Good morning and welcome to the Brave Bison Group PLC Investor Presentation. Throughout the recorded meeting, investors will be in listen-only mode. Questions are encouraged. Questions can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Simply click Q&A, scroll to the bottom, type your question, and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Oliver Green, Executive Chairman. Good morning, sir.
Good morning, everyone, and thank you for dialing into our Investor Meet Presentation. I'm Ollie Green, Executive Chairman. Joining me on the call today is my brother and Chief Growth Officer, Theo Green, as well as our CFO, Philippa Norridge. Let's get started. Our presentation this morning will last around 35 minutes, and we'll have some time for questions at the end. We'll cover a general introduction to the company, our financial results for last year, our story and business model, and we'll also touch on what to expect in the short and medium term. For those of you who need a bit of a refresh, Brave Bison is a digital advertising and technology services company purpose-built for the new era.
We operate from trend to spend, and we charge our clients fees for services that include building their brands on social media, driving online transactions by targeting consumers with personalized digital advertising, consulting on their digital customer experience, and building websites and apps that maximize sales. We also own and manage sports and entertainment channels on leading social media platforms that generate revenue. We're delighted to be working with some of the biggest brands on the planet, including New Balance, General Mills, Pernod Ricard, and as of last year, ASUS. Our business is made up of four specialist practices. These practices work both independently and together to help our clients capitalize on the complexity that defines the modern marketing landscape. Brave Bison Performance is our paid and organic media practice.
Here, we plan and buy digital media on platforms like Google, Meta, TikTok, Amazon, and YouTube, as well as provide search engine optimization and digital PR services. Customers include New Balance, ASUS, and Currys. Brave Bison Commerce is our digital commerce practice. Customers engage us to build complex digital e-commerce platforms and support digital commerce operations. We are specialist consultants in composable system architecture, the most advanced tech available for enterprise clients. Customers include Furniture Village, Fiskars, and Winparts. SocialChain is our social media advertising and influencer marketing practice. Here, we advise clients on how to navigate the various social platforms, create original social-first content, and manage influencers and creators to distribute native content. Customers include KFC, Holland & Barrett, and The Army. Brave Bison Media Network is a portfolio of sports and entertainment channels that run across YouTube, Facebook, Snap, TikTok, and Instagram.
These channels generate over 1 billion monthly views, and the advertising inventory from each channel is sold through online ad exchanges. Popular channels include The Hook, The PGA Tour, US Open, and Link Up TV. We're now going to play you a short video to give you a feel for the sort of work we do and how we show up to market as a business.
Ready, steady, go.
We switch stuff up all the time.
It's pretty impressive, right?
Oh, that's a nice feeling.
Yeah.
Oh my God. Perfect.
2023 was a really exciting year for Brave Bison. It was our fourth full year since Ollie, myself, and Philippa joined the business, and we're really pleased with progress to date. Revenue and adjusted EBITDA were at record levels. We made one transformational acquisition, Social Chain, which completed in February last year. Despite this, we ended the year with a significant amount of net cash to be deployed for future growth. Apart from acquisitions and financial growth, we've been working hard on our operational setup. We've made some senior hires, doubling the size of our leadership team, and we've rolled out a new professional services automation platform that will allow us to track resource across our entire group. On top of this, we launched our own AI tool, Scribe, which is a copy bot that uses GPT-3 to write brand-safe product descriptions.
We won some fantastic new business with major advertisers like The Army, LinkedIn, and Holland & Barrett. As a board, we are happy with trading in 2024 to date. Our clients are still experiencing some uncertainty, but we've managed to cut through the noise, and so far, we are ahead of last year. Social Chain, in particular, is on a winning streak, following some good wins at the end of last year and the beginning of this year. Now, there is always risk in delivering for clients, but we are feeling optimistic, and we are pleased with our acquisition of Social Chain. Overall, we are comfortable with full-year market expectations, and we look forward to updating shareholders as the year progresses.
