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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 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jan 2020 to Jan 2025
TIDMBHRD
RNS Number : 3561M
Be Heard Group PLC
16 September 2019
16 September 2019
For Release
BE HEARD GROUP PLC
Unaudited Interim Report For The Six Months Ended 30 June 2019
Be Heard Group plc ("Be Heard") the marketing services group is pleased to report good progress with improved margins and operational efficiencies
Operational Highlights
-- Continued organic growth with improved operating margins. -- Strategic investment in digital transformation business. -- Repositioning of the creative and influencer businesses.
Financial Highlights
-- Group revenue increased by 4.6% to GBP14.8m (2018: GBP14.2m) -- Adjusted EBITDA (1) increased to GBP1.6m (2018: GBP0.7m) -- Operating Margin (2) increased by 6.2 percentage points to 10.8% (2018: 4.6%) -- Loss from operations narrowed to GBP(1.2)m (2018: GBP(3.5)m) -- Net cash of GBP0.2m (3) (December 2018: net debt GBP0.8m) -- Earnout liability (5(th) July 2019) reduced by GBP5.6m to GBP9.4m. -- Earnout (cash) balance of GBP9.4m (December 2018: GBP9.9m)
David Morrison Non-Executive Chairman of Be Heard Plc, commented:
"The Group's first half results are satisfactory particularly given the prospects for the business twelve months ago. The new management team led by Simon Pyper (CEO) and Ben Rudman (COO), has focused on operational effectiveness and margin improvement, and this emphasis has helped to deliver both improved operating margins and profitability. Additionally, the business has over the past few months sought to address a number of structural issues such as reducing the liability under the Group's various earnout obligations, improving the Group's new business pipeline and the repositioning of its creative and influencer businesses. We have been busy and have achieved a great deal, but there is, as ever, still much to do.
Our first half results are satisfactory, and the Board remains confident that the full year results will be in line with expectations."
Note 1
We define Adjusted EBITDA as EBITDA adjusted for costs associated with acquisitions, restructuring of the Group, share based payments, impairments and the impact of IFRS 16 (accounting for leases).
Note 2
Operating Margins are Adjusted EBITDA divided by revenue.
Note 3
Net cash (debt) excludes GBP3,604k of convertible loan notes 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.
Enquiries
Be Heard Group plc +44 20 3828 6269
David Morrison, Non-Executive Chairman
Simon Pyper, Chief Executive Officer
NOMAD
Cairn Financial Advisers +44 20 7213 0880
Jo Turner
Broker
Dowgate +44 20 3903 7715
James Serjeant
Hudson Sandler
Nick Lyon +44 20 7796 4133
Non-Executive Chairman's Statement
The Group's first half results are satisfactory particularly given the prospects for the business twelve months ago. The new management team led by Simon Pyper and Ben Rudman, has focused on operational effectiveness and margin improvement, and this emphasis has helped to deliver both improved operating margins and profitability. Additionally, the business has over the past few months sought to address a number of structural issues such as reducing the liability under the Group's various earnout obligations, improving the Group's new business pipeline which included a strategic investment in a digital transformation business and the repositioning and integrating of its creative and influencer businesses.
The management team has started to address a number of structural issues facing the Group, the highlights of which are below:
Reducing the Group's Earnout Liability
The Group's earnout liability at December 2018 was GBP15.1 million, consisting of GBP9.9 million in cash and GBP5.2 million (book value) for consideration shares. The consideration shares, which were subject to collar and cap arrangements (with an average price of 2.52 pence per share), were due to be issued in tranches over the next 24 to 36 months. However, as earnout payments (either in cash or shares) were no longer contingent-based the Group decided to satisfy the share payments ahead of schedule (5(th) July 2019) and in doing so remove the uncertainty around both the timing and quantum of shares to be issued.
Additionally, the remaining cash earnouts of GBP9.4 million (June 2019) have now been formally subordinated to the Group's banking facilities. By entering into the subordination arrangements, the earnout holders can only receive payments if the Group satisfies its banking covenants and has prior Bank approval.
New Business Pipeline
In June the Group announced that it had made a strategic investment in a digital transformation consultancy (trading as 3pointsDigital "3PD") which supports C-Suite executives in framing their approach on how best to benefit from the digital revolution. For Be Heard, the investment in 3PD should prove to be a valuable source of new business engagements and further expand the range of services the Group can offer to clients.
