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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Be Heard Group Plc | LSE:BHRD | London | Ordinary Share | GB00BT6SJV45 | ORD GBP0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.475 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMBHRD
RNS Number : 2450L
Be Heard Group PLC
18 April 2018
18 April 2018
Be Heard Group plc
RESULTS FOR THE YEARED 31 DECEMBER 2017
Connected, digital offering delivering organic revenue growth
Be Heard, the digital marketing services group, today announces its full year results for the year ended 31 December 2017.
Highlights
-- Strong revenue growth
o 25% increase in organic net revenue
-- Profit in line with guidance announced in January -- Connected offering extended by two acquisitions
o The Corner (integrated creative agency) and Freemavens (data and analytics)
-- Increasing demand for integrated, end-to-end marketing services
o 13 clients using two or more of our partner companies; four clients use three or more
o 30% of revenue coming from clients using two or more Be Heard partners
-- Good new business momentum
o 46 client wins, including first using all Be Heard partners
-- Management structure strengthened to drive the next phase of growth
Headline financial results
Hot Features
Premium
2017 2016 Change
GBPm GBPm
Billings 34.7 28.9 +20%
Net revenue 19.6 9.5 +106%
Trading EBITDA (1) 3.6 2.4 +50%
Operating profit (adjusted)
(2) 1.6 0.8 +98%
Profit / (loss) per
share (diluted) (0.00) (0.01)
Peter Scott, Chief Executive, said:
"2017 was only our second year as Be Heard. Phase one of our strategy is well advanced - building an integrated, end-to-end platform to offer connected, digital marketing services. We now have 330 digital experts covering data and analytics, integrated creative, media, content and UX, design and build. We continue to see an immense opportunity ahead for Be Heard, as the traditional holding groups scramble to adapt to changing client needs.
"The Group's focus is now shifting to the next phase of our strategy - driving organic revenue growth by maximising collaboration across our partner agencies. Against a backdrop of weakness in the sector, we have seen strong new business momentum in 2018 to date, at both Group and partner company levels, after some existing clients were slow out of the blocks in the first quarter. We are optimistic of further progress in the year ahead as we help clients navigate the digital customer journey."
Enquiries
Be Heard Group plc +44 20 3828 6269
Peter Scott, Group Chief Executive
N+1 Singer +44 20 7496 3000
Mark Taylor / Lauren Kettle
Dowgate +44 20 3903 7715
James Serjeant
FTI Consulting +44 203 727 1000
Jamie Ricketts / Niamh Fogarty
About Be Heard
Be Heard (AIM: BHRD) is a digital marketing services group helping clients solve the challenges they face in the connected world. Our five partner companies are:
agenda21, a digital media and analytics agency, which became a partner on admission in November 2015 www.agenda21digital.com
MMT, a user experience ("UX"), design and build agency, which became a partner in May 2016 www.mmtdigital.co.uk
Kameleon, a content marketing agency, which became a partner in December 2016 www.kameleon.co.uk
Freemavens, a data-driven analytics and insight consultancy, which became a partner in February 2017 www.freemavens.com
The Corner, an integrated creative agency based in London, which became a partner in November 2017 www.thecornerlondon.com
www.beheardgroup.com
@Be_Heard_Group
Notes
1. Represents Operating Profit (adjusted) prior to central group costs
2. Adjusted to exclude non-recurring and non-cash items
Strategic Review
Building a leading, integrated digital marketing services group
From a standing start little more than two years ago, Be Heard has built a connected group that offers end-to-end marketing services.
Be Heard's defining characteristic is its agile, forward-looking, connected business model.
This is what sets us apart from the traditional marketing holding groups that are - increasingly - struggling to adapt to the needs of the digital age.
Be Heard has been designed and built for the needs of today's marketers. No legacy conflicts, no legacy structure. Instead, a pure focus on helping clients solve one of the major challenges of our age: making the most of the digital customer journey.
This is why Be Heard exists - and now has 330 digital experts, covering data and analytics, integrated creative, media, content and UX, design and build.
As part of our buy-and-build strategy, we extended our connected offering in 2017 through the acquisition of data and insights consultancy Freemavens and integrated creative agency The Corner.
Digital transformation is driving market growth
Business growth is increasingly driven by digital channels and services. Marketers are increasing investment in digital channels to drive brand growth as well as direct marketing. Two data points illustrate this trend. First, global internet advertising overtook broadcast TV spend in 2017. Second, mobile devices are projected to account for 94% of net growth in global advertising expenditure over the next three years.
Increasing demand for our integrated, end-to-end marketing services model
The convergence of technology, data and creative is changing client needs.
There is a growing opportunity for an agile mid-size player - as clients seek new thinking, integrated solutions and transparency.
Be Heard's connected approach is attracting new clients and generating additional revenue. We have 13 clients served by two or more Group companies, and four clients served by three or more; 30% of our 2017 net revenue was generated by multi-company clients compared to just 1% in 2016.
We enjoyed strong new business performance in 2017, with 46 client wins and our first Group wins (where clients chose to enlist the services of all five of our partner agencies).
In recognition of the opportunity for more collaboration and cross-fertilisation between Be Heard partner agencies, we expect to announce the co-location of our London teams in the second half of 2018.
Management structure strengthened to drive the next phase of growth
Having laid the foundations for a connected digital market group, our focus now shifts to the next phase of our strategy - driving organic revenue growth through collaboration across our partner agencies.
To oversee this phase, and support the demands of an enlarged Group, we have completed a strengthening of the management structure in recent months.
At board level, Peter Scott was appointed Group Chief Executive on 4(th) January 2018, having created the Group in 2015 and driven the first phase of acquisition-led growth in his previous role as Executive Chairman. Peter's focus has shifted to the integration and development of Be Heard's operations and offering.
On the same date, recognising the requirements of a growing, AIM-listed company, David Morrison was appointed as Non-Executive Chairman, having served as a Non-Executive Director since August 2017. David has a wealth of experience building and developing growth companies.
Simon Pyper was appointed Group Chief Financial Officer on 9(th) April 2018. Simon adds significant experience to the Be Heard board, from senior leadership roles over the past three decades in the media sector and consumer industries.
Following Peter's appointment as Group Chief Executive, and with Simon's imminent arrival, the Board decided to share COO responsibilities between them, and accordingly Robin Price decided to step down from the Board on 9(th) April 2018. Ian Maude stepped down from the Board, also with effect from 9(th) April 2018.
To drive growth and collaboration across Be Heard's partner agencies, Richard Costa D'Sa was appointed Group Development Director in December 2017, having joined Be Heard as Chief Growth Officer in July 2017. In a short period he has made a strong impact on collaboration and culture across the Group.
Operations review
Revenue growth was strong at Group level, with organic net revenue up 25%, including double digit growth at MMT, Freemavens and agenda21, and good progress at The Corner which joined the Group in December 2017. Kameleon had a challenging first half of the year but recovered well and enjoyed good new business success in the second half of the year. Group profitability grew at a lower rate due to one-off issues late in the year, albeit trading EBITDA was up 50% to GBP3.6m.
Mapping the digital customer journey, Be Heard comprises five partner agencies. The leadership group of these companies is closely aligned with Be Heard, through a combination of equity, earn outs and a commitment to a joint vision, endeavour and culture.
MMT Digital
Be Heard's Group's UX, design and build operation creates digital solutions that transform business performance.
MMT Digital enjoyed rapid growth driven by its expansion into digital transformation and UX and increasing collaboration with agenda21 - both through existing relationships and new client wins (including cross-referrals). As outlined on 4(th) January 2018, margin was impacted by the increase in contractors that were required to support rapid topline growth. Given growth rates, MMT Digital has found recruiting and retaining developers challenging due to the widely recognised UK skills shortage but nevertheless has continued to recruit, and now has c.100 developers.
MMT Digital is increasingly competing with large consultancies and the 'big four' holding groups, as it moves up the client food chain. It is now the leading global partner for Kentico (the website content management system firm) and has expanded the range of CMS platforms it supports. MMT Digital designed and built TOBi, the UK's first AI powered e-commerce enabled chatbot for a UK telecoms company.
Freemavens
Be Heard's data and analytics business is a data-driven growth consultancy. Freemavens has flourished since joining the Group in February 2017, with like-for-like revenue up 39%. In recognition of its important role within Be Heard's connected offering, Freemavens is moving to a more central role within the Group to drive insights, strategy and product development, and relocated to Frith Street in April 2018 to share the same building as agenda21 and Kameleon.
During the year, new client wins included GSK, Diageo, Mastercard and Sainsbury's. Freemavens continued as a core insights partner for Unilever People Data Centre (PDC).
agenda21
Be Heard's digital media planning and buying agency is a media agency engineered for the digital age. agenda21 performed well in 2017, with revenues up 11% following rapid growth in 2016.
New client wins included Addison Lee, Travis Perkins and Vodafone Enterprise, offsetting some client volatility with Casumo (the online gaming firm) taking its media planning and buying in-house during the year. agenda21's data driven media planning and buying has shown tangible results - for example, increasing Addison Lee's return on investment from its app by 48%.
Be Heard stands apart from the crowd in its ability to add media to creative and analytics - in simple terms, putting 'the band back together'. agenda21 is central to this connected offering.
During the year agenda21 launched its proprietary Content Compass platform, onboarding a number of clients, and rolled out a new AI powered media offering.
Kameleon
Kameleon is a content marketing agency where data meets creativity.