2023 was another year of strong growth for Brave Bison, where we more than delivered against expectations. We saw our gross revenue increase by 13% and our net revenue increase by 23% year-on-year. This was primarily driven by the Social Chain acquisition in February 2023, which bolstered our capabilities in this fast-growing section of the market. There was a small reduction in the net revenue from the Brave Bison Media Network despite increased views overall on our network. This was due to this practice being more exposed to macroeconomic factors driving reductions in advertising rates. We would expect to see this revenue recover as rates return to normal levels. Social Chain was loss-making at the point of acquisition, but we were able to swiftly integrate the business onto our operating platform and restructure to drive both new client wins and profitability.
As a result, we saw our adjusted PBT over net revenue margins improve from 15% in the first half of the year to 19% in the second half, meaning we were able to increase our full-year margins to 17% from 16% in the prior year. Our adjusted profit before tax grew by 38% year-on-year as a result, and our adjusted earnings per share grew by 18%. We remain well capitalized with GBP 6.8 million of net cash compared to GBP 6.2 million in 2022. We now have no debt apart from GBP 0.2 million of government-backed COVID relief loans, which are on very favorable interest rates. We do still have an undrawn GBP 3 million revolving credit facility with Barclays, which provides further liquidity if required for future acquisitions.
On the next slide, you can see a summary of the exceptional costs and adjustments that explain the difference between our adjusted profit before tax of GBP 3.6 million and our statutory profit before tax of GBP 1.1 million. The bulk of these are exceptional costs relating to the acquisition and restructure of Social Chain. We had GBP 0.8 million of acquisition costs during the period, which were made up of GBP 0.3 million of fees relating to our oversubscribed fundraising, as well as other professional fees associated with the acquisition, including due diligence, legal fees, and PR costs. We also had GBP 0.8 million of restructuring costs, most of which related to severance costs and duplicate staff costs over the course of the H1 Social Chain restructure.
There were also costs related to duplicate IT costs, the migration of IT systems, as well as duplicate property costs, and some professional fees associated with the restructure. We anticipate limited restructuring costs in the first half of 2024 relating to property and duplicate IT costs. As well as these exceptional costs, we also had adjustments of GBP 0.4 million relating to the amortization of acquired intangibles. This relates to the amortization of the customer relationships acquired as part of the SocialChain, Best Response Media, and Greenlight acquisitions over the last three years, as well as the amortization of the SocialChain brand name. Finally, we adjust for equity-settled share-based payments. This includes charges relating to our employee share option scheme, which is used to incentivize key employees, as well as charges in relation to directors' long-term incentive plans.
Redemption of shares in relation to these plans is contingent on achievement of performance conditions and may only occur between the third and sixth anniversaries of the adoption of the plan. Our cash balance increased by GBP 0.4 million over the course of the year. The fundraising at the start of the year of GBP 4.8 million was used to fund the cash outflow on the initial purchase of SocialChain. There were then the additional cash outflows of GBP 1.7 million in relation to the restructuring and acquisition costs already discussed. We also repaid borrowings of GBP 0.6 million during the year, and there was a GBP 0.8 million change in working capital, which again was linked to the working capital requirements following the acquisition of SocialChain.
Most of the significant outflows occurred in the first half in the months following the acquisition, so in the second half of the year, we were significantly cash-generative with a GBP 2.5 million cash inflow. We anticipate continuing to be cash-generative throughout 2024. Our normalized cash conversion should be between 80% and 90% due to brought-forward tax losses and minimal CapEx requirements.
This shows the four-year track record of Brave Bison since we took over as executive management in 2020. We're really pleased with progress, and 2023 marks the third consecutive year of growth in net revenue and adjusted EBITDA. A proportion of this growth has come from acquisitions, and we are always mindful of share issuance and dilution. Considering this, we are pleased to show further growth in adjusted earnings per share, which has increased by over 50% since 2021.
