Be Heard Group PLC (LON:BHRD), the digital marketing services group, announces a trading update for the year ending 31 December 2017 and the evolution of its management structure.
Trading update
Revenue growth has remained strong, with the second half of 2017 expected to outperform the first half significantly. Across the Group the organic revenue growth of the operating companies in 2017 is 24% up on 2016.
This strong level of organic growth underlines the market opportunity for Be Heard to offer connected solutions to help clients optimise the digital customer journey. The Group won 46 new clients in 2017, including Addison Lee, Diageo, Dreams, GSK, Mastercard, Pittsburgh Paint Group, Pret a Manger, Travis Perkins, Unilever Food Solutions and Vodafone Enterprise, with 10 clients now served by two or more Be Heard companies.
Whilst annualised revenues and new business wins provide an excellent platform for 2018, profitability for 2017 is expected to be below market expectations due to a number of unexpected factors. MMT, agenda21 and Freemavens experienced a reduction in activity towards the end of the year and some deferral, to 2018, of existing and new contracts. As these emerged very late in the year the operations were unable to adjust costs and thus lower revenue resulted in lower margins. In addition, MMT suffered cost overruns on a substantial contract and although this has now been addressed it may result in a write-off of certain non-recoverable costs in 2017.
As previously announced, Kameleon has continued its recovery, was profitable in the final quarter of 2017, and we expect it to trade profitably through 2018.
The deferral of certain contracts from the last quarter of 2017 to the first quarter of 2018, means that the Group enters the new year with a strong pipeline and Management remain confident about the trading outlook for 2018.
Management strengthened
Since launch two years ago, Be Heard has built an integrated marketing services group via acquisition. Phase one of the strategy – delivering a platform to offer connected, digital marketing services – is now well advanced. Having completed five acquisitions in two years, the group’s focus moves to integrating these operations to serve clients more effectively and thus drive organic growth.
To oversee the next phase, and support the demands of the Group which is now employing over 300 people, we have strengthened the management structure. Peter Scott will become Group Chief Executive with immediate effect, having served as Executive Chairman since Be Heard’s launch in November 2015. Having created the Group and driven the first phase of acquisition-led growth, Peter’s focus will shift to the integration and development of Be Heard’s operations and offering.
At the same time and recognising the requirements of a growing, AIM-listed company, David Morrison has been appointed as non-executive Chairman with immediate effect, having served as a non-executive Director since August 2017.
Additionally, the Board has decided to separate the roles of Chief Financial Officer and Chief Operating Officer, and will look to appoint a new Chief Financial Officer in the next few months. Until an appointment is made, Robin Price will continue in both roles.
Looking forward, Be Heard expects to house its specialist London-based digital teams from its five partner agencies under one roof within the next 12 months. This will further enable Be Heard’s talent to collaborate seamlessly to give clients a truly differentiated offering in a fast changing market place.
David Morrison, Chairman of Be Heard, said:
“Be Heard has made great strides since its launch in 2015. As a result of our five acquisitions, we have created a connected service offering and begun to see the benefits of our integrated approach coming through in the last year. The focus is now on continued integration and generation of organic growth. I look forward to working with senior management to deliver value for shareholders at an exciting time for the Group.
“Whilst we expect profitability in 2017 to be below expectations, Be Heard’s new business momentum is proof of the demand for fast-moving, agile digital specialists operating seamlessly to deliver a better service to clients in today’s increasingly complex market place. We see this trend gathering pace and remain confident of further progress in 2018.”
Gresham House Strategic PLC has a 9.5% ownership of Be Heard Group PLC correct as of 31 December 2017 month end NAV announcement, released 2 January 2017