It was a challenging first year with the Group for Kameleon, largely for reasons out of its control as three major clients all but ceased activity and spend on marketing - the UK government, NCS and Lee Cooper.
It is a testament to the leadership of co-founder Richard Armstrong, and talent of his team, that Kameleon returned to profitability in the final quarter of 2017.
Kameleon had some impressive client achievements in 2017, winning and then developing and implementing social marketing strategies for all Coca-Cola brands in the UK in a three month period.
But the year overall was disappointing with Kameleon suffering a revenue decline of 52%, resulting in trading EBITDA loss of GBP0.7m. As part of the swift and decisive remedial action to get Kameleon back on track, the CEO exited Kameleon and had his share of the earnout cancelled. During the year, Kameleon relocated into Frith Street, helping to drive good new business conversion in the first quarter.
The Corner
The Corner is a modern, integrated creative agency for modern times.
The Corner joined the Group in December 2017 - the creative element within Be Heard's connected offering, alongside media and analytics.
Year-on-year revenue was up 18%, with normalised EBITDA of GBP1.3m in 2017.
Since joining the Group, The Corner created and co-led the new business pitch for blu global. We see multiple opportunities with Group companies as The Corner moves to the centre of our connected offering.
The Corner's market-leading capability was recognised by winning Marketing Week's Campaign of the Year for its Jigsaw 'Heart Immigration' campaign and figuring in The Sunday Times' Best 100 Small Companies to work for.
Expanding the new business pipeline
Be Heard has seen good success in converting new business at partner agency and Group level in 2018 to date.
This reflects a greater focus on developing the Be Heard offering and converting 'low hanging fruit'.
New business opportunities at partner agency level have been led by founders and business development teams. This has benefitted from cross referrals from other Group companies and Company specific opportunities (inbound, via intermediaries, and outbound).
New business opportunities at Group level have been led by the Group Development Director, Richard Costa D'Sa. He is leading a focus and drive for greater collaboration and integration to convert 'low hanging fruit' from existing clients, creating new Be Heard opportunities, improving Group intermediary relationships and partnerships and reinvigorating Group marketing and communications.
Summary and outlook
Be Heard is two years into its journey. Phase one of our strategy is well advanced - building an integrated, end-to-end platform to offer connected, digital marketing services. The Group now has 330 digital experts covering data and analytics, integrated creative, media, content and UX, design and build, and continues to see an immense opportunity ahead as the traditional holding groups scramble to adapt to changing client needs.
Our focus is now shifting to the next phase of the strategy - driving organic revenue growth by maximising collaboration across our partner agencies. Against a backdrop of weakness in the sector, we have seen strong new business momentum in 2018 to date, at both Group and partner company levels, after some existing clients were slow out of the blocks in the first quarter. We are optimistic of further progress in the year ahead as we help clients navigate the digital customer journey.
FINANCIAL REVIEW
The group now has five partner companies that offer complementary skills and competencies across the digital marketing spectrum, with their clients increasingly using more than one of the companies to meet their digital needs.
Partner companies
The results for the year comprise the trading of the Partner companies as follows:
agenda21 (acquired November 12 months 2015) MMT Digital (acquired May 12 months 2016) Kameleon (acquired December 12 months 2016) Freemavens (acquired February 10.7 months 2017) The Corner (acquired November 1 month 2017)
Headline results
Group Billings for the year were GBP34.67m (2016: GBP28.85m). Group Net Revenue for the year was GBP19.6m (2016: GBP9.5m). Operating profit before non-recurring and non-cash items was GBP1.6m (2016: GBP0.8m).
Non-recurring and non-cash items of GBP5.4m (2016: GBP4.4m) comprised:
Depreciation GBP0.11m (2016: GBP0.07m) Amortisation and impairment GBP4.10m (2016: GBP2.86m) of intangibles Impairment of goodwill GBP2.27m (2016: nil) Write back of contingent GBP(2.27m) (2016: nil) consideration Acquisition costs GBP0.94m (2016: GBP1.01m) Termination payments GBP0.11m (2016: nil) Share-based payments GBP0.24m (2016: GBP0.51m)
resulting in an operating loss of GBP3.9m (2016: GBP3.6m)
Key performance indicators
Key performance indicators used within the Group are:
Trading EBITDA
This is determined prior to the charging of Group central costs to operating profit before non-recurring and non-cash items. With Group central costs of GBP2.0m (2016: GBP1.6m), trading EBITDA for the year was GBP3.6m (2016: GBP2.4m).
Trading EBITDA margin
This is measured against Net Revenue and on a Group basis gives a margin for the year of 18% (2016: 25%). This is below the Board's threshold target of 20% and accordingly analysis is ongoing at Partner companies under the control of Group finance to identify areas for improvement.
Net Revenue growth
Average Net Revenue growth across Partner companies in comparison to prior years, a proportion of which were pre- acquisition by the Group, was 25% in 2017 (2016: 16%).
Clients served across Partner companies
13 of the Group's clients are served by 2 or more Partner companies; four clients are served by 3 or more Partner companies. 30% of Group Net Revenue came from multi-company clients (2016: 2%).
Net Revenue per employee
The range of net revenues per employee across the Group* during the year was GBP91k to GBP109k (2016: GBP81k to GBP106k). (* excluding Kameleon where this was GBP46k as they rebuilt after the loss of key clients in the first part of the year).
Taxation
Due to reliefs as detailed in Note 7 of the accounts, available to the Group there is no charge to corporation tax for the year (2016: nil).
Earnings per share
Earnings per share for the year were GBP(0.00) (2016: GBP(0.01)).
Dividends
The Board is not proposing to pay a dividend for 2017 (2016: GBPnil).
Cash Flow
Net cash outflows from operating activities was GBP1.6m (2016: outflow GBP1.6m) and net funds raised by the issue of shares on AIM and Convertible Loan Notes issued were GBP7.95m (2016: GBP7.65m).
Net cash outflows on acquisition-related payments (inclusive of working capital and loan note payments) totalled GBP9.2m (2016: GBP14.6m).
Liquidity & financial position
In June 2017 the Group entered into an agreement with Barclays Bank in respect of a GBP3m Revolving Credit Facility maturing in June 2020.
The Group had cash balances of GBP3.1m at 31 December 2017 (2016: GBP2.8m) with a drawn-down balance of GBP1.0m (2016: nil) owing on the Revolving Credit Facility.
Acquisitions
On 9 February 2017, the Group acquired a 75% stake in Freemavens Limited, a marketing analytics and innovation consultancy specialising in the use of big data, for an initial consideration of GBP0.9m plus assumed debt of GBP0.8m. The management of Freemavens between them hold 9.3m shares in Be Heard Group plc and retain the remaining 25% holding in Freemavens that is subject to put & call options, not to be exercised before 1 January 2021, that are subject to a maximum value of GBP6.0m. The transaction was funded by the placement of shares in the market to the value of GBP2.1m at 3.6p per share.
On 2 November 2017 The Corner Communications (London) Limited ('The Corner'), an integrated creative agency based in London, was acquired by the Group for an initial consideration of GBP7.95m and potential earnout payments based on their results to December 2020 that could raise this to a maximum of GBP12.7m. The management of The Corner between them hold 80.4m shares in Be Heard Group plc. The transaction was funded by the raising of gross proceeds of GBP6.2m through placement of shares in the market to the value of GBP2.2m at 2.8p per share and the raising of GBP4.0 million through the issue of Convertible Loan Notes.
Operational developments
Under the leadership of the CEO, an Operations Board has been established that meets every six weeks to connect the senior management of Partner companies to discuss and manage the key strategic and operational issues.
In February 2018 the Group held its first awayday for the second-tier management across the Group that proved immensely valuable in connecting people and providing a cross Group understanding of the different skill sets and capabilities.
The financial capabilities of the Group have been enhanced by the recruitment of an experienced Chief Financial Officer and bringing in additional senior contractual resource to develop reporting systems and provide commercial support to Partner Company finance teams. Moving to a single location will afford the opportunity to consolidate appropriate parts of the financial operations across the Group.
The recruitment of an experienced Group Development Director, initially on a six-month contract basis, and full time since December 2017, has had a significant effect upon the development of cross-group opportunities that will result in three significant clients signing up to Group Master Service Agreements, under which all Group companies will be able to operate. By combining resources our partners can work seamlessly across broader briefs to deliver faster and more effective solutions to clients.
As the Group grows we believe more and more opportunities will present themselves where we can, as a Group, add significant value to our clients.
It remains our intention to co-locate our London-based businesses as soon as an appropriate location becomes available. In the meantime, three of the businesses and the Group team now share space in the same building, with a fourth company located close by. This interim level of co-location is already proving valuable in developing new business opportunities and working practices across the Group and confirms the rationale for a full-scale move.
With the assistance of outside professional resource we are conducting a Group-wide general data protection regulation review to ensure all Partner companies have a consistent and compliant approach.
