person had reported an interest
of 3% or more in the Company's ordinary shares.
Directors
The directors who held office during the year were as
follows:
Appointed Resigned
D Stewart Chairman - -
J Draper Executive - -
F Petruzzelli Executive - -
J McIntosh Executive - -
L Mair Non-Executive - 2 July 2019
J Taylor Non-Executive - 2 July 2019
M Hayes Non-Executive 10 April 2019 -
D Wise Non-Executive 2 July 2019 -
Directors' emoluments
Directors during the Salary/Fees/ Share-based Total Emoluments 2018
year Benefits payment
GBP GBP GBP GBP
D Stewart(1) Chairman 40,000 6,921 46,961 24,233
J Draper Executive 135,000 - 135,000 129,440
F Petruzzelli Executive 135,000 178,905 313,905 330,477
J McIntosh(2) Executive 95,000 14,667 109,667 12,161
L Mair Non-Executive 17,500 - 17,500 30,600
J Taylor(3) Non-Executive 17,500 - 17,500 54,871
M Hayes Non-Executive 21,818 32,366 54,184 -
D Wise Non-Executive 15,125 25,901 41,026 -
--------------- --------------- ------------- ------------ ----------------- --------
476,943 258,760 735,743 581,782
------------------------------- ------------- ------------ ----------------- --------
(1) Donald Stewart, Chairman, is also a consultant to Kepstorn
Solicitors. Fees for corporate and legal services of GBP79,186
(2018: GBP77,370) were charged by Kepstorn during the year ended 31
December 2019, of which GBP 24,000 related to Kepstorn's fees for
acting as the Company's solicitors on the corporate transaction for
the acquisition of Minimised Media Limited (2018: GBP60,000). As at
31 December 2019, GBPNil was owed to Kepstorn Solicitors (2018:
GBP19,080).
(2) John McIntosh, Finance Director, is also a Director of C P
Limited. Fees for consultancy services of GBPNil (2018: GBP9,000)
were charged by C P Limited during the year ended 31 December 2019.
As at 31 December 2019, GBPNil was owing to C P Limited (2018:
GBPNil).
(3) John Taylor, Non-Executive Director, is also a Partner of
Ugly Panda LLP. Fees for consultancy services to Bidstack Ltd of
GBPNil (2018: GBP26,471) were charged by Ugly Panda LLP during the
year ended 31 December 2019. As at 31 December 2019, GBPNil was
owing to Ugly Panda LLP (2018: GBP409).
Statement of compliance with the Corporate Governance Code
The Group complies with the Quoted Companies Alliance's
Corporate Governance Code (the "QCA Code") as revised and reissued
in May 2018.
Donald Stewart, in his capacity as Non-Executive Chairman, has
assumed responsibility for leading the Board effectively and
ensuring that the Group has appropriate corporate governance
standards in place and that these standards are observed and
applied within the Group as a whole.
The corporate governance arrangements that the Board has adopted
are intended to ensure that the Group delivers medium and long-term
value to its shareholders. The Board maintains a regular dialogue
with its major investors and other professional investors,
providing them with such information on the Group's progress as is
permitted by the AIM rules, MAR and the requirements of the
relevant legislation.
It should be noted that all the Directors are shareholders
and/or option holders in the Group and that both Mr Draper and Mr
Petruzzelli are founders and significant shareholders. The
Directors therefore view their own medium and long-term interests
to be integrally linked to the medium and long-term value of the
Group and, as such, the interests of the Directors are directly
aligned with those of the shareholders.
The Board currently consists of three Independent
Non-Executives, Donald Stewart, Mike Hayes and Derek Wise, and
three Executive Directors, James Draper, Francesco Petruzzelli and
John McIntosh.
Since the period end, as outlined in the Chairman's statement,
the Company has constituted an advisory committee of selected
individuals with experience in areas relevant to the business
growth, whose remit is to provide strategic input and direction to
the Board and to assist with introductions to key
counterparties.
The QCA Code sets out 10 principles that should be applied.
These are listed on the Company's website at www.bidstackgroup.com
together with an explanation of how the Company applies each of the
principles. Set out below are further disclosures on certain of
these principles.
Principle 1 - Business Model and Strategy
Bidstack is a provider of native in-game advertising that is
dynamic, targeted and automated, serving the global video games
industry across multiple platforms. Its proprietary technology is
capable of inserting adverts into natural advertising space within
video games.
Bidstack has two sets of customers. On the demand side are
advertising agencies, buyers for specific brands and operators of
programmatic advertising platforms. On the supply side are games
publishers, owners and developers.
As set out in the Chairman's statement, the Board has concluded
that the highest medium and long-term value can be delivered to its
shareholders by focusing the Group's resources during the first
half of 2019 on technical development.
For further information on the market, the future strategy of
the Group and the risks the Board consider to be the most
significant for potential investors, Shareholders are referred to
the Strategic Report.
Principle 4 - Risk Management
The Board has overall responsibility for the determination of
the Company's risk management objectives and policies and
recognises the need for an effective and well-defined risk
management process. The overall objective of the Board is to set
policies that seek to reduce risk as far as possible without unduly
affecting the Company's competitiveness and flexibility. The Board
is responsible for the monitoring of financial performance against
budget and forecast and the formulation of the Group's risk
appetite including the identification, assessment and monitoring of
the Group's principal risks.
For further information on the risks the Board consider to be
the most significant for potential investors, Shareholders are
referred to in the section headed "Principal risks and
uncertainties".
The Board has delegated certain authorities to committees, each
with formal terms of reference. As part of its terms of reference,
the Audit Committee is obliged, inter alia, to keep under review
the Group's internal financial controls systems that identify,
assess, manage and monitor financial risks, and other internal
control and risk management systems, review the adequacy and
security of the Group's arrangements for its employees and
contractors to raise concerns, in confidence, about possible
wrongdoing in financial reporting or other matters and ensure that
these arrangements allow proportionate and independent
investigation of such matters and appropriate follow up action,
review the Group's procedures for detecting fraud and review the
Group's systems and controls for the prevention of bribery.
Principle 5 - A Well-functioning Board of Directors
The Board is responsible for the management of the business of
the Group, setting the strategic direction of the Group and
establishing the policies of the Group. It is the Board's
responsibility to oversee the financial position of the Group and
monitor the business and affairs of the Group on behalf of
Shareholders, to whom the Directors are accountable. The primary
duty of the Board is to act in the best interests of the Group at
all times. The Board also addresses issues relating to internal
control and the Group's approach to risk management.
The Board consists of three Executive Directors, comprising the
Chief Executive Officer, Finance Director and Chief Technology
Officer, and three Non-Executive Directors.
Donald Stewart chairs the Board. The Executive Directors have
industry and technical knowledge and expertise (James Draper and
Fran Petruzzelli) and financial expertise (John McIntosh). The
Non-Executive Directors have legal, accounting, public market,
leadership and people management experience (Donald Stewart, Mike
Hayes and Derek Wise).
Liam O'Donoghue, who is a qualified corporate lawyer and an
experienced Company Secretary, is the Company Secretary.
The Board holds board meetings monthly and whenever issues arise
which require the urgent attention of the Board. The Executive
Directors are full time employees, and the Non-Executive Directors
are expected to devote at least two days per month to the affairs
of the Company and such additional time as may be necessary to
fulfil their roles.
The Board has also established an Audit Committee and a
Remuneration Committee. The Company considers that, at this stage
of its development, and given the current size of its Board, it is
not necessary to establish a formal Nominations Committee and
nominations to the Board will be dealt with by the whole Board.
This position will be reviewed on a regular basis by the
Directors.
All three Non-Executive Directors (Donald Stewart, Mike Hayes
and Derek Wise) are considered to be independent. The three
Non-Executive Directors sit on the Audit Committee, which is
chaired by Mike Hayes (who is a chartered accountant) and on the
Remuneration Committee, which is chaired by Derek Wise.
During the year under review the Board held ten regular board
meetings, at which all the members of the Board attended. In
addition, the Board met formally a further eighteen times for
specific purposes including in relation to the exercise of
warrants, to approve the Company's fundraise, to approve
publication of the Report and Accounts for 2018 and to approve
publication of the Interim Accounts for the period to 30 June 2019.
In addition to the Company's formal board meetings, all of the
directors regularly discuss matters affecting the business and the
strategy of the Group.
Principle 6 - Appropriate Skills and Experience of the
Directors
The Group believes that the current balance of skills within the
Board as a whole reflects a broad and appropriate range of
commercial, technical and professional skills relevant to the
sector in which the Group operates and its status as an AIM listed
company.
Biographical details of each of the Directors and officers are
set out below:
Donald Stewart - Non-Executive Chairman
Appointed to the Board on 1 December 2015, Donald is a solicitor
and has practiced corporate law, particularly focused on smaller
quoted companies, for almost 30 years. Between April 2013 and July
2015, he was on the board of AIM quoted Progility Plc and, before
that, had been a corporate partner in the London office of a global
law firm. He is a former director (and past chairman) of the Quoted
Companies Alliance. Donald brings extensive experience of quoted
companies, legal and regulatory issues, corporate governance and of
the role of chairman. As a practicing solicitor, Donald is required
to keep his skills up to date through continuing professional
development.
