Bonhill Group PLC – BONH – Trading Update

Bonhill Group PLC – BONH – Trading Update

Bonhill Group Plc (AIM: BONH), a leading B2B media business specialising in three key areas: Business Information, Events and Data & Analytics, provides the following trading update for the year ended 31 December 2020 (the “Year”). All figures for the Year included in this announcement remain subject to audit.

In what was undoubtedly a difficult year, the Company announces that it delivered a strong second half of the Year (“H2”) with £10.1 million of revenue, versus £7.7 million reported in the first half of the Year (“H1”), and adjusted EBITDA of approximately £1.55 million (H1: £1.69 million loss). This was as a result of the swift and positive action taken during the early months of the pandemic.  Revenue for the Year is therefore expected to be £17.8 million (2019: £24.4 million), which excludes Government support of approximately £1.0 million, and adjusted EBITDA of approximately £0.1 million (2019: £2.3 million) prior to an adverse year end FX movement of £0.2 million. Following a clarification regarding the accounting for Government financial support, the £1.0 million received has been recognised as other income, with £0.1 million of H1 revenue being reclassified as such.

The result for the Year is in line with the Company’s expectations based on the assumptions made in its announcement of the placing of new shares on 9 April 2020. At the time of the release of the Company’s unaudited interim results for the six months ended 30 June 2020 on 15 September 2020, it was still anticipated that the Company would have some live events in the UK in the final quarter of the Year, which would have led to an improved H2 performance. However, as a result of revised, tighter Government restrictions (and a second national lockdown) all of these events were converted to virtual and additional cost saving measures were taken to manage contribution levels. Cash at 31 December 2020 is expected to be higher than expected at £1.3 million (2019: £1.9 million).

The Group will incur exceptional integration and restructuring costs in the Year totalling approximately £1.4 million (2019: £2.8 million), due mainly to the final integration into the Group of each of InvestmentNews (“IN”) and Last Word Media (“LWM”), which were acquired by the Company in August 2018 and April 2019 respectively, other restructuring costs relating to COVID-19 in all of the Group’s businesses and the refinancing in April 2020.

COVID-19 cost management plan

In H2 2020, the Company put in place a new divisional structure, new KPIs and incentives to focus on an increased level of recurring revenue and new product development. During the Year, the Company also undertook a restructuring programme and utilised the UK Government’s Coronavirus Job Retention Scheme. There are currently no staff members on furlough and headcount across the Group at the end of the Year was 124 (31 December 2019: 162). The annualised impact of cost saving initiatives taken in 2020 is approximately £1.0 million.

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

In August 2020, the Company exited the Transitional Services Agreement (“TSA”) with Crain Communications, Inc (“Crain”), IN’s former owners, and, as set out above, in December 2020 renegotiated a new lease in the US away from Crain. The final payment due to Crain under the vendor loan agreement is payable in August 2021 and, as at 31 December 2020, $1.4m was outstanding.

Business Information

Overall revenues were impacted by approximately 26% in the Year (including LWM for a full 12-month period as opposed to the 8 months of ownership in 2019 post-acquisition).  We have seen a strong digital performance in our core titles outperforming the reforecast carried out at the start of the pandemic. IN saw digital revenues achieve pre-COVID budgeted levels for the Year, benefitting from the investment in the core website in January 2020. Portfolio Adviser saw a 3% increase in digital revenues compared with the previous year and Small Business titles saw 36% growth in revenues benefitting from a subscriber base that grew fivefold during the Year as the UK SME community managed the impact of COVID-19. The recently relaunched Fund Selector Asia website saw a strong digital performance compared to prior years. Print revenues in IN were impacted, but this created the opportunity to develop a digital magazine that was launched in April 2020. We achieved cost savings as a result of a reduced print run and, in response to customer demand, reinstated a print edition in July 2020. We continue to run the magazine in both a digital and print format.

Events

All business areas moved swiftly to a virtual event platform in the summer of 2020 and during the Year, the Company delivered a total of 102 virtual events ranging from 12 to 400 people and from a simple 1-hour format to a number of multi-day flagship events. The Company’s decision to partner with best-in-class solutions gave it the confidence to transfer the majority of its planned live events to virtual. The pandemic resulted in a 39% decline in event revenue year-on-year from £9.6 million in 2019 to £5.9 million for the Year, but, due to the move to virtual events, at a much improved gross margin of 71% from 54%. Despite the ongoing restrictions on events, the Company is confident that it can continue to deliver high quality virtual events in 2021, building on its current offering. We expect a return to live events in a modest way in late 2021.

ESG

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

Technology

The Group has completed its initial technology investment programme, which provides it with a stable open platform with the ability to expand and greatly improve the features which can be delivered for customers. The Company is already seeing the benefits of this Group-wide platform and the capability it brings.

Outlook

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

The Company expects to release its audited final results for the year ended 31 December 2020 in late March 2021, when it will provide a further update on current trading and prospects.

Simon Stilwell, Bonhill’s Chief Executive, commented:

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

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

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