TIDMBHRD
RNS Number : 9504A
Be Heard Group PLC
30 March 2017
Be Heard Group Plc
("Be Heard", the "Company" or the "Group")
Full Year Results for the period ended 31(st) December 2016
Be Heard Group Plc (AIM: BHRD), the digital marketing services
group, is pleased to announce its Full Year Results for the twelve
months ended 31(st) December 2016.
Headline Financial Results for the period
GBP'000
Billings 28,854
Net Revenue 9,490
Trading EBITDA (i) 2,396 at a margin to net revenue
of 25%
Operating Profit
(adjusted ii) 810
Loss per share (diluted) GBP(0.01)
(i) represents Operating Profit (adjusted) prior to central group costs.
(ii) adjusted to exclude depreciation, amortisation &
impairment of intangibles, acquisition & listing costs and
share based payments.
Operational Highlights
-- Acquisition of second partner company MMT (May) and third
partner company Kameleon (December) to expand the Group's
service offering into user experience, design and build
(MMT) and content marketing (Kameleon)
-- Strong underlying net revenue growth of c.16% based on
full year performance of the three partners in the Group
at 31 December 2016
-- At agenda21
o New MD and FD appointed, freeing Co-founders to focus
on strategy and business development
o Major client wins include SEO business for Vodafone
and lead digital agency for Domestic & General
o Industry recognition in The Drum's Digital Census
Report 2016, ranking second 2nd overall among media
agencies
-- At MMT
o Industry recognition at the 2016 RAR Digital Awards
and in the 2016 Econsultancy Top 100 Digital Agencies
Report
o New management structure including appointment of
COO to free Co-founders as at agenda21
o Major client wins include Vodafone, BGL Group, Centaur
Media and Euromoney
-- Post period end:
o Acquired fourth partner company Freemavens - funded
via a cash placing of GBP2.1m
o First Group pitch involving all four Partner companies
for an international opportunity
o Robin Price appointed COO in addition to existing
role as CFO
Outlook
-- Early months of the year have seen the business trading
well and in line with management expectations
-- Particularly strong Q1 growth at MMT as group cross referrals
start to impact
-- Increasing number of opportunities for partner companies
to work together - this will continue to be a primary
focus in 2017 as we move to co-locate our operations
-- We continue to explore a strong and growing pipeline of
acquisition opportunities, in line with our strategy
Peter Scott, Executive Chairman said:
"In our first full year of trading we made our second and third
acquisitions, identified our fourth, which we acquired just post
year end, made clear progress in building links across the group
and helping our partners develop, and strengthened both the
Executive team and the Board.
The numbers at this stage show our growing scale but do not
represent the size of our ambition; nevertheless I am delighted
with the foundations we now have in place and what we have achieved
this year.
We are already seeing the first instances of our partners
working together to offer better services to clients by solving
complex problems in the connected world. We'll continue to connect
our businesses under the banner of experience, innovation and
excellence and we are confident that great things will happen."
For further information, please contact:
Be Heard Group plc +44 20 3828 6269
Peter Scott, Executive
Chairman
Robin Price, Chief Financial
Officer & Chief Operating
Officer
Numis +44 20 7260 1000
Nick Westlake / Kevin
Cruickshank (Nominated
Adviser)
James Black (Corporate
Broker)
Dowgate +44 20 3903 7715
James Serjeant
Bell Pottinger (Financial
PR) +44 20 3772 2578
Elly Williamson
Molly Stewart
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014) prior to its release as part of this
announcement.
(A DIFFERENT KIND OF) CHAIRMAN'S STATEMENT
The Chairman's Statement - three words that have introduced
annual reports for over a century but which sound a little stiff
for the digital era when the leader of the free world engages his
nation in bursts of 140 characters or less...
So let me brush aside convention and talk to you about what's
been happening in our business and our market place over the last
twelve months just as if we were all sitting down and sharing a
coffee together.