Repositioning and Integration of Creative and Influencer Businesses
The Group made the decision at the start of the financial year to reposition and integrate its creative (The Corner) and influencer (Kameleon) offering into a single business, which is reducing duplication of services and is facilitating the delivery of creative solutions across both digital and traditional platforms. The integration is largely complete with both clients and staff being supportive of the change.
We have been busy and have achieved a great deal, but there is still much to do. The financial constraints of the Group require us to work harder and think smarter, and we continue to believe that organic growth can be driven by capitalising on the range of skills that are to be found across the Group.
Our Employees
Be Heard is totally dependent on its people and our improved performance and prospects would not have been possible without their hard work, dedication and commitment. I would particularly like to thank the employees of the Group in all the partner companies for their efforts, as well as both my executive and non-executive colleagues on the Board.
Long Term Incentive Plan
We are a small business and one which is totally dependent upon attracting and retaining talented and committed people. To allow us to remain competitive the Group in May 2019 introduced a Long-Term Incentive Plan ("LTIP") which offers options to around 50 staff. The options granted equate to circa 10% of the current shares in issues and vest once the following conditions have been met:
Hot Features
Premium
Adjusted EBITDA Share Price Targets Weighting
targets
60% 40%
Target
1 GBP4.0 million 2.00 p 20%
Target
2 GBP5.0 million 3.00 p 40%
Target
3 GBP6.0 million 4.00 p 40%
All options are exercisable at a price of nil pence, and vest at multiple points dependent upon profit and share price targets.
Current Trading and Outlook
We have started to address the structural issues of the Group and have delivered an improved set of results for the first half of the year. That said, challenges still remain, some of which are structural, and some of which relate to the increased turbulence brought about by the uncertainty surrounding Brexit. Whilst the medium-term economic impact of the current political storm remains difficult to predict, we are seeing some evidence of client spending decisions being either extended or delayed. The Board remains confident that the full year results for 2019 will be in line with market expectations, but there is inevitably constrained visibility when looking into 2020.
David Morrison
Non-Executive Chairman
16 September 2019
Chief Executive's Statement
Given the prevailing economic headwinds and the somewhat subdued market for creative services such as those provided by The Corner, our first half results should be considered more than satisfactory. During the first half, the Group recorded a number of new client wins including Carlsberg, delivered good revenue growth and increased operating margins, with the latter continuing to benefit from the restructure implemented in the second half of last year. So, in summary, a good first half performance.
Be Heard, like many companies in our sector is seeing a bias in favour of digital solutions and data led insights, and this has to some degree benefited both MMT and Freemavens. Against this, and as I mentioned earlier, the more traditional creative businesses are finding the current climate more than a little testing and Be Heard is not alone in seeing the adverse consequences of this. To address this, the team at The Corner and Kameleon came together to form one integrated business and are currently working on a more compelling proposition, one which includes insights, social influencers and creative talent.
Group Performance to 30 June 2019
Freemavens:
Revenues GBP2.0 million, 82% ahead of last year Contribution GBP0.9 million, 2018 GBP0.3 million
Analytics and insight business which makes use of customer, audience and market data to provide critical insights to blue chip clients. Freemavens is our only partner company which regularly engages with client-side "C-Suite" executives. Growth has come from both increased engagements from its top clients and some new notable business wins.
MMT:
Revenues GBP7.8 million, 16% ahead of last year Contribution GBP1.4 million, 2018 GBP1.5 million
A user experience and design business which creates digital solutions that transform business performance. Revenue growth reflects MMT's focus on delivering quality solutions for clients to timetable and to budget. Growth has come from both existing clients and a number of client referrals. Contribution is broadly unchanged due to higher than expected contractor mix and moreover, investment in headcount to support growth into the second half of this year and into 2020.
agenda21:
Revenues GBP2.0 million, (19%) below last year Contribution GBP0.1 million, 2018 GBP(0.1) million
agenda21 is a media planning and buying business which optimises media and content across connected devices. Performance against prior year primarily reflects the loss of its largest client in 2018. The new management team has stabilised the business, returned it to profitability (albeit rather modest) and has been successful in winning a number of new client engagements.
The Corner (including Kameleon)
Revenues GBP2.9 million, (23%) below last year Contribution GBPNil, 2018 GBP0.3 million
With the integration of Kameleon the business now has a more credible brand and a broader creative and influencer proposition, one which aims through new thinking and new ideas to help clients become more relevant to both their traditional and ever more digital-savvy audience. Much of the revenue and contribution decline can be ascribed to market uncertainty, but some if not a significant part can also be ascribed to client led changes to the revenue model which has moved, in a relatively short period of time from "retainer" to "project" led engagements.
