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Be Heard Group PLC Half-year Report

16/09/2019 7:00am

UK Regulatory (RNS & others)


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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:

 
           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

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September 16, 2019 02:00 ET (06:00 GMT)

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