We live in exciting times. Almost daily we hear of new wonder
technology, new algorithms, new ways of working and communicating
that challenge the old order - with much of it driven by that
infuriating little object in your pocket, hand, or bag, or lying
quietly on your desk, or recharging in the socket - that 'ever so
smart' phone that lets you communicate, search, investigate, buy,
sell, invest, verify - do almost anything from almost anywhere at
any time.
Ten years ago mobile phones were just that: mobile phones - and
mostly called Nokia.
Facebook had been open to all for less than a year.
The morning chorus was bird song rather than tweets.
Taxis were taxis or mini cabs not Ubers.
BnB had no Air.
And Google still looked as though it had competitors in with a
chance of surviving.
How our world has changed and how that change seems to be
accelerating by the day.
Today we think about AI, virtual assistants, voice search,
chatbots, virtual and augmented reality, the internet of things,
home automation, drones, robotics and cybersecurity as much as we
think about our traditional IRL (In Real Life) ways of doing
things.
So as older consumers learn to adapt and younger consumers
enthusiastically encourage disruption we have to find new, quicker,
smarter, more engaging, and more measurable ways of talking to
consumers about our clients' brands and services.
Be Heard began with a simple premise.
We, like everybody, could see that the world of marketing
communications was fast moving to all things digital (remember
online advertising expenditure overtook TV in the U.K. way back in
2009).
We could see that the marketing services sector was polarising
between the behemoths and the younger, agile independents who
sensed the danger of being marginalised - despite their
extraordinary skills sets - in a disaggregated, fragmented but
increasingly global market place.
So we thought that there was an irrefutable logic in bringing
together a group of these smarter, independent agencies.
It all made sense to us because the digital world is connected,
and because we could see value in connecting digital services that
followed the customer journey from beginning to end, from social
through search, through creative and content to website or app, all
the way through to purchase.
Today we have four partners in the group covering many of these
digital skill sets. They all understand, like and trust what their
fellow partners do and are starting to work together to deliver
smarter, more efficient and more measurable solutions for our
clients.
The journey has just begun: Be Heard is still in its infancy.
agenda 21 is the only partner agency who have been with us for the
full year. MMT joined in May, Kameleon in December and Freemavens
in February this year.
But they have all responded well to the changes that we have
encouraged as they move from founder ownership to a group
culture.
They have embraced the Be Heard story with gusto and seen the
benefits of collaborating and connecting with other partners.
We have seen and felt new spurts of energy and enthusiasm as we
build out the Be Heard story and capabilities.
And we have all embraced Be Heard by becoming substantial
shareholders in the group. As I pen this your board and our
partners speak for 23% of the equity in the group. In short we have
invested heavily in our future and are fully aligned with the
interests of our outside shareholders.
The response from some of our partners' clients to news of each
new partner that has joined our group shows that they too are
excited by what Be Heard might mean for them. It would simplify the
challenges they face to know that professionals they trust to
provide ingenious services will now have more scope to connect with
similarly energized experts in their respective fields.
While the numbers alone can't convey all of the ways in which we
have advanced our model to create long-term shareholder value,
we're proud to now have group net revenue of GBP9.5m and annualized
group net revenue of GBP15.1m based on the performance of all four
partners throughout calendar year 2016.
So we are quietly satisfied with our first full year but hungry
for more.
Very hungry.
In the year ahead we expect to further expand our offering,
explore opportunities in the US and Europe, add new skill sets to
our group, move everybody to one shared office - where knowledge
and experiences will flow freely across the digital landscape -
centralise common functions where it makes sense, maximise
investment in our analytics and insight and much, much more.
Oh and by the way we expect to have some fun doing it all.
The sort of fun you can only have when you like and trust your
partners, enjoy their company, and sleep well in the knowledge that
we are helping clients solve complex problems and issues just that
little bit better than the competition.
FINANCIAL & OPERATIONAL REVIEW
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 8 months
May 2016)
Kameleon (acquired December 3 weeks
2016)
Freemavens was acquired in February 2017 and therefore is not
included within the results for the period.
Comparative figures for the period to 31(st) December 2015
reflect just five weeks of trading of agenda21, the one partner
company then owned by the Group. As such, a year-on-year comparison
of the statutory numbers is largely irrelevant.