Overheads
Overheads GBP0.8 million, 2018 GBP1.3 million
The reduction in overheads is a result of the changes implemented in the second half of last year. The first half central overhead percentage to revenue is 5.4% compared to 8.8% for the same period last year.
Note: Partner contribution is equal to Group adjusted EBITDA before central overheads.
New Clients
Notable client wins included: Carlsberg, Onitsuka Tiger, Barclays and Levi Strauss.
Earnout Liability
Subsequent to the share issue in July of this year, the remaining earnout liability has reduced to GBP9.4 million from GBP9.9m as at December 2018. The remaining earnout liability which is due to be paid in cash has now been subordinated to bank debt. Consequently, earnout payments can only be made with Bank approval.
Impairment of Goodwill
The Group has taken a non-cash impairment charge to goodwill of GBP1.1 million. The whole of the impairment relates to The Corner which has now been integrated with Kameleon into one business.
Cash Generation
Cash generation improved, with cash generated from operations increasing by GBP1.9m to GBP2.4m (2018: GBP0.5m).
Net Cash - Debt
Net cash which excludes earnout liabilities and the GBP3.6m convertible loan note, increased to GBP0.2m as at June 2019 (December 2018: Net Debt of GBP0.8m).
Chief Executive Statement
Strategic Priorities
The challenge ahead, given the financial constraints of the Group and the somewhat inconsistent performance of the partner companies, is how best to deliver profitable growth over the medium to long term. If we are to achieve growth without recourse to additional capital then the most appropriate approach is to more fully leverage our proposition, to further improve our operational effectiveness and where appropriate to enter into capital light joint ventures with businesses operating within or adjacent to our competitive footprint.
Leveraging our Proposition
We are on many levels a successful business, winning a number of new client engagements and achieving revenue growth from several clients. Despite some notable successes we, like many of our competitors, have seen a general reduction in the volume and value of new business which, in part, reflects the impact on marketing budgets brought about by the continued economic and political uncertainty in the United Kingdom. Aligned with this softening of new business, we have also found that the pitch process has become more competitive, with prolonged client decision timeframes and furthermore, with procurement requirements playing an ever-greater part in the client's decision-making mix.
Moreover, in response to demand side structural changes many marketing services firms are re-engineering their business model. We have seen a number of our competitors moving to a "single provider model", whereby individual brands are no longer as relevant as the competencies and services being offered. Whilst other companies have invested further in the "holding company" model, where the individual agencies with minimal support from the parent deliver client solutions. We at Be Heard believe that a more flexible approach is needed, one which recognises that "one size" does not fit all and that the key to success is in providing clients with creative solutions to real commercial challenges. Our business model allows us to present ourselves as single provider with deep expertise in a number of areas, or to act as an individual agency, or to provide multiple service combinations from two or more partner companies.
Leveraging Operational Effectiveness
Be Heard is a collection of four different partner companies which have historically run independently with separate operations and discreet processes. Ben Rudman, Group Chief Operating Officer, has made good progress on several fronts, which include, but are not limited to:
-- Reducing office locations from 4 to 3; -- Implementing common processes particularly around resource planning; -- Standardising reporting processes and output; and -- Implementing cost reduction initiatives
Whilst we continue to make good progress there remains much to do.
Joint Ventures
The capital constraints within which the Group operates means that we have to take a more creative yet pragmatic approach towards growth. The Group recently completed an investment in a successful but sub-scale business ("3PD") which operates in our competitive footprint. The investment in 3PD was "capital light" with Be Heard offering access to infrastructure, business processes and client fulfilment capabilities in exchange for new routes to market and a broadening of our prospective client base and offerings.
The Market
There is little doubt that the market in which we operate is changing and moving at pace to one which is provider agnostic, project or programmed based with a bias towards digital solutions and data-led actionable insights. We have benefited from this change as evidenced by the growth in both MMT and Freemavens, but we have also and in "real time" experienced the adverse consequences of this move. I believe that creative led businesses such as The Corner still have an important role to play in supporting clients, one which is moving to a post-hoc model, whereby creative services come into the service delivery mix after the provision of data led insights.
