Be Heard : Half year results

RNS Number : 2968Q

Be Heard Group PLC

11 September 2017

Be Heard Group plc

("Be Heard", the "Company" or the "Group")

Half year results for the period to 30 June 2017

Strong revenue growth; 85% visibility on 2017 revenue; underpins confidence for full year expectations.

vStrong revenue growth, which is expected to accelerate further in H2 as new business wins feed through

o Good organic growth at longest-serving partner companies, agenda21 and MMT Digital, with net revenue increasing 21% and 44% respectively

vProof of concept firmly established

o 23% of H1 revenue from clients served by two or more Be Heard companies

o Eight clients now served by two or more companies within the Group with our first client working with three Group companies

vProgress with buy-and-build strategy

o £2.1m raised to acquire Freemavens, a leading-edge analytics and insight consultancy, in February 2017

vStrong new business performance across the Group with 25 new client wins including Addison Lee, Coca-Cola, GSK, Unilever Food Solutions and Vodafone Enterprise

vHalf year profit constrained by investment to deliver growth and headwinds at Kameleon

o Increased headcount at MMT to support growth

o Kameleon loss making in H1; expected to return to profit in the second half

Headline Financial results

	HY 2017	HY 2016
	£m	£m
Billings	16.0	14.7
Net Revenue	8.3	3.3
Trading EBITDA1	1.2	0.7
Operating Profit (adjusted)2	0.1	0.0
Loss per share (diluted)	(0.3)p	(0.6)p

1. represents Operating Profit (adjusted) prior to central group costs.

2. adjusted to exclude depreciation, amortisation and impairment of intangibles, acquisition & listing costs, share based payments and holiday pay accrual.

Current trading

vContinuing strong new business run. Additional assignments from existing clients including Axelos, ComparetheMarket, Hodder, Unilever and Vodafone plus new client wins including Autotrader and Pittsburgh Paint Group

vMomentum and visibility on revenues underpins confidence for the full year

o Over 85% of forecast 2017 revenue billed or confirmed

Peter Scott, Executive Chairman of Be Heard, said:

"Be Heard enjoyed exceptional revenue growth in the first half. This reflects two long-term growth drivers: first, increasing client demand for connected marketing services as digital disruption accelerates; second, our pure play digital capabilities which are designed to help brands and marketers meet today's challenges across the customer journey. While two factors held back profitability in the short term - increasing headcount at MMT to support growth and headwinds at Kameleon - momentum within the Group continues to be strong and we expect revenue in the second half of the year to be considerably above the first half as new business wins feed through.

"Current visibility on revenues and progress underpins the Board's confidence that the Group will deliver full year results in line with market expectations and strong run-rate profitability by the year end. Since our listing in November 2015 we have acquired four exceptionally-talented businesses and continue to explore opportunities to broaden our offering to clients."

Be Heard Group plc	[phone]
Peter Scott, Executive Chairman
Robin Price, Chief Financial Officer & Chief Operating Officer
N+1 Singer	[phone]
Mark Taylor / Lauren Kettle
Dowgate	[phone]
James Serjeant
Bell Pottinger (Financial PR)	[phone] / [phone]
Liz Morley / Jamie Ricketts / Celine MacDougall

Notes to Editors:

About Be Heard Group plc

Be Heard Group plc(AIM:BHRD) is a digital marketing services group helping clients solve the challenges they face in the connected world. To achieve this, we acquire and connect exceptionally-talented companies, providing management experience, access to deeper resources and a strong platform for growth.

Our four partner companies today are:

Agenda 21 Digital Limited('agenda21'), a digital media and analytics agency, which became a partner on admission in November 2015 www.agenda21digital.com

MMT Limited('MMT Digital'), a user experience ("UX"), design and build agency, which became a partner in May 2016 www.mmtdigital.co.uk

Kameleon Worldwide Limited('Kameleon'), a content marketing agency, which became a partner in December 2016 www.kameleon.co.uk

Freemavens Limited('Freemavens'), a data-driven analytics and insight consultancy, which became a partner in February 2017 www.freemavens.com

www.beheardgroup.com

@Be_Heard_Group

EXECUTIVECHAIRMAN'S STATEMENT

Less than two years into the Be Heard journey, we are particularly pleased with our partners' success in collaborating to deliversimpler, faster and more powerful ways to connect with customers,encouraging an increasing number of our clients to work with two or more of our companies.