We believe there is an opportunity to build Brave Bison into an industry-leading marketing media and technology company, and I think there are really three catalysts for this. The first is that global advertisers continue to shift ad dollars away from traditional channels like TV and print and toward digital platforms like Google, Meta, Amazon, and TikTok.
Our business has been built with this in mind, and we're hungry to grow our service offering. The second is that this new digital ecosystem is unbelievably complex. The speed of change within digital is monumental, with new platforms, new regulations, new technology, and new trends popping up every single month. This complexity makes it difficult for advertisers to run everything in-house, and so they look to third parties like Brave Bison for expertise and support. Lastly, we believe that the existing ad network model is broken. The size and complex structures of the large advertising holding groups make for poor service and approach that just isn't joined up across all of these new channels. The traditional holding groups that manage over 75% of global media spend are no longer fit for purpose. They champion legacy media over digital channels.
They're too big to collaborate across their different specialisms, and there is often competition built into their operating models given the lack of integration carried out over the years. Instead of buying services from the now bloated ad networks, clients could opt to work with a number of specialists. But this can add even more complexity into marketing programs, with clients often left to join the dots themselves. Marketing strategies become siloed, and delivery and results start to suffer. Enter Brave Bison. With a proposition of connected expertise and seamless delivery, our specialist teams work from a single trade proposition, and our operating model allows for agile and frictionless delivery across multiple specialisms. We are channel-agnostic, and all of our capabilities are underpinned by the latest technology, either proprietary or licensed from best-in-class partners.
We constantly ask ourselves and our clients why they choose to work with us, and we thought it might be useful for you to understand why clients choose to buy from Brave Bison. Our business is comprised of pure-play digital capability with connected specialisms across everything marketing and technology leaders need to grow their businesses. Through the acquisitions we have made, we now have unbelievably strong case studies with global brands that demonstrate our ability to deliver results and develop deep relationships. We're quick to innovate with our own tooling, and we've developed a suite of AI tools that helps us to deliver faster, better, and cheaper. Ultimately, Brave Bison has a challenger positioning in the market, and this resonates with clients that are looking to get ahead. We're viewed as a partner that is big enough to deliver but small enough to still care.
As well as why we win clients, we're obsessed with achieving what we call operational excellence. As a result, we're often refining our models and frameworks for delivery. Our modern approach to hiring remotely and in a hybrid fashion means we get access to the best talent in the market quickly and often at competitive prices. We work hand in glove with big tech, and we have formal partnerships with the likes of Google, Meta, BigCommerce, and Salesforce. This means we get referrals and often access to products before they come to market. We have a single unitary structure with an operating system that runs across our business, allowing us to make data-led decisions with regard to hiring, utilization, and pricing.
We also run quarterly staff and client satisfaction surveys to better understand where we can improve, but also to find out where there are opportunities for growth and development.
So artificial intelligence is changing the way that we work with our clients, and it's changing the way that we work with each other. Now, like all technology revolutions, there are opportunities and threats around every corner, but we have found that AI has huge potential to accelerate our business. Our focus to date has been to leverage this powerful technology on behalf of our clients to deliver work and capability that could not have previously been achieved. One example of this is Scribe. Scribe is our proprietary copy bot that uses GPT-3, the model from OpenAI, to write product descriptions for our retail customers.
Now, some of our clients, such as Currys, have tens of thousands of products available for sale, and that means that they have tens of thousands of product pages on their website. Scribe helps us to manage the content on those web pages in an efficient manner. Another really exciting use case of AI is synthetic audiences. Here, we use generative AI, primarily chatbots and image generator models, to create a digital persona that matches one of our clients' customers. An example might be women, age between 30 and 40, living in London and working in finance. Once we've created this model, we can then ask our digital persona questions, hear the responses, and then use that to inform our media strategies. We are a clear thought leader in the AI space, and we're pleased to have been nominated for our work at the Campaign Awards this year.