Be Heard and its clients do not operate within a vacuum and the continued political and economic uncertainty caused by the United Kingdom's decision to leave the European Union and the unforssen consequences of doing so continue to impact upon the volume, value and timing of client spend decisions. To mitigate this, we at Be Heard have to ensure that we remain focused on helping our clients make better informed, creatively led decisions around how they execute their digital transformation and moreover, how they communicate and engage with their audience.
Priorities
Our immediate priorities remain unchanged: to focus on better leveraging our proposition and operational effectiveness and moreover, to build a business which delivers sustainable long-term profitable growth.
Simon Pyper
Chief Executive Officer
16 September 2019
INTERIM CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2019
Unaudited Unaudited Audited
Six months Six months 12 months
to to to
30 June 30 June 31 December
19 18 18
GBP'000 GBP'000 GBP'000
Billings 27,881 27,152 49,720
Cost of sales (13,084) (13,001) (20,261)
_______ _______ ______
Net Revenue 14,797 14,151 29,459
Administrative expenses (16,044) (17,638) (39,156)
_______ _______ ______
Operating loss (1,244) (3,487) (9,697)
Operating profit before non-recurring
and non-cash items (adjusted EBITDA) 1,601 651 3,041
Adjustment for change in accounting
policy(1) 557 - -
Amortisation of intangibles (946) (1,599) (2,977)
Depreciation(2) (600) (96) (183)
Impairment of intangibles (81) (717) (1,158)
Impairment of goodwill (1,089) (982) (7,222)
Adjustment to deferred and contingent
consideration - 200 (104)
Revaluation of loan note - - 662
Acquisition costs (31) - (50)
Share based payments (36) (8) (11)
Termination payments (398) (595) (1,398)
Restructuring costs (146) (151) (297)
Holiday pay accrual (75) (190) -
______ ______ ______
Loss from operations (1,244) (3,487) (9,697)
--------------------------------------------- ----------- ----------- ----------
Finance costs (493) (285) (602)
______ ______ _____
Loss before taxation (1,737) (3,772) (10,299)
Tax credit 579 645 884
______ ______ _____
Loss after tax (1,158) (3,127) (9,415)
______ ______ ______
TOTAL COMPREHENSIVE EXPENSE FOR
THE PERIOD (1,158) (3,127) (9,415)
======== ======== ========
Loss and Total Comprehensive Expense
for the Period attributable to:
Non-Controlling Interest 253 162 413
Equity holders of the parent (1,411) (3,289) (9,828)
______ ______ ______
(1,158) (3,127) (9,415)
======== ======== ========
Loss per share (see below)
Basic GBP(0.00) GBP(0.00) GBP(0.01)
Diluted GBP(0.00) GBP(0.00) GBP(0.01)
(1) Adjusted EBITDA excludes the impact of adopting IFRS 16 Accounting for Leases to allow for comparison with prior periods by adding back the lease charge on right of use assets
(2) The depreciation charge includes GBP500k relating to depreciation of right of use assets under IFRS 16
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2019
Unaudited Audited
as at as at
30 June 19 31 December 18
GBP'000 GBP'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 394 391
Investments in associates 320 -
Intangible assets 31,762 33,876
Right of use assets 4,880 -
______ _______
TOTAL NON-CURRENT ASSETS 37,356 34,267
______ _______
CURRENT ASSETS
Trade and other receivables 11,771 12,116
Corporation tax 873 424
Cash and cash equivalents 3,064 2,167
______ _______
TOTAL CURRENT ASSETS 15,708 14,707
______ _______
TOTAL ASSETS 53,064 48,974
______ _______
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (24,010) (19,071)
Lease liability (921) -
Bank and other loans (2,828) (3,000)
_______ ________
TOTAL CURRENT LIABILITIES (27,759) (22,071)
_______ ________
NON-CURRENT LIABILITIES
Trade and other payables (2,160) (3,150)
Lease liability (3,809) -
Bank and other loans (3,605) (3,520)
Deferred tax (395) (395)
Provision for liabilities - (3,220)
_______ ________
TOTAL NON-CURRENT LIABILITIES (9,969) (10,285)
_______ ________
TOTAL LIABILITIES (37,728) (32,356)
_______ ________
TOTAL NET ASSETS 15,336 16,618
_______ ________
CAPITAL AND RESERVES
ATTRIBUTABLE TO EQUITY HOLDERS OF
THE PARENT
Share capital 10,407 10,407
Share premium reserve 13,208 13,208
Merger relief reserve 8,038 8,038
Retained earnings (16,725) (15,350)
_______ _______
Equity attributable to owners of