Our thesis has always rested on two key trends: first, the increasing complexity of the digital customer journey requiring new ideas and approaches; second, the growing demand for connected solutions which help clients maximise their return on investment from digital marketing. Eight clients - delivering 23% of H1 revenue - have now made the decision to work with two or more of our companies. We believe that this trend will continue as we add more skills and resources to the Group.

To aid and accelerate cross Group client relationships we appointed Richard Costa D'Sa as Chief Growth Officer in June 2017, reflecting our ambition of growing both our and our clients' businesses by delivering quicker, smarter, more cost-efficient and broader solutions. Richard was previously Global CEO at Deep Focus, a digital creative agency, prior to which he was one of the founding team at Deep Focus' predecessor, Jam.

At board level, we appointed David Morrison as Non-Executive Director on 2 August 2017. David brings a wealth of experience in identifying and developing early stage growth companies.

Operations review

We now have four operating companies and over 240 digital specialists in the Group. I was particularly pleased that, from a standing start less than two years ago, Be Heard generates 23% of its revenue from cross-Group work - meaning at least two of our companies. We see this as affirmation of our business model, and are delighted with this early 'proof of concept'.

agenda21

Be Heard's digital media planning and buying agency performed well in H1. Net revenue increased by 21% over the prior year to £3.0 million. The company rolled out a new in-house AI-powered programmatic buying solution and soft-launched Content Compass, its new proprietary product enabling companies to optimise search and website performance. New client wins include Addison Lee, BDO, Brakes Brothers and Vodafone Enterprise (alongside MMT). agenda21's transparent approach to media buying, investment in analytics and recent senior appointments mean that it is well positioned for growth in the second half.

MMT Digital

The Group's UX, design and build operation has enjoyed rapid growth, driven by itsexpansion into digital transformation and UX and increasing collaboration with agenda21. Net revenue in H1 increased by 44% to £4.2 million over the prior year. Newclient wins include Forestry Commission, Gowling WLG and Pittsburgh Paint Group and Save the Children with additional projects from Axelos, ComparetheMarket and Hodder and Vodafone. Having started the year with 65 talented people, the company is on track to end the year with 125 or more. While managing this level of growth has inevitably brought challenges, MMT has continued to deliver high quality work on time and on budget - one highlight being the development and launch for Vodafone of Tobi, the first AI-powered chatbot for a UK telecoms company. MMT has an excellent new business pipeline going into the second half and 2018.

Kameleon

Be Heard's content agency had a difficult first half. As noted in our trading update on 2 August 2017, two clients suspended activity and the snap election brought all Government work to an abrupt halt - though this has now restarted. Added to this Steve Butterworth, COO, was incapacitated by injury for some months. This severely suppressed activity in the first half, but we are encouraged by their response and resilience with a number of new client wins in recent weeks including The AA, Autotrader, Britain is Great and Vodafone and a growing new business pipeline. We expect Kameleon to return to profitability in the second half.

Freemavens

Be Heard's data and analytics business has flourished since we acquired it. Net revenue in H1 was up 20% to £1.0 million versus the same period a year earlier. Freemavens secured a major contractwith Unilever, the company's largest client, for its People Data Centre (PDC) to provide consumer and market insights through an onsite team of analysts. The companywon several new clients including GSK, Unilever Food Services and Pepsi Lipton. It also launched Trend Rider, a new proprietary tool enabling early identification of emerging trends, which has a wide range of applications from market analysis to new product development.

Group data and analytics capabilities

We see data and analytics underpinning the Be Heard proposition: Freemavens and agenda21 are collaborating with our development team and other partner companies to develop a full suite of in-house and proprietary analytics capabilities. Across the Group we now have over 30 data scientists and analysts delivering better insights and optimising performance for our clients. Key developments in the first half included the launch of Content Compass and Trend Rider with several innovative and proprietary data-driven products and services in development for the second half of the year.