Peter Scott
Chief Executive Officer
17 April 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2017
Year ended Year ended
31 December 31 December
2017 2016
Notes GBP'000 GBP'000
Billings 2 34,666 28,854
Cost of sales (15,116) (19,364)
------------------- -------------------
NET REVENUE 19,550 9,490
Administrative expenses (23,434) (13,127)
------------------- -------------------
OPERATING LOSS (3,884) (3,637)
------------------------------ ------ ------------------------- -------------------------
Operating profit before
non-recurring and non-cash
items 1,601 810
Depreciation (107) (67)
Amortisation (2,604) (2,036)
Impairment of intangibles (1,493) (824)
Impairment of goodwill (2,269) -
Write back of contingent 2,269 -
consideration
Acquisition costs (937) (1,012)
Termination payments (109) -
Share based payments (235) (508)
------------------------------ ------ ------------------------- -------------------------
LOSS FROM OPERATIONS 3 (3,884) (3,637)
Finance income - 6
Finance costs 6 (66) (30)
---------------------- ----------------------
LOSS BEFORE TAXATION (3,950) (3,661)
Taxation 7 1,536 762
------------------------ ------------------------
LOSS AFTER TAX (2,414) (2,899)
Loss and Total Comprehensive
Expense attributable to:
(162) -
Non-controlling interest
Equity holders of the parent (2,252) (2,899)
------------------------ ------------------------
(2,414) (2,899)
=========== ===========
EARNINGS PER SHARE
Basic 8 (0.00) (0.01)
Diluted 8 (0.00) (0.01)
============== ========
All of the above losses after taxation arise from continuing operations.
There was no other comprehensive income for the year. Total comprehensive expense for the year ended 31 December 2017 is GBP2,414k (2016: GBP2,899k).
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2017
Share Merger Attributable Non-
Share Premium Relief Retained to Owners Controlling
Capital Reserve Reserve Earnings of Parent Interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January 2016 3,329 5,566 798 (1,125) 8,568 - 8,568
Total
comprehensive
expense for the
year ended 31
December 2016 - - - (2,899) (2,899) - (2,899)
Issue of new
shares 3,815 5,482 3,158 - 12,455 - 12,455
Issue costs
deducted
from equity - (439) - - (439) - (439)
Share based
payment
expense - - - 508 508 - 508
---------------- -------------------- ------------------- ------------------- -------------------- -------------------- --------------
Balance at 1
January 2017 7,144 10,609 3,956 (3,516) 18,193 - 18,193
Total
comprehensive
expense for the
year ended 31
December 2017 - - - (2,252) (2,252) (162) (2,414)
Issue of new
shares 2,675 2,920 2,733 - 8,328 - 8,328
Issue costs
deducted
from equity - (305) - - (305) - (305)
Share based
payment
expense - - - 235 235 - 235
Non-controlling
interests on
acquisition of
subsidiary - - - - - 64 64
---------------- -------------------- ------------------- ------------------- -------------------- -------------------- --------------
Balance at 31
December 2017 9,819 13,224 6,689 (5,533) 24,199 (98) 24,101
======= ========== ========= ========= ========== ========== =======
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2017
2017 2016
Notes GBP'000 GBP'000 GBP'000 GBP'000
ASSETS:
NON-CURRENT
ASSETS
Property, plant
and equipment 9 324 93
Intangible
assets 10 45,232 40,272
--------------------- ---------------------
TOTAL
NON-CURRENT
ASSETS 45,556 40,365
CURRENT ASSETS
Trade and other
receivables 13 10,423 7,804
Cash and cash
equivalents 3,107 2,812
--------------------- -------------------
TOTAL CURRENT
ASSETS 13,530 10,616
LIABILITIES:
CURRENT
LIABILITIES
Trade and other
payables 14 (14,984) (11,069)
Bank and other
loans 15 (1,000) (175)
--------------------- ----------------------
TOTAL CURRENT
LIABILITIES (15,984) (11,244)
NON-CURRENT
LIABILITIES
Other payables 14 (682) (307)
Bank and other
loans 15 (4,014) -
Deferred tax
liability 17 (1,093) (988)
Provision for
liabilities 18 (13,212) (20,249)
------------------- ---------------------
TOTAL
NON-CURRENT (19,001) (21,544)
LIABILITIES
TOTAL
LIABILITIES (34,985) (32,788)
--------------------- ---------------------
TOTAL NET ASSETS 24,101 18,193
========== ==========
CAPITAL AND
RESERVES:
ATTRIBUTABLE TO
EQUITY
HOLDERS OF THE
PARENT
Share capital 19 9,819 7,144
Share premium
reserve 20 13,224 10,609
Merger relief
reserve 20 6,689 3,956
Retained
earnings 20 (5,533) (3,516)
--------------------- --------------------
Equity
attributable
to owners of
parent
company 24,199 18,193
Non-controlling
interests 21 (98) -
--------------------- ---------------------
TOTAL EQUITY 24,101 18,193
========== =========
The financial statements were approved by the Board of Directors and authorised for issue on 17 April 2018
and were signed on its behalf by:
Peter Scott David Wilkinson
Director Director
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2017
2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
OPERATING ACTIVITIES
Loss before taxation (3,950) (3,661)
Adjustments for:
Depreciation 107 67
Amortisation 2,604 2,036
Impairment of
intangibles 1,493 824
Impairment of 2,269 -
goodwill
Write back of (2,269) -
contingent
consideration
Share based payment
expense 235 508
Finance income - (6)
Finance costs 66 30
--------------------------------- ----------------------------------
4,505 3,459
------------------- ----------------------
Profit/(loss) from
operations before
changes 555 (202)
in working capital
and provisions
Decrease/(increase)
in trade and other
receivables 45 (994)
Decrease in trade and
other payables (2,614) (366)
------------------- -------------------
(2,569) (1,360)
------------------- ----------------------
Cash consumed by
operations (2,014) (1,562)
Net tax received 458 12
------------------ ------------------
Cash flow from
operating
activities (1,556) (1,550)
INVESTING ACTIVITIES
Purchase of property,
plant and equipment (251) (98)
Consideration paid
on acquisition of
subsidiaries (6,675) (9,841)
Deferred
consideration
paid (2,330) (3,931)
Payment to buy out
shareholders (175) (850)
Cash with
subsidiaries
over which control
has been obtained 2,378 3,163
Finance income - 6
Expenditure on (45) -
development
costs
--------------------------------- -------------------------------
Cash flow from
investing
activities (7,098) (11,551)
FINANCING ACTIVITIES
Issue of ordinary
shares 4,283 8,117
Share issue expenses (305) (439)
Bank loan 1,000 -
Loan notes issued 4,000 -
Finance costs (29) (30)
------------------ ------------------
Cash flow from
financing
activities 8,949 7,648
INCREASE/(DECREASE)
IN CASH AND CASH ------------------ ---------------------
EQUIVALENTS 295 (5,453)
Cash and cash equivalents
at 1 January 2,812 8,265
-------------------- ---------------------
Cash and cash equivalents
at 31 December 3,107 2,812
========== ==========
Cash available on
demand 3,107 2,812
========== ==========
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2017
Reconciliation of net cashflow to 2017 2016
movement in net debt:
GBP'000 GBP'000
Net increase/(decrease) in cash and
cash equivalents 295 (5,453)
Revolving credit facility drawn (1,000) -
Convertible loan notes issued (4,000) -
---------------------- ----------------------
Movement in net debt in the year (4,705) (5,453)
Net debt at 1 January 2,812 8,265
------------- -------------
Net debt at 31 December (1,893) 2,812
======= =======
There were no significant non-cash transactions.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2017
1. ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS
Be Heard Group plc is incorporated in England and Wales. The Company is domiciled in the UK. The Company is a public limited company which is listed on the Alternative Investment Market ("AIM"). The address of its registered office is 10 Norwich Street, London, England EC4A 1BD.
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.
These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations issued by the International Accounting Standards Board as adopted by the European Union ("IFRSs") and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRSs. The consolidated financial statements have been prepared under the historical cost convention and on a going concern basis.
The financial statements are presented in pounds sterling (the functional currency) and rounded to the nearest thousand (GBP'000).
Going concern
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group ("the Group") have adequate resources to continue in operational existence for the foreseeable future. In reaching this conclusion the Directors have considered the financial position of the Group, its cash, liquidity position and borrowing facilities together with its forecasts and projections for 18 months from the reporting date that take into account reasonably possible changes in trading performance. The going concern basis of accounting has therefore continued to be adopted in preparing the financial statements
Basis of consolidation
Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the Company and its subsidiaries as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
Business combinations
The consolidated financial statements incorporate the results of business combinations using the acquisition method of accounting other than disclosed above. In the consolidated statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. Acquisition-related costs are expensed as occurred. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration agreement. Non-controlling interests in acquired companies are measured at the non-controlling interests' proportionate share of the acquiree's identifiable net assets.
Critical judgements and estimates
There are areas in which Group management has exercised its judgement in the application of the Group's accounting policies and making estimates about the future. These include:
-- Depreciation rates - fixed assets are depreciated over their expected useful economic life.
-- Amortisation rates - the Group applies a reasonable industry standard to amortise acquired intangibles over a 3-year period.
-- Impairment of goodwill - the Group assesses the discounted future cashflows of acquired companies using reasonable measures of discount factors and growth rates, in line with industry standards.
-- Bad debt provision - debts outstanding over 90 days will usually be provided against, unless there is evidence of imminent recovery.
Goodwill
Goodwill represents the excess of the cost of a business combination over the interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired. Cost comprises the fair value of assets given, liabilities assumed, and equity instruments issued.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the statement of comprehensive income.
Any gains on acquisition are recognised in the statement of comprehensive income on the date of acquisition.
Impairment tests on goodwill are undertaken at least annually or more frequently if events or changes in circumstance indicate a potential impairment.
Impairment of non-financial assets
Impairment tests on goodwill are undertaken annually on 31 December and on other non-financial assets whenever events or changes in circumstances indicate that their carrying value may not be reasonable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.
Impairment charges are included in the administrative expenses line item in the consolidated statement of comprehensive income, except to the extent that they reverse gains previously recognised in the consolidated statement of recognised comprehensive income. Any impairment loss for goodwill is not reversed.