Headline results
Group billings for the year were GBP28.85m (2015: GBP2.35m).
Group net revenue for the year was GBP9.5m (2015: GBP0.5m).
Operating profit before acquisition and non-cash items was
GBP0.8m (2015: GBP(0.4)m).
Acquisition and non-cash items of GBP4.4m (2015: GBP0.7m)
comprised:
Depreciation GBP0.07m (2015: GBP0.002m)
Amortisation and impairment GBP2.86m (2015: GBP0.13m)
of intangibles
Acquisition & listing GBP1.0m (2015: GBP0.6m)
costs
Share based payments GBP0.5m (2015: GBP0.04m)
resulting in an operating loss of GBP3.6m (2015: GBP(1.1)m).
Full year underlying net revenue was GBP13.6m and trading EBITDA
was GBP3.6m, showing strong underlying growth on 2015 of c.16% at
net revenue level.
These underlying numbers illustrate the good performance of the
Group during 2016, in line with management expectations, and an
excellent platform for further growth in 2017.
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 acquisition costs and non-cash items.
With Group central costs of GBP1.6m (2015: GBP0.5m) Trading EBITDA
for the year was GBP2.4m (2015: GBP0.1m).
Trading EBITDA margin
This is measured against Net Revenue and on a group basis gives
a margin for the year of 25% (2015: 20%) that the Board considers
to be in line with industry standards.
Net Revenue growth
Average net revenue growth within subsidiary companies in
comparison to prior years, a large proportion of which were
pre-acquisition by the Group, was 16% in 2016.
Net Revenue per employee
The range of net revenues per employee across the Group in 2016
was GBP0.081m to GBP0.107m.
Taxation
Due to reliefs available to the Group there is no charge to
corporation tax for the year (2015: GBPnil).
Earnings per share
Earnings per share for the year was GBP(0.01) (2015:
GBP(0.01)).
Dividends
The Board is not proposing to pay a dividend for 2016 (2015:
GBPnil).
Cash flow
Net cash outflow from operating activities was GBP1.5m (2015:
GBP0.6m) and net funds raised by the issue of shares on AIM were
GBP7.65m (2015: GBP8.53m).
Net cash outflows on acquisition related payments (inclusive of
working capital and loan note payments) totaled GBP14.6m (2015:
GBP2.1m).
Liquidity & financial position
The Group had cash balances of GBP2.8m at 31 December 2016
(2015: GBP8.3m).
The Group has an undrawn overdraft facility of up to GBP1.5m
with Barclays Bank Plc within one of the Partner companies as at 31
December 2016 and is currently in discussions to put in place a
revolving credit facility on a Group basis, in order to better meet
the needs of the Group as it continues to grow.
Acquisitions
On 9th May 2016 MMT Limited ('MMT Digital'), a design, build and
user experience ("UX") agency was acquired by the Group for an
initial consideration of GBP5.1m and potential earn out payments
based on their results to December 2019 that could raise this to a
maximum of GBP20.5m. The first earn out payment would not be before
March 2018. The transaction was funded by the placement of shares
in the market to the value of GBP8.1m at 3.25p per share. All
payments to the vendors are to be made as 65% cash, 35% in Be Heard
Group Plc shares.
On 7(th) December 2016 Kameleon Worldwide Limited, a content
marketing agency, was acquired by the Group for an initial
consideration of GBP4.05m and potential earn out payments based on
their results to December 2019 that could raise this to a maximum
of GBP10m. The transaction was funded out of Group cash reserves.
All payments to the vendors are to be made as no less than 35% in
Be Heard Group Plc shares, the balance in cash.
On 9th February 2017 the Group acquired a 75% stake in
Freemavens Limited, a marketing analytics and innovation
consultancy specializing in the use of big data, for an initial
consideration of GBP1.7m. 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 1st January 2021, that are subject to a
maximum value of GBP6m. The transaction was funded by the placement
of shares in the market to the value of GBP2.1m at 3.6p per share.
Freemavens was acquired after 31(st) December 2016 and therefore is
not included in the results for the year.