James Draper - Chief Executive Officer
James is the co-founder and Chief Executive Officer of Bidstack.
He initiated Bidstack's move into the gaming space in 2017 and led
the negotiations to secure the three-year contract with SEGA's
Football Manager title. He has been responsible for the day to day
management of Bidstack, as well as overseeing its strategic
direction. Prior to Bidstack, James spent several years working
within marketing and advertising with a range of clients in the
sports and b2b space. James brings core management, marketing and
strategic vision and an intimate knowledge of all aspects of the
Bidstack business to the Board.
Francesco Petruzzelli - Chief Technology Officer
Fran is the co-founder and Chief Technology Officer of Bidstack.
He created Bidstack's core artificial intelligence engine, heads
its development studio and oversees its team of developers and
programmers. Prior to Bidstack, Francesco founded Whaleslide, a
privacy conscious search engine allowing users to control all
aspects of their online lives from one webpage. Fran brings to the
Board software technical and developmental expertise and a
comprehensive understanding of the Bidstack product.
John McIntosh CA - Finance Director
After qualifying with Deloitte in 1994, John worked with Sony,
global advertising agency DMB&B (acquired by Publicis) and the
BBC before concentrating on online, multi-media businesses. He was
CFO and COO of DCD Media plc for five years until May 2012 then CFO
of Progility Plc to April 2015, growing the business from a GBP12
million to GBP60 million turnover. John has worked as a consultant
CFO for a number of entities in UK, Europe and Hong Kong, and since
October 2016 as CFO for McLaren GT, a joint venture with McLaren
Automotive. John brings significant experience of CFO and COO roles
in AIM-quoted companies. As a member of the Institute of Chartered
Accountants of Scotland John is required to keep his skills up to
date through the ICAS Professional Development Process.
Michael (Mike) Hayes - Non-Executive Director
Mike has a wealth of experience in the video games industry
having spent eight years at SEGA, latterly as CEO of SEGA Europe
and America. During his tenure, SEGA became established as a top 10
worldwide publisher of video games. Prior to SEGA, Mike spent five
years as Sales and Marketing Director on the Board of Codemasters,
the award-winning British developer and publisher of high quality
racing games. For over five years, Mike was Sales and Marketing
Director at Nintendo, responsible for hardware and software. Mike
is a former Investment Director at AIM listed Mercia Technologies
PLC, where he was Head of Digital and Digital Entertainment.
Derek Wise - Non-Executive Director
Derek, a highly experienced software technologist, became Chief
Technology Officer of Grapeshot in January 2017 responsible for
software development, product, support and operations globally.
Following Oracle's acquisition of Grapeshot in August 2018, Derek
is now VP of Contextual Intelligence with Oracle Data Cloud,
responsible globally for all products related to the contextual
understanding of data. Starting his technical career in 2000 with
Enron Broadband, in 2001 Derek founded GNi, turning it into one of
the fastest growing technology companies in the US. He then held a
series of Technical Director and CTO roles with CCP, TRC Family
Entertainment, Jagex and Benevolent AI.
Liam O'Donoghue from ONE Advisory Group acts as the Company
Secretary and is responsible for ensuring that Board procedures are
followed and that the Company complies with all applicable rules,
regulations and obligations governing its operation, as well as
helping the Chairman maintain good standards of corporate
governance. Liam is an ICSA Chartered Company Secretary.
The Directors have access to the Company's external advisers
e.g. Nomad, lawyers and auditors as and when required and are able
to obtain advice from other external advisers when necessary.
All Directors have access to independent legal advice at the
Company's expense.
The Board will seek to take into account Board imbalances for
future nominations, with areas to take into account including
gender balance.
Principle 7 - Evaluation of Board Performance
The first internal evaluation of the Board, its Committees and
individual Directors and officers is due to be undertaken in Q3 of
2019 and thereafter such evaluations will be undertaken on an
annual basis to ensure the Board is performing effectively as a
whole. Such evaluations will be undertaken with reference to how
the Director or officer has performed in fulfilling his/her
specific functions, attendance at Board and Committee meetings as
appropriate, and overall contribution to the Group as a whole.
The Board is aware that succession planning is a vital task and
the management of succession planning represents a key
responsibility of the Board. The balance of skills required of the
Board as a whole is under constant review as the business develops.
As a result the composition of the Board will change over time. The
Board is likely to appoint additional directors in the event that
outstanding people with relevant skills are able to make the
necessary commitment to drive the business forward.
Principle 8 - Corporate Culture
The Company recognises the importance of promoting an ethical
corporate culture, interacting responsibly with all stakeholders
and the communities and environments in which the Group operates.
The Board considers this to be essential if medium and long term
value is to be delivered.
The Directors consider that at present the Group has an open
culture facilitating comprehensive dialogue and feedback,
particularly with regard to providing a safe and enjoyable working
environment for employees and seeking to ensure they are
remunerated and incentivised appropriately.
The Group also works directly with games publishers and
developers to understand their unique requirements, participates in
gaming conferences and sponsors e-sport tournaments to get direct
feedback from the players and viewers of video games and seeks to
be regarded as a good corporate citizen by all its stakeholders
within its sphere of operation.
The Directors view their own medium and long-term interests to
be integrally linked to the medium and long-term value of the
Group, and, as such, the interests of the Directors are directly
aligned with those of the shareholders. The Group has adopted
policies to deal with corruption and bribery and to comply with the
UK Bribery Act.
Principle 10 - Shareholder Communication
The Board delegates authority to two Committees to assist in
meeting its business objectives, and the Committees meet
independently of Board meetings.
Audit Committee Report
The Audit Committee comprises Mike Hayes as Chairman, Derek Wise
and Donald Stewart and meets not less than twice a year. The
committee is responsible for making recommendations to the Board on
the appointment of auditors and the audit fee and for ensuring that
the financial performance of the Group is properly monitored and
reported. In addition, the Audit Committee receives and reviews
reports from management and the auditors relating to the interim
report, the annual report and accounts and the internal control
systems of the Group.
As noted above the Audit Committee is also responsible for
reviewing the Group's internal financial controls systems that
identify, assess, manage and monitor financial risks, other
internal control and risk management systems and other aspects of
risk management.
During the year under review, the Audit Committee was
responsible for adopting a new Financial Reporting Procedures
Manual which was adopted by the Company on 31 August 2018. In
addition, the Audit Committee has worked with and reviewed the work
of the Company's auditors in the production of the Report and
Accounts of the Company for the year ended 31 December 2019 set out
in this document.
Remuneration Committee Report
The Remuneration Committee comprises Derek Wise as Chairman,
Mike Hayes and Donald Stewart meets not less than twice each year.
The committee is responsible for the review and recommendation of
the scale and structure of remuneration for senior management,
including any bonus arrangements or the award of share options with
due regard to the interests of the Shareholders and the performance
of the Enlarged Group.
During the year under review, the Remuneration Committee made
recommendations to the board in relation to the salaries and
bonuses of the Chief Executive, the Chief Technical Officer and the
Finance Director and, separately, in relation to the issue of share
options to certain employees of the Group. The amounts of
remuneration for each Director are set out above. These include
basic salary, bonus and the estimated monetary value of benefits in
kind.
Director's interests
The beneficial interests of the directors of the Company in the
ordinary share capital of the Company and options and warrants to
purchase such shares were:
31 December
2019
Warrants Options
Director Ordinary Ex. Ex. Price Ex. Price Ex. Ex. Price Ex. Ex.
Shares Price 1.14p 6p Price 20p Price Price
5p 14.4p 31.75p 50p
D Stewart 1,149,773 250,103 - - - 1,000,000 - -
J Draper 39,760,562 - - - - 5,000,000 - -
F
Petruzzelli 5,750,000 - 4,799,500 7,500,000 - 10,000,000 - -
J McIntosh 200,000 - - 1,000,000 - 500,000 - -
M Hayes - - - - 700,000 300,000 - -
D Wise - - - - - - 700,000 300,000
31 December
2018
Warrants Options
Director Ordinary Ex. Price Ex. Price Ex. Price Ex. Price Ex. Price
Shares 5p 20p 20p 6p 1.14p
D Stewart 989,733 250,103 25,000 - - -
J Draper 41,260,562 - - 5,000,000 - -
F Petruzzelli 7,250,000 - - 10,000,000 7,500,000 4,799,500
J McIntosh - - - - 1,000,000 -
J Taylor 560,000 500,205 15,000 - - -
L Mair 1,041,666 250,103 62,500 - - -
Going concern
The Group is dependent on further equity fundraising in order to
operate as a going concern for at least twelve months from the date
of approval of the financial statements. Although the entity has
had past success in fundraising and continues to attract interest
from investors, making the Board confident that such fundraising
will be available to provide the required capital, there can be no
guarantee that such fundraising will be available. Accordingly,
this constitutes a material uncertainty over going concern.
Auditors
All of the current Directors have taken all the steps that they
ought to have taken to make themselves aware of any information
needed by the Group's auditors for the purposes of their audit and
to establish that the auditors are aware of that information.
The directors are not aware of any relevant audit information of
which the auditors are unaware.