parent company 14,928 16,303
Non-controlling interests 408 315
_______ _______
TOTAL EQUITY 15,336 16,618
_______ _______
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2019
Unaudited Audited
Six months Period to
to
30 June 19 31 December
18
GBP'000 GBP'000
OPERATING ACTIVITIES
Net loss from ordinary activities before
taxation (1,737) (10,299)
Adjustments for:
Depreciation 600 182
Amortisation 946 2,976
Other intangible impairment 81 1,159
Impairment of goodwill 1,089 7,221
Loan note revaluation - (662)
Adjustments to contingent and deferred
consideration - 104
Share based payment expense 36 11
Finance costs 493 602
_____ _____
Operating profit before changes in working
capital and provisions 1,508 1,295
Decrease/(increase) in trade and other
receivables 1,666 (1,835)
Decrease in trade and other payables (790) 997
_____ _____
Cash generated by operations 2,384 457
Income taxes (paid)/ recovered (68) 296
_____ _____
Cash flows from operating activities 2,316 753
_____ _____
INVESTING ACTIVITIES
Purchase of property, plant and equipment (103) (253)
Consideration paid on acquisition of (320) -
associate
Deferred consideration paid (442) (3,063)
_____ _____
Cash consumed by investing activities (865) (3,316)
FINANCING ACTIVITIES
Share issue expenses - (16)
Bank loan (172) 2,000
Dividends paid (160) -
Finance costs (222) (361)
_____ _____
Cash (consumed)/generated by financing (554) 1,623
activities
INCREASE/(DECREASE) IN CASH AND CASH 897 (940)
EQUIVALENTS --------------- ---------------
Cash and cash equivalents brought forward 2,167 3,107
_____ _____
CASH AND CASH EQUIVALENTS CARRIED FORWARD 3,064 2,167
_____ _____
Represented by:
Cash at bank and in hand 3,064 2,167
_____ _____
3,064 2,167
_____ _____
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2019
Reconciliation of net cashflow to movement
in net debt:
Net increase/(decrease) in cash and
cash equivalents 897 (940)
Term loan drawn - (2,000)
Term loan repaid 172 -
Interest accrued on convertible loan
notes (245) (488)
Interest paid on convertible loan notes 160 320
Revaluation of share option component
of convertible loan notes - 662
_____ _____
Movement in net debt in the year 984 (2,446)
Net debt as at beginning of period (4,353) (1,907)
_____ _____
Net debt at end of period (3,369) (4,353)
_____ _____
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2019
Share Merger Equity Non-
Share premium Relief Retained Attributable controlling
capital reserve Reserve earnings to Owners Interests Total
of
Parent Company
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 July
2017 8,131 13,043 3,956 (5,892) 19,237 54 19,291
Total comprehensive
expense for the
period - - - 336 336 (152) 184
Issue of new shares 1,689 359 2,733 - 4,781 - 4,781
Issue costs deducted
from equity - (178) - - (178) - (178)
Share based payment
expense - - - 23 23 - 23
_____ _____ _____ _____ ______ _____ _____
Balance at 31 December
2017 9,819 13,224 6,689 (5,533) 24,199 (98) 24,101
Total comprehensive
expense for the
period - - - (3,289) (3,289) 162 (3,127)
Issue of new shares 588 - 1,349 - 1,937 - 1,937
Issue costs deducted
from equity - (16) - - (16) - (16)
Share based payment
expense - - - 8 8 - 8
_____ _____ _____ _____ ______ _____ _____
Balance at 30 June
2018 10,407 13,208 8,038 (8,814) 22,839 64 22,903
Total comprehensive
expense for the
period - - - (6,539) (6,539) 251 (6,288)
Share based payment
expense - - - 3 3 - 3
_____ _____ _____ _____ ______ _____ _____
Balance at 31 December
2018 10,407 13,208 8,038 (15,350) 16,303 315 16,618
Total comprehensive
expense for the
period - - - (1,411) (1,411) 253 (1,158)
Share based payment
expense - - - 36 36 - 36
Dividends paid
to non-controlling
interest - - - - - (160) (160)
_____ _____ _____ _____ ______ _____ _____
Balance at 30 June
2019 10,407 13,208 8,038 (16,725) 14,928 408 15,336
_____ _____ _____ _____ ______ _____ _____
NOTES TO THE INTERIM REPORT
for the six months ended 30 June 2019
1. Corporate information
The interim consolidated financial statements of the group for the period ended 30 June 2019 were authorised for issue in accordance with a resolution of the directors on 16 September 2019. Be Heard Group plc is a Public Limited Company listed on AIM, registered in England and Wales and domiciled in the UK.