Operational developments
As Partner companies join the Group we review team structures to
look for development opportunities to facilitate growth. This has
resulted in new Managing and Finance Directors being appointed at
agenda21, and the internal promotion of a Chief Operating Officer
at MMT Digital, all of which have served to free the senior
management to concentrate on business development.
Business development practices and opportunities are being
shared and coordinated across the Group and in the ten months since
we became two, three months since we became three and one month
since we became four we have 4 clients for whom more than one
Partner company is working. Most recently we had our first pitch
involving all four Partner companies in an international pitch in
Europe. 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 is our intention to co-locate our London based businesses at
some stage during 2017. The current lease arrangements of all
Partner companies are conducive to this and we believe the benefits
of proximity will be significant in developing client
opportunities, new products and services, as well as being
immensely beneficial to staff training & learning.
We have commenced the process of reviewing HR practices across
Partner companies with a view to establishing best practice and
looking for a common platform on which to share and develop our
talent strategy.
Current trading and outlook
The uncertainty immediately following Britain's EU referendum
result that caused some clients to postpone projects at MMT appears
to have been short lived. The early months of the year have seen
our business trading at or above budget and we are hopeful that
this trend will continue as the year progresses. In this context we
are seeing an increasing number of opportunities for our partner
companies to work together to solve complex problems for the
groups' clients: this will continue to be a primary focus for the
group in the year ahead.
Robin Price
Chief Financial Officer & Chief Operating Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2016
Period
17 September
Year ended 2014 to
31 December 31 December
Notes 2016 GBP 2015 GBP
-------------------------------- ----- ------------ -------------
Billings 28,854,646 2,346,631
Cost of sales (19,364,258) (1,832,151)
-------------------------------- ----- ------------ -------------
NET REVENUE 9,490,388 514,480
Administrative expenses (13,127,461) (1,656,329)
-------------------------------- ----- ------------ -------------
OPERATING LOSS (3,637,073) (1,141,849)
-------------------------------- ----- ------------ -------------
Operating profit/(loss) before
acquisition and non-cash items 809,943 (354,240)
Depreciation (67,179) (1,578)
Amortisation (2,035,694) (128,141)
Impairment of intangibles (823,842) -
Acquisition/listing costs (1,012,285) (618,047)
Share based payments (508,016) (39,843)
-------------------------------- ----- ------------ -------------
OPERATING LOSS (3,637,073) (1,141,849)
-------------------------------- ----- ------------ -------------
Finance income 6,360 12,993
Finance costs (29,875) (10,034)
-------------------------------- ----- ------------ -------------
LOSS BEFORE TAXATION (3,660,588) (1,138,890)
Tax credit/(expense) 761,781 (26,561)
-------------------------------- ----- ------------ -------------
LOSS ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT (2,898,807) (1,165,451)
-------------------------------- ----- ------------ -------------
EARNINGS PER SHARE
Basic 3 (0.01) (0.01)
Diluted 3 (0.01) (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 2016 is
GBP2,898,807 (2015: GBP1,165,451)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2016
Share
Share Premium Retained
Capital Reserve Earnings Total
GBP GBP GBP GBP
------------------------------------------------------------------ --------- ---------- ----------- -----------
Total comprehensive expense for the period ended 31 December 2015 - - (1,165,451) (1,165,451)
Issue of new shares 3,329,308 6,770,318 - 10,099,626
Issue costs deducted from equity - (406,513) - (406,513)
Share based payment expense - - 39,483 39,843
------------------------------------------------------------------ --------- ---------- ----------- -----------
Balance at 1 January 2016 3,329,308 6,363,805 (1,125,608) 8,567,505
Total comprehensive expense for the year ended 31 December 2016 - - (2,898,807) (2,898,807)
Issue of new shares 3,815,455 8,640,283 - 12,455,738
Issue costs deducted from equity - (439,116) - (439,116)