By order of the Board
Donald Stewart
Chairman
4 May 2020
Statement of Directors' responsibilities
The Directors are responsible for preparing the Strategic
Report, the Directors' Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the Directors
have elected to prepare the Group and Company financial statements
in accordance with International Financial Reporting Standards
("IFRSs") as adopted by the European Union. Under company law, the
directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Group and Company and of the profit or loss of the
Group and Company for that period. The Directors are also required
to prepare financial statements in accordance with the rules of the
London Stock Exchange for companies trading securities on AIM.
In preparing these financial statements, the Directors are
required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and accounting estimates that are reasonable and prudent;
- state whether the financial statements have been prepared in
accordance with IFRSs as adopted by the European Union subject to
any material departures disclosed and explained in the financial
statement period; and
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company's website. Legislation in the United Kingdom governing the
preparation and dissemination of the financial statements and other
information included in annual reports may differ from legislation
in other jurisdictions.
Independent auditor's report to the members of Bidstack Group
Plc
Opinion
We have audited the financial statements of Bidstack Group plc
(the 'parent company') and its subsidiaries (the 'group') for the
year ended 31 December 2019 which comprise a consolidated statement
of comprehensive income, a consolidated statement of financial
position, a company statement of financial position, a consolidated
statement of changes in equity, a company statement of changes in
equity, a consolidated statement of cash flows and a company
statement of cash flows and notes to the financial statements,
including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
-- give a true and fair view of the state of the group's and of
the parent company's affairs as at 31 December 2019 and of the
group's loss for the year then ended;
-- have been properly prepared in accordance with IFRSs as
adopted by the European Union; and
-- have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Material Uncertainty Related to Going Concern
Note 2 of these financial statements describes how the business
is dependent on further equity funding to sustain itself over the
following year. This condition indicates that a material
uncertainty exists that may cast significant doubt on the entity's
ability to continue as a going concern. The auditor's opinion is
not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Going concern
Due to the continued losses Our audit work included, but
made (GBP5.2 million in 2019) was not restricted to the following:
there is a risk that the Group
may not have sufficient resources We reviewed the cash flow forecasts
to continue trading for the and budgets. We scrutinized
foreseeable future. these and challenged the assumptions
made by management.
We reviewed the forecasts against
post year-end actuals and management
accounts in order to assess
if the Group has sufficient
resources to continue trading
for the foreseeable future.
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, in evaluating the effect of misstatements. We
consider materiality to be the magnitude by which misstatements,
including omissions, could influence the economic decisions of
reasonable users that are taken based on the financial statements.
Importantly, misstatements below these levels will not necessarily
be evaluated as immaterial as we also take into account the nature
of identified misstatements, and the particular circumstances of
their occurrence, when evaluating their effect on the financial
statements as a whole.
We consider total assets to be the financial metric of most
interest to shareholders and other users of the financial
statements.
We determined materiality for the Group to be GBP84,000 which is
2% of total assets.
Performance materiality is the application of materiality at the
individual account or balance level set at an amount to reduce to
an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality for
the financial statements as a whole. Performance materiality for
the Group was set at GBP63,000.
We agreed with the audit committee that we would report to the
committee all individual audit differences identified during the
course of our audit in excess of GBP4,200. We also agreed to report
differences below these thresholds that, in our view warranted
reporting on qualitative grounds.
An overview of the scope of our audit
We performed a full scope audit of Bidstack Group plc and its
two subsidiaries - Bidstack Limited and Minimised Media
Limited.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We
have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
the parent company and its environment obtained in the course of
the audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by
law are not made; or
-- we have not received all the information and explanations we
require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and the parent company's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities .
This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an Auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Ian Cliffe (Senior Statutory Auditor)
for and on behalf of Haysmacintyre LLP, Statutory Auditors
10 Queen Street Place
London
EC4R 1AG
Date: 4 May 2020
Consolidated statement of comprehensive income
for the year ended 31 December 2019
Note Year ended Year ended
31 December 31 December
2019 2018
GBP GBP
Revenue 140,391 316,906
Cost of sales (106,697) (240,849)
----------- -----------
Gross profit 33,694 76,057
Administrative expenses 5 (5,353,375) (1,263,348)
----------- -----------
Operating loss before acquisition
related costs (5,319,681) (1,187,291)
Transaction costs (44,833) (713,744)
Share based payment on reverse
acquisition - (1,411,478)
----------- -----------
Operating (loss) (5,364,514) (3,312,513)
Finance income 8 8,060 -
Finance costs 8 (967) (729)
(Loss) before taxation (5,357,421) (3,313,242)
Taxation 9 148,141 50,517
----------- -----------
(Loss) for the year (5,209,280) (3,262,725)
Other comprehensive income
Total other comprehensive income - -
----------- -----------
Total comprehensive (loss) for
the year (5,209,280) (3,262,725)
=========== ===========
Loss per share - basic and diluted
(pence) 10 (2.26) (4.23)
Consolidated statement of financial position
as at 31 December 2019
Note 31 December 31 December
2019 2018
ASSETS GBP GBP
Non-current assets
Intangible assets 12 310,960 43,842
Property, plant and equipment 13 22,377 15,752
Right of use asset 15 26,710 -
============ ============
Total non-current assets 360,047 59,594
============ ============
Current assets
Trade and other receivables 17 533,207 807,691
Cash and cash equivalents 18 3,148,540 2,106,557
------------ ------------
Total current assets 3,681,747 2,914,248
============ ============
Total assets 4,041,794 2,973,842
============ ============
EQUITY AND LIABILITIES
Equity
Share capital 20 5,516,759 5,286,429
Share premium account 20 23,283,880 18,000,247
Share-based payment reserve 20 734,365 258,060
Merger relief reserve 20 6,508,673 6,213,021
Reverse acquisition reserve 20 (23,320,632) (23,320,632)
Warrant reserve 20 71,480 71,480
Retained losses 20 (9,183,725) (3,974,445)
------------ ------------
Total equity 3,610,800 2,534,160
============ ============
Non-current liabilities
Lease liability 14 8,300 -
------------ ------------
Total non-current liabilities 8,300 -
============ ============
Current liabilities
Trade and other payables 19 406,672 439,682
Lease liability 14 16,022 -
Total current liabilities 422,694 439,682
============ ============
Total equity and liabilities 4,041,794 2,973,842
============ ============
The financial statements were approved by the board of Directors
on 4 May 2020 and signed on its behalf by:
Donald Stewart
Chairman of Bidstack Group Plc
The notes form part of these financial statements.
Company statement of financial position
as at 31 December 2019
Note 31 December 31 December
2019 2018
ASSETS GBP GBP
Non-current assets
Right of use asset 15 26,710 -
Investments 16 7,477,841 7,177,841
------------ ------------
Total non-current assets 7,504,551 7,177,841
============ ============
Current assets
Trade and other receivables 17 4,638,373 846,654
Cash and cash equivalents 18 3,040,326 2,087,120
------------ ------------
Total current assets 7,678,699 2,933,774
============ ============
Total assets 15,183,250 10,111,615
============ ============
EQUITY AND LIABILITIES
Equity
Share capital 20 5,516,759 5,286,429
Share premium account 20 23,283,880 18,000,247
Share-based payment reserve 20 734,365 258,060
Merger relief reserve 20 6,508,673 6,213,021
Warrant reserve 20 76,457 76,457
Retained losses 20 (21,036,180) (19,849,761)
------------ ------------
Total equity 15,083,954 9,984,453
============ ============
Non-current liabilities
Lease liability 14 8,300 -
------------ ------------
Total non-current assets 8,300 -
============ ============
Current liabilities
Trade and other payables 19 74,974 127,162
Lease liability 14 16,022 -
Total current liabilities 90,996 127,162
============ ============
Total equity and liabilities 15,183,250 10,111,615
============ ============
As permitted by Section 408 of the Companies Act 2006, the
income statement of the parent Company is not presented as part of
these financial statements. The parent Company's loss for the
financial year was GBP1,186,419 (2018: loss of GBP1,231,774).
The financial statements were approved by the board of Directors
on 4 May 2020 and signed on its behalf by:
Donald Stewart
Chairman of Bidstack Group Plc
The notes form part of these financial statements.
