9 Mar 2016 07:00
March 2016
Be Heard Group plc
Results for the period ended 31 December 2015 and Notice of Annual General Meeting
First step towards creation of a next-generation digital marketing group
Be Heard Group plc (AIM: BHRD), the digital marketing group, today announces its results for the period ended 31st December 2015 together with notice of its Annual General Meeting to be held at the offices of Macfarlanes LLP, 20 Cursitor Street, London, EC4A 1LT on 31st March 2016 at 10:00 a.m.
The Company began trading on 23rd November 2015 when it was admitted to AIM as Be Heard Group Plc (BHRD.L) raising £5.5m (before expenses) through a placing at 3.25p and completing the acquisition of Agenda21 Holding Limited. The results incorporate the same short period of trading at Agenda21.
Corporate and operational highlights
· Admission to AIM on 23rd November 2015 following successful placement of the Company's shares
· Simultaneous acquisition of Agenda21, the award-winning digital media buying and analytics agency based in central London
· Experienced team in place, led by Executive Chairman Peter Scott, co-founder and former CEO of Engine Group and Aegis plc
· Clear vision and strategy to build a next-generation digital marketing group as marketing, technology and e-commerce converge
· Strong pipeline of potential investment opportunities to build the Group's capabilities and capacity in the UK, US and Europe
Financial highlights
| £'000 |
Turnover | 2,347 |
EBITDA | (1,020) |
Loss before tax | (1,139) |
Loss per share (basic) | (0.01)p |
Gross profit margin | 21.92% |
The Group's loss before tax was largely due to acquisition and listing costs of £618,000. Agenda21 contributed £114,000 profit before tax to the Group for the period. For the full year 2015 Agenda21's income was up nearly a third to to £4.2 million (2014: £3.25 million), while EBITDA increased 65% to £1.16 million (2014: £0.7 million*). As at 31st December 2015, Be Heard Group's net assets were £8.57 million, of which cash and cash equivalents were £8.27 million.
*before exceptional provision
Commenting on the results, Peter Scott said:
"The acquisition of Agenda21 was the first step towards our ambition of building Be Heard into a next-generation marketing group, designed to help clients maximise their return on investment from digital marketing.
"Digital technologies are now at the epicentre of strategy and marketing. While digital platforms already account for a very substantial share of marketing and advertising expenditure, there is huge scope for further and rapid expansion.
"We have a clear roadmap and strong pipeline of investment opportunities as we build the Group's capabilities and capacity in the UK, Europe and US. We will continue to pursue an acquisitive but selective development strategy, while enhancing organic growth across the Group."
Enquiries
Be Heard Group plc Peter Scott, Executive Chairman Robin Price, Group Financial Director | 020 3667 8877
|
Numis (Financial Advisor) Nick Westlake / Kevin Cruickshank (Nominated Advisor) James Black (Corporate Broker) | 020 7260 1000 |
Bell Pottinger (Financial PR) Zoë Pocock | 020 3772 2574 zpocock@bellpottinger.com |
About Be Heard Group plc
Be Heard Group plc (BHRD.L) is a digital marketing group operating at the intersection of marketing, technology and e-commerce. Our vision is to build an agile interconnected group focused on helping clients maximise their return on investment from digital marketing. To achieve this, we will acquire and integrate best-in-class companies spanning the core digital marketing disciplines, providing management experience, access to deeper resources and a strong platform for growth.
CHAIRMAN'S STATEMENT
Foundation of the Group
The Company was incorporated on 17th September 2014 and began trading on 23rd November 2015 (after delisting from the LSE as Mithril Capital Plc) when it was admitted to AIM as Be Heard Group Plc (BHRD.L) raising £5.5m (before expenses) through a placing at 3.25p and completing the acquisition of Agenda21 Holding Limited.
An experienced team led by Peter Scott (previously co-founder and CEO of The Engine Group and Aegis Group plc) took on the management of the Group with the objective of building a next-generation digital marketing group operating at the intersection of marketing services, technology and e-commerce across the UK, the US and Europe.
Be Heard made a good start in 2015. The acquisition of Agenda21 was the first step towards our ambition of creating a new digital marketing group, built to deliver superior performance for clients across the digital landscape.