Share based payment expense - - 508,016 508,016
------------------------------------------------------------------ --------- ---------- ----------- -----------
Balance at 31 December 2016 7,144,763 14,564,972 (3,516,399) 18,193,336
------------------------------------------------------------------ --------- ---------- ----------- -----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2016
2016 2015
Notes GBP GBP GBP GBP
---------------------------- ----- ------------ ------------ ------------ ------------
ASSETS
NON-CURRENT ASSETS
Property, plant and
equipment 92,867 20,887
Intangible assets 4 40,271,738 15,506,319
---------------------------- ----- ------------ ------------ ------------ ------------
TOTAL NON-CURRENT
ASSETS 40,364,605 15,527,206
CURRENT ASSETS
Trade and other receivables 7,723,157 3,827,060
Corporation tax 82,253 -
Cash and cash equivalents 2,811,610 8,264,801
---------------------------- ----- ------------ ------------ ------------ ------------
TOTAL CURRENT ASSETS 10,617,020 12,091,861
---------------------------- ----- ------------ ------------ ------------ ------------
TOTAL ASSETS 50,981,625 27,619,067
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (11,069,203) (10,244,080)
Loan notes (175,055) (849,965)
Corporation tax liabilities - (92,529)
---------------------------- ----- ------------ ------------ ------------ ------------
TOTAL CURRENT LIABILITIES (11,244,258) (11,186,574)
NON CURRENT LIABILITIES
Other payables (307,463) -
Loan notes - (175,055)
Deferred tax liability (987,621) (748,541)
Provision for liabilities (20,248,947) (6,941,392)
---------------------------- ----- ------------ ------------ ------------ ------------
TOTAL NON-CURRENT
LIABILITIES (21,544,031) (7,864,988)
TOTAL LIABILITIES (32,788,289) (19,051,562)
---------------------------- ----- ------------ ------------ ------------ ------------
TOTAL NET ASSETS 18,193,336 8,567,505
---------------------------- ----- ------------ ------------ ------------ ------------
CAPITAL AND RESERVES
ATTRIBUTABLE TO
EQUITY HOLDERS OF
THE PARENT
Share capital 7,144,763 3,329,308
Share premium reserve 14,564,972 6,363,805
Retained earnings (3,516,399) (1,125,608)
---------------------------- ----- -------------------------- ------------ ------------
TOTAL EQUITY 18,193,336 8,567,505
---------------------------- ----- -------------------------- ------------ ------------
The financial statements were approved by the Board of Directors
and authorized for issue on 28 March 2017 and were signed on its
behalf by:
Peter Scott Robin Price
Director Director
29 March 2017
Company registration number 09223440
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2016.
Period to 31
2016 December 2015
------------------------- ------------------------
GBP GBP GBP GBP
---------------------------------- ----------- ------------ ----------- -----------
OPERATING ACTIVITIES
Loss before taxation (3,660,588) (1,138,890)
Adjustments for:
Depreciation 67,179 1,578
Amortisation 2,035,694 128,141
Impairment of intangibles 823,842 -
Share based payment expense 508,016 39,843
Finance income (6,360) (12,993)
Finance costs 29,875 10,034
---------------------------------- ----------- ------------ ----------- -----------
3,458,246 166,603
---------------------------------- ----------- ------------ ----------- -----------
Loss from operations before
changes in working capital
and provisions (202,342) (972,287)
Increase in trade and other
receivables (993,524) (1,057,444)
(Decrease)/increase in
trade and other payables (366,485) 1,429,843
---------------------------------- ----------- ------------ ----------- -----------
(1,360,009) 372,399
---------------------------------- ----------- ------------ ----------- -----------
Cash consumed by operations (1,562,351) (599,888)
Net tax received 12,150 -
---------------------------------- ----------- ------------ ----------- -----------
Cash flow from operating
activities (1,550,201) (599,888)
INVESTING ACTIVITIES
Purchase of property, plant
and equipment (97,608) (447)
Consideration paid on acquisition
of subsidiaries (9,840,861) (2,139,688)
Deferred consideration
paid (3,931,297) -
Payment to buy out shareholders (849,965) -
Cash with subsidiaries
over which control has
been obtained 3,162,672 2,468,366
Finance income 6,360 12,993
Expenditure on development
costs - (7,488)
---------------------------------- ----------- ------------ ----------- -----------
Cash flow from investing
activities (11,550,699) 333,736