Each of our business units, Performance, Commerce, SocialChain, and Media, has been nominated for an award this year. Here are some really good examples that we're keen to share today. So firstly, New Balance, one of our largest customers, has had a fantastic year, and our work for them ahead of the London Marathon was incredibly successful, and we've exceeded all expectations for revenue generated from our work. With Jameson, we used influencers to create content and saw immense viral success. Influencers can be an amazing tool, not just to create content for our customers, but also to distribute that content to a loyal audience of followers who are often keen to make purchase decisions. Our work with MKM, a composable commerce project, has now won two more awards and remains a world first for some of the integration software and practices deployed on this project.
The US Open was the most watched Grand Slam on YouTube in 2023. In this instance, we're actually breaking our own records, and we're building an exciting and referenceable franchise in premium sports on YouTube that has seen us renew our contract with the Australian Open as well.
Our leadership is made up of an executive team that includes myself, Theo, and Philippa, as well as Hannah and Laura, our new Chief Operating and Chief Marketing Officer, as well as Buster, our Chief Business Officer. This executive team sets the strategy for the business but is also ultimately responsible for making sure that we deliver on company revenue, margin, and new business targets. Reporting into our executive team are the CEOs and MDs of each of our business units. Each MD has their own heads of department and is supported by group functions for HR, IT, finance, marketing, and operations.
This year, we're launching a central function for strategy and client services to enable us to better understand our clients' problems and opportunities and deliver solutions accordingly. One important thing to note here is that there is a strong degree of operational gearing within the senior ranks of our business. As we scale revenue in each of our business units, we do expect to recruit more junior and midweight staff to deliver that revenue, but the costs associated with the heads of department, the MDs, and the exec team are much more fixed, which will ultimately drive margin as we grow the business.
Brave Bison is committed to both assessing and improving our environmental and social impact. We have three key pillars within ESG, namely people, planet, and community. We are a people-based business, and we know that diversity fuels innovation and makes our work better.
We already have a gender-balanced executive team and a clear diversity, inclusion, and belonging vision for the group, bolstered by a robust governance framework. We are looking to build on this with management training, improved reporting, and a diversity, inclusion, and belonging committee responsible for building and delivering our roadmap. This is complemented by a comprehensive benefits package and flexible working policy. On the second pillar, we've been looking to reduce our impact on our planet through continuous improvements in our carbon accounting and offsetting, as well as strategic initiatives in energy use, recycling, and responsible purchasing. We have been carbon neutral since 2021 and last year shifted to credible carbon removal projects, offsetting 48 tons of Scope one and two emissions. We have also started to track our Scope three emissions for the first time and are looking to amend our supply selection processes to bring these down.
Finally, we are committed to having a meaningful impact on the communities that we are part of. We hired a cohort of digital marketing apprentices, as well as supporting local students from both Leeds University and the School of Thought in training and development. We also have a program of community engagement, volunteering, and fundraising initiatives with local charities. We are currently establishing a community committee to explore further opportunities for positive impact across the business.
So we have a number of different goals and targets as an executive team, but we thought it might be helpful to outline our top five priorities this year. These include winning and delivering record levels of new business. Our target for this year is to win GBP 4 million of new business, which is around double last year.
We want to work with bigger clients on more complex and strategic problem sets so that we can truly leverage our connected proposition. We want to put our balance sheet to work and make another accretive acquisition. We think it's important to broaden the investor base to create liquidity and bring in shareholders that want to come on our journey. And finally, we want to maintain our level of dedication to operational excellence. Last year, this involved rolling out a new professional services automation tool to help drive utilization, support hiring decisions, and allow for effective pricing. And this year, we want to make sure we are using that data to make more commercial decisions. At the end of last year, we launched a new mission, vision, and set of values across the whole company.
With 250 staff and a number of them working overseas, it's important that everyone in the business is clear on what we are trying to achieve so that everyone is pulling in the same direction. We included this plan on a page today because we wanted to give shareholders a feel for how we run the business and the frameworks we have in place today. Pillars range across growth and marketing, clients, capabilities, people, and operations and tech. Ultimately, it is these pillars working together seamlessly that drive top and bottom-line growth and deliver value for all of our stakeholders.