Consolidated statement of changes in equity
for the year ended 31 December 2019
Share-based Merger Reverse Capital
Share Share payment relief acquisition redemption Warrant Retained
capital premium reserve reserve reserve reserve reserve losses Total equity
GBP GBP GBP GBP GBP GBP GBP GBP GBP
Balance as
at 1 January
2018 137 669,674 17,435 - - 23 - (711,720) (24,451)
Parent company
reflected
on reverse
acquisition 4,417,442 15,009,243 - - - - - - 19,426,685
Issue of
Bidstack
Ltd shares
prior to
acquisition 19 445,968 - - - - - - 445,987
Issue of
Bidstack
Ltd shares
to Bidstack
Group prior
to
acquisition 13 399,987 - - (400,000) - - - -
Reverse
acquisition
adjustment (169) (1,515,629) (17,435) - (16,142,791) (23) - - (17,676,047)
Issue of
shares 291,667 3,208,334 - - - - - - 3,500,001
Issue of
consideration
shares 564,820 - - 6,213,021 (6,777,841) - - - -
Issue of
adviser
shares 12,500 137,500 - - - - - - 150,000
Costs of
raising
equity - (307,297) - - - - - - (307,297)
Share-based
payments - (47,533) 258,060 - - - 71,480 - 282,007
Loss and total
comprehensive
income for
the year - - - - - - - (3,262,725) (3,262,725)
Balance as
at 31
December
2018 5,286,429 18,000,247 258,060 6,213,021 (23,320,632) - 71,480 (3,974,445) 2,534,160
=========== ============ =========== =========== ============== ========== ======== ============= =============
Issue of
shares 225,982 5,541,549 - - - - - - 5,767,531
Issue of
consideration
shares 4,348 - - 295,652 - - - - 300,000
Costs of
raising
equity - (257,916) - - - - - - (257,916)
Share-based
payments - - 476,305 - - - - - 476,305
Loss and total
comprehensive
income for
the year - - - - - - - (5,209,280) (5,209,280)
Balance as
at 31
December
2019 5,516,759 23,283,880 734,365 6,508,673 (23,320,632) - 71,480 (9,183,725) 3,610,800
=========== ============ =========== =========== ============== ========== ======== ============= =============
The notes form part of these financial statements.
Company statement of changes in equity
for the year ended 31 December 2019
Share-based Merger relief Warrant Retained
Share capital Share premium payment reserve reserve reserve losses Total equity
GBP GBP GBP GBP GBP GBP GBP
Balance as
at 1 January
2018 4,417,442 15,009,243 - - 4,977 (18,617,987) 813,675
Issue of shares 291,667 3,208,334 - - - - 3,500,001
Issue of
consideration
shares 564,820 - - 6,213,021 - - 6,777,841
Issue of adviser
shares 12,500 137,500 - - - - 150,000
Costs of raising
funds - (307,297) - - - - (307,297)
Share-based
payments - (47,533) 258,060 71,480 - 282,007
Loss and total
comprehensive
income for
the year - - - - - (1,231,774) (1,231,774)
------------- ------------- ---------------- ------------- --------- ------------ ------------
Balance as
at 31 December
2018 5,286,429 18,000,247 258,060 6,213,021 76,457 (19,849,761) 9,984,453
Issue of shares 225,982 5,541,549 - - - - 5,767,531
Issue of
consideration
shares 4,348 - - 295,652 - - 300,000
Costs of raising
funds - (257,916) - - - - (257,916)
Share-based
payments - - 476,305 - - - 476,305
Loss and total
comprehensive
income for
the year - - - - - (1,186,419) (1,186,419)
Balance as
at 31 December
2019 5,516,759 23,283,880 734,365 6,508,673 76,457 (21,036,180) 15,083,954
============= ============= ================ ============= ========= ============ ============
The notes form part of these financial statements.
Consolidated statement of cash flows
for the year ended 31 December 2019
31 December 31 December
2019 2018
GBP GBP
Cash flows from operating activities
(Loss) before taxation (5,357,421) (3,313,242)
Adjustments for:
Amortisation - Intangibles 18,859 4,407
Amortisation - Right of use asset 5,337 -
Depreciation 8,330 3,134
Share based payment on reverse acquisition - 1,411,478
Equity settled share-based payments 476,305 282,007
Doubtful debts expenses 325,200 -
Interest received (8,060) -
Interest paid 967 729
(4,530,483) (1,611,487)
Changes in working capital
Decrease/(increase) in trade and other
receivables 151,646 (602,523)
(Decrease)/increase in trade and other
payables (80,204) 208,715
----------- -----------
Cash used in operations (4,459,041 (2,005,295)
Taxation received - 27,623
----------- -----------
Net cash used in operations (4,459,041) (1,977,672)
Cash flow from investing activities
Investment in intangible assets (370) (46,687)
Cash acquired with subsidiary 6,683 208,817
Investment in property, plant and equipment (14,272) (17,524)
----------- -----------
Net cash flow (used in)/generated from
investing activities (7,959) 144,606
Cash flow from financing activities
Proceeds from issue of share capital 5,767,531 4,245,988
Cost of issue (257,916) (307,297)
Interest paid (967) (729)
Principal paid on finance leases (7,725) -
Interest received 8,060 -
Net cash generated from financing activities 5,508,983 3,937,962
Increase in cash and cash equivalents
in the year 1,041,983 2,104,896
Cash and cash equivalents at beginning
of year 2,106,557 1,661
Cash and cash equivalents at the end of
the year 3,148,540 2,106,557
=========== ===========
The notes form part of these financial statements.
Company statement of cash flows
for the year ended 31 December 2019
31 December 31 December
2019 2018
GBP GBP
Cash flows from operating activities
(Loss) before taxation (1,186,419) (1,231,774)
Adjustments for:
Amortisation - Right of use asset 5,337 -
Expenses financed by shares - 150,000
Share-based payments 476,305 282,007
Interest received (8,060) -
Interest paid 967 -
(711,870) (799,767)
Changes in working capital
Decrease/(increase) in trade and other
receivables 36,524 (764,540)
(Decrease)/increase in trade and other
payables (52,187) 22,865
Net cash (used in) operations (15,663) (1,541,442)
Cash flow from investing activities
Change in intercompany (3,828,244) -
Investment in subsidiary undertakings - (400,000)
Net cash flow used in investing activities (3,828,244) (400,000)
Cash flow from financing activities
Issue of ordinary shares for cash 5,767,531 3,500,000
Costs directly related to issue of shares (257,916) (307,297)
Interest paid on lease liabilities (967) -
Principal paid on finance leases (7,725) -
Interest received 8,060 -
Net cash generated from financing activities 5,808,983 3,192,703
Increase in cash and cash equivalents
in the year 953,206 1,251,261
Cash and cash equivalents at beginning
of year 2,087,120 835,859
Cash and cash equivalents at the end
of the year 3,040,326 2,087,120
=========== ===========
The notes form part of these financial statements.
Notes to the financial statements
1 General information
Bidstack Group Plc (the "Company") is a public limited company
and is incorporated and domiciled in the UK. The address of the
registered office is 201 Temple Chambers, 3-7 Temple Avenue,
London, EC4Y 0DT. The registered number of the company is
04466195.
2 Summary of significant accounting policies
Basis of preparation
The consolidated financial statements consolidate those of the
Company and its subsidiary (together the "Group"). The financial
statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs) and International Financial
Reporting Interpretation Committee (IFRIC) interpretations as
endorsed by the European Union ("IFRS-EU"), and those parts of the
Companies Act 2006 applicable to companies reporting under
IFRS.
Management has implemented logistical and organisational changes
to underpin the Group's resilience to the impact felt by the
COVID-19 pandemic, with the key focus being protecting all
personnel, minimising the impact on critical work streams and
ensuring business continuity. The effect on the economy may impact
the Group in varying ways, which could lead to a direct bearing on
the Group's ability to generate future cash flows for working
capital purposes. The inability to gauge the length of such
disruption further adds to this uncertainty. For these reasons the
generation of sufficient operating cash flows remain a risk.
Management is closely monitoring commercial and technical aspects
of the Group's operations to mitigate risk, and believes the Group
will have access to sufficient working capital to continue
operations for the foreseeable future.
Consolidation
The consolidated financial statements consolidate the financial
statements of the Company and the results of its subsidiary
undertakings Bidstack Limited and Minimised Media 'Pubguard' made
up to 31 December 2019.
Subsidiaries are entities over which the Group has control. The
Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
Although the consolidated financial information has been issued
in the name of Bidstack Group Plc, the legal parent, it represents
in substance continuation of the financial information of the legal
subsidiary, Bidstack Ltd.
Going concern
The financial statements have been prepared on a going concern
basis which assumes that the Group will be able to continue trading
for the foreseeable future. The Group's business activities,
together with the factors likely to affect its future development,
performance and position are set out in the Chairman's
statement.
The financial statements at 31 December 2019 show that the Group
generated an operating loss for the year of GBP5.2 million (2018:
GBP3.3 million) after accounting for acquisition related costs of
GBP0.045 million (2018: GBP2.1 million); with cash used in
operating activities of GBP4.5 million (2018: GBP2.0 million) and a
net increase in cash and cash equivalents of GBP1.04 million in the
year (2018: increase of GBP2.1 million). Group balance sheet also
showed cash reserves at 31 December 2019 of GBP3.1 million (2018:
GBP2.1 million). The Group is dependent on further equity
fundraising in order to operate as a going concern for at least
twelve months from the date of approval of the financial
statements. Although the entity has had past success in fundraising
and continues to attract interest from investors, making the Board
confident that such fundraising will be available to provide the
required capital, there can be no guarantee that such fundraising
will be available. Accordingly, this constitutes a material
uncertainty over going concern.
The Board has considered various alternative operating
strategies should these be necessary in the light of actual trading
performance not matching the Group's forecasts given the current
macro-economic conditions, and are satisfied that such revised
operating strategies could be adopted, if and when necessary.
Specific attention needs to be drawn to the comments made in
respect of the impact the COVID-19 pandemic on Going Concern and
the approaches being taken by the Group to manage and mitigate the
additional operational and financial challenges the environment
presents.