The interim consolidated financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006, and should be read in conjunction with the 2018 annual financial statements. The statutory audited accounts for the year ended 31 December 2018 have been delivered to the Registrar of Companies in England and Wales. The auditors' report on these accounts was unqualified and did not contain statements under section 498 of the Companies Act 2006.
2. Statement of Accounting policies 2.1 Basis of Preparation
The interim consolidated financial statements of the group for the period ended 30 June 2019 have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union.
The interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the group's annual financial statements for the year ended 31 December 2018, which were prepared in accordance with IFRS's as adopted by the European Union.
The directors are satisfied that, at the time of approving the consolidated interim financial statements, it is appropriate to continue to adopt a going concern basis of accounting.
2.2 Accounting Policies
The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the group's annual financial statements for the year ended 31 December 2018, except for those policies detailed below.
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.
Accounting for investments in associates
The Group follows IAS 28 Investments in Associates in its accounting treatment of investments in which it holds less than a majority stake. Accordingly, the Group consolidates the associate on the basis of cost plus a proportion of profits for the period.
Impact of the adoption of IFRS 16: Leases
IFRS 16 is effective from 1 January 2019. The standard eliminates the classification of leases as either operating or finance leases and introduces a single accounting model. Lessees are required to recognise a right-of-use asset and related lease liability for their operating leases and show depreciation of leased assets and interest on lease liabilities separately in the income statement. IFRS 16 requires the Group to recognise substantially all of its operating leases on the balance sheet.
The Group adopted IFRS 16 effective 1 January 2019 on a modified retrospective basis. Accordingly, prior year financial information has not been restated and will continue to be reported under IAS 17: Leases. The right-of-use asset and lease liability have initially been measured at the present value of remaining lease payments, with the right-of-use asset being subject to certain adjustments.
NOTES TO THE INTERIM REPORT
for the six months ended 30 June 2019
When applying IFRS 16, the Group has applied the following practical expedients, on transition date:
-- Reliance on the previous identification of a lease (as provided by IAS 17) for all contracts that existed on the date of initial application;
-- Reliance on previous assessments on whether leases are onerous instead of performing an impairment review;
-- Exclusion of initial direct costs from the measurement of the right-to-use asset at the date of initial application;
-- The accounting for operating leases with a remaining term of less than 12 months as at 1 January 2019 as short-term leases; and
-- The use of hindsight, such as determining the lease term if the contract contains options to extend or terminate the lease.
The right of use asset and lease liability recorded on the unaudited consolidated interim balance sheet as of 1 January 2019 were GBP5,813k and GBP4,163k respectively.
For the six months ended 30 June 2019, depreciation of the right-of-use asset and recognition of interest on the lease liability in the unaudited consolidated interim income statement replaced amounts recognised as rent expense under IAS 17. The implementation of IFRS 16 on 1 January 2019 resulted in a decrease to profit of GBP44k, comprised of an increase to depreciation of GBP500k, an interest charge of GBP101k and a reduction in lease charge of GBP557k.
The following table reconciles the opening balance for the lease liabilities as at 1 January2019 based upon the operating lease obligations as at 31 December 2018:
GBP'000
Operating lease commitments at 31 December 2018 5,813
Short-term leases not included in lease liabilities (50)
Extension options reasonably certain to be exercised 413
Leases starting after 1 January 2019 included in
lease commitments (1,100)
Gross lease liabilities at 1 January 2019 5,076
Effect of discounting (913)
Lease liabilities at 1 January 2019 4,163
NOTES TO THE INTERIM REPORT
for the six months ended 30 June 2019
3. Segment Information
The Group's primary reporting format for segment information is business segments which reflect the management reporting structure in the Group.