Summary and outlook

With every day that passes we see more and more evidence that by connecting our companies we are better placed to deliver better, faster and more cost-effective solutions across each stage of the digital customer journey - from market analysis to identifying and connecting with key customer groups, to developing compelling campaigns and content and creating smarter websites and applications.

Our partner companies have settled in well and are benefitting from access to broader thinking, wider skill sets and increased business opportunities across the Group.

We have firmly established proof of concept, attracting larger, blue chip clients with a growing number of clients buying the services of at least two Group companies. Expanding capabilities in areas such as analytics and key Group level hires including Richard Costa-D'Sa as Chief Growth Officer will further accelerate organic growth and improve efficiency.

We expect performance in the second half of the year to outperform the first half, with new business wins feeding through, increasing cross-fertilisation and the rollout of new proprietary products and services such as Content Compass and Trend Rider. Over 85% of forecast 2017 revenue is billed or confirmed.

The scale of the opportunity remains huge and we look forward to exploiting this in the interests of all our stakeholders - clients, staff, shareholders and partners - in the months and years ahead.

Be Heard is still be in the early stages of its development, but the Board is encouraged by the levels of revenue growth, and by client cross referrals. Current visibility on revenues and progress underpins the Board's confidence that the Group will deliver full year results in line with market expectations, and deliver strong run-rate profitability by the year end.

Peter Scott

Executive Chairman

11 September 2017

FINANCIAL REVIEW

Group companies

The results for the period comprise the trading of group companies for the full six months, with the exception of Freemavens Limited who were acquired on 6 February 2017 and therefore are included for 21 weeks since acquisition.

Headline results

Group billings for the period were £16.0m (2016: £14.7m).

Group net revenue for the period was £8.3m (2016: £3.3m).

Operating profit before acquisition and non-cash items was £0.1m (2016: £0.04m).

Acquisition and non-cash items of £3.1m (2016: £2.2m) comprised:

Depreciation	£0.06m (2016: £0.02m)
Amortisation and impairment of intangibles	£2.5m (2016: £1.1m)
Acquisition & listing costs	£0.2m (2016: £0.8m)
Share based payments Holiday pay accrual	£0.2m (2016: £0.3m) £0.1m (2016: £0.06m)

resulting in an operating loss of £3.0m (2016: loss £2.2m).

Cash flow & banking

Net cash inflow from operating activities was £6k (2016: outflow £2,395k) and net funds raised by the issue of shares on AIM were £1,966k (2016: £7,660k).

Net cash outflows on acquisition-related payments (inclusive of working capital and loan note payments) totalled £1,616k (2016: £7,555k)

In July 2017, Be Heard entered into an agreement with Barclays Bank in respect of a £3m Revolving Credit Facility maturing in June 2020.

Acquisitions

On 9 February 2017, the Group acquired a 75% stake in Freemavens Limited, a marketing analytics and innovation consultancy specialising in the use of big data,for an initial consideration of £0.9m plus assumed debt of £0.8m. The management of Freemavens between them hold 9.3m shares in Be Heard Group Plc and retain the remaining 25% holding in Freemavens that is subject to put & call options, not to be exercised before 1st January 2021, that are subject to a maximum value of £6.0m. The transaction was funded by the placement of shares in the market to the value of £2.1m at 3.6p per share.

Earn-outs

On 25 August 2017, the terms of the earnout for MMT Limited were changed from a performance basis to a fixed annual payment of £3.233m for each of the years 2017, 2018 and 2019, subject to MMT's revenue in each of the respective years being greater than that of 2015, with such amounts remaining payable as to 65% in cash, 35% in shares. Any shares due to be issued will be priced at the higher of 3.55 pence and the average of the middle market closing prices in the 12-month period prior to the relevant payment date. Consideration paid to date totals £7.8m, comprising initial consideration of £5.1m paid upon original completion of the acquisition and an additional payment of £2.7m. The effect of the amendment of the earnout is to bring the total deal cap down from a maximum potential consideration of £20.5m to a fixed consideration of £17.5m. Further details are contained in note 12.