New standards, interpretations and amendments not yet
effective
There are several standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting periods that the group has decided
not to adopt early. The most significant of these is are as
follows, which are all effective for the period beginning 1 January
2020:
-- IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors
(Amendment - Definition of Material)
-- IFRS 3 Business Combinations (Amendment - Definition of Business)
-- Revised Conceptual Framework for Financial Reporting
-- Interest Rate Benchmark Reform (IBOR) reform Phase 1
(Amendments to IFRS 9, IAS 39 and IFRS 7)
Bidstack Group Plc is currently assessing the impact of these
new accounting standards and amendments.
Revenue Recognition
Revenue represents amounts receivable for goods and services
provided in the normal course of business, and excludes intragroup
sales, Value Added Tax and trade discounts. Revenue comprises:
-- Sale of advertising space: the value of goods and services is
recognised across the period of use.
-- Sale of reseller rights: the value of goods and services is
recognised upon agreement.
-- Sale of development programmes and content creation: the
value of goods and services supplied is recognised on delivery of
content and accepted by customers.
-- Sponsorship income: the value of goods and services is
recognised over the time period to which it relates.
Net finance costs
Finance costs comprise interest on bank loans and other interest
payable. Interest on bank loans and other interest is charged to
the Statement of Comprehensive Income over the term of the debt
using the effective interest rate method so that the amount charged
is at a constant rate on the carrying amount.
Finance income comprises interest receivable on loans to related
parties. Interest income is recognised in the Statement of
Comprehensive Income as it accrues using the effective interest
method.
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the Statement of Comprehensive
Income except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
Taxation
Current tax is recognised as the amount of corporation tax
payable in respect of taxable profit for the current or past
reporting periods using tax rates and laws that have been enacted
or substantively enacted by the reporting date.
Deferred tax is recognised in respect of all timing differences
at the reporting date, except as otherwise indicated.
Deferred tax assets are only recognised to the extent that it is
probable that they will be recovered against the reversal of
deferred tax liabilities or other future taxable profits.
Deferred tax is calculated using the tax rates and laws that
have been enacted or substantively enacted by the reporting date
that are expected to apply to the reversal of the timing
difference.
With the exception of changes arising on initial recognition of
a business combination, the tax expense/(income) is presented
either in the income statement, other comprehensive income or
equity depending on the transaction that resulted in the tax
expense/(income).
Deferred tax liabilities are presented within provisions for
liabilities and deferred tax assets within debtors. Deferred tax
assets and deferred tax liabilities are offset only if:
- the company has a legally enforceable right to set off current
tax assets against current tax liabilities, and
- the deferred tax assets and deferred tax liabilities relate to
corporation tax levied by the same taxation authority on either the
same taxable entity or different taxable entities which intend
either to settle current tax liabilities and assets on a net basis,
or to realise the assets and settle the liabilities
simultaneously.
Research and Development tax credits are not recognised as
receivables until the claims have been submitted and agreed by
HMRC.
Valuation of investments
Investment in subsidiary undertakings are accounted for at cost
less impairment. Advances to subsidiaries are initially recorded at
fair value based on a market rate of interest and subsequently at
amortised cost. The difference between funds advanced and fair
value is recorded in investments.
Impairment of fixed asset investments
An impairment review of fixed asset investments is conducted
annually, and any resulting impairment loss is measured and
recognised on a consistent basis.
Leased assets
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for:
- Leases of low value assets; and
- Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in
the lease unless (as is typically the case) this is not readily
determinable, in which case the incremental borrowing rate on
commencement of the lease is used.
On initial recognition, the carrying value of the lease
liability also includes:
- amounts expected to be payable under any residual value guarantee;
- any penalties payable for terminating the lease, if the term
of the lease has been estimated on the basis of the termination
option being exercised.
Right of use assets are initially measured at the amount of the
lease liability, reduced for any lease incentives received, and
increased for:
- lease payments made at or before commencement of the lease;
- initial direct costs incurred; and
- the amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased
asset.
Subsequent to initial measurement, lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining
term of the lease or over the remaining economic life of the asset
if, rarely, this is judged to be shorter than the lease term. When
the Group revises its estimate of the term of any lease (because,
for example, it re-assesses the probability of a lessee extension
or termination option being exercised), it adjusts the carrying
amount of the lease liability to reflect the payments to make over
the revised term, which are discounted at the same discount rate
that applied on lease commencement.
An equivalent adjustment is made to the carrying value of the
right-of-use asset, with the revised carrying amount being
amortised over the remaining (revised) lease term.
Goodwill
Goodwill represents the difference between amounts paid on the
cost of a business combination and the fair value of Bidstack
Group's share of the identifiable assets and liabilities of the
acquiree at the date of acquisition. Subsequent to initial
recognition, goodwill is measured at cost less accumulated
impairment losses.
Intangible assets
An intangible asset, which is an identifiable non-monetary asset
without physical substance, is recognised to the extent that it is
probable that the expected future economic benefits attributable to
the asset will flow to the Group and that its cost can be measured
reliably, the asset is deemed to be identifiable when it is
separable or when it arises from contractual or other legal
rights.
Amortisation is charged on a straight-line basis through the
profit or loss. The rates applicable, which represent the
directors' best estimate of the useful economic life, are:
- Website costs - 5 years
- Trademarks - 10 years
- Brand - 5 years
- Software - 5 years
Property, plant and equipment
Items of property, plant and equipment are initially recognised
at cost. As well as the purchase price, cost includes directly
attributable costs. Depreciation is provided on all items of
property, plant and equipment, so as to write off their carrying
value over their expected useful economic lives. It is provided at
the following rates:
- Computer equipment - 33.33% straight line
- Office equipment - 20% straight line
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
call with banks and other short-term highly liquid investments that
are readily convertible into known amounts of cash and which are
subject to an insignificant risk of changes in value.
Financial assets
The Group classifies all of its financial assets as loans and
other receivables. Financial assets do not comprise prepayments.
Management determines the classification of its financial assets at
initial recognition.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments. They are initially recognised at
fair value and are subsequently stated at amortised cost using the
effective interest method, less any impairment. Interest income is
recognised by applying the effective interest rate, except for
short-term receivables when the recognition of interest would be
immaterial.
The Group's financial assets held at amortised cost comprise
trade and other receivables and cash and cash equivalents in the
Statement of Financial Position.
Financial liabilities
Trade and other payables are recognised initially at fair value
and are subsequently measured at amortised cost,
using the effective interest method.
Share Capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new share or options are
shown in equity as deduction net of tax, before proceeds.
Share-based payments
Where share options are awarded to employees, the fair value of
the options at the date of grant is charged to the income statement
over the vesting period. Non-market vesting conditions are taken
into account by adjusting the number of equity instruments expected
to vest at each balance sheet date so that, ultimately, the
cumulative amount recognised over the vesting period is based on
the number of options that eventually vest. Market vesting
conditions are factored into the fair value of the options
granted.
As long as all other vesting conditions are satisfied, a charge
is made irrespective of whether the market vesting conditions are
satisfied. The cumulative expense is not adjusted for failure to
achieve a market vesting condition.
Where the terms and conditions of options are modified before
they vest, the increase in the fair value of the options, measured
immediately before and after the modification, is also charged to
the income statement over the remaining vesting period. Where
equity instruments are granted to persons other than employees, the
income statement is charged with fair value of goods and services
received.
Functional and presentation currency
Items included in the financial statements of the Group are
measured using the currency of the primary economic environment in
which the Group operates ("the functional currency"). The financial
statements are presented in Pounds Sterling (GBP) which is also the
Group's functional currency.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the Statement of Comprehensive Income.
3 Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated on
historical experience and other factors, including expectations of
future events that are believed to be reasonable. In the future,
actual experience may differ from these estimates and assumptions.
The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amount of assets and
liabilities within the next financial year are discussed below.
Share-based payments
In order to calculate the charge for share-based compensation as
required by IFRS 2, the Group makes estimates principally relating
to the assumptions used in its option-pricing model as set out in
note 22.
Impairment review
Impairment testing is carried out for all non-current assets at
the year-end date or where there is an indication that impairment
exists. For the purposes of impairment testing, the carrying
amounts of the non-current assets are reviewed and an impairment
loss is recognised where the carrying amounts exceed the assets
recoverable amount.
Expected credit losses (ECLs)
Expected credit losses are shown in note 17. ECLs are determined
based on historical data available to management in addition to
forward looking information utilising management knowledge.
Adequate information exists to support the recoverability of the
net receivables balance.
4 Segmental information
During the year ended 31 December 2019 and the year ended 31
December 2018, the Group operated one business segment, that of the
provision of native in-game advertising.
Given that there is only one continuing class of business,
operating within the UK, no further segmental information has been
provided.