Media Planning Design, Content Data Analytics Full Service Group Total
& Buying Build Management Agency and consold'n
&UX
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Billings
External 11,338 8,042 2,445 1,880 4,177 - 27,881
Intercompany 536 167 3 367 26 (1,100) -
---------------- --------------- --------------- --------------- -------------- --------------- --------------------
11,874 8,209 2,448 2,247 4,203 (1,100) 27,881
Revenue 2,047 7,839 946 2,050 1,915 - 14,797
Profit/(loss)
before tax (37) 1,295 107 794 (239) (3,657) (1,737)
Balance sheet
Assets 11,099 12,932 1,006 1,770 2,968 23,290 53,065
Liabilities (8,740) (2,241) (806) (973) (1,216) (23,752) (37,728)
---------------- ------------- ------------- ------------- ------------- --------------- --------------------
Net
assets/(liabilities) 2,359 10,691 200 797 1,752 (462) 15,337
---------------- ------------ ------------ ------------ ------------ --------------- --------------------
Other
Capital expenditure
- Tangible fixed
assets 7 48 15 2 24 7 103
Depreciation,
amortisation
and
other non cash
expenses 19 38 9 8 28 2,667 2,769
Interest paid - - - - 224 224
There was one client accounting for more than 10% of the Group's turnover in the period (GBP3,489k)
4. Earnings per share
2019
The earnings per share is based on the following:
GBP
Earnings (1,641,712)
==========
Weighted average number of shares 1,040,778,370
Diluted number of shares 1,415,091,584
Earnings per share (0.00)
Diluted earnings per share (0.00)
=======
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 1,040,778,370.
The diluted earnings per share is the same as the earnings per share due to the consolidated group loss.
NOTES TO THE INTERIM REPORT
for the six months ended 30 June 2019
5. Intangible Assets
Goodwill
Development on Customer Brand
Costs Consolidation relationships Value Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
31 December
2018 544 44.099 8,935 4,382 57,960
---------------- --------------------- ------------------ ------------------ ---------------------
30 June 2019 544 44,099 8,935 4,382 57,960
---------------- --------------------- ------------------ ------------------ --------------------
Amortisation
31 December
2018 514 12,490 8,297 2,783 24,084
Charge for
the
period 7 - 363 576 946
Impairment - 1,088 80 - 1,168
---------------- ----------------- ----------------- ----------------- -----------------
30 June 2019 521 13,578 8,740 3,359 26,198
---------------- ------------------ ------------------ ------------------ -----------------
Net book
value
23 30,521 195 1,023 31,762
30 June 2019 --------------- --------------- --------------- --------------- ---------------
31 December
2018 30 31,609 638 1,599 33,876
--------------- --------------- --------------- --------------- ---------------
30 June 2018 45 37,848 1,756 2,310 41,934
--------------- --------------- --------------- --------------- ---------------
31 December
2017 45 38,830 3,317 3,040 45,232
--------------- --------------- --------------- --------------- ---------------
The development costs relate to Amplify and Content Compass, data analytics tools developed in-house by Agenda21.
6. Liabilities
Current Liabilities June December
2019 2018
GBP'000 GBP'000
Trade creditors 5,611 2,951
Accruals and deferred income 2,341 3,846
Other creditors 1,121 243
Other taxes and social security 2,512 2,400
Lease liability 921 -
Bank loans 2,828 3,000
Deferred consideration 12,425 8,657
--------------- ---------------
27,759 22,071
--------------- ---------------
NOTES TO THE INTERIM REPORT
for the six months ended 30 June 2019
Non-current liabilities
Deferred consideration 2,160 3,150
Lease liability 3,809 -
Bank and other loans 3,605 3,520
Deferred taxation 395 395
Contingent consideration - 3,220
--------------- ---------------
9,969 10,285
--------------- ---------------
7. Share capital
Allotted, issued and No Value
fully paid GBP
Ordinary shares of
1p each 1,040,778,370 10,407,784
================ ============
At 30 June 2019 the number of shares covered by option agreements amounted to 58,752,033.
8. Seasonality
From a revenue perspective there are no clearly identifiable trends suggesting a bias in favour of one reporting period over another.
9. Post Balance Sheet Events
On 5 July 2019 Be Heard Group plc issued 206,048,214 shares to satisfy deferred consideration due at an average price of 2.52p to a book value of GBP5,200,519.
Further copies of this document are available both at the registered office of the Company and from the offices of the Company at 53 Frith Street, London W1D 4SN. The statement will also be available to download on the Company's website.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR LLFERADIVLIA
(END) Dow Jones Newswires
September 16, 2019 02:00 ET (06:00 GMT)
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