---------------------------------- ----------- ------------ ----------- -----------
(13,100,900) (266,152)
2016 2015
GBP GBP GBP GBP
--------------------------- --------- ----------- --------- ---------
FINANCING ACTIVITIES
Issue of Ordinary Shares 8,116,700 8,947,500
Share issue expenses (439,116) (406,513)
Finance costs (29,875) (10,034)
--------------------------- --------- ----------- --------- ---------
Cash flow from financing
activities 7,647,709 8,530,953
--------------------------- --------- ----------- --------- ---------
(DECREASE)/INCREASE IN
CASH AND CASH EQUIVALENTS (5,453,191) 8,264,801
Cash and cash equivalents
at 1st January 2016 8,264,801 -
--------------------------- --------- ----------- --------- -----------
Cash and cash equivalents
at 31 December 2016 2,811,610 8,264,801
--------------------------- --------- ----------- --------- -----------
Cash and cash equivalents
comprise:
Cash available on demand 2,811,610 8,264,801
--------------------------- --------- ----------- --------- -----------
There were no significant non-cash transactions
NOTES TO THE FINANCIAL STATEMENTS
For the year to 31st December 2016
1. The financial information for the year to 31st December 2016
does not constitute statutory accounts as defined in section 435
(1) and (2) of the Companies Act 2006. The auditors have reported
on these accounts; their reports were unqualified, did not include
a reference to any matter to which the auditors drew attention by
way of emphasis of matter and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
Whilst this preliminary announcement has been prepared in
accordance with International Financial Reporting Standards (IFRS)
and IFRS Interpretations Committee (IFRIC) interpretations adopted
for use by the European Union, with those parts of the Companies
Act 2006 applicable to companies reporting under these condensed
financial statements do not contain sufficient information to
comply with IFRS.
2. ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS
The financial information in this preliminary announcement had
been prepared using the recognition and measurement principles of
International Accounting Standards, International Financial
Reporting Standards and Interpretations adopted for use in the
European Union (collectively Adopted IFRSs). The principal
accounting policies used in preparing the preliminary announcement
are those the Group will apply in its financial statements for the
year to 31st December 2016.
3. EARNINGS PER SHARE
2016 2015
GBP GBP
--------------------------------------- ----------- -----------
The earnings per share is based on the
following:
Earnings (2,898,807) (1,165,451)
--------------------------------------- ----------- -----------
Weighted average number of shares 553,597,753 136,416,579
Diluted number of shares 778,222,256 396,676,795
Earnings per share (0.01) (0.01)
Diluted earnings per share (0.01) (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 553,597,753
(2015:136,416,579).
The diluted earnings per share is the same as the earnings per
share due to the consolidated group loss.
4. INTANGIBLE ASSETS
Other
Goodwill
Development on Intangible
Costs Consolidation assets Total
GBP GBP GBP GBP
-------------------------- ----------- ------------- ---------- ----------
Cost
At 31 December 2015 499,489 11,407,442 4,102,387 16,009,318
Acquisition of subsidiary - 26,198,675 4,493,372 30,692,047
Adjustments - (67,092) - (67,092)
-------------------------- ----------- ------------- ---------- ----------
31 December 2016 499,489 37,539,025 8,595,759 46,634,273
-------------------------- ----------- ------------- ---------- ----------
Amortisation
At 31 December 2015 389,044 - 113,955 502,999
Charge for the year 85,488 - 1,950,206 2,035,694
Impairment - - 823,842 823,842
Remeasurement - 3,000,000 - 3,000,000
-------------------------- ----------- ------------- ---------- ----------
31 December 2016 474,532 3,000,000 2,888,003 6,362,535
-------------------------- ----------- ------------- ---------- ----------
Net Book Value
At 31 December 2016 24,957 34,539,025 5,707,756 40,271,738
-------------------------- ----------- ------------- ---------- ----------
At 31 December 2015 110,445 11,407,442 3,988,432 15,506,319
-------------------------- ----------- ------------- ---------- ----------
The cost of other intangible assets comprises the estimated net
present value of GBP6,439,072 of customer relationships and
GBP2,156,687 of brand value at the date of acquisition.