2016 started well. The Group has put into place the resources and systems needed to manage and grow our business as we build out. Alongside this many new initiatives at Agenda21 are beginning to take effect and have an encouragingly strong pipeline of new investment opportunities emerging in the UK, US and Europe.
Financial review
| £'000 |
Turnover | 2,347 |
EBITDA | (1,020) |
Loss before tax | (1,139) |
Loss per share (basic) | (0.01)p |
Gross profit margin | 21.92% |
The Group had been trading for only five weeks as at 31st December 2015, and the results incorporate the same short period of trading at Agenda21.
Group revenue was £2.347 million and there was an overall group loss before tax of £1.139 million largely as a result of acquisition and listing costs of £618,000. Agenda21 contributed £114,000 profit before tax to the group results for the period.
As at 31st December 2015 the Group's net assets were £8.568 million of which cash and cash equivalents were £8.265 million.
Agenda21
Our first partner company is Agenda21, the award-winning digital media and analytics agency, specialising in an area which we see as one of the key pillars of the Group as brands and clients continue to ramp up investment in digital platforms and marketing.
Agenda21 was established in 2005 and is led by an accomplished and entrepreneurial management team under founders Pete Robins and Rhys Williams and now employs over 50 people from its central London office.
Operating under the banner 'Engineered for digital', Agenda21 provides digital strategy, digital media planning & buying and the use of deep analytics to generate customer insight and improve return on investment for clients.
The company plans, buys and manages multi-channel marketing campaigns including paid search (SEM/PPC), search engine optimisation (SEO), paid social media, programmatic and negotiated display media across desktop, mobile and other digitally connected devices.
Agenda21 aims to deliver better performance for brands through its deep industry and technical knowledge, strong partnerships with key technology companies and proprietary analytics. These advantages have enabled the agency to build a broad client base across a range of sectors including financial services, utilities, B2B and B2C goods and charities.
In the year to 31st December 2015 revenue at Agenda21 increased 29% on 2014 to £4.2 million, with an increased EBITDA of £1.16 million, 65% above the 2014 profit (after adjusting the latter for an exceptional provision).
During the year Agenda21 was cited in several industry awards. Notable citations included The Drum Search Awards 2015 (Finalist), The Drum Independent Agencies Census (ranked No. 6 among Elite Media Agencies), and RAR Digital Awards - Digital Strategy 40-99 Staff (Winner).
Since our involvement with Agenda21, management has launched a programme of initiatives to strengthen the business and ensure that it remains at the forefront of digital media planning and buying. As a part of this Andy Brown, who had left the business in 2014, was welcomed back in the new role of Managing Director.
With the inevitable distractions of restructuring now behind them, the management team is well positioned to lead the company forward through the next period of growth. The business is strongly placed to benefit from and help drive the increasing shift of marketing and media expenditure to digital platforms. It will continue to grow through expanding relationships with existing clients, exploiting new business opportunities and leveraging the support of Be Heard.
Finally I am delighted that Pete Robins and Rhys Williams are now important shareholders in Be Heard - a position that will grow as a significant proportion of their performance-related earn-out payments will be made in Be Heard shares over the next 3 years.
Outlook
We have a clear roadmap and strong pipeline of potential investment opportunities as we seek to build the Group's capabilities and capacity in the UK and beyond. We will continue to pursue an acquisitive but selective growth strategy, while enhancing organic growth and capabilities across the Group.
We look forward with considerable confidence to the year ahead.
Peter Scott
Executive Chairman
Date 8th March 2016
STRATEGIC REPORT
The Market opportunity
The internet is now the fastest growing component of the global economy.
Rising adoption of smartphones, tablets and other smart devices and high-speed connectivity are reshaping the way that we communicate, create, learn, teach, consume content and conduct business. Digital transformation is revolutionising product and brand development, customer relationships and commerce across markets and industries.
As a result, digital technologies are at the epicentre of strategy and marketing.