5 Loss for the year
31 December 31 December
2019 2018
GBP GBP
The loss for the year has been arrived at
after charging:
Depreciation of property, plant and equipment 8,330 3,134
Amortisation of Right of use assets 5,337 -
Amortisation of intangible assets 18,859 4,407
Equity settled share-based payments 476,305 282,007
Premises costs payments 195,491 82,090
Auditors' remuneration (note 6) 26,750 29,500
----------- -----------
6 Auditors' remuneration
31 December 31 December
2019 2018
GBP GBP
Fees payable to the Group's auditors in respect
of:
Audit of the financial statements of the
Company 15,000 15,000
Audit of the financial statements of the
Company's subsidiary 10,000 10,000
Other services in relation to the audit - 2,750
Other services in relation to taxation 1,750 1,750
26,750 29,500
=========== ===========
7 Employees and directors
Staff costs, including directors, comprise:
31 December 31 December
2019 2018
GBP GBP
Wages and salaries 1,480,614 719,246
Redundancy costs 19,506 -
Social security costs 169,593 73,385
Share-based payment expense 303,885 258,060
Other benefits - 88
----------- -----------
1,973,598 1,050,779
=========== ===========
Directors' remuneration is as follows:
31 December 31 December
2019 2018
GBP GBP
Salaries and fees 476,943 224,454
Bonus - 100,000
Pension 1,554 -
Share-based payments 258,760 257,240
Gain on exercise of share options - 117,190
Other benefits - 88
----------- -----------
Total 737,257 698,972
=========== ===========
2019 2018
Average number of directors 6 4
Average number of employees 20 9
=========== ===========
Key management compensation
The directors consider that the key management comprises the
directors of the Group and the heads of sales, their emoluments are
set out below:
31 December 31 December
2019 2018
GBP GBP
Salaries and fees 597,854 416,136
Bonus - 100,000
Pension 16,364 -
Share-based payments 287,252 257,240
Gain on exercise of options - 117,190
Other benefits - 88
Total 901,470 890,654
=========== ===========
Highest paid director
31 December 31 December
2019 2018
GBP GBP
Salaries and fees 135,000 40,000
Post-retirement benefit 1,188 -
Bonus - 50,000
Share-based payments 178,905 240,477
Total 315,093 330,447
=========== ===========
8 Finance income and finance costs
31 December 31 December
2019 2018
GBP GBP
Other interest receivable and similar income 8,060 -
Total finance income 8,060 -
=========== ===========
31 December 31 December
2019 2018
GBP GBP
Other interest payable 967 729
Total finance costs 967 729
=========== ===========
9 Taxation
Reconciliation of effective tax rate
Tax assessed for the year is lower than (2018: lower than) the
standard rate corporation tax of 19% (2018: 19%). The differences
are explained below:
31 December 31 December
2019 2018
GBP GBP
Loss before tax (5,357,421) (3,313,242)
Tax using the UK corporation tax rate of
19% (2018: 19%) (1,017,910) (629,516)
Unrelieved tax losses and other deductions
in the period - 13,873
Surrender of tax losses for Research and
Development tax credit refund 22,045
Research and development tax credit (52,611) (33,109)
Expenses not deductible for tax purposes
other than goodwill amortisation and impairment 145,615 369,670
Adjustment for prior period (77,106) (5,813)
Deferred tax not recognised 831,826 234,376
Other reconciling items - 2
Total tax charge (148,141) (50,517)
=========== ===========
The Group has tax losses of approximately GBP9,490,506 ( 2018:
loss of GBP3,738,890) to carry forward against future taxable
profits.
No deferred tax asset has been recognised in relation to the
trading losses available for offset against future taxable profits.
The Company has not recognised deferred tax asset due to there
being insufficient evidence of short-term recoverability.
10 Loss per share
The loss per share is based upon the loss of GBP5,209,280 (2018:
loss of GBP3,262,725) and the weighted average number of ordinary
shares in issue for the year of 230,957,900 (2018: 77,234,073).
The loss incurred by the Group means that the effect of any
outstanding warrants and options would be considered anti-dilutive
and is ignored for the purposes of the loss per share
calculation.
11 Business combination
Summary of acquisition
On 1 August 2019 the parent entity acquired 100% of the issued
share capital of Minimised Media Limited (Pubguard), a security
systems service company. The acquisition was intended to maintain
and utilise the Pubguard platform to enhance its current technical
and commercial offering as part of its Software Development Kit.
Details of the purchase consideration, the net assets acquired, and
goodwill are as follows:
Purchase consideration GBP
Ordinary consideration shares issued at fair value
(869,565 @ 34.5 pence) 300,000
========
Acquisition costs of GBP44,833 have been expensed to the
Statement of Comprehensive Income and are within Transaction
costs.
The assets and liabilities recognised as a result of the
acquisition are as follows:
Carrying Fair value Fair value
value adjustments
GBP GBP GBP
Cash and cash equivalents 6,683 - 6,683
Trade receivables and other receivables 54,221 - 54,221
Property, plant and equipment 682 682
Intangible assets - Brand - 29,402 29,402
Intangible asset - Software platform - 88,205 88,205
Trade and other payables (36,613) - (36,613)
Loans and borrowings (10,580) - (10,580)
--------- ------------- -----------
Net identifiable assets acquired 14,393 117,607 132,000
========= ============= ===========
Fair value of consideration paid 300,000
Goodwill 168,000
===========
The provisional fair values include recognition of intangible
assets brand and the software, which will be amortised over a 5
year and 5 months period on a straight-line basis.
Regarding the acquired trade receivables in the transaction of
GBP45,380 the amount estimated to be potentially uncollectible at
the acquisition date was GBPnil. At 31 December 2019, all of this
balance has been collected.
Since the acquisition date, Minimised Media Limited has
contributed GBP17,477 to Group revenues and a loss of GBP117,817 to
the Group's comprehensive income. If the acquisition had occurred
on 1 January 2019, Group revenue would have increased by
GBP122,286, however, the Group loss would have also increased by
GBP187,797.
The net cash sum expended on acquisition is as follows:
GBP
Cash paid on consideration on acquisition -
Less cash acquired at acquisition 6,683
--------
Net cash movement (6,683)
========
12 Intangible assets - Group
Website Trademarks Software Brand Goodwill Total
costs
GBP GBP GBP GBP GBP GBP
Cost
At 1 January
2018 1,931 520 - - - 2,451
Additions 46,687 - - - - 46,687
------------------------ -------------------- -------- ------ -------- -------
At 31 December
2018 48,618 520 - - - 49,138
Amortisation
At 1 January
2018 837 52 - - - 889
Charge 4,355 52 - - - 4,407
------------------------ -------------------- -------- ------ -------- -------
At 31 December
2018 5,192 104 - - - 5,296
Cost
At 1 January
2019 48,618 520 - - - 49,138
Additions - 370 88,205 29,402 168,000 285,977
------------------------ -------------------- -------- ------ -------- -------
At 31 December
2019 48,618 890 88,205 29,402 168,000 335,115
Amortisation
At 1 January
2019 5,192 104 - - - 5,296
Charge 9,723 89 6,785 2,262 - 18,859
------------------------ -------------------- -------- ------ -------- -------
At 31 December
2019 14,915 193 6,785 2,262 - 24,155
Net book value
At 31 December
2019 33,703 697 81,420 27,140 168,000 310,960
======================== ==================== ======== ====== ======== =======
At 31 December
2018 43,426 416 - - - 43,842
======================== ==================== ======== ====== ======== =======
13 Property, plant and equipment - Group
Office equipment Computer Total
equipment
GBP GBP GBP
Cost
At 1 January 2018 - 4,904 4,904
Additions 4,819 12,705 17,524
---------------- ---------- ------
At 31 December 2018 4,819 17,609 22,428
Depreciation
At 1 January 2018 - 3,542 3,542
Charge 161 2,973 3,134
---------------- ---------- ------
At 31 December 2018 161 6,515 6,676
Cost
At 1 January 2019 4,819 17,609 22,428
Additions 2,906 11,367 14,273
Business combinations 682 - 682
---------------- ---------- ------
At 31 December 2019 8,407 28,976 37,383
Depreciation
At 1 January 2019 161 6,515 6,676
Charge 1,056 7,274 8,330
---------------- ---------- ------
At 31 December 2019 1,217 13,789 15,006
Net book value
At 31 December 2019 7,190 15,187 22,377
================ ========== ======
At 31 December 2018 4,658 11,094 15,752
================ ========== ======
14 Lease liability
Nature of leasing activities
Bidstack Group Plc leases several computer equipment assets for
its office space. Lease terms are negotiated on an individual basis
and contains separate terms and conditions.
31 Dec
2019
No.
-------
Number of active leases 3
=======
Lease liability at year end
31 Dec
2019
GBP
-------
Non-current
Lease liability 8,300
-------
8,300
-------
Current
Lease liability 16,022
-------
16,022
-------
Total lease liability 24,322
=======
Analysis of lease liability
Lease
liability
GBP
-----------
At 1 January 2019 -
Additions 32,047
Interest expense 967
Lease payments (8,692)
At 31 December 2019 24,322
===========
Analysis of gross value of lease liabilities
Maturity of the lease liabilities is analysed as follows:
31 Dec
2019
GBP
-------
Within 1 year 8,300
Later than 1 year and less than 5 years 16,022
After 5 years -
At 31 December 2019 24,322
=======
The total cash outflow for leases in 2019 was GBP17,950, which
includes insurance, bank fees, VAT and a lease advance payment to
align the quarter with the year.