Robin Price

Chief Financial Officer & Chief Operating Officer

11 September 2017

INTERIM CONSOLIDATED INCOME STATEMENT

for the six months ended 30 June 2017

	Unaudited	Unaudited	Audited
	Six months to	Six months to	Period to
	30 June 17	30 June 16	31 December 16
	£'000	£'000	£'000
Billings	16,002	14,707	28,854
Cost of sales	(7,673)	(11,399)	(19,364)
	_______	_______	______
Net Revenue	8,329	3,308	9,490
Administrative expenses	(11,350)	(5,472)	(13,127)
	_______	_______	______
Loss from operations	(3,021)	(2,164)	(3,637)
Operating profit before acquisition costs and non-cash items	121	44	810
Depreciation	(61)	(19)	(67)
Amortisation	(1,364)	(1,082)	(2,036)
Impairment of intangibles	(1,181)	-	(824)
Acquisition/listing costs	(186)	(795)	(1,012)
Share based payments	(212)	(256)	(508)
Holiday pay accrual	(138)	(56)	-
	______	______	______
Loss from operations	(3,021)	(2,164)	(3,637)
Finance income Finance costs	- (5)	1 (18)	6 (30)
	______	______	______
Loss before taxation	(3,026)	(2,181)	(3,661)
Tax credit	428	-	762
	______	______	_____
Loss for the period	(2,598)	(2,181)	(2,899)
	______	______	______
TOTAL COMPREHENSIVE EXPENSE FOR THE	(2,598)	(2,181)	(2,899)
PERIOD	========	========	========
Loss and Total Comprehensive Expense for the Period attributable to: Non-Controlling Interest Equity holders of the parent	(10) (2,588)	- (2,181)	- (2,899)
	______	______	______
	(2,598) ========	(2,181) ========	(2,899) ========
Loss per share (see below)
Basic	(0.3)p	(0.6)p	(0.5)p
Diluted	(0.3)p	(0.6)p	(0.5)p

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 June 2017

(unaudited)

		Share		Equity	Non-
	Share	premium	Retained	Attributable	controlling
	capital	reserve	earnings	to Owners of	Interests	Total
				Parent Company
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 30 June 2015	1,283	2,165	(123)	3,325	-	3,325
Total comprehensive expense for the period	-	-	(1,043)	(1,043)	-	(1,043)
Issue of new shares	2,046	4,605	-	6,651	-	6,651
Issue costs deducted from equity	-	(406)	-	(406)	-	(406)
Share based payment expense	-	-	40	40	-	40
	_____	_____	_____	_____	_____	_____
Balance at 31 December 2015	3,329	6,364	(1,126)	8,567	-	8,567
Total comprehensive expense for the period	-	-	(2,181)	(2,181)	-	(2,181)
Issue of new shares	3,192	7,175	-	10,367	-	10,367
Issue costs deducted from equity	-	(439)	-	(439)	-	(439)
Share based payment expense	-	-	256	256	-	256
	_____	_____	_____	_____	_____	_____
Balance at 30 June 2016	6,521	13,100	(3,051)	16,570	-	16,570
Total comprehensive expense for the period	-	-	(718)	(718)	-	(718)
Issue of new shares	624	1,465	-	2,089	-	2,089
Share based payment expense	-	-	252	252	-	252
	_____	_____	_____	_____	_____	_____
Balance at 31 December 2016	7,145	14,565	(3,517)	18,193	-	18,193
Total comprehensive expense for the period	-	-	(2,588)	(2,588)	(10)	(2,598)
Issue of new shares	986	2,561	-	3,547	-	3,547
Issue costs deducted from equity	-	(127)	-	(127)	-	(127)
Share based payment expense	-	-	212	212	-	212
Non controlling interests on acquisition of subsidiary	-	-	-	-	64	64
	_____	_____	_____	______	_____	_____
Balance at 30 June 2017	8,131	16,999	(5,893)	19,237	54	19,291
	_____	_____	_____	______	_____	_____