Intangible assets (other than goodwill)
Intangible assets are recognised on business combinations if they are separable from the acquired entity or arise from other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques. Intangible assets principally related to brand names and customer lists which were valued by discounting estimated future net cashflows from the asset.
Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. Cost includes all directly attributable costs of acquisition. The amortisation expense is included within the administration expense line in the consolidated statement of comprehensive income. Externally acquired intangible assets are amortised over their useful economic life of 3 years.
Intangible assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying value may not be recoverable.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker is identified as the Group Board who are responsible for allocating resources and assessing the performance of the operating segments. The Group is organised into six operating segments based on individual entities within the Group.
Billings
Billings represent the total amounts receivable from clients, exclusive of VAT, in respect of services provided.
Net revenue
Net revenue is recognised when it is probable that future economic benefits will flow to the Group and the revenue can be reliably measured. Net revenue is measured at the fair value of the consideration received or receivable from customers, net of trade discounts, VAT, and other sales related taxes. Net revenue is recognised as follows:
-- Net revenue from commissions on digital media placements is recognised on a straight-line basis over the digital campaign year. Where a campaign has run but not yet billed by the balance sheet date, income is accrued. Where amounts are received in advance of the campaign running, income is deferred.
-- Net revenue derived from retainer fees is recognised on a straight-line basis across the retainer year in accordance with the terms of the contractual arrangements.
-- Net revenue from creative services is recognised using the percentage completion method, determined on the proportion of the service provided at the balance sheet date. When services have been delivered but not yet billed by the balance sheet date, income is accrued. Where amounts are received in advance of delivery, income is deferred based on the percentage of services not yet completed.
-- Net revenue from user experience ("UX") delivery contracts is recognised on a time and materials basis. Services delivered but not billed at the balance sheet date are accrued.
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 to write off the carrying value of items over their expected useful economic lives. It is applied at the following rates:
-- Land and buildings leasehold - 33% per annum on a straight-line basis -- Fittings and equipment - 33% per annum on a straight-line basis -- Computers - 33% per annum on a straight-line basis
Leased assets
Where substantially all of the risks and rewards incidental to ownership are retained by the lessor (an "operating lease"), the total rentals payable under the lease are charged to the statement of comprehensive income on a straight-line basis over the lease term.
The land and buildings elements of property leases are considered separately for the purposes of lease classification.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax base, except for differences arising on:
-- the initial recognition of goodwill;
-- the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit; and
-- investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the differences can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities, and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
Pensions
The pension schemes operated by the Group are defined contribution schemes. The pension cost charge represents the contributions payable by the Group.
Foreign currency
Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which it operates are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are retranslated at the rates ruling at the date of the statement of financial position. Exchange differences arising are recognised in the statement of comprehensive income.
Research and development costs
Expenditure on internally developed products is capitalised if it can be demonstrated that:
-- it is technically feasible to develop the product for it to be available for use or sold;
-- adequate technical, financial and other resources are available to complete the development;
-- there is an intention to complete and sell or use the product; -- there is an ability for the Group to sell the product; -- sale of the product will generate future economic benefits; and -- expenditure on the project can be measured reliably.
Capitalised development costs are amortised over three years. The amortisation expense is included within the administrative expenses line in the statement of comprehensive income. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the statement of comprehensive income as incurred.
Financial assets
The Group classifies its assets into one of the following categories, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:
Loans and receivables: These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise through the provision of goods and services to customers (trade receivables). They are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition or issue and subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
The effect of discounting on these financial instruments is not considered to be material.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
Where possible, credit insurance is sought against the credit risk associated with trade receivables.
Financial liabilities
The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired. The Group's accounting policy for each category is as follows:
Other financial liabilities include the following:
-- Trade payables and other short term monetary liabilities, which are recognised at amortised cost.
-- Loan notes are recognised at amortised cost (other than convertible loan notes which are detailed below).
Convertible loan note
Convertible loan notes are considered to be a hybrid financial instrument comprising a financial liability (loan) and an embedded derivative (share option). At the date of issue, both elements were included in the balance sheet as liabilities held at fair value. The fair value of the loan element was estimated using the prevailing market interest rate for a similar non-convertible debt. This amount is recorded as a liability on an amortised cost basis until extinguished upon conversion at the instrument's maturity date. The fair value of the option element was estimated using the Black Scholes option pricing model with subsequent changes in fair value being recognised in the income statement.
On conversion of the loan note to equity, the fair value of the equity will be calculated based on a pre-agreed share price. The difference between the fair value of the equity issued and the carrying value of the loan note immediately prior to conversion will be recognised within finance costs in the income statement.
Investments
Investments in subsidiaries are held at cost less impairment.
Shared based payment
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated statement of comprehensive income over the vesting year. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each statement of financial position date so that, ultimately, the cumulative amount recognised over the vesting year is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of 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 statement of comprehensive income over the remaining vesting year.
Standards and amendments and interpretations to published standards not yet effective
Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group's accounting years beginning on or after 1 January 2018 or later years and which the Group has decided not to adopt early are:
Amendments to IFRS 2 Share-Based Payment (effective for accounting years beginning on or after 1 January 2018)
IFRS 9 Financial Instruments (effective for accounting years beginning or after 1 January 2018).
IFRS 15 Revenue from Contracts with Customers (effective for accounting years beginning on or after 1 January 2018)
IFRS 16 Leases (effective for accounting years beginning on or after 1 January 2019)
The implementation of these standards is not expected to have any material effect on the Group's financial statements, with the exception of IFRS 16. Specifically, the Group has assessed the impact of implementing IFRS 15 and the impact on the financial statements for the current or prior years is GBPnil.
The impact that the implementation IFRS 16 will have on the financial statements is currently being assessed.
2. BILLINGS Year ended Year ended
31 Dec 31 Dec
2017 2016
GBP'000 GBP'000
Billings arises from:
Provision of services 34,666 28,854
======= =======
Billings by geographical location and by operating
segment is given in note 24.
3. LOSS FROM OPERATIONS Year ended Year ended
31 Dec 31 Dec
2017 2016
GBP'000 GBP'000
This has been arrived at after
charging/(crediting):
Staff costs (see note 4) 10,898 4,391
Acquisition costs 937 1,012
Depreciation of property, plant
and equipment 107 67
Amortisation of computer software
and other intangible assets 2,604 2,036
Impairment of intangible assets 1,493 824
Impairment of goodwill 2,269 -
Write back of contingent consideration (2,269) -
Audit fees 29 25
Audit of accounts of subsidiaries
of the company pursuant to legislation 61 37
Non-audit fees: taxation advisory
services 10 7
Operating lease rentals 737 226
Foreign exchange differences 9 (20)
======= =======
Details of transactions with related parties of the Directors are given in note 26.
4. STAFF COSTS
Staff costs for all employees during the year,
including the Executive Directors, were as follows:
Year ended Year ended
31 Dec 31 Dec
2017 2016
GBP'000 GBP'000
Wages and salaries 9,824 3,904
Social security costs 983 472
Other pension costs 91 15
--------------- ---------------
10,898 4,391
======= =======
The average monthly number of employees during
the year, including the three Executive Directors,
was as follows:
Number Number
Selling 35 12
Production 158 68
Management and administration 32 24
--------------- ---------------
225 104
======= =======
5. DIRECTORS' EMOLUMENTS, INTERESTS AND SERVICES CONTRACTS
The value of all elements of remuneration received by each Director in the year was as follows:
Salary Benefits Total Pension
fees Bonuses in kind emoluments Contributions Total
2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Peter Scott 230 - 3 233 - 233
Robin Price
(resigned 9
April 2018) 188 - 1 189 - 189
Ian Maude
(resigned
9 April
2018) 126 20 1 147 - 147
David
Wilkinson 30 - - 30 - 30
Rakhi
Goss-Custard 60 - - 60 - 60
David Poutney 30 - - 30 - 30
David
Morrison
(appointed 1
August 2017) 13 - - 13 - 13
--------------- --------------- --------------- --------------- --------------- ---------------
Total 677 20 5 702 - 702
======= ======= ======= ======= ======= =======
Salary Benefits Total Pension
fees Bonuses in kind emoluments Contributions Total
2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Peter Scott 150 75 8 233 - 233
Robin Price
(resigned 9
April 2018) 150 75 7 232 - 232
Ian Maude
(resigned
9 April
2018) 138 - 3 141 - 141
David
Wilkinson 30 - - 30 - 30
Rakhi
Goss-Custard 60 - - 60 - 60
Rodger
Sargent 15 - - 15 - 15
David Poutney 15 - - 15 - 15
--------------- --------------- --------------- --------------- --------------- ---------------
Total 558 150 18 726 - 726
======= ======= ======= ======= ======= =======
The Executive Directors have service contracts with the Company which are terminable by the Company, or the relevant Director, on twelve months' notice.