15 Right of use assets
Computer
equipment
Cost
At 1 January 2019 -
Additions 32,047
----------
At 31 December 2019 32,047
Amortisation
At 1 January 2019 -
Charge 5,337
----------
At 31 December 2019 5,337
Net book value
----------
At 31 December 2019 26,710
==========
16 Investments - Company
Investments
in subsidiaries
GBP
Cost
At 1 January 2019 7,177,841
Additions 300,000
----------------
At 31 December 2019 7,477,841
Impairment
At 1 January 2019 -
Charge -
----------------
At 31 December 2019 -
================
Net book value
----------------
At 31 December 2019 7,477,841
================
Principal subsidiary undertakings of the Company
On 1 August 2019, the Company acquired the entire issued share
capital of Minimised Media Limited ("Pubguard") for a consideration
of GBP300,000, satisfied by the issue of 869,565 shares.
The subsidiary undertaking of the Company is presented
below:
Proportion of
Country of ordinary shares
Subsidiary incorporation held
--------------------------- ---------------- -----------------
England and
Bidstack Limited Wales 100%
England and
Minimised Media Limited Wales 100%
--------------------------- ---------------- -----------------
The principal activity of the Bidstack Limited is the provision
of native in-game advertising. The principal activity of Minimised
Media Limited is to provide content security and assurance to cross
platform advertisers.
17 Trade and other receivables
Group Company
31 December 31 December 31 December 31 December
2019 2018 2019 2018
GBP GBP GBP GBP
Trade receivables 131,525 380,227 - -
Prepayments and accrued income 48,916 183,515 17,229 15,745
Other receivables 204,625 221,055 4,621,144 830,909
Corporation tax 148,141 22,894 - -
533,207 807,691 4,638,373 846,654
=========== =========== =========== ===========
Analysis of trade receivables
31 -
Days <30 60 61 -90 > 90 Total Gross ECL Total Net
----- ------- ------ ------ ----- ----------- --- ---------
GBP GBP GBP GBP GBP GBP GBP
2019 39,556 81,901 199 9,869 131,525 - 131,525
2018 380,277 - - - 380,227 - 380,227
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses (ECL) which uses a lifetime expected loss
allowance for all trade receivables. The Group measures ECL based
on historical data available to management in addition to current
and forward-looking information utilising managements knowledge of
their customers. The Directors consider that the carrying amount of
trade and other receivables is approximately equal to their fair
value.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses (ECL) which uses a lifetime expected loss
allowance for all trade receivables. The ECL balance has been
determined based on historical data available to management in
addition to forward looking information utilising management
knowledge. Based on the analyses performed, management expect that
all balances will be recovered, thus there is no material impact on
the transition to ECL.
Trade receivables are amounts due from customers for services
performed in the ordinary course of business. They are generally
due for settlement within 30 days and therefore are all classified
as current. All trade and other receivables are non-interest
bearing. The carrying amount of trade and other receivables
approximates fair value.
18 Cash and cash equivalents
Group Company
31 December 31 December 31 December 31 December
2019 2018 2019 2018
GBP GBP GBP GBP
Cash and cash equivalents 3,148,540 2,106,557 3,040,326 2,087,120
=========== =========== =========== ===========
19 Trade and other payables
Group Company
31 December 31 December 31 December 31 December
2019 2018 2019 2018
GBP GBP GBP GBP
Trade payables 163,696 315,238 5,550 71,989
Taxation and social security 73,278 32,778 8,098 3,802
Other payables 7,858 8,793 - -
Accruals 161,840 82,873 61,326 51,371
406,672 439,682 74,974 127,162
=========== =========== =========== ===========
20 Share capital and reserves
Allotted, called up and fully Ordinary Share capital
paid 0.5p shares
No. GBP
At 1 January 2019 198,807,631 5,286,429
Exercised warrants 4,863,116 24,315
Exercised options 333,334 1,667
Issue of consideration shares 869,565 4,348
Issue of placing shares 40,000,000 200,000
As at 31 December 2019 244,873,646 5,516,759
================================ ============ =============
On 31 August 2019, the Company announced that it had agreed to
acquire the entire issued share capital of Minimised Media Limited.
The consideration for the acquisition was GBP300,000 comprising the
issue on 1 August 2019, of 869,565 shares at GBP0.345 per share.
The Company also raised GBP5 million by a placing of 40 million
shares at GBP0.125 per share.
All ordinary shares are equally eligible to receive dividends
and the repayment of capital and represent equal votes at meetings
of shareholders.
The following describes the nature and purpose of each reserve
within owner's equity:
Share capital : Amount subscribed for shares at nominal
value.
Share premium : Amount subscribed for share capital in excess of
nominal value, less costs of share issue.
Share-based payment reserve: The share-based payment reserve
comprises the cumulative expense representing the extent to which
the vesting period of share options has passed and management's
best estimate of the achievement or otherwise of non-market
conditions and the number of equity instruments that will
ultimately vest.
Merger relief reserve: Effect on equity of the consideration
shares issued over their nominal value.
Reverse acquisition reserve: Effect on equity of the reverse
acquisition of Bidstack Limited.
Warrant reserve: The warrant reserve comprises the cumulative
expense representing the extent to which the vesting period of
warrants has passed and management's best estimate of the
achievement or otherwise of non-market conditions and the number of
equity instruments that will ultimately vest.
Retained losses: Cumulative realised profits less cumulative
realised losses and distributions made, attributable to the equity
shareholders of the Company.
21 Share options and warrants
Options
The Company operates two equity-settled share-based remuneration
schemes for employees, one being the Enterprise Management
Inventive ("EMI") Scheme and the other is an unapproved scheme for
executive directors and certain senior management.
A condition attached to both schemes is for the option holder to
remain in employment until exercised otherwise the options become
forfeited.
2019 2018
Weighted Weighted
Average Exercise Average Exercise
Number Price Number Price
GBP GBP
Outstanding at the beginning
of the year 30,132,837 0.122 2,295,390 0.095
Granted during the year 8,750,000 0.09 30,132,837 0.122
Forfeited/waived during
the year - - (1,662,000) 0.087
Exercised during the year (333,334) 0.06 (633,390) 0.115
Total outstanding 38,549,503 0.09 30,132,837 0.122
---------- ----------------- ----------- -----------------
Total exercisable 27,299,500 0.13 22,500,000 0.153
---------- ----------------- ----------- -----------------
On 10 May 2019, M Hayes was granted 700,000 and 300,000 options
under the unapproved schemes for 14.43p and 20p respectively. The
options vest on the 1(st) anniversary of their grant date, subject
to remaining an employee and expire on the 10th anniversary of the
grant date.
On 10 May 2019, the Company granted 1,500,000 and 1,000,000
options under the unapproved scheme. The options are exercisable at
8p (1,500,000) and 12p (1,000,000), vest on the 1(st) anniversary
of their grant date and expire on the 10(th) anniversary of the
grant date.
On 13 May 2019, the Company granted 1,500,000 options under the
EMI scheme. The options are exercisable at 12.5p per share, vest on
the 3(rd) anniversary of their grant date subject to remaining an
employee and expire on the 10(th) anniversary of the grant
date.
On 2 July 2019, D Wise was granted 700,000 and 300,000 options
under the unapproved scheme. The options are exercisable at 31.75p
(700,000) and 50.0p (300,000) per share, vest on the 1(st)
anniversary of their grant date subject to remaining an employee
and expire on the 10(th) anniversary of the grant date.
On 2 October 2019, the Company granted 850,000 options under the
unapproved scheme. The options are exercisable at 30p (100,000),
32.25p (500,000) and 25.25p (250,000) per share, vest on the 1(st)
anniversary of their grant date and expire on the 10(th)
anniversary of the grant date.
On 20 October 2019, the Company granted 400,000 options under
the unapproved scheme. The options are exercisable at 18.5p per
share, vest on the 1(st) anniversary of their grant date and expire
on the 10(th) anniversary of the grant date.
On 30 October 2019, D Stewart and J McIntosh were granted
1,000,000 and 500,000 options under the unapproved and EMI scheme
respectively. The options are exercisable at 20p per share, vest on
the 3(rd) anniversary from their grant date, subject to remaining
an employee and expire on the 10(th) anniversary of the grant
date.
The Black-Scholes model was used for calculating the cost of
options. The model inputs for each of the options issued were:
Grant date (all 10 May 10 May 10 May 10 May 13 May
2019)
Share price at
grant date 18p 18p 18p 18p 18p
Exercise prices 8p 12p 14.4p 20p 12.5p
Expected volatility 56.35% 56.35% 56.35% 56.35% 55.70%
Contractual life 10 years 10 years 10 years 10 years 10 years
Grant date (all 2 July 2 July 2 October 20 October 30 October
2019)
Share price at
grant date 30.75p 30.75p 27p 23.75p 20.5p
Exercise prices 31.75p 50p 30p 18.50p 20p
Expected volatility 55.58% 55.58% 92.83% 93.32% 94.59%
Contractual life 10 years 10 years 10 years 10 years 10 years
The weighted average contractual life of the options is 4 years
and 188 days (2018: 4 years and 186 days)
Warrants
2019 2018
Weighted Weighted
Average Exercise Average Exercise
Number Price Number Price
GBP GBP
Outstanding at the beginning
of the year 8,751,028 13.7p 7,501,028 15p
Issued during the year - - 1,250,000 6p
Exercised during the year (4,863,116) 15.37p - -
Total outstanding and
exercisable 3,887,912 9.71p 8,751,028 13.7p
=========== ================= ========= =================
The Company granted no warrants during the year ended 31
December 19.