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 30 June 2017

	Unaudited	Unaudited	Audited
	as at	as at	as at
	30 June 17	30 June 16	31 December 16
	£'000	£'000	£'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment	163	98	93
Intangible assets	36,532	34,230	40,272
	______	______	_______
TOTAL NON-CURRENT ASSETS	36,695	34,328	40,365
	______	______	_______
CURRENT ASSETS
Trade and other receivables	7,065	6,365	7,723
Corporation tax	121	-	-
Deferred tax asset	-	796	82
Cash and cash equivalents	1,220	8,649	2,812
	______	______	_______
TOTAL CURRENT ASSETS	8,406	15,810	10,617
	______	______	_______
TOTAL ASSETS	45,101	50,138	50,982
	______	______	_______
LIABILITIES
CURRENT LIABILITIES
Trade and other payables	(7,605)	(11,483)	(11,069)
Loan notes	-	(700)	(175)
Corporation tax liabilities	-	(92)	-
Provision for liabilities	(5,530)	(2,300)	-
	_______	_______	________
TOTAL CURRENT LIABILITIES	(13,135)	(14,575)	(11,244)
	_______	_______	________
NON-CURRENT LIABILITIES
Trade and other payables	(184)	(451)	(307)
Deferred tax liability	(724)	(1,251)	(988)
Provision for liabilities	(11,767)	(17,291)	(20,250)
	_______	_______	________
TOTAL NON-CURRENT LIABILITIES	(12,675)	(18,993)	(21,545)
	_______	_______	________
TOTAL LIABILITIES	(25,810)	(33,568)	(32,789)
	_______	_______	________
TOTAL NET ASSETS	19,291	16,570	18,193
	_______	_______	________
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital	8,131	6,521	7,145
Share premium reserve	16,999	13,100	14,565
Retained earnings	(5,893)	(3,051)	(3,517)
	_______	_______	_______
Equity attributable to owners of parent company	19,237	16,570	18,193
Non-controlling interests	54	-	-
	_______	_______	_______
TOTAL EQUITY	19,291	16,570	18,193
	_______	______	_______

CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 30 June 2017

	Unaudited	Unaudited	Audited
	Six months to	Six months to	Period to
	30 June 17	30 June 16	31 December 16
	£'000	£'000	£'000
OPERATING ACTIVITIES
Net loss from ordinary activities before taxation	(3,026)	(2,181)	(3,661)
Adjustments for: Depreciation	60	19	67
Amortisation	1,364	1,082	2,036
Other intangible impairment	1,181	-	824
Share based payment expense	212	256	508
Finance costs	5	17	24
	_____	_____	_____
Operating loss before changes in working capital and provisions	(204)	(807)	(202)
Decrease/(increase) in trade and other receivables	230	(1,208)	(994)
Decrease in trade and other payables	(20)	(440)	(282)
Decrease/(increase) in provisions	-	61	(84)
	_____	_____	_____
Cash generated/(consumed) by operations	6	(2,394)	(1,562)
Income taxes recovered	-	-	12
	___	___	_____
Cash flows from operating activities	6	(2,394)	(1,550)
	___	___	_____
INVESTING ACTIVITIES
Purchase of property, plant and equipment	(109)	(63)	(98)
Consideration paid on acquisition of subsidiaries	(1,441)	(7,555)	(9,841)
Deferred consideration	(2,186)	-	(3,931)
Payment to buy out shareholders	(175)	-	(850)
Cash with subsidiaries over which control has been obtained	347	2,735	3,163
Finance income	-	1	6
	_____	_____	_____
Cash consumed by investing activities	(3,564)	(4,882)	(11,551)
	(3,558)	(7,276)	(13,101)
	_____	_____	_____
FINANCING ACTIVITIES
Issue of ordinary shares	1,971	7,678	7,678
Finance costs	(5)	(18)	(30)
Cash generated by financing activities	_____ 1,966	_____ 7,660	_____ 7,648
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS	(1,592) ---------------	384 ---------------	(5,453) ---------------
Cash and cash equivalents brought forward	2,812	8,265	8,265
	_____	_____	_____
CASH AND CASH EQUIVALENTS CARRIED FORWARD	1,220	8,649	2,812
	_____	_____	_____
Represented by:
Cash at bank and in hand	1,220	8,649	2,812
	_____	_____	_____
	1,220	8,649	2,812
	_____	_____	_____

NOTES TO THE INTERIM REPORT

for the six months ended 30 June 2017

1. Corporate information

The interim consolidated financial statements of the group for the period ended 30 June 2017 were authorised for issue in accordance with a resolution of the directors on 6 September 2017. 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 2016 annual financial statements. The statutory audited accounts for the year ended 31 December 2016 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 2017 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 2016, 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 2016.