Acquisitions are definitely part of the growth strategy of Brave Bison, and we have a track record in accretive transactions followed by comprehensive integrations. Typically, an acquisition for Brave Bison will fall into one of three buckets.
Firstly, a bolt-on that can be added to our existing business units. Here, we are buying a team and a book of business, and typically, we would pay a lower multiple for this sort of opportunity. Combinations are where we see an opportunity to significantly level up one of our business units or possibly add a new capability. The SocialChain acquisition is a good example of how we overhauled our social and influencer division through a merger with SocialChain and relaunched the combined business to the market under a new leadership team and brand. Transformations are acquisitions that give us scale or access to a totally new market. These opportunities are rare, and we are selective but sometimes can be attractive. The transformational acquisition of Greenlight in 2021 was one such opportunity, and we continue to reap the benefits of that merger three years later.
Now, the most important part of any acquisition is the integration strategy. SocialChain is a good case study because it involved considerable size and complexity. When we go about planning an integration, we focus on three key areas. Firstly, clients because they are our revenue. Secondly, delivery because this is how we generate a profit. And finally, people because this is our business. These can largely be classified into marketing and new business, operations and finance, and people and culture. When we acquire a business, we typically overhaul the customer proposition and bring it close to Brave Bison. This means new potential customers, a new brand, and we plug them into our centralized marketing team that churns out content to drive brand awareness in the marketplace. We then look at the operations and delivery of a business.
We centralize resource management and control and have a single professional services automation tool that sits across the entire group so resource can be shared across the business. We also integrate finance and IT so that company targets are always aligned. Finally, we use a centralized HR team to standardize working practice. Our scale allows us to invest further into the employee experience than a smaller company might, and we have excellent social activity both online and offline through shared working tools.
We thought it might be helpful for prospective shareholders on the call for us to outline what we think are the top six reasons to invest in Brave Bison. Number one, we have a strong balance sheet. Net cash at year-end was GBP 6.8 million, and our market forecast has this rising to above GBP 9 million at the end of this year.
Number two, there really is strong alignment between the management team and the company's shareholder base. Theo and I own just under 20% of the business, and Philippa is also now a significant shareholder. Number three, all of our services and capabilities are technology-enabled, meaning that we are using the latest tech in the market to drive results for our clients and efficiency for ourselves. Number four, there is huge potential for consolidation within our market, and our business plan is focused on taking advantage of this. Number five, we have a track record of doing accretive acquisitions with successful integrations thereafter. And number six, finally, our underlying markets are growing as advertisers pull spend out of traditional channels and accelerate their own digital transformation.
Before we answer your questions, I'd like to say thank you to all of our existing shareholders for supporting us last year and for coming along on the Brave Bison journey. Theo, Philippa, and I are confident that there will be more excitement as we build the business, and we look forward to updating you throughout the year.
Fantastic. Thank you very much, indeed, all for your presentation. Ladies and gentlemen, please continue to submit your questions just using that Q&A tab situated on the right-hand corner of your screen. Just while the team take a few moments to review those questions submitted today, I'd like to remind you that recording of the presentation along with a copy of the slides and the published Q&A can be accessed via your investor dashboard.
As you can see, we've had a number of questions throughout today's presentation, and thank you to all the investors for submitting those. Perhaps I could hand back to you, maybe Theo, in the first instance, to read out the questions where appropriate to do so and direct them to the team. That'd be great, and I'll pick up from you at the end.
Sure. So we've had a couple of questions about SocialChain, the integration, and why we are seeing some client wins. So I think if we just go back to the beginning of SocialChain, we bought a business that was loss-making at the time and part of a very uncomfortable corporate structure that I think really meant the brand was not fulfilling its full potential.
The business, obviously, was started by relatively high-profile entrepreneurs, Steven Bartlett, and that gave the business really strong brand recognition among marketing leaders. Brand managers between the age of 20 and 35 would all have heard of SocialChain, partly because they would have heard of Steven Bartlett, but partly because it was operating at a time where social was growing so quickly. So it's been an enormous effort to reconfigure the backend of this business and build a delivery model that works from a profitability perspective. But by H2 this year, we certainly had achieved that, and that's continued into this year. So effectively, what we have now is a very exciting business that is working with very large companies, global brand advertisers like General Mills and Pernod Ricard, to run social media advertising campaigns.
And that is something that is a great area of interest for a huge number of customers. I think people are particularly interested in how they can use social to build their brand. Social media was always quite an exciting channel for targeted performance marketing. You obviously have an awful lot of information about your customers because you know what they like. You know what interests they have on platforms like Facebook and Instagram. So it was a very good conversion channel, the kind of thing we would do at Brave Bison Performance. But now that so much of a younger audience has moved onto platforms like TikTok and Instagram over TV and other non-advertised platforms, it really has become a fantastic brand channel. And we think that the tailwinds are behind us on that one.
If we can continue to execute in the way we are currently, we are expecting to see further growth there.
There's a question about whether or not Brave Bison may, in time, pay a dividend. I think right now, we're focused on pursuing other opportunities, but as a board, that is something that we discuss regularly, and we're absolutely committed to increasing shareholder value in the medium and long term. So that's something that definitely we will continue to consider and may well happen over the next year or so.
There's a question around whether we can expect to see the revenue and EBITDA growth to continue at current rates and how much visibility we have. Obviously, as we said, the net revenue growth in 2023 was fairly heavily driven by the acquisition of SocialChain.
So I think it partly depends on what acquisitions we do and which one of the three buckets that we spoke about that acquisition falls into, whether it's a bolt-on, a transformational one, or more of a combination. I think in terms of organic growth, we wouldn't be looking at the sort of high 23% levels. We'd probably be targeting more around a 5%-10% level of growth at the sort of organic level. So beyond that, it would be driven by the acquisitions.
There's a question here about financing acquisitions and how we would go about doing that. Obviously, we would look at this on a case-by-case basis, but it's not lost on us that we have a significant net cash pile, and that's also something that is growing.
The market forecasts for this year have our net cash exceeding GBP 9 million by the end of the year. So I think it's fair to say that for the majority of acquisitions that we would look at, bolt-ons and possibly combinations, those would be funded by our existing cash resources and possibly a drawdown on our debt facility that's already in place. Of course, if there are other opportunities that require more capital, we would have to revisit that. But I think it's safe to say we're in a good position to use our balance sheet to make acquisitions in the short term.
There's a question about who do we consider our competitors to be. The short answer is that the market is quite fragmented, and you have, as we mentioned, a number of very large advertising networks that every so often we do compete against.
There are also some more sort of challenger-esque private equity-backed groups. Some are private, and some are listed. So we compete against a range of smaller and bigger businesses. Ultimately, in the U.K., there isn't one particular company that we come up time and time again against. And you have to remember that because we have four different business practices that have a different and quite specialist capability, we actually compete differently within those different divisions of our business.
Perfect. Well, I think that's all of the questions for now unless anyone wants to write something additional.
Fantastic, Theo. Ollie, Philippa, thank you very much indeed. As you can see, any further questions that do come through, you will have the ability to review those and publish your responses where appropriate to do so. Or if they do come through and you see them, please do take them.
But on that basis, perhaps before redirecting investors to give you your feedback, Ollie, can I just ask you for a few closing comments?
Yep. I think on behalf of the board and I, we'd like to say thank you to all of our existing investors, and we look forward to updating shareholders over the coming months. Thank you.
Fantastic. Ollie, Philippa, Theo, thank you very much indeed for updating investors today. Can I please ask investors not to close the session? You should be automatically redirected to provide your feedback in order the team can better understand your views and expectations. This will only take a few moments to complete, and it is greatly valued by the company. On behalf of the management team, Brave Bison Group PLC, we'd like to thank you for attending today's presentation, and good morning to you all.
Thank you.