The Directors of the Company on 17 April 2018 and at the statement of financial position date, and their interest in the issued ordinary share capital of the Company as at that date of 31 December 2017 were as follows:
17 April 31 December 31 December
2018 2017 2016
GBP GBP GBP
Peter Scott 21,256,680 19,856,680 16,644,776
Robin Price (resigned
9 April 2018) 2,897,227 2,897,227 2,006,752
Ian Maude (resigned
9 April 2018) 2,605,989 2,605,989 2,160,752
David Wilkinson 2,386,208 1,886,208 1,083,828
Rakhi Goss-Custard 764,325 764,325 320,754
David Poutney 11,692,857 10,692,857 5,000,000
David Morrison 2,142,857 2,142,857 -
Simon Pyper - - -
========== ========== ==========
Details of the options over the Company's shares are as follows:
Options
held
at
Type of 31 December Exercise
Option 2017 Price Date of Expiry Date
Grant
Peter Scott EMI 16,972,792 GBP0.0325 23 November 23 November
2015 2025
Robin Price EMI 16,972,792 GBP0.0325 23 November 23 November
(resigned 2015 2025
9 April 2018)
Ian Maude EMI 16,972,792 GBP0.0325 23 November 23 November
(resigned 2015 2025
9 April 2018)
Rakhi Goss-Custard Fully taxable 7,833,657 GBP0.0325 23 November 23 November
2015 2025
Peter Scott Fully taxable See note GBP0.01 23 November 23 November
(i) 2015 2025
Peter Scott Fully taxable See note GBP0.01 23 November 23 November
(ii) 2015 2025
Peter Scott Fully taxable See note GBP0.01 23 November 23 November
(iii) 2015 2025
On 9 April 2018, Robin Price and Ian Maude resigned as Directors of the Company. At that date their options over the Company's shares lapsed.
note (i) such number of Ordinary Shares as is equal to two per cent of the lower of: a) the Company's entire issued share capital on the date the Option is exercised; and
b) such number of Ordinary Shares as would constitute the Company's entire issued share capital if the total share capital (including share premium) of the Company was GBP37 million (on the assumption that the amount of share premium paid on each Ordinary Share is equal to the mean average amount of share premium paid on each Ordinary Share in issue immediately prior to the time at which such number is calculated).
The performance condition applicable to these options is that the mid-market closing price per Ordinary Share must be at least GBP0.10 for each day during a year of twenty consecutive business days.
note (ii) such number of Ordinary Shares as is equal to two per cent of the lower of: a) the Company's entire issued share capital on the date the Option is exercised; and
b) such number of Ordinary Shares as would constitute the Company's entire issued share capital if the total share capital (including share premium) of the Company was GBP37 million (on the assumption that the amount of share premium paid on each Ordinary Share is equal to the mean average amount of share premium paid on each Ordinary Share in issue immediately prior to the time at which such number is calculated).
The performance condition applicable to these options is that the mid-market closing price per Ordinary Share must be at least GBP0.125 for each day during a year of twenty consecutive business days.
note (iii) such number of Ordinary Shares as is equal to two per cent of the lower of: a) the Company's entire issued share capital on the date the Option is exercised; and
b) such number of Ordinary Shares as would constitute the Company's entire issued share capital if the total share capital (including share premium) of the Company was GBP37 million (on the assumption that the amount of share premium paid on each Ordinary Share is equal to the mean average amount of share premium paid on each Ordinary Share in issue immediately prior to the time at which such number is calculated).
The performance condition applicable to these options is that the mid-market closing price per Ordinary Share must be at least GBP0.15 for each day during a year of twenty consecutive business days.
Peter Scott is not permitted to transfer, charge, assign or dispose any Ordinary Shares issued to him in satisfaction of the exercise of any of these options until 23 November 2018 (save to family members, in the event of a takeover of the Company or to sell to cover the tax arising in connection with his acquisition of those Ordinary Shares).
The following information is relevant to the determination of the fair value of the options detailed in (i), (ii) & (iii) as above:
Option pricing model used Monte Carlo
Date of grant 23 November
2016
Share price at grant date 3.45p
Exercise price 1p
Expected volatility 27%
Risk free interest rate 1.26%
The expected volatility is based on a statistical analysis of daily share prices of a similar stock to Be Heard Group plc over a 12-month year prior to the date of the grant.
Based on the results of the stochastic model, the modal vesting time (excluding instances in which vesting does not occur) is between 4.5 and 5 years from the date of grant.
The performance condition applicable to the EMI options is that the mid-market closing price per Ordinary Share must be at least GBP0.08 for each day during a year of twenty consecutive business days.
The market price of the shares at 31 December 2017 was GBP0.0285, with a quoted range during the year of GBP0.0275 to GBP0.0415.
The following information is relevant to the determination of the fair value of the options:
Option pricing model used Black Scholes
Date of grant 23 November
2016
Share price at grant date 3.25p
Exercise price 3.25p
Expected volatility 27%
Risk free interest rate 0.90%
The expected volatility is based on a statistical analysis of daily share prices of a similar stock to Be Heard Group plc over a 12-month year prior to the date of the grant.
The market vesting conditions have been factored into the calculation by applying an appropriate discount to the fair value of equivalent share options without the specified vesting conditions.
6. FINANCE COSTS Year ended Year ended
31 Dec 31 Dec
2017 2016
GBP'000 GBP'000
Loan note interest 41 29
Other interest 25 1
--------------- ---------------
Total finance costs 66 30
======= =======
Interest on the 8% convertible loan has been
charged at the rate of 11.9%, being the estimated
interest that would have been applied on a pure
loan in the absence of the convertible element.
This has increased the interest charge in the
year by GBP14k (2016: GBPnil).
7. TAX EXPENSE 2017 2016
GBP'000 GBP'000
Current tax credit
UK corporation tax on profits
or losses for the current year (483) (233)
UK corporation tax on profits (357) -
or losses for the prior year
Deferred tax credit (696) (529)
--------------- ---------------
Total tax credit (1,536) (762)
======= =======
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the UK applied to profits for the year are as follows:
2017 2016
GBP'000 GBP'000
Loss before tax (3,950) (3,661)
--------------- ---------------
Expected tax charge based on the
effective standard rate of corporation
tax in the UK of 19.25% (2016:
20.00%) (760) (732)
Effect of:
Expenses not deductible for tax
purposes 422 368
Share scheme deduction (50) (704)
Additional deduction for R&D expenditure (928) (201)
Surrender of tax losses for R&D
tax credit refund 6 88
Losses carried back 132 -
Other adjustment - (11)
Prior year adjustment (357) -
Deferred tax not recognised (3) 429
Adjust deferred tax to average
rate 2 1
--------------- ---------------
Tax credit for the year (1,536) (762)
======= =======
8. EARNINGS PER SHARE 2017 2016
GBP'000 GBP'000
The earnings per share is based
on the following:
Earnings (2,252) (2,899)
======= =======
Weighted average number of shares 812,812,081 553,597,753
Diluted number of shares 1,045,693,688 778,222,256
Earnings per share (0.00) (0.01)
Diluted earnings per share (0.00) (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 812,812,081 (2016: 553,597,753).
The diluted earnings per share is the same as the earnings per share due to the consolidated Group loss.
9. PROPERTY, PLANT AND
EQUIPMENT
Fixtures Plant & Leasehold
&
Fittings Machinery Improvements Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 31 December
2016 35 596 103 734
Additions 7 244 - 251
Acquisition
of subsidiaries - 321 - 321
Disposals - (348) (103) (451)
--------------- --------------- --------------- ---------------
At 31 December
2017 42 813 - 855
--------------- --------------- --------------- ---------------
Depreciation
At 31 December
2016 13 526 102 641
Charge for the
year 7 99 1 107
Acquisition
of subsidiaries - 234 - 234
Disposals - (348) (103) (451)
--------------- --------------- --------------- ---------------
At 31 December
2017 20 511 - 531
--------------- --------------- --------------- ---------------
Net Book Value
At 31 December
2017 22 302 - 324
======= ======= ======= =======
At 31 December
2016 22 70 1 93
======= ======= ======= =======
10. INTANGIBLE Development Goodwill Customer Brand
ASSETS on
Costs Consolidation Relationships Value Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 31 December
2016 499 37,539 6,439 2,157 46,634
Addition 45 - - - 45
Acquisition
of subsidiaries - 9,525 2,496 2,225 14,246
Remeasurement - (2,965) - - (2,965)
--------------- --------------- --------------- --------------- ---------------
31 December
2017 544 44,099 8,935 4,382 57,960
--------------- --------------- --------------- --------------- ---------------
Amortisation
At 31 December
2016 474 3,000 2,441 447 6,362
Charge for
the year 25 - 1,684 895 2,604
Impairment - 2,269 1,493 - 3,762
--------------- --------------- --------------- --------------- ---------------
31 December
2017 499 5,269 5,618 1,342 12,728
--------------- --------------- --------------- --------------- ---------------
Net Book Value
At 31 December
2017 45 38,830 3,317 3,040 45,232
======= ======= ======= ======= =======
At 31 December
2016 25 34,539 3,998 1,710 40,272
======= ======= ======= ======= =======
Development costs relate to Amplify and Content Compass; data analytics tools developed in-house by Agenda21.
Amortisation of GBP2,604k and impairment of GBP3,762k are included in administrative expenses in the year.
The Group tests intangible assets biannually for impairment or more frequently if there are indications of impairment. A discounted cashflow analysis is computed to compare the discounted future cashflows to the net carrying value of goodwill and other intangible assets for each operating segment as appropriate.
11. GOODWILL AND IMPAIRMENT
Details of the carrying amount of goodwill allocated to cash generating units (CGUs) is as follows:
Goodwill carrying
amount
2017 2016
GBP'000 GBP'000
Details of the carrying amount
of goodwill allocated to cash generating
units
(CGUs) is as follows:
Agenda 21 Digital Limited 11,340 11,340
MMT Limited 15,058 15,072
Kameleon Worldwide Limited 2,907 8,127
Freemavens Limited 752 -
The Corner Communications (London) 8,773 -
Limited
--------------- ---------------
38,830 34,539
======= =======
The value of goodwill relating to CGUs that have been held for less than a year is assessed according to the expectations of amounts likely to be paid in total for the CGU, and in addition any revisions to the fair value of assets acquired.