The charge for the year for warrants and options amounted to
GBP540,488 (2018: GBP329,540), charged to the statement of
comprehensive income.
22 Premises costs commitments
Group Company
31 December 31 December 31 December 31 December
2019 2018 2019 2018
GBP GBP GBP GBP
Within one year 87,540 152,640 - -
87,540 152,640 - -
=========== =========== =========== ===========
23 Financial instruments
In common with other businesses, the Company is exposed to risks
that arise from its use of financial instruments. This note
describes the Company's objectives policies and processes for
managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented
throughout these financial statements.
The significant accounting policies regarding financial
instruments are disclosed in note 2.
Financial assets
Financial assets measured at amortised cost comprise trade
receivables, other receivables and cash, as follows:
31 December 31 December
2019 2018
GBP GBP
Trade receivables 131,525 380,227
Other receivables 116,256 221,055
Cash and cash equivalents 3,148,540 2,106,557
Total financial assets 3,396,321 2,707,839
=========== ===========
Financial liabilities
Financial liabilities measured at amortised cost comprise trade
payables, other payables and accruals, as follows:
31 December 31 December
2019 2018
GBP GBP
Trade payables 163,696 315,238
Other payables 6,873 8,793
Accruals 161,840 82,873
Total financial liabilities 332,409 406,904
=========== =================
There is no significant difference between the fair value and
the carrying value of financial instruments.
Risk management
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and, while
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Group's finance function. The Board receives regular reports
through which it reviews the effectiveness of the processes put in
place and the appropriateness of the objectives and policies it
sets.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. The Group's operations
expose it to some financial risks arising from its use of financial
instruments, the most significant ones being capital risk, credit
risk and liquidity risk
Further details regarding these policies are set out below:
Capital risk management
The capital structure of the business consists of cash and cash
equivalents, debt and equity. Equity comprises share capital, share
premium and retained losses and is equal to the amount shown as
'Equity' in the balance sheet. Debt comprises various items which
are set out in further detail above and in note 19.
The Group's current objectives when maintaining capital are
to:
- Safeguard the Group's ability to operate as a going concern so
that it can continue to pursue its growth plans.
- Provide a reasonable expectation of future returns to shareholders.
- Maintain adequate financial flexibility to preserve its
ability to meet financial obligations, both current and long
term.
The Group sets the amount of capital it requires in proportion
to risk. The Group manages its capital structure and adjusts it in
the light of changes in economic conditions and the risk
characteristics of underlying assets.
Credit risk and impairment
Credit risk refers to the risk that counterparty will default on
its contractual obligations resulting in financial loss to the
Group. In order to minimise the risk, the endeavours only to deal
with companies which are demonstrably creditworthy and this,
together with the aggregate financial exposure, is continuously
monitored. The maximum exposure to credit risk is the carrying
value of its, trade and other receivables and cash and cash
equivalents as disclosed in the notes.
The Board recognises that having a focus of revenue within one
or few clients represents a concentration of risk and is
incentivised to diversify the Group's customer base to mitigate
this. The Group seeks to obtain credit insurance, or obtain advance
payment on trade receivables, where appropriate. The receivables'
age analysis is also evaluated on a regular basis for potential
doubtful debts, considering historic, current and forward-looking
information.
The Company has made unsecured interest free loans to Bidstack
Limited which stood at GBP4,405,090 at 31 December 2019 (2018:
GBP718,774). Although it is repayable on demand, it is unlikely to
be repaid until the subsidiary is sufficiently cash generating.
Liquidity risk
The Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. However, the Group continues to absorb cash in its
operations for the time being and management recognises the risk of
insufficient cash and capital to carry on its activities and
safeguard the Group's ability to continue as a going concern.
The Board receives cash flow projections on a regular basis,
which are monitored regularly. The Board will not commit to
material expenditure in respect of its ongoing development
programme prior to being satisfied that sufficient funding is
available to the Group to finance the planned programmes. Regular
reviews will ensure that further steps will be taken if
necessary.
The COVID-19 pandemic resulted in a significant fall in the
value of global stock markets during March 2020. The pandemic has
created a unique environment, which adds additional challenges for
any companies seeking future funding from the capital markets.
24 Related parties
Transactions with subsidiaries
During the year, cash advances of GBP3,510,001 (2018:
GBP625,000) were made to Bidstack Ltd and incurred net costs of
GBP176,314 that were paid on behalf by the Company (2018:
GBP93,774). The advances are held on an interest free inter-group
loan which has no terms for repayment. At the year end the
inter-Group loan amounted to GBP4,405,090 (2018: GBP718,774).
During the year, cash advances of GBP66,000 (2018: GBPNil) were
made to Minimised Media Ltd and incurred net costs of GBP75,928
that were paid on behalf by the Company (2018: GBPNil). The
advances are held on an interest free inter-group loan which has no
terms for repayment. At the year end the inter-Group loan amounted
to GBP141,928 (2018: GBPNil).
Transactions with other related parties
During the year the Group paid GBP85,399 to Kepstorn Solicitors,
of which Donald Stewart is a director and shareholder (2018:
GBP77,370). The invoices were for legal work during the year. All
transactions have been conducted at arm's length. At the year end,
the balance due to Kepstorn Solicitors was GBP23,941 (2018:
GBP19,080).
During the year the Company paid GBP25,000 to CP Limited, of
which John McIntosh is a director and shareholder (2018: GBP9,000).
The invoices were for consulting work during the year. All
transactions have been conducted at arm's length. At the year end,
the balance due to CP Limited was GBPNil (2018: GBPNil).
During the year the Company paid GBPNil to Barletta Media, of
which Francesco Petruzzelli is a director and shareholder (2018:
GBP44,687). The invoices were for development work performed on the
platform. All transactions have been conducted at arm's length. At
the year end, the balance due to Barletta Media was GBPNil (2018:
GBPNil).
During the year the Company paid GBPNil to Ugly Panda LLP, of
which John Taylor is a partner (2018: GBP26,471). At the year end,
the balance due to Ugly Panda LLP was GBPNil (2018: GBP409).
Lindsay Mair, a former Director who served during the year until
his resignation, received GBP250 (2018: GBPNil) from the Company
for reimbursement of expenses for the year. As at 31 December 2019,
GBPNil (2018: GBPNil) was owing to Mr Mair.
John McIntosh, Finance Director invoiced GBP10,076 (2018:
GBPNil) to the Company for reimbursement of expenses for the year.
As at 31 December 2019, GBP2,278 (2018: GBPNil) was owing to Mr
McIntosh.
Donald Stewart, Chairman, received GBP987 (2018: GBPNil) from
the Company for reimbursement of expenses for his 2018 expenses. As
at 31 December 2019, GBPNil (2018: GBPNil) was owing to Mr
Stewart.
Francesco Petruzzelli, Director, claimed GBP120,788 (2018:
GBPNil) from the Company for reimbursement of departmental IT and
team travel expenses for the year. As at 31 December 2019,
GBP20,537 (2018: GBPNil) was owing to Mr Petruzzelli.
James Draper, Director and Chief Executive Officer, claimed
GBP1,837 from the Company for reimbursement of expenses for the
year (2018: GBP6,284). As at 31 December 2019, GBPNil (2018:
GBPNil) was owing to Mr Draper.
David Payne, a former Director of the Company's subsidiary
Bidstack Ltd, made a gain of GBP29,954 on options he exercised on
28 August 2018. The options exercised were issued in June 2016 and
had an exercise price of 8.256p. As at 31 December 2019, GBP7,917
(2018: GBP7,917) was owing to Mr Payne.
25 Post balance sheet events
COVID-19
The outbreak of COVID-19 creates a new and highly unpredictable
challenge. We have tested our business continuity plans which have
been successfully activated.
The investment in technology over recent years has resulted in
the business being well placed to continue delivering services to
our clients without disruption and with no increase in operational
risk.
Management do not consider it possible to quantify the true
impact of COVID-19 on the business at this time but remain
confident that the business can adjust to the challenges it
presents.
26 Transition to IFRS 16
In the current year, the Group, for the first time, has applied
IFRS 16 Leases (as issued by the IASB in January 2016). IFRS 16
introduces new or amended requirements with respect to lease
accounting. It introduces significant changes to the lessee
accounting by removing the distinction between operating and
finance leases and requiring the recognition of a right-of-use
asset and a lease liability at the lease commencement for all
leases, except for short-term leases and leases of low value
assets.
The date of initial application of IFRS 16 for the Group is 1
January 2019. The Group has applied IFRS 16 using the prospective
approach since the leases that the Group entered commenced within
the year ended 31 December 2019.
The impact of the adoption of IFRS 16 on the Group's
consolidated financial statements is described below.
Operating lease commitments 31 December
18 152,640
Reclassified as Premises costs following
assessment under IFRS 16 (152,640)
Operating lease commitments 1 January
19 -
=========
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contact rns@lseg.com or visit www.rns.com.
END
FR UPUBWAUPUPUW
(END) Dow Jones Newswires
May 04, 2020 02:00 ET (06:00 GMT)
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