The development costs relate to Amplify, a data analytics tool
developed in-house by agenda21 Digital Limited.
Amortisation of GBP2,035,694 and impairment of GBP823,842 are
included in administrative expenses.
The Group tests intangible assets annually 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.
5. GOODWILL AND IMPAIRMENT
Details of the carrying amount of goodwill allocated to cash
generating units (CGUs) is as follows:
Goodwill carrying
amount
----------------------
2016 2015
GBP GBP
------------------------------------------- ---------- ----------
Details of the carrying amount of goodwill
allocated to cash generating units
(CGUs) is as follows:
agenda21 Digital Limited 11,340,350 11,407,442
MMT Limited 15,071,914 -
Kameleon Worldwide Limited 8,126,761 -
------------------------------------------- ---------- ----------
34,539,025 11,407,442
------------------------------------------- ---------- ----------
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.
MMT Limited was reviewed according to reasonable estimates of
its projected growth rates, and it was assessed that the amount of
consideration payable will be less than originally provided for.
Accordingly, a GBP3m revision has been made to goodwill and
contingent consideration.
Kameleon Worldwide Limited was bought on 6 December 2016, and a
review by management found no reason to impair the goodwill arising
on its acquisition.
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.
The recoverable amount of agenda21 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
GBP3,141,000. If any one of the following changes were made to the
above key assumptions, the carrying amount would still exceed the
recoverable amount.
Discount Increase from 8% to 10%
rate:
Growth Reduction from 6% to 4%
rate:
6. SEGMENT INFORMATION
The Group's primary reporting format for segment information is
business segments which reflect the management reporting structure
in the Group.
Media
Be Heard Design, Planning Content Intersegment
Build
Group & UX and Buying Management adjustments Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- ------- ---------- ---------- ------------ --------
Revenue
External - 3,670 24,871 314 - 28,855
Intercompany 204 - 38 17 (259) -
--------------------------- -------- ------- ---------- ---------- ------------ --------
204 3,670 24,909 331 (259) 28,855
Profit/(loss) before
tax (2,883) 540 1,438 104 (2,860) (3,661)
Tax expense/(recovery) - (236) 2 - (527) (761)
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
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) - (5,860) (5,927)
Interest paid - - (29) (1) - (30)
--------------------------- -------- ------- ---------- ---------- ------------ --------
Three clients of agenda21 Digital Limited each provided more
than 10% of the turnover of the group. Their combined turnover was
GBP13,821,298. These clients are included within Media Planning and
Buying.
External revenue
by
location of customer
----------------------
2016 2015
GBP GBP
--------------- ----------- ---------
United Kingdom 23,772,051 1,258,424
Rest of Europe 4,671,438 1,071,754
Asia 236,093 16,453
USA 175,064 -
--------------- ----------- ---------
28,854,646 2,346,631
--------------- ----------- ---------
All the above relate to continuing operations.
7. ACQUSITION OF SUBSIDIARY
MMT Limited:
On 10 May 2016 the Group acquired 100% of the Ordinary Shares in
MMT Limited for a maximum consideration of GBP23,635,159 subject to
certain benchmarks being achieved in the four financial years
following completion, these benchmarks being related to profit and
growth. This investment is included in the Parent company's balance
sheet at its fair value at the date of acquisition. MMT Limited is
a digital design and build agency.
MMT Limited was reviewed according to reasonable estimates of
its projected growth rates, and it was assessed that the amount of
consideration payable will be less than originally provided for.
Accordingly, a GBP3m revision has been made to goodwill and
contingent consideration.
