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Be Heard released an encouraging Trading Update for the year to December 2019. It indicated that the FY outlook for 2019 remains unchanged and EBITDA will be in line with market expectations. As reported at the interims results in September, the Group's digital and insight businesses continue to perform well which has offset the decline in its traditional and creative businesses. Further, the group notes it has made strong progress during the year, particularly in new business (most notably Carlsberg), improved costs control and tighter working capital management. Looking forward to 2020, the group expects a broadly similar market and industry backdrop and enters the year with a 'reasonable level' of booked business and a 'guardedly positive' outlook.
Be Heard Group
Be Heard made further operational, strategic and financial progress in the first half. Group revenues rose +5%, with further strong growth at MMT Digital (+16%) and Freemavens (+82%) partially offset by challenging trading at agenda21 (-19%) and The Corner (-23%). Tight cost control led to pre-IFRS16 EBITDA more than doubling to £1.6m while the operating margin increased to creditable 10.9%. Cash generation was encouraging and the group has made good progress in fixing its earnouts. The share element was settled in July, leaving £9.4m cash to be paid. We maintain our full year forecasts on an underlying basis, though update for IFRS16. In our view, the group is now in far better operational and financial shape than a year ago and although the shares have been disappointing performers, we retain our view that equity value can be rebuilt.
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Be Heard has released an encouraging AGM statement for Q1 indicating that revenues and EBITDA are both ahead of budget and last year, which underpins performance for the balance of 2019. The five partner companies are performing well and in line with expectations and we retain our FY19 PBT/EPS estimates for £3.1m/0.21p. At the FY18 results in March the group indicated that MMT Digital and Freemavens continue to demonstrate robust growth while the other businesses are stable and performing in line with management's expectations. The group has enjoyed a positive start to the year for new business, with notable account wins including the Chartered Institute of Taxation, Batiste and Drinkaware, while the pipeline remains 'robust'. At the FY18 results the group detailed its focus on operational effectiveness, profitability and cash generation in addition to the migration of earnout payments in 2019 to three-year loan notes to provide breathing space. We retain our view that the shares are materially undervalued on a SOTP basis given the undoubted strength of three of the group's businesses and stabilisation in the remaining two. We believe that as confidence in the group's balance sheet recovers, value will rebuild for equity shareholders.
Be Heard has issued a positive AGM trading update for Q1 citing good YoY revenue and EBITDA growth. Both results are ahead of budget. The strong start, business wins, pipeline strength and activity levels have made the Company more confident of its overall 2019 performance outlook. It is therefore perhaps no surprise that in summary the Company is confident about achieving a satisfactory result in 2019 but one that is “comfortably in line with expectations”. Investment, consistent with meeting EBITDA expectations, has been raised and should help build on momentum. From our perspective it is very encouraging to see the turnaround of Be Heard by new management delivering a thriving business that can capitalise on its potential through the strength of its offer.
Be Heard had a challenging H1 but under the new management team of Simon Pyper (CEO) and Ben Rudman (COO) the group delivered a markedly improved H2 outcome. Performance last year was mixed, with very robust growth at MMT Digital, Freemavens and Kameleon offset by disappointing results at The Corner and agenda21. However, The Corner and agenda21 are now showing evidence of stabilisation while the group has focused on operational effectiveness, profitability and cash generation. Crucially, the earnout payments due in 2019 have been migrated to three-year loan notes which provides breathing space. Encouragingly, the new year has started brightly with Q1 set to perform ahead of budget, which underpins our revenue and EBITDA forecasts. We view Be Heard as materially undervalued on a SOTP basis given the undoubted strength of three of the group's businesses and stabilisation in the remaining two. We believe that as confidence in the group's balance sheet recovers, value will rebuild for equity shareholders.
After some significant reorganisation work EBITDA leapt in H2 to £2.4m driving full year EBITDA up to £3.0m from £1.6m in the prior year and in line with our forecast. With trading on track (Q1 ahead of budget) based on a robust macro-aware budget we are encouraged at this early stage in the year. The new CEO has delivered a huge turnaround leaving the shares looking fundamentally undervalued.
The Company has issued an update today signalling a good trading performance for full year 2018. In combination with strong cost controls this has boosted EBITDA and results will be in line with market expectations and we maintain our revenue and profit forecasts. We maintain profit expectations for 2019 and 2020 given current trading and the cost control measures put in place. New management has tackled historic issues decisively and is responding to conditions. This should help continue re-building confidence in Be Heard, which has an attractive commercial business model, but had been weak on execution. With the shares on a P/E of just 5.0x for 2019.