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.

Standards and amendments and interpretations to published standards not yet effective

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the group's accounting periods beginning on or after 1 July 2017 or later periods and which the group has decided not to adopt early are:

IFRS 9 Financial Instruments(effective for accounting periods on or after 1 January 2018)

IFRS 15 Revenue from Contracts with Customers(effective for accounting periods beginning on or after 1 January 2018)

IFRS 16 Leases(effective for accounting periods beginning on or after 1 January 2019)

Amendments to IFRS 2 Share Based Payments(effective for accounting periods on or after 1 January 2018)

The implementation of these standards is not expected to have any material effect on the Group's financial statements, with the exception of IFRS 16. The impact that the implementation of IFRS 16 will have on the financial statements is currently being assessed.

NOTES TO THE INTERIM REPORT

for the six months ended 30 June 2017

3. Segment Information

The Group's primary reporting format for segment information is business segments which reflect the management reporting structure in the Group.

		Be Heard Group	Media Planning & Buying		Design, Build &UX	Content Management	Data Analytics	Consolidation	Total
		£'000	£'000		£'000	£'000	£'000	£'000	£'000
	Billings
	External	-	10,158		4,317	811	716	-	16,002
	Intercompany	227	1,142		-	13	-	(1,382)	-
		----------------	----------------		---------------	---------------	---------------	---------------	--------------------
		227	11,300		4,317	824	716	(1,382)	16,002
	Profit/(loss) before tax	(1,283)	447		961	(570)	99	(2,680)	(3,026)
	Balance sheet
	Assets	47,139	12,991		6,136	857	475	(22,497)	45,101
	Liabilities	(26,548)	(4,980)		(918)	(543)	(954)	8,133	(25,810)
		----------------	----------------		-------------	-------------	-------------	---------------	--------------------
	Net assets/(liabilities)	20,591	8,011		5,218	314	(479)	(14,364)	19,291
		----------------	----------------		------------	------------	------------	---------------	--------------------
	Other
	Capital expenditure
	- Tangible fixed assets	4	22		67	3	11	-	107
	Depreciation, amortisation and
	other non cash expenses	4	13		20	2	21	2,546	2,606
	Interest paid	4	1		-	-	-	-	5

Included within Media Planning & Buying is turnover of £5,658k relating to income from two major customers which each account for more than 10% of the Group's turnover in the period.

4. Earnings per share

		2017
		£
	The earnings per share is based on the following:
	Earnings	(2,497,661)
		==========
	Weighted average number of shares	781,964,545
	Diluted number of shares	876,795,448
	Earnings per share	(0.3)p
	Diluted earnings per share	(0.3)p
		======

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 781,964,545.

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 2017

5. Business Combinations

On 9 February 2017, the Group acquired 75% of the ordinary shares in Freemavens Limited for a consideration of £942,538. This investment is included in the Parent company's balance sheet at its fair value at the date of acquisition. Freemavens is a data and analytics business.

The completion accounts show a breakdown of the assets and liabilities of the acquired company to be as follows:

			Book value	Fair value adjustment	Fair value to Group
Intangible fixed assets			£'000 -	£'000 1,005	£'000 1,005
Tangible fixed assets			22	-	22
Receivables			284	-	284
Cash and cash equivalents			347	-	347
Payables			(375)	-	(375)
Loan from BHG			(858)	-	(858)
Deferred tax			-	(171)	(171)
			-----------------------	-----------------------	-----------------------
Net assets on acquisition			(580)	834	254
Non-controlling interest					(64)
Goodwill on acquisition					752
					----------------------
Total consideration					942
					==========

Discharged by:
		£'000
Cash paid Shares in Be Heard Group plc		583 359
		---------------------
		942
		==========

The non-controlling interest in Freemavens Limited is calculated as 25% of the fair value of Freemavens at acquisition.

The intangible fixed assets are in relation to brand and customer relationships.