The completion accounts show a breakdown of the assets and
liabilities of the acquired company to be as follows:
Fair value
Fair value to
Book value adjustment Group
GBP GBP GBP
------------------------------ ----------- ----------- -----------
Intangible fixed assets - 2,529,837 2,529,837
Tangible fixed assets 33,830 - 33,830
Receivables 1,633,881 134,449 1,768,330
Cash and cash equivalents 2,735,214 - 2,735,214
Payables (1,064,904) (4,226) (1,069,130)
Deferred tax (4,764) (430,072) (434,836)
------------------------------ ----------- ----------- -----------
Net assets on acquisition 3,333,257 2,229,988 5,563,245
Goodwill on acquisition 18,071,914
------------------------------ ----------- ----------- -----------
Total consideration 23,635,159
------------------------------ ----------- ----------- -----------
Discharged by: GBP
------------------------------ ----------- ----------- -----------
Cash paid 7,735,773
54,774,425 shares in Be Heard
Group plc at 3p 1,643,233
28,705,684 shares in Be Heard
Group plc at 3.325p 954,464
Deferred consideration 614,926
Contingent consideration 12,686,764
------------------------------ ----------- ----------- -----------
23,635,159
------------------------------ ----------- ----------- -----------
The intangible fixed assets are in relation to brand and
customer relationships.
The revenue and profit included in the Consolidated Statement of
Comprehensive Income since the acquisition of MMT Limited on 10 May
2016 was GBP3,669,888 and GBP776,553 respectively.
If MMT had been acquired on 1 January 2016, the revenue that
would have been included in the Consolidated Statement of
Comprehensive Income would have been GBP5,665,673 and the profit
would have been GBP1,523,480.
Acquisition costs of approximately GBP718,000 were written off
as overheads in the period.
Kameleon Worldwide Limited
On 6 December 2016 the Group acquired 100% of the Ordinary
Shares in Kameleon Worldwide Limited for a maximum consideration of
GBP10,531,716 subject to certain benchmarks being achieved in the
three financial years following completion, these benchmarks being
related to profit and growth. This investment will be included in
the Group's balance sheet at its fair value at the date of
acquisition. Kameleon Worldwide Limited is a digital marketing
company.
The provisional completion accounts show a breakdown of the
assets and liabilities of the acquired companies to be as
follows:
Fair value
Fair value to
Book value adjustment Group
GBP GBP GBP
------------------------------ ---------- ---------- ----------
Intangible fixed assets 1,963,535 1,963,535
Tangible fixed assets 7,111 7,111
Receivables 1,221,312 1,221,312
Cash and cash equivalents 427,458 427,458
Payables (875,587) (875,587)
Deferred tax 643 (333,801) (333,158)
------------------------------ ---------- ---------- ----------
Net assets on acquisition 780,937 1,629,734 2,410,671
Goodwill on acquisition 8,126,761
------------------------------ ---------- ---------- ----------
Total consideration 10,537,432
------------------------------ ---------- ---------- ----------
Discharged by:
Cash paid 2,105,088
33,585,456 shares in Be Heard
Group plc at 3.375p 1,133,509
Deferred consideration 1,347,082
Contingent consideration 5,951,753
------------------------------ ---------- ---------- ----------
10,537,432
------------------------------ ---------- ---------- ----------
The intangible fixed assets are in relation to brand and
customer relationships.
The revenue included in the Consolidated Statement of
Comprehensive Income arising from Kameleon Worldwide Limited was
GBP330,609. The profit included in the Consolidated Statement of
Comprehensive Income arising from Kameleon Worldwide Limited was
GBP103,890.
If Kameleon had been acquired on 1 January 2016, the revenue
that would have been included in the Consolidated Statement of
Comprehensive Income would have been GBP3,909,465, and the profit
GBP542,294.
Acquisition costs of approximately GBP196,000 were written off
as overheads in the year.
The deferred and contingent consideration will be paid in a
combination of cash and shares.
The Annual Report will be sent to shareholders shortly and made
available to the public at the registered office of the Company at
10 Norwich Street, London EC4A 1BD and will also be available to
download on the Company's website www.beheardgroup.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UKOWRBVAOUAR
(END) Dow Jones Newswires
March 30, 2017 02:01 ET (06:01 GMT)
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