Be Heard Group, the digital marketing services group, issued a trading update for the year ending 31 December 2018. The Group has reported a good trading performance alongside strong cost control in H2 resulting in Adjusted EBITDA trading in-line with market expectations for FY18. We anticipate continued margin improvement in FY19E.
Interim results have met expectations. Headline results show strong growth with revenues up 18% on a LFL basis. Profitability has leapt, with group EBITDA up over 400%. Net debt was better than expected with a significant improvement in working capital. In addition to the £2.0m of cost savings now in place, progress is being made with regard to the centralisation of business support functions. The centralisation of the business development teams targeting winning and growing larger clients is also progressing. Following the recent management changes, the new executive team has initiated a review of the operations with a view to making sure the business can leverage its proposition by becoming more “relevant, authentic and distinct”. While market conditions are soft the group still expects healthy growth in H2 given current visibility. This underpins our FY18 expectation and with the cost savings set to benefit in full next year we maintain our FY19 forecasts as well.
Be Heard Group (BHRD.L) today announced H1 2018 results demonstrating proof of concept and a strong business model that should lead to strong future revenue growth. Management have announced a new ‘Be Heard 2.0’ initiative to improve cashflow, margins and profitability. The appointment of Simon Pyper as CEO and elevation of Ben Rudman to the Board strengthens BHRD’s offering and we take confidence from their impressive track records. We believe in the Group’s new strategy and maintain our 2.5p target price.
H1 revenue met our expectations with LFL of growth of 15% driven by client wins and expanding activity with existing clients. Total growth, with significant acquisition contributions, was c70%. Persistent cost pressure related to pitching, service capacity and client spend volatility has impacted the margin, meaning a shortfall on profits. The Company has responded by taking volume related and structural cost measures which will help H2’2018 and 2019. Costs have been reshaped after a thorough review to allow for a better balance of efficiency and growth capacity. Revenue visibility analysis has yielded only modestly lower full year revenue guidance and the group is expected to continue to grow very rapidly. The net impact of these changes is EBITDA reductions of 24.6% for FY18 and 15.4% for FY19. We have also taken a simple, but we believe realistic approach for now, to adjusting earn-out payments by £1m. Be Heard is delivering on its growth strategy and now has significantly improved controls to deal with managing this growth.
Be Heard Group (BHRD.L) today announced a pre-close trading update for the six months to 30 June 2018. BHRD achieved strong top-line growth but management have revised earnings as margins will likely be lower in FY18 due to certain increased costs and greater contingencies. We maintain our recommendation with a new 2.5p target price.
Be Heard (BHRD LN) H1 shows strong revenue growth, but profit shortfall | dotdigital Group (DOTD LN) Another year of strong growth & cash generation | EKF Diagnostics (EKF LN) Manufacturing agreement with Oragenics Inc | Goals Soccer Centres (GOAL LN) Profit warning | LiDCO Group (LID LN) UK distribution deal with Maicuff Technology | Nichols (NICL LN) Solid interims with a 3% PBT beat | Speedy Hire (SDY LN) In line Q1 update, with ROCE continuing to move forwards |
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Be Heard is building a group of digital marketing specialists, with five partner companies increasingly working together in a process that should become smoother once they are co-located. Last year’s trading issues have been resolved and new business momentum is good, with some pitches now carried out under the group banner. The management team has been reconfigured and responsibilities clarified, with unified procedures and financial reporting being put in place. Consensus sees strong revenue growth in FY18e, with operating margins starting to build, which should then be reflected in an improving rating.
Be Heard Group (BHRD.L) today announced FY17 results in line with their January statement. Net revenue grew 106% to £19.6m (DCe £18.2m) with 25% organic growth. The acquisitions made in FY17 and the increasing demand for integrated, end-to-end marketing services creates greater opportunity for BHRD to grow its market share. In FY17, 30% of revenue derived from clients using two or more BHRD partners (FY16: c.2%). The Group experienced good new business momentum with 46 client wins and management is now focused on driving organic growth and maximising collaboration among the five partner agencies. The shares appear undervalued trading on just 6.45x P/E in the current year and we maintain our “Buy” recommendation.
Be Heard (BHRD LN) Win momentum maintained into 2018 | Bodycote (BOY LN) 15 year contract signed with Rolls Royce | City of London Investment Group (CLIG LN) FuM +1.6% in Q3, no material net inflows but growth in smaller strategy | IFG Group (IFP LN) All change! New leadership team | Strategy The latest ONS data shows the first real wage growth for a year | N Brown Group (BWNG LN) PREVIEW – prelims due on Thursday 26 April
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Be Heard (BHRD LN) CFO appointment | Churchill China (CHH LN) Executing against LT targets and modest FY18 upgrades | Earthport (EPO LN) Positive outlook despite challenging period | Halfords Group (HFD LN) CFO departure disappointing but Halfords can attract new talent | Mobile Streams (MOS LN) Subscriber growth has picked up again | T. Clarke (CTO LN) High quality focus paying dividends | Trend spotting - Synchronicity II Better H2 for hard hit consumer and retail stocks?