In the UK, the internet is projected to account for half of all advertising spend in 2016, the first major economy to hit this mark. Advertising expenditure on the internet overtook that on broadcast television across Western Europe in 2014 and this milestone is expected to be passed in the US in 2018. Globally it is projected that by 2020 internet advertising spend will be worth over $250 billion, representing a 60% increase versus 2015 and approximately 40% of all advertising, more than any other medium.
The further rapid expansion of digital marketing will be driven by a number of factors, including:
· Continuing growth in e-commerce, which still accounts for a relatively small proportion of retail sales. In the UK, arguably the most advanced online economy, e-commerce represented just 13% of retailers' revenues in 2015. In the US, the internet represented less than $1 of every $10 spent in retail last year.
· An increasing share of display and brand advertising moving online as consumers spend more time on the internet and more television and video content is distributed and consumed via connected devices and new creative opportunities emerge.
· More precise targeting and better customer insight enabled by improved measurement and analytics will continue to improve return on investment from online commerce and marketing, encouraging marketers to shift further resource to digital platforms and opportunities.
The growing importance of e-commerce and the internet as a route to market means that getting digital right is now a CEO-level priority. At the same time digital marketing is becoming more complex, leading organisations to seek digital experts to help them develop and execute their strategies.
Be Heard strategy
In the digital world everything is connected.
The ability to target customers and measure the impact of communications increasingly quickly, even in real-time, is transforming the entire marketing value chain. Expertise in analysing data and deriving marketing insights has become a critical determinant of business success.
Our vision is to create an agile and interconnected marketing group specialising in digital solutions designed to help clients achieve better results.
We see the Group being built around four key pillars:
· Media Planning and Buying
· Content
· Design, Build and UX
· Strategy, Analytics & CRM
While a majority of marketers maintain a roster of specialist digital agencies, recent surveys and feedback from major brands and advertisers indicate that many are cutting the size of their rosters or even consolidating digital marketing assignments under a lead agency.
Be Heard will leverage this opportunity by building a new digital Group spanning the key digital marketing disciplines. We have a clear plan to achieve this by acquiring best-in-class businesses and developing key capabilities within partner companies and across the Group.
Our mission is to help clients achieve better performance through superior insight, innovative ideas and agile execution. Our model is based on working with vendors who share our vision and commit to Be Heard's success by becoming long-term shareholders in the Group.
The initial focus is to establish scale and reach in the UK, US and Europe, targeting entrepreneurial and market-leading companies that meet our investment criteria in terms of sector, management depth, client retention, growth, margin and valuation.
In addition to building capacity and capabilities across the Group, we will seek to add scale and depth to partner companies, as well as exploiting future opportunities and technologies as they emerge.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 31st December 2015
|
| 2015 |
| Notes | £ |
|
|
|
Revenue |
| 2,346,631 |
Cost of sales |
| (1,832,151) |
|
| -------------- |
|
|
|
GROSS PROFIT |
| 514,480 |
Administrative expenses |
| (1,656,329) |
|
| -------------- |
LOSS FROM OPERATIONS |
| (1,141,849) |
|
|
|
Finance income Finance costs |
| 12,993 (10,034) |
|
| -------------- |
LOSS BEFORE TAXATION |
| (1,138,890) |
|
|
|
Tax expense |
| (26,561) |
|
| -------------- |
|
|
|
LOSS ATTRIBUTABLE TO EQUITY HOLDERS |
|
|
OF THE PARENT |
| (1,165,451) |
|
| ======= |
|
|
|
EARNINGS PER SHARE |
|
|
Basic | 3 | (0.31) |
Diluted | 3 | (0.31) |
|
| ======= |
|
|
|
All of the above losses after taxation arise from continuing operations.