The billings and profit included in the Consolidated Statement of Comprehensive Income since the acquisition of Freemavens Limited on 9 February 2017 was £716k and £99k respectively.

Acquisition costs of approximately £186k were written off as overheads in the period.

6. Remeasurement of Goodwill

Kameleon Worldwide 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 £2.952m revision has been made to goodwill and contingent consideration.

NOTES TO THE INTERIM REPORT

for the six months ended 30 June 2017

7.	Intangible Assets
			Goodwill	Other
		Development	On	Intangible
		Costs	consolidation	Assets	Total
		£'000	£'000	£'000	£'000
	Cost
	31 December 2016 Acquisition of subsidiary	499 -	37,539 752	8,596 1,004	46,634 1,756
		----------------	---------------------	------------------	---------------------
	30 June 2017	499	38,291	9,600	48,390
		----------------	---------------------	------------------	--------------------
	Amortisation
	31 December 2016	474	3,000	2,888	6,362
	Charge for the period	25	-	1,339	1,364
	Impairment	-	-	1,181	1,181
	Remeasurement	-	2,951	-	2,951
		----------------	-----------------	-----------------	-----------------
	30 June 2017	499	5,951	5,408	11,858
		----------------	------------------	------------------	-----------------
	Net book value 30 June 2017	- ---------------	32,340 ---------------	4,192 ---------------	36,532 ---------------
	31 December 2016	25	34,539	5,708	40,272
		---------------	---------------	---------------	---------------

The cost of other intangible assets comprises the estimated net present value of £7,138k of customer relationships and £2,462k of brand value at the date of acquisition.

The development costs relate to Amplify, a data analytics tool developed in-house by Agenda21.

8. Share capital

Allotted, issued and fully paid		No		Value £
Ordinary shares of 1p each		813,049,493		8,130,495
		===========		==========

At 30 June 2017, the number of shares covered by option agreements amounted to 58,752,033 plus an undetermined number with respect to Peter Scott's share options (see 2016 financial statements for details).

NOTES TO THE INTERIM REPORT

for the six months ended 30 June 2017

Shares issued in the period:

Date	Description	No shares	Price/ share	Gross share value	Cash received
			p	£	£
9 February 2017	Consideration for Freemavens	9,303,766	3.863	359,404	-
9 February 2017	Share placing	58,300,000	3.600	2,098,800	2,098,800
31 March 2017	Agenda 21 earnout payment	22,909,784	3.516	805,508	-
31 March 2017	Kameleon additional consideration	8,059,642	3.516	283,377
		-----------------------		---------------------	---------------------
	Totals	98,573,192		3,547,089	2,098,800
		===========		==========	=========

9. Related party transactions

There were no material related party transactions in the period.

10. Seasonality

The Group's activities are not subject to significant seasonal variation.

11. Holiday Pay Accrual

To comply with International Financial Reporting Standards, a holiday pay accrual has been included across all Group companies, to provide for any staff holidays accrued but not taken during the period. As all companies within the Group have a holiday year which is coterminous with the Group's financial year, this accrual is expected to reverse out by the financial year-end.

12. Earn-outs

The total value of earn out consideration (cash and shares) contained within the Balance Sheet is made up as follows:

Years payable:	2018			2019		2020
	Cash (£'000)	Shares (£'000)	Cash (£'000)		Shares (£'000)	Cash (£'000)	Shares (£'000)
Agenda21(1)	1,496	805	1,496		805	-	-
MMT(2)	2,101	1,132	2,101		1,132	2,101	1,132
Kameleon(1)	-	-	650		350	1,300	700
	£3,597	£1,937	£4,247		£2,287	£3,401	£1,832

(1) Shares issuedwill be priced at the average of the middle market closing prices in the 20-day period prior to the relevant payment date, subject to being no more than 15% above/below the price at which the immediately preceding shares were issued. For any shares issued in 2018 the immediately preceding price is 3.516 pence.

(2) Sharesissued will be priced at the higher of 3.55 pence and the average of the middle market closing prices in the 12-month period prior to the relevant payment date.

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 information is provided by RNS

The company news service from the London Stock Exchange

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