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Be Heard issued a trading update on 4 January 2018 demonstrating strong organic revenue growth of +24% in FY17. BHRD added 46 new clients and saw its first cross group customer in the year. However, due to timing factors on a number of contracts, the company will fall short of market expectations. The recent acquisitions and client wins should ensure that the company is on target for a substantial increase in adj EBITDA in FY18 creating a buying opportunity.
The update was disappointing from a profit perspective, but the root cause was a positive; faster than expected revenue growth leading to faster than expected cost growth. Revenues are growing fast because the business has an attractive offer that is gaining cross-selling success. The Company has also just won its first group level contract, meaning that it is pre-approved to supply any services chosen. Looking forward we lift our revenue assumption for 2018 and maintain our profit expectation. This builds in a little extra cost buffer, something we see as important as the group deals with the practical pressure of fast growth. The Company has also announced board changes. Executive Chairman Peter Scott becomes CEO, NED David Morrison becomes non-executive Chairman and the Company intends to split the CFO/COO roles once they have recruited a new CFO (Robin Price to retain COO role).
Be Heard (BHRD LN) Revenues driven by strong offer | Brooks Macdonald Group (BRK LN) 7% growth in FuM on strong flows, in line | Centaur Media (CAU LN) Trading update
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Be Heard has issued its January trading update indicating organic revenue growth of 24% for 2017. This implies a c5% beat. Given the recent win rate management had expected this to turnout even more strongly but timing factors mean that these revenues will fall into 2018. Building out resource to support this very fast growth rate has however taken its toll in December and led to a mismatch on revenue and costs. While we expect to reduce our forecast EBITDA for 2017 we do not expect to make any changes to our 2018 assumptions given the client win momentum and healthy visibility. The Company has also announced board changes. Executive Chairman Peter Scott becomes CEO, NED David Morrison becomes non-executive Chairman and the Company intends to split the CFO/COO roles once they have recruited a new CFO (Robin Price to retain COO role). While in the short term there will be some disappointment on 2017 profitability the underlying factor is strong growth (something which agency groups do struggle with in terms of cost planning when growth rates are very high) and from this perspective this demonstrates that the strategy fundamentals are sound in our view.
Be Heard (BHRD LN) Revenues ahead but costs timing mismatch | Cambria Automobiles (CAMB LN) Exciting new luxury brand makes 4 new franchise wins in just 2 months | Churchill China (CHH LN) Positive year-end trading update | Futura Medical (FUM LN) Additional positive data published on MED2002 | MJ Gleeson (GLE LN) Striking acceleration in Gleeson Homes completions | Vectura Group (VEC LN) Trading and strategy update | Walker Greenbank (WGB LN) Trading in line with reduced forecasts; Anstey defers £0.4m profit to Q1
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After a difficult period in H1 the Kameleon business has been reorganised and the Company updates today by indicating it anticipates it will return to profit in calendar/fiscal Q4 on the back of business wins. Management has been reorganised with the CEO leaving and the Chief Strategy Officer (and co-founder) taking over the CEO role. The business has been relocated to the Frith Street office where Agenda21 operates and which is also group HQ. This should help build on the success that Kameleon has enjoyed in pitching with group companies. From a financial perspective the effect of the CEO leaving is to half the £3m earn-out value assumption.
The Company produced an update yesterday confirming two main points. Firstly that executive director Ian Maude has resigned as he is planning to relocate, with his partner, to Sweden; and secondly flagging the second half business performance. Ian Maude’s Group Development Director role will be taken up by Richard Costa D’Sa, who is Chief Growth Officer. The Company has highlighted that 10 clients now use two or more group companies and that the group has won 36 new clients so far this year. Be Heard has great momentum in executing its strategy. Its focus on being able to deliver complete solutions to help clients improve their performance in digital marketing is proving highly attractive and we expect the Company to continue to make further significant commercial headway in 2018.
Be Heard (BHRD LN) Trading on track | Curtis Banks Group (CBP LN) Upside from strategic initiatives not yet recognised
Be Heard Group Curtis Banks Group PLC
Over the last two years Be Heard has built an attractive commercial offering that is finding excellent traction with 36 new client wins YTD. Moreover its ability to execