Good morning, and welcome to the Brave Bison Group plc Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated in the right-hand corner of your screen. Just 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 will review all questions submitted today and publish responses where appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Oli Green, Executive Chairman. Good morning, sir.
Good morning, everyone, and thank you for dialing in to our Investor Meet Company presentation. I'm Oli Green, Executive Chairman of Brave Bison Group PLC. Joining me on the call today is Theo Green, our Chief Growth Officer, and Philippa Norridge, our Chief Financial Officer. Our presentation today will last around 25 minutes, and we'll have some time for questions at the end. We'll be covering everything from our financial results for the first half of the year, through to our outlook for the full year and beyond, as well as progress on the integration of Social Chain, which we acquired in February of this year. Brave Bison is a digital advertising and technology services business. We charge our customers fees, and we earn a revenue share from digital advertising that takes place on our channels. H1 was a steady period for us.
Trading definitely did have some challenges, but we've been really pleased to report some decent growth in spite of that. You will notice that there has been a cash outflow during the period, and that's because we used some of our balance sheet cash to pay for an acquisition that we made in February, the acquisition of Social Chain, which is an influencer marketing and social media advertising business. We did do a fundraising as well, but you may remember we had over GBP 6 million of cash at the end of 2022. Some of that was applied towards this acquisition.
We are pleased to report that our Adjusted EBITDA and Adjusted PBT numbers are in line with where we anticipated being at the half-year point, at GBP 1.9 million and GBP 1.5 million respectively. This is despite the more challenging trading conditions in the first half than we saw in the previous year. We have seen some significant new wins, and client budgets start to increase going into the second half, and we also tend to be H2 weighted due to the impact of Christmas advertising spend. So we believe we are on track to deliver our expectations of Adjusted EBITDA of GBP 4.1 million for the full year. Our net revenue is up by 23% year-on-year, which is largely due to the acquisition of Social Chain, which completed in February of this year.
Social Chain has been very much a turnaround story over the course of the first half, since it was loss-making at the point of acquisition. This has resulted in a slightly lower Adjusted EBITDA margin on net revenue of 18.9%. However, we should see this improve in future periods as a result of the cost savings and efficiencies already realized. We had a healthy net cash balance of GBP 4.3 million at the thirtieth of June. As Theo said, the cash outflows in the period were primarily related to the acquisition of Social Chain and then the associated working capital requirements for the business over the following few months. We anticipate being significantly cash generative in the second half of the year.
The only outstanding debt was government-backed COVID-related loans, which had favorable interest rates, and the cash balance and the undrawn revolving credit facility, which we have agreed with Barclays, puts us in a strong position to make further acquisitions. On the next slide, you can see the key adjustments during the period and reconciliation back to statutory profit before tax. We had GBP 0.6 million of restructuring costs in the period, which were primarily costs of notice periods and severance related to employees lost as part of the Social Chain integration and restructure. We achieved a net headcount reduction of 28% in this part of our business, whilst also securing some significant new wins to return Social Chain to a profitable run rate.
The majority of the expected restructuring costs were recognized in the first half of the year, with only some small costs relating to property leases and IT contracts still expected. Acquisition costs of GBP 0.8 million were made up of GBP 0.3 million of fees relating to our oversubscribed GBP 4.75 million fundraising, as well as other legal and professional fees associated with the acquisition, including due diligence and PR costs. There was a small impairment during the period in relation to the retirement of the Best Response Media brand, following the purchase price allocation exercise and successful integration into Brave Bison Commerce.
The final allocation exercise in relation to the Social Chain acquisition is currently underway, and we expect amortization of impaired intangibles to increase in the second half once this is complete. Share-based payments relate in large part to the directors' Long-Term Incentive Plan, redemption of which is subject to various performance conditions, including the share price exceeding 3 pence.
So Brave Bison has been a listed company since 2013, but your management team today, the one in front of you, has only been in place for the last three years. Oli and I built a stake in the business in 2019 and joined as executives in 2020 alongside Philippa. The company has grown well since then, and we are expecting further, albeit more modest, growth into 2024. Our end markets are definitely in flux, but Brave Bison is, and always has been, an exciting and independent company that has a demonstrated ability to grow revenues by winning market share from some of the larger incumbent agencies. We've also shown an ability to acquire businesses with low profit margins and turn them around, and that's something that we did with Greenlight most recently, and now we're in the process of doing with Social Chain.
In terms of expectations for this year and next year, we're comfortably in line with the current expectations for 2023. There have, of course, been some challenges that we've mentioned, but our business does have a resilience to it and a diversity to it that has allowed us to mostly weather the storm and crucially protect our profitability by controlling costs as quickly as possible. Social Chain is obviously a big driver of growth for us, and it will be in H2 this year. We are expecting our margins to pick up as the benefits of that integration come through, and we really do have big ambitions for Social Chain, particularly in the next 12-24 months, but also over a longer time period. By way of reminder, Brave Bison has four distinct business units or verticals.
Brave Bison Performance is our digital media practice. This is where we buy digital media on behalf of our clients across platforms such as Google, Meta, and TikTok, and we do this for global and national brands like New Balance, ASUS, and Currys. Social Chain by Brave Bison is our social media and influencer marketing practice. We create social content and run campaigns for global businesses like KFC, Apple, and General Mills. Brave Bison Commerce is our digital commerce practice. We consult, architect, build, manage, and support e-commerce platforms for enterprise retailers such as Müller, Primark, and MKM Building Supplies. The Brave Bison Media Network is our social publishing business unit. We own and operate hundreds of channels across platforms like YouTube, Facebook, and TikTok.
We run franchises for sports federations like the PGA Tour and the US Open, and we own channels like The Hook and Slick on Snapchat. So during the first half of the year, a huge amount of management time and energy was spent on the repositioning, restructuring, and integration of Social Chain into the Brave Bison platform. This integration is now substantially complete, and we are due to launch Social Chain's new brand, proposition, and website in the coming weeks. We're now going to play a short video that gives you a sense of the work we produce at Social Chain, the clients we partner with and work with, and our proposition to brand advertisers.
Listen. The feed moves fast. The noise is loud. Others try to shout above it, not us. We take a minute to listen to the voices that matter most. We go where they go, live in the same world they do, connecting communities and cultures through content and conversations. Building stronger connections between people and brands, creating a never-ending, always evolving relationship, your Social Chain. This is where most stories end. Ours has just begun. We listen, connect, and learn, then go back to the beginning.
When we acquired Social Chain, as with previous acquisitions, we grouped our efforts to improve underlying profitability into really three areas: marketing and new business, operations and finance, and finally, people and culture. As far as marketing and new business is concerned, we have an eight-person strong team that follows a very clear strategy to build brand awareness of Brave Bison across our industry and generate new opportunities and leads into our business. To achieve this, we run virtual and in-person events. We write blog posts and create downloadable white papers on industry topics. We speak on panels at industry conferences. We nurture relationships with platforms like Google, Meta, Adobe, and BigCommerce. We enter and win awards for our work. We align ourselves with intermediaries. We shout about the work we do for our clients and the outcomes we achieve for them in monthly wrap-up videos.
Ultimately, it's all of these tactics that generate noise and cement Brave Bison as an industry leader and a disruptive partner for clients. In turn, this drives new revenue, improves pitch conversion rates, and strengthens existing client relationships. Operations and finance is clearly fundamental to how we drive performance and profitability. We have developed strict framework, strict, strict frameworks for how we price work, how we record time spent on a project or client account, how we resource work, when we know it's time to hire additional resource, full-time or freelance, how we track margin at a discipline, project, or client level.
We have defined processes for how we negotiate fees, and over the past six months, we have started to roll out an enterprise-grade professional services automation tool that will allow us to deliver work, deliver better work, faster and more profitably, and crucially, do all of this at scale. I assure you, this has been no small task, but with this new PSA almost complete, it means that as a services business, we now have the foundation to grow productively and efficiently.
People are the lifeblood of our business, and the executive team spend a significant amount of time and energy thinking about how we can make Brave Bison an even better place to work. We've developed clear career progression frameworks, and staff have the opportunity to potentially benefit from salary increases twice per year, as well as the quarterly Brave Bison bonus. We have 55 staff in the business with stock options, and we make every effort to foster communication and collaboration, with lunch and learn sessions, as well as regular team building activities. This diagram is an org chart of how our business is structured. You can see our four distinct capabilities, as well as shared services, such as Finance, IT, HR, and Marketing.
I think I have touched on this before, but I'd like to reiterate that the board believes there is significant operational leverage within the senior ranks of the business, specifically inside the executive team, the MDs, and their heads of department. I really am confident that the team we have in place today is more than capable of running a bigger business, and so in the medium term, we should benefit from these implied economies of scale. So we'd just like to touch on a couple of case studies from Social Chain, to give you a flavor of the kind of work that we've been up to. So firstly, the Army. This is a case study that we're really proud of.
It was one using the new Social Chain brand proposition, so the skeleton of that video that you've seen, and that's a new look and feel that is really differentiated from the previous owners of the business. Secondly, it's a client that spans multiple business practices for us. So Brave Bison Performance, our performance marketing arm, will actually be delivering a significant part of this work. And then finally, the Army is exactly the kind of customer we want to be working with. They are a major U.K. brand advertiser, and they've signed a contract with us for 12 months, and they have a habit of being very sticky, given the tricky procurement cycles that they experience.
We could obviously be doing a lot more for them, so the team at the moment is working very hard to deliver well, so that we can land and expand on an account like this. Secondly, we have KFC, which is a real flagship customer for Social Chain. It's a very exciting customer. It's a very visual customer, and our teams absolutely love working on it, because they get to see their work every day on the social media accounts, on TikTok, on Twitter, on Instagram, for KFC. There's a really good level of trust between KFC and ourselves, because we've been working with them for some time, and the work is also very high profile. It often gets nominated for awards. We're actually up for two awards this year, so the customer is obviously very happy as well.
Moving on from Social Chain, we have a couple of updates from our other business practices. So firstly, Brave Bison Performance, as Oli mentioned, is our digital media practice, where we advertise on platforms like Google, Meta, and Amazon. And one of the really exciting things here was the launch of a new proposition. So at the beginning of the year, we launched something around marketplaces, third-party marketplaces. These are effectively websites where you can sell your products, but on your own website. So places like Amazon, places like eBay, places like Target Plus or Walmart or Google Shopping. And the idea is that you can offer all your products simultaneously at once, and that is a service that we will manage for you by using different feeds.
And as you can imagine, if you simultaneously offer all of your products in 1,000 new shops, that can be very good for incremental sales. So it was quite a popular new service that we launched this year. Brave Bison Commerce is our digital commerce practice. As Oli mentioned, we design, engineer, and implement e-commerce websites for large enterprise retailers. Now, over the last few years, we've been moving away from some of the more commoditized systems integration work, where you might set up a website, integrate with an ERP, and that would be it. And instead, we're moving into what's called composable commerce. It's a catch-all term for a much more modern and strategic consultancy that works with delivery teams. And this process has actually worked very well for us.
We were really pleased to win a major new client in Winparts, which is a very large European car parts retailer. It's a B2 B or a B 2 SME product, and they could spend well over GBP 1 million over this year and next year. So we're feeling good about progress made to date in Brave Bison Commerce. The Brave Bison Media Network is where we have our own channels. We publish content, and we monetize through advertising. Effectively here, we're a digital broadcaster, so we publish the content, the advertising is inserted into it, and then we make a revenue share. Our franchises in sports are going well.
Golf and tennis particularly has shown a bit of a resurgence this year, and we run channels here under long-term contracts, sometimes as long as three years. The market has been difficult here. Particularly advertising rates have been a challenge. So even if we're able to deliver the same number of views for our partners, the value of that advertising is less than it was certainly two years ago. However, despite that, because our customers can see the good work that we've been doing, a lot of our channel management contracts have been renewed. Well over half of our revenue, I think 65%, has been renewed on long-term, on long-term contracts, and a lot of that is already held under contract. And secondly, advertising rates have shown a good improvement. Since about April this year, they've been steadily increasing, so we're confident that Q4 is gonna be good, and we're hoping that into next year, we see some normalization.
So what's next for Brave Bison? We thought it might be helpful to list out our top five priorities for the next six months or so. Number one, we are committed to growing each of our business verticals. Despite the tricky macro environment, we're still targeting growth over the next 12 months. Number two, we really, really want to demonstrate the value of being able to provide multiple services by selling a more connected solution into customers. Theo touched on this with the Army, but we're looking for more of this integrated work and from larger clients. Number three, we'll be moving into a new London HQ at the end of this year. This needs to become a home for us, and we're excited about being able to collaborate in a more modern and relevant environment.
Four, we're always on the lookout for accretive acquisitions, either in new markets or books of revenue that we think we can run and optimize. Five, growing the Brave Bison brand is important to us, not just across our industry of media and marketing professionals, but also with new investors. We want to be a bigger company, and we know we need to raise our profile over the next 12 months. So to summarize, we feel as though the business has performed well against a difficult backdrop, and with Social Chain now integrated, we have a stronger and more exciting platform that will continue to grow and develop into next year. We operate in a fast-moving but thriving marketplace, and we believe that we have what it takes to succeed and grow value for all of our stakeholders.
So we'll be moving over to some of the questions that have been posted. I think if I just call out, I'll read some of the stuff. So you've mentioned your target of GBP 6 million of cash at year-end. Is the current strategy to stay debt-free, and will future acquisitions be from available resources? Philippa, do you want to answer that one?
Um.
You're on.
I think the key thing here is that we're, we are keen to do some further acquisitions. I think certainly any bolt-on acquisitions, any smaller ones we'd be looking to do from existing resources, and we're certainly in a very good position to do that. I think with any larger acquisitions, which would be possible in the future, we'd be very conscious of shareholders' concerns around dilution, and we would be very focused on increasing the earnings per share as a result of any of those larger acquisitions.
I think it's also worth noting that Brave Bison benefits from quite advantageous historic tax losses. There's about GBP 55 million of tax losses in the current company, which does mean that a significant proportion of our operating cash will convert into cash on the balance sheet. So we feel we have a bit of an advantage there versus some of our peers, because while they might be paying 20% plus of corporation tax, we should be paying significantly less than that, or no tax, certainly for the next couple of years. There's a question here about how much Social Chain revenue is in H1, and the additional contingent consideration related to Social Chain. So we don't expect any additional consideration for Social Chain.
I don't believe that we'll be paying that, either because we won't meet the performance hurdles, or because the company that we acquired Social Chain off has now gone into liquidation themselves. So we don't. There won't be any further earn-out on that. In terms of revenue in H1, there's somewhere between GBP 3 million and GBP 4 million of revenue from Social Chain in the first half. But I think I just want to emphasize that, that's got to be taken with a bit of a pinch of salt. Because the integration strategy that we have pushed has meant that, our social and influencer business has been totally merged with Social Chain, and our management team is now working above the Social Chain management team in order to grow the business.
So the integration does make it quite difficult to then point to, well, who won which bits of work? Where did they come from? Who were they delivered by? So in terms of how much Social Chain we expect for this year, I think we'll have to evaluate it at the end of the period and look then.
There's a question around whether or not the purchase of Social Chain has changed our vision for the future roadmap. The short answer is, I don't think it has changed our focus. We've always been a company that has been focused on selling digital advertising services as well as technology services to clients for a fee. If you remember, pre the acquisition, we did have, as Theo mentioned, a small and growing social and influencer marketing business unit. What's happened with the acquisition of Social Chain is that this business unit is now our largest business unit, but we're equally as excited as our other business units. I think they all have their strengths, and some have weaknesses, as all businesses do, but I think our focus has been consistent, so over the last four years.
There's a question about: How concentrated is your revenue from clients? I think we've got quite a nice revenue spread over clients. We've got clients which are large enough to be healthily profitable, but not so large that we're overly dependent on them. Our larger clients, like New Balance, Currys and Winparts, the new wind, should be fall into one of these categories as well. Around about the sort of 8% level. So like I said, a nice level where they're delivering solid profits, but we're not overly dependent.
There's a question.
There's a quest. Sorry, you go.
There's a question on what markets would be our top priority for acquisition? And I'll answer that in two parts. I think from a sort of existing business point of view, we would love to really grow our performance marketing business unit. Performance marketing is a great part of our business. It's a retained service. Clients typically spend more and more every year. There's now a really sort of large number of channels that the clients can spend on, and so they really rely on experts from agency partners to help them buy and spend money on digital media platforms like TikTok and Facebook, and as Theo mentioned, there's all the retail platforms now as well. So I think we'd love to do something in performance marketing.
And then over the next sort of 12-24 months, we do think the U.S. is exciting. We obviously have a small outpost there, in Social Chain, but that's a very exciting part of the world with big budgets that we'd love to start to attract.
There's a question here about target margins and how we're looking for improvements at Social Chain. So when we talk about margins, we typically look at our Adjusted EBITDA as a percentage of our net revenue gross profit. That allows us to strip out the impact of any pass-through media costs, or any revenue shares that are held under contract, so can't be changed in the short term. So typically, we would look for that to be between 16% and 17%. It's probably taken a little bit of a dip in the first half of this year as Social Chain came with, you know, more people than it needed.
Now that we've changed that, reduced the headcount, cut our costs across the whole business, we expect that we should come back up to that level, certainly in H2, and into FY 2024 as well.
That's fantastic, Theo. Thank you very much indeed, and thank you for addressing all those questions from investors that we've had through. Of course, any further questions do come through, the team will have the ability to review those, and we'll publish responses where appropriate to do so on the Investor Meet Company platform. Although, but just before redirecting investors to provide you with their feedback, which is particularly important to you and the team, if I could just ask you for some closing comments, please.
Absolutely. We wanted to say a big thank you to all existing and prospective shareholders for dialing in. We do appreciate the time you take to listen to our story, and we hope to update you with more progress in the coming months. Thank you very much.
That's fantastic. Oliver, Theo, Philippa, thank you very much indeed for updating investors today. Could I please ask investors not to close the session? You'll be automatically redirected to provide your feedback in order the team can better understand your views and expectations. It'll only take a few moments to complete, and is greatly valued by the company. On behalf of the management team at Brave Bison Group plc, we'd like to thank you for attending today's presentation, and good morning to you all.
Thank you very much.