The value of CGU's held for more than a year is assessed according to the projected performance of the business. This is done by using appropriate short-term forecasts, and reasonable growth rates and discount factors to determine the net present value of the investment.
Agenda 21 Digital Limited
The recoverable amount of Agenda 21 Digital Limited has been determined from a review of the current and anticipated performance of this unit. In preparing the projection, a discount rate of 8% has been used based on the weighted average cost of capital and a future growth rate of 6% has been assumed beyond the first three years, for which the projection is based on the budget produced by Agenda21. The future growth rate has then been applied until the tenth year. It has been assumed investment in capital equipment will equate to depreciation over this year. The discount rate was based on the Company's cost of capital as estimated by management.
The recoverable amount exceeds the carrying amount by GBP2,218k. If any one of the following changes were made to the above key assumptions, the carrying amount would still exceed the recoverable amount by GBP1,164k.
Discount rate: Increase from 8% to 10%
Growth rate: Reduction from 6% to 4%
MMT Limited
The recoverable amount of MMT Limited has been determined from a review of the current and anticipated performance of this unit. In preparing the projection, a discount rate of 8% has been used based on the weighted average cost of capital and a future growth rate of 6% has been assumed beyond the first three years, for which the projection is based on the budget produced by MMT. The future growth rate has then been applied until the tenth year. It has been assumed investment in capital equipment will equate to depreciation over this year. The discount rate was based on the Company's cost of capital as estimated by management.
The recoverable amount exceeds the carrying amount by GBP3,080k. If any one of the following changes were made to the above key assumptions, the carrying amount would still exceed the recoverable amount by GBP1,685k.
Discount rate: Increase from 8% to 10%
Growth rate: Reduction from 6% to 4%
Kameleon Worldwide Limited
Goodwill in Kameleon Worldwide Limited was remeasured in June 2017, with a reduction of GBP2.95m. This was due to the loss of key clients that might have been known at the date of acquisition.
Goodwill was further impaired in December 2017 by GBP2.27m due to ongoing poor trading. In addition, one of the founders has left the Company, which has reduced the future consideration due by GBP1.77m. Contingent consideration has been reduced in conjunction with the goodwill impairment.
The recoverable amount of Kameleon Worldwide Limited has been determined from a review of the current and anticipated performance of this unit. In preparing the projection, a discount rate of 8% has been used based on the weighted average cost of capital and a future growth rate of 6% has been assumed beyond the first three years, for which the 2018 projection is based on the budget produced by Kameleon. The 2019 projection is based upon the budgeted monthly profit at the end of 2018, on the basis that in a turnaround scenario, linear growth rates are not appropriate. The future growth rate has then been applied until the tenth year. It has been assumed investment in capital equipment will equate to depreciation over this year. The discount rate was based on the Company's cost of capital as estimated by management.
The recoverable amount exceeds the carrying amount by GBP282k. If any one of the following changes were made to the above key assumptions, the carrying amount would still exceed the recoverable amount by GBP42k.
Discount rate: Increase from 8% to 10%
Growth rate: Reduction from 6% to 4%
Freemavens Limited
Freemavens Limited was acquired on 9 February 2017.
The recoverable amount of Freemavens Limited has been determined from a review of the current and anticipated performance of this unit. In preparing the projection, a discount rate of 8% has been used based on the weighted average cost of capital and a future growth rate of 6% has been assumed beyond the first three years, for which the projection is based on the budget produced by Freemavens. The future growth rate has then been applied until the tenth year. It has been assumed investment in capital equipment will equate to depreciation over this year. The discount rate was based on the Company's cost of capital as estimated by management.
The recoverable amount exceeds the carrying amount by GBP7,295k. If any one of the following changes were made to the above key assumptions, the carrying amount would still exceed the recoverable amount by GBP6,753k.
Discount rate: Increase from 8% to 10%
Growth rate: Reduction from 6% to 4%
The Corner Communications (London) Limited
The Corner Communications (London) Limited was acquired on 29 November 2017.
The recoverable amount of The Corner Communications (London) Limited has been determined from a review of the current and anticipated performance of this unit. In preparing the projection, a discount rate of 8% has been used based on the weighted average cost of capital and a future growth rate of 6% has been assumed beyond the first three years, for which the projection is based on the budget produced by The Corner. The future growth rate has then been applied until the tenth year. It has been assumed investment in capital equipment will equate to depreciation over this year. The discount rate was based on the Company's cost of capital as estimated by management.
The recoverable amount exceeds the carrying amount by GBP4,763k. If any one of the following changes were made to the above key assumptions, the carrying amount would still exceed the recoverable amount by GBP3,865k.
Discount rate: Increase from 8% to 10%
Growth rate: Reduction from 6% to 4%
12. SUBSIDIARIES
The subsidiaries of Be Heard Group plc, which have been included in these consolidated financial statements are as follows:
Proportion
of voting
rights
and
ordinary
Subsidiary Country Registered share capital Nature of
undertakings of incorporation Office held business
Agenda 21 Digital United 53 Frith Street 100% Holding company
Holding Limited Kingdom London W1D
4SN
Agenda 21 Digital United 53 Frith Street 100% Digital media
Limited * Kingdom London W1D and analytics
4SN agency
MMT Limited United 1a Uppingham 100% Digital marketing
Kingdom Gate, Uppingham, company
Rutland, LE15
9NY
Kameleon Worldwide United 53 Frith Street 100% Digital marketing
Limited Kingdom London W1D agency
4SN
Freemavens United 3 Loughborough 75% Analytics
Limited Kingdom Street, London, consultancy
SE11 5RB
The Corner United 1 Richmond 100% Advertising
Communications Kingdom Mews, London, agency
(London) Limited W1D 3DA
In all cases the country of operation and of incorporation is England.
*indirectly held by Agenda 21 Digital Holding Limited
13. TRADE AND OTHER RECEIVABLES 2017 2016
GBP'000 GBP'000
CURRENT
Trade receivables 7,191 6,022
Corporation tax recoverable 556 82
Other receivables 128 406
Prepayments and accrued income 2,443 1,294
--------------- ---------------
10,318 7,804
NON-CURRENT
Other receivables 105 -
--------------- ---------------
10,423 7,804
======= =======
14. TRADE AND OTHER PAYABLES 2017 2016
GBP'000 GBP'000
CURRENT
Trade payables 3,879 2,009
Other taxes and social security 1,180 916
Other payables 6,300 4,017
Accruals and deferred income 3,625 4,127
--------------- ---------------
14,984 11,069
======= =======
Other payables due in less than one year include
GBP6,029k of deferred consideration (2016:
GBP3,950k).
NON-CURRENT
Other payables 682 307
======= =======
Other payables due in greater than one year include GBP682k of deferred consideration (2016: GBP307k).
15. BANK AND OTHER LOANS
CURRENT
Revolving Credit Facility
The Group entered into an agreement with Barclays Bank on 29 June 2017 in respect of a GBP3,000k Revolving Credit Facility maturing on 29 June 2020. The facility is unsecured and interest is payable at 4.0% plus LIBOR. The facility must be reduced to a GBPnil balance for 10 consecutive working days once every 12 months.
As at 31 December 2017, the Company had drawn GBP1,000k of the facility (2016: GBPnil).
NON-CURRENT
Convertible Loan Notes
Convertible loan notes were issued on 28 November 2017. The notes are convertible by the holder into ordinary shares of the Company at any time between the date of issue of the notes and their redemption date. The notes are convertible at 3.5 pence per share.
If the notes are not converted, they may be redeemed at par at the option of the issuer on the fourth, fifth or sixth anniversary of issue. Interest, payable quarterly in arrears of 8% per annum is payable in years 1-4 and interest of 10% per annum payable in years 5-6.
2017
GBP'000
Nominal value of convertible loan notes
issued 4,000
Less:
Share option component (674)
---------------
Liability component at date of issue 3,326
Interest charged 41
Interest payable (27)
---------------
Liability component at 31 December 2017 3,340
Add:
Share option component 674
---------------
Value of convertible loan notes at 31
December 2017 4,014
=======
The interest charge for the year is calculated by applying an effective rate of interest of 11.9% to the liability component for the one month since the loan notes were issued, being the interest rate that would have been applied if there were no share option element (see note 6).
16. FINANCIAL INSTRUMENTS
The Group's overall risk management programme seeks to minimise potential adverse effects on the Group's financial performance.
The Group's financial instruments comprise cash and cash equivalents and various items such as trade payables and receivables that arise directly from its operations. The Group is exposed through its operations to the following risks:
-- Credit risk -- Foreign currency risk -- Liquidity risk
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks. Further quantitative information in respect of these risks is presented throughout these financial statements.
The Board has overall responsibility for the determination of the Group's risk management policies. The objective of the Board is to set policies that seek to reduce the risk as far as possible without unduly affecting the Group's competitiveness and effectiveness. Further details of these policies are set out below:
Credit risk
The Group is exposed to credit risk primarily on its trade receivables, which are spread over a range of customers, a factor that helps to dilute the concentration of the risk.
It is Group policy, implemented locally, to assess the credit risk of each new customer before entering into binding contracts. Credit insurance is purchased where available; for riskier clients without sufficient trading history to be covered, payment in advance is required.