There was no other comprehensive income for the period. Total comprehensive expense for the period ended 31st December 2015 is £1,165,451.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 31st December 2015
|
| Share |
|
|
| Share | Premium | Retained |
|
| Capital | Reserve | Earnings | Total |
| £ | £ | £ | £ |
|
|
|
|
|
|
|
|
|
|
Total comprehensive | - | - | (1,165,451) | (1,165,451) |
expense for the period |
|
|
|
|
ended 31st December 2015 |
|
|
|
|
|
|
|
|
|
Issue of new shares | 3,329,308 | 6,770,318 | - | 10,099,626 |
Issue costs deducted from equity |
| (406,513) |
| (406,513) |
|
|
|
|
|
Share based payment expense | - | - | 39,843 | 39,843 |
|
|
|
|
|
| -------------- | ------------ | ------------- | ------------ |
Balance at 31 December 2015 | 3,329,308 | 6,363,805 | (1,125,608) | 8,567,505 |
|
|
|
|
|
| ======= | ====== | ====== | ====== |
|
|
|
|
|
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31st December 2015
|
| 2015 | |
|
| £ | £ |
ASSETS |
|
|
|
|
|
|
|
NON-CURRENT ASSETS |
|
|
|
Property, plant and equipment |
|
| 20,887 |
Intangible assets |
|
| 12,640,221 |
|
|
| --------------------- |
TOTAL NON-CURRENT ASSETS |
|
| 12,661,108 |
|
|
|
|
CURRENT ASSETS |
|
|
|
Trade and other receivables |
| 3,827,060 |
|
Cash and cash equivalents |
| 8,264,801 |
|
|
| ------------------- |
|
TOTAL CURRENT ASSETS |
|
| 12,091,861 |
|
|
| --------------------- |
TOTAL ASSETS |
|
| 24,752,969 |
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
Trade and other payables Loan notes |
| (7,377,982) (849,965) |
|
Corporation tax liabilities |
| (92,529) |
|
|
| --------------------- |
|
TOTAL CURRENT LIABILITIES |
| (8,320,476) |
|
|
|
|
|
NON CURRENT LIABILITIES |
|
|
|
Loan notes |
| (175,055) |
|
Deferred tax liability |
| (748,541) |
|
Provision for liabilities |
| (6,941,392) |
|
|
| --------------------- |
|
TOTAL NON-CURRENT |
| (7,864,988) |
|
LIABILITIES |
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
| (16,185,464) |
|
|
| --------------------- |
TOTAL NET ASSETS |
|
| 8,567,505 |
|
|
| ========== |
CAPITAL AND RESERVES |
|
|
|
ATTRIBUTABLE TO EQUITY |
|
|
|
HOLDERS OF THE PARENT |
|
|
|
Share capital |
|
| 3,329,308 |
Share premium reserve |
|
| 6,363,805 |
Retained earnings |
|
| (1,125,608) |
|
|
| -------------------- |
TOTAL EQUITY |
|
| 8,567,505 |
|
|
| ========= |
The financial statements were approved by the Board of Directors and authorised for issue on 8th March 2016 and were signed on its behalf by:
Peter Scott Director | Robin Price Director |
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 31st December 2015
| 2015 | |
| £ | £ |
OPERATING ACTIVITIES |
|
|
|
|
|
Loss before taxation |
| (1,138,890) |
Adjustments for: |
|
|
Depreciation | 1,578 |
|
Amortisation | 128,141 |
|
Share based payment expense | 39,843 |
|
Finance income | (12,993) |
|
Finance costs | 10,034 |
|
|
| 166,603 |
|
| ------------- |
Loss from operations before changes |
| (972,287) |
in working capital and provisions |
|
|
Increase in trade and other receivables | (1,057,444) |
|
Increase in trade and other payables | 1,429,843 |
|
| ------------------- |
372,399 ------------------- |
Cash consumed by operations |
| (599,888) |
|
|
|
|
| ------------------ |
Cash flow from operating activities |
| (599,888) |
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
Purchase of property, plant and equipment | (447) |
|
Consideration paid on acquisition of |
|
|
subsidiaries | (2,139,688) |
|
Cash with subsidiaries over which control |
|
|
has been obtained | 2,468,366 |
|
Finance income | 12,993 |
|
Expenditure on development costs | (7,488) |
|
| ------------------- |
|
|
| 333,736 |
|
| ------------------ |
|
| (266,152) |
FINANCING ACTIVITIES |
|
|
|
|
|
Issue of ordinary shares | 8,947,500 |
|
Share issue expenses | (406,513) |
|
Finance costs | (10,034) |
|
| ------------------ |
8,530,953 |
|
| ------------------- |
INCREASE IN CASH AND CASH EQUIVALENTS |
| 8,264,801 |
|
| ========= |
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended (continued)
| 2015 |
| £ |
Cash and cash equivalents comprise: |
|
|
|
Net increase in cash and cash equivalents | 8,264,801 |
| ------------------- |
Cash and cash equivalents at end of period | 8,264,801 |
| ------------------- |
|
|
There were no significant non-cash transactions |
|
|
|
Cash available on demand | 8,264,801 |
| ------------------- |
| 8,264,801 |
| ========= |
NOTES TO THE FINANCIAL STATEMENTS
For the period ended 31st December 2015
1. The financial information for the period ended 31st December 2015 does not constitute statutory accounts as defined in section 435 (1) and (2) of the Companies Act 2006. The auditors have reported on these accounts; their reports were unqualified, did not include a reference to any matter to which the auditors drew attention by way of emphasis of matter and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
Whilst this preliminary announcement has been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRIC) interpretations adopted for use by the European Union, with those parts of the Companies Act 2006 applicable to companies reporting under these condensed financial statements do not contain sufficient information to comply with IFRS.
2. ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS
The financial information in this preliminary announcement has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The principal accounting policies used in preparing the preliminary announcement are those the Group will apply in its financial statement for the period ended 31st December 2015.
NOTES TO THE FINANCIAL STATEMENTS
For the period ended (continued)
3. | EARNINGS PER SHARE | 2015 |
|
| £ |
| The earnings per share is based on the following: |
|
|
|
|
| Earnings | (1,165,451) |
|
| ========== |
|
|
|
| Weighted average number of shares | 136,416,579 |
| Diluted number of shares | 396,676,795 |
|
|
|
| Earnings per share | (0.01) |
| Diluted earnings per share | (0.01) |
|
| ===== |
|
|
|
Earnings per ordinary share has been calculated using the weighted average number of shares in issue during the year. The weighted average number of equity shares in issue was 136,416,579.
The diluted earnings per share is the same as the earnings per share due to the consolidated group loss.
NOTES TO THE FINANCIAL STATEMENTS
For the period ended (continued)
4. SEGMENT INFORMATION
The Group's primary reporting format for segment information is business segments which reflect the management reporting structure in the Group.
| Be Heard | Agenda21 Group | Consolidation | Total |
| £'000 | £'000 | £'000 | £'000 |
Revenue |
|
|
|
|
External | - | 2,347 |
| 2,347 |
Intercompany | 13 | - | (13) | - |
| ---------------- | ---------------- | --------------- | -------------------- |
| 13 | 2,347 | (13) | 2,347 |
Profit/(loss) before tax | (1,132) | 114 | (121) | (1,139) |
Tax expense | - | (27) | - | (27) |
|
|
|
|
|
|
|
|
|
|
Balance sheet |
|
|
|
|
Assets | 17,426 | 6,744 | 582 | 24,752 |
Liabilities | (8,825) | (6,749) | (610) | (16,184) |
| ---------------- | ---------------- | --------------- | -------------------- |
Net assets/(liabilities) | 8,601 | (5) | (28) | 8,568 |
| ---------------- | ---------------- | --------------- | -------------------- |
Other |
|
|
|
|
Capital expenditure |
|
|
|
|
- Tangible fixed assets | - | - | - | - |
- Intangible fixed assets | - | 7 | - | 7 |
Depreciation, amortisation and other non cash expenses | - | 16 | 114 | 130 |
Interest paid | - | 10 | - | 10 |
|
|
|
|
|
Included with Agenda21 is turnover of £1,541,774 relating to income from three major customers which each account for more than 10% of the Group's turnover in the year.
|
External revenue by location of customer |
| 2015 |
| £ |
|
|
United Kingdom | 1,258,424 |
Rest of Europe | 1,071,754 |
Asia | 16,453 |
| ---------------- |
| 2,346,631 |
| ======== |
All the above relate to continuing operations.
NOTES TO THE FINANCIAL STATEMENTS
For the period ended (continued)
The Annual Report will be sent to shareholders shortly and made available to the public at the registered office of the Company at 10 Norwich Street, London, EC4A 1BD and will also be available to download on the Company's website www.beheardgroup.com.