The maximum exposure to credit risk is represented by the carrying value in the statement of financial position as shown in note 13 and in the statement of financial position. The amount of the exposure shown in note 13 is stated net of provisions for doubtful debts.
The credit risk on liquid funds is low as the funds are held at banks with high credit ratings assigned by international credit rating agencies.
Foreign currency risk
Foreign exchange transaction risk arises when individual Group operations enter into transactions denominated in a currency other than their functional currency. The general policy for the Group is to sell to customers in the same currency that goods are purchased in reducing the transactional risk. Where transactions are not matched excess foreign currency amounts generated from trading are converted back to sterling and required foreign currency amounts are converted from sterling and the use of forward currency contracts is considered.
Liquidity risk
If any part of the Group identifies a shortfall in its future cash position the Group has sufficient facilities that it can direct funds to the location where they are required. If this situation is forecast to continue into the future remedial action is taken.
Credit risk
The carrying amount of financial assets represents the maximum credit exposure. The Group maintains its cash reserves at reputable banks. The maximum exposure to credit risk at the reporting date was:
2017 2016
GBP'000 GBP'000
Financial assets
Trade and other receivables 7,424 6,427
Cash and cash equivalents 3,107 2,812
--------------- ---------------
10,531 9,239
======= =======
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
2017 2016
GBP'000 GBP'000
UK 6,597 5,839
Non-UK 594 183
--------------- ---------------
7,191 6,022
======= =======
The Group policy is to make a provision against those debts that are overdue, unless there are grounds for believing that all or some of the debts will be collected.
Trade receivables ageing
by geographical segment
30 days 60 days 90 days
Geographical Total Current past due past past
area due due
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2017
UK 6,597 3,495 1,366 554 1,182
Non-UK 594 474 97 5 18
--------------- --------------- --------------- --------------- ---------------
Total 7,191 3,969 1,463 559 1,200
======= ======= ======= ======= =======
2016
UK 5,839 1,500 520 2,195 1,624
Non-UK 183 28 114 41 -
--------------- --------------- --------------- --------------- ---------------
Total 6,022 1,582 634 2,236 1,624
======= ======= ======= ======= =======
2017 2016
GBP'000 GBP'000
Current financial
liabilities
Trade and other payables 10,179 6,026
Revolving credit 1,000 -
facility
Loan notes - 175
--------------- ---------------
11,179 6,201
======= =======
Financial liabilities are measured
at amortised cost.
Non-current financial
liabilities
Convertible loan note - loan 3,340 -
element (see note 15)
Convertible loan note - share 674 -
option element (see note
15)
Other payables 682 307
--------------- ---------------
4,696 307
======= =======
The following are maturities of current financial liabilities, including estimated contracted interest payments.
Carrying Contractual 6 months 6 - 1 or
12 more
Amount cash flow or less months Years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2017
Trade and other
payables 10,179 10,179 8,795 1,302 82
Revolving credit
facility 1,000 1,000 1,000 - -
Convertible
loan notes 4,014 4,014 - - 4,014
Other payables 682 682 - - 682
--------------- --------------- --------------- --------------- ---------------
15,875 15,875 9,795 1,302 4,778
======= ======= ======= ======= =======
2016
Trade and other
payables 6,026 6,026 6,026 - -
Loan notes 175 175 175 - -
Other payables 307 307 - - 307
--------------- --------------- --------------- --------------- ---------------
6,508 6,508 6,201 - 307
======= ======= ======= ======= =======
Foreign currency risk
The Group's main foreign currency risk is the short-term risk associated with accounts receivable and payable denominated in currencies that are not the subsidiaries functional currency. The risk arises on the difference in the exchange rate between the time invoices are raised/received and the time invoices are settled/paid. For sales denominated in foreign currencies the Group will try to ensure that the purchases associated with the sale will be in the same currency.
All monetary assets and liabilities of the Group were denominated in sterling with the exception of the following items which were denominated in Euros and US dollars, and which are included in the financial statements at the sterling value based on the exchange rate ruling at the statement of financial position date.
The following table shows the net assets exposed to exchange rate risk that the Group has at 31 December 2017:
Euro US dollars Total
GBP'000 GBP'000 GBP'000
Trade receivables 53 111 164
Cash and cash
equivalents 83 23 106
Trade payables 35 176 211
--------------- --------------- ---------------
171 310 481
======= ======= =======
The Group is exposed to currency risk because it undertakes trading transactions in US dollars and Euros. The Directors do not generally consider it necessary to enter into derivative financial instruments to manage the exchange risk arising from its operations, but from time to time when the Directors consider foreign currencies are weak and it is known that there will be a requirement to purchase those currencies, forward arrangements are entered into.
Details of those outstanding at the statement of financial position date are given later in this note.
The effect of a strengthening of 10% in the rate of exchange in the currencies against sterling at the statement of financial position date would have resulted in an estimated net increase in pre-tax profit for the year and an increase in net assets of approximately GBP48k and the effect of a weakening of 10% in the rate of exchange in the currencies against sterling at the statement of financial position date would have resulted in an estimated net decrease in pre-tax profit for the year and a decrease in net assets of approximately GBP44k.
There were no forward purchase agreements in place at 31 December 2017.
Capital under management
The Group considers its capital to comprise its ordinary share capital, share premium account and accumulated retained earnings.
In managing its capital, the Group's primary objective is to maximise returns for its equity shareholders. The Group seeks to maintain a gearing ratio that balances risks and returns at an acceptable level and also to maintain sufficient funding to enable the Group to meet its working capital and strategic investment need. In making decisions to adjust its capital structure to achieve these aims the Group considers not only its short-term position but also its long term operational and strategic objectives.
The Group defines gearing as borrowings less cash over equity. The Group's gearing ratio at 31 December 2017 is shown below:
2017 2016
GBP'000 GBP'000
Revolving credit facility 1,000 -
Loan notes - 175
Convertible loan notes 4,014 -
Cash and cash equivalents (3,107) (2,812)
--------------- ---------------
1,907 (2,637)
======= =======
Share capital 9,819 7,144
Share premium reserve 13,224 10,609
Merger relief reserve 6,689 3,956
Retained earnings (5,533) (3,516)
--------------- ---------------
24,199 18,193
======= =======
Gearing ratio 0.08 (0.14)
======= =======
17. DEFERRED TAX 2017 2016
GBP'000 GBP'000
Accelerated capital allowances,
capitalised development costs
and goodwill on acquisition of
subsidiaries:
Deferred tax arising on acquisition
of subsidiaries 1,090 970
Origination and reversal of timing
differences 3 14
Arising from R&D intangible - 4
--------------- ---------------
At 31 December 2017 1,093 988
======= =======
Credit:
Origination and reversal of timing
differences (692) (528)
Effect of tax rate change - (1)
Arising from R&D intangible (4) -
--------------- ---------------
(696) (529)
======= =======
A reduction to the UK corporation tax rate to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. This will reduce the Group's future current tax charge accordingly. The deferred liabilities on 31 December 2017 have been calculated based on these rates.
2017 2016
GBP'000 GBP'000
As at 1 January 2017 988 749
Arising from acquisitions 803 764
Charged to the Income Statement (696) (529)
Other adjustments (2) 4
--------------- ---------------
As at 31 December 2017 1,093 988
======= =======
18. PROVISION FOR LIABILITIES
Provisions represent amounts payable to former shareholders of Agenda 21 Digital Limited, MMT Limited, Kameleon Worldwide Limited and The Corner Communications (London) Limited, contingent upon certain results being achieved over the relevant periods. These amounts are broken down as follows:
2017 2016
GBP'000 GBP'000
As at 1 January 20,249 6,904
Acquisitions 3,449 18,646
Reclassification to deferred consideration (5,535) (2,301)
Remeasurement of contingent consideration (2,951) (3,000)
Write back of contingent consideration (2,000) -
--------------- ---------------
As at 31 December 13,212 20,249
======= =======
19. SHARE CAPITAL 2017 2016
No GBP'000 No GBP'000
Allotted, issued
and fully paid
Ordinary shares
of 1p each 981,947,733 9,819 714,476,301 7,144
========== ======= ========== =======
Details of options granted are set out in note 5. At 31 December 2017 the number of shares covered by option agreements amounted to 58,752,033 plus an undetermined number with respect to Peter Scott's share options.
On 9 April 2018, Robin Price and Ian Maude resigned as Directors of the Company. At that date, their Company options over the Company's shares lapsed (see note 5).
Shares issued in the year:
Date Description No shares Price/ Gross Cash
share share received
value
(pence) GBP'000 GBP'000
9 February
2017 Share placing 58,300,000 3.6000 2,099 2,099
9 February Freemavens
2017 consideration 9,303,766 3.8630 359 -
31 March Agenda21 earnout
2017 payment 22,909,784 3.5160 805 -
31 March Kameleon additional
2017 consideration 8,059,642 3.5160 283 -
29 November
2017 Share placing 78,000,000 2.8000 2,184 2,184
29 November The Corner
2017 initial consideration 90,898,240 2.8565 2,598 -
--------------------- --------------- ---------------
Total 267,471,432 8,328 4,283
========== ======= =======
On 18 November 2016 the Company entered into a Warrant Agreement with Numis Securities. Numis was granted the right to subscribe for 4,993,962 ordinary shares pursuant to the terms of the Warrant Agreement.
The Warrant is exercisable, subject to certain limited exceptions, at any time during the year until the third anniversary of the Company's admission to London Stock Exchange plc's AIM Market, provided that the share price of the ordinary shares on the business day prior to exercise is at least 10 pence per ordinary share. The subscription price for each ordinary share the subject of the warrant in 3.25 pence per ordinary share. This is valued under the Black Scholes model. See note 5.
20. RESERVES
Full details of movements in reserves are set out in the consolidated statement of changes in equity on page 28.
The following describes the nature and purpose of each reserve within owners' equity.
Reserve Description and Purpose
Share premium Amount subscribed for share capital
in excess of nominal value.
Retained earnings Cumulative net gains and losses recognised
in the consolidated income statement.
Non-controlling Cumulative net gains and losses attributable
interests to non-controlling interested.
Merger relief Amounts in excess of nominal value
reserve of share capital issued as consideration
for acquisition of more than 90%
ownership.
21. NON-CONTROLLING INTERESTS
On 9 February 2017, the Group purchased 75% of the Ordinary Share Capital of Freemavens Limited. This gave rise to a non-controlling interest in the assets of the Group.
2017
GBP'000
Arising on acquisition of Freemavens
Limited (64)
Interest in the profits of Freemavens
in the period 162
---------------
98
=======
22. LEASING COMMITMENTS
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
2017 2016
GBP'000 GBP'000
No later than 1 year 846 768
Between 2 and 5 years 1,339 1,555
In over 5 years 95 -
======= =======
The commitments are with respect to property rental leases held across the Group.
22. SHARE BASED PAYMENT
The Group operates an approved Enterprise Management Incentive Scheme whereby and have been granted options to purchase shares in Be Heard Group plc at a subscription price of 3.25p per share. The options in place at 31 December 2017 all have exercise years of any time after finalisation of the accounts for the year on which the performance criteria are based. Full details are set out in note 5.
The fair value of the options is based on the market value at the date of grant of the number of shares for which the performance criteria have been met for the year less the exercise price of 3.25p per share. The market value per share at the date of grant was 3.25p
The share-based remuneration expenses amount to GBP235k for the year (2016: GBP508k).
Non-EMI options are valued by the Directors based on the probability of the outcome being achieved.
24. SEGMENT INFORMATION
The Group's primary reporting format for segment information is business segments which reflect the management reporting structure in the Group.
2017 Be Design, Media Content Analytics Full Inter-segment Total
Heard Build Planning Manage-ment Consult-ancy Service adjustments
Group & UX & Buying Agency
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Billings
External 10 7,214 21,539 1,717 1,859 2,327 - 34,666
Intercompany 478 2,440 44 40 - - (3,002) -
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
488 9,654 21,583 1,757 1,859 2,327 (3,002) 34,666
Profit/(loss)
before tax (2,718) 1,393 1,813 (916) 351 237 (4,110) (3,950)
Tax
expense/(recovery) - (502) 283 93 - (26) (1,384) (1,536)
Balance sheet
Assets 56,472 7,646 11,503 863 468 3,452 (21,318) 59,086
Liabilities (32,691) (784) (6,542) (806) (691) (2,266) 8,795 (34,985)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net
assets/(liabilities) 23,781 6,862 4,961 57 (223) 1,186 (12,523) 24,101
======= ======= ======= ======= ======= ======= ======= =======
Other
Other
Capital expenditure
- Tangible
fixed assets 4 173 37 17 15 5 - 251
- Intangible
fixed assets - - 45 - - - - 45
Depreciation,
amortisation
and other
non-cash
expenses 244 41 29 6 25 1 4,093 4,439
Interest
paid 59 - 7 - - - - 66
======= ======= ======= ======= ======= ======= ======= =======
2016 Be Heard Design, Media Content Analytics Full Inter-segment Total
Group Build Planning Manage-ment Consult-ancy Service adjustments
& UX & Buying Agency
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Billings
External - 3,670 24,870 314 - - - 28,854
Intercompany 204 - 38 17 - - (259) -
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
204 3,670 24,908 331 - - (259) 28,854
Profit/(loss)
before tax (2,883) 540 1,438 104 - - (2,860) (3,661)
Tax
expense/(recovery) - (236) 2 - - - (528) (762)
Balance sheet
Assets 47,080 4,472 13,496 1,606 - - (15,673) 50,981
Liabilities (28,838) (215) (5,935) (721) - - 2,921 (32,788)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net
assets/(liabilities) 18,242 4,257 7,561 885 - - (12,752) 18,193
======= ======= ======= ======= ======= ======= ======= =======
Other
Other
Capital expenditure
- Tangible
fixed assets 31 33 34 - - - - 98
- Intangible
fixed assets - - - - - - 30,692 30,692
Depreciation,
amortisation
and other
non-cash
expenses 6 38 23 - - - 3,368 3,435
Interest
paid - - 29 1 - - - 30
======= ======= ======= ======= ======= ======= ======= =======
Three clients each provided more than 10% of the billings of the Group (2016: three clients). Their combined billings were GBP15,721k (2016: GBP13,821k). These clients are included within Design, Build & UX and Media Planning & Buying.
External billings
by
location of customer
2017 2016
GBP'000 GBP'000
United Kingdom 26,882 23,772
Rest of Europe 6,700 4,671
Asia - 236
USA 888 175
Rest of World 196 -
--------------- ---------------
34,666 28,854
======= =======
All the above relate to continuing operations.
25a. ACQUISITION OF SUBSIDIARY
On 9 February 2017, the Group acquired 75% of the ordinary shares in Freemavens Limited for a consideration of GBP942k. This investment is included in the Parent Company's balance sheet at its fair value at the date of acquisition. Freemavens is a data and analytics business.
The completion accounts show a breakdown of the assets and liabilities of the acquired Company to be as follows:
Book Value Fair Value Fair Value
Adjustment to Group
GBP'000 GBP'000 GBP'000
Intangible fixed - 1,005 1,005
assets
Tangible fixed
assets 22 - 22
Receivables 284 - 284
Cash and cash
equivalents 347 - 347
Payables (375) - (375)
Loan from Be
Heard Group
plc (858) - (858)
Deferred tax - (171) (171)
--------------- --------------- ---------------
Net assets on
acquisition (580) 834 254
Non-controlling
interest (64)
Goodwill on acquisition 752
---------------
Total consideration 942
=======
Discharged by:
GBP'000
Cash paid 583
Shares in Be Heard
Group plc 359
---------------
942
=======
The non-controlling interest in Freemavens Limited is calculated as 25% of the fair value of Freemavens at acquisition.
The intangible fixed assets are in relation to brand and customer relationships.
The billings and profit included in the Consolidated Statement of Comprehensive Income since the acquisition of Freemavens Limited on 9 February 2017 was GBP1,859k and GBP376k respectively.
Acquisition costs of approximately GBP252k were written off as administrative expenses in the year.
25b.
On 29 November 2017, the Group acquired 100% of the ordinary shares in The Corner Communications (London) Limited for a consideration of GBP12,737k. This investment is included in the Parent Company's balance sheet at its fair value at the date of acquisition. The Corner is an integrated creative agency.
The completion accounts show a breakdown of the assets and liabilities of the acquired company to be as follows:
Book Value Fair Value Fair Value
Adjustment to Group
GBP'000 GBP'000 GBP'000
Intangible - 3,716 3,716
fixed assets
Tangible fixed
assets 64 - 64
Receivables 2,364 - 2,364
Cash and cash
equivalents 2,031 - 2,031
Payables (3,515) (64) (3,579)
Deferred tax - (632) (632)
--------------- --------------- ---------------
Net assets
on acquisition 944 3,020 3,964
Goodwill on acquisition 8,773
---------------
Total consideration 12,737
=======
Discharged by:
GBP'000
Cash paid 6,092
Shares in Be Heard
Group plc 2,596
Deferred consideration 600
Contingent consideration 3,449
---------------
12,737
=======
The intangible fixed assets are in relation to brand and customer relationships.
The billings and profit included in the Consolidated Statement of Comprehensive Income since the acquisition of The Corner Communications (London) Limited on 29 November 2017 was GBP2,326k and GBP238k respectively.
Acquisition costs of approximately GBP685k were written off as administrative expenses in the year.
26. RELATED PARTY TRANSACTIONS
During the year, the Group paid brokers fees of GBP79k (2016: GBPnil) to Dowgate Capital Stockbrokers Limited. David Poutney, a Director of the Company, is Chairman of Dowgate Capital Stockbrokers Limited. At the year end, GBPnil (2016: GBPnil) was due to Dowgate Capital Stockbrokers Limited.
During the year, three Directors subscribed for convertible loan notes as described in note 15. David Poutney subscribed for GBP200k (via Smith & Williamson Nominees Limited), Peter Scott subscribed for GBP50k, and David Morrison subscribed for GBP50k (via Prospect Investment Management Limited).
The key management team are considered to be the Board of Directors. Their remuneration is disclosed in detail within note 5. Key management were remunerated GBP702k in the year (2016: GBP726k).
27. ANNUAL REPORT AND ACCOUNTS
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.
The Consolidated Income Statement, Consolidated Statement of Financial Position, Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows, together with associated notes, have been extracted from the Group's 2017 statutory financial statements upon which the auditor's opinion is unqualified and does not include any statement under section 498(2) or (3) of the Companies Act 2006.
A copy of this preliminary statement will be available to download on the Group's website www.beheardgroup.com. Copies of the Annual Report and Accounts will be posted to shareholders in due course at which time the Annual Report and Accounts will be made available to download on the Group's website www.beheardgroup.com in accordance with AIM Rule 26, and will be delivered to the Registrar of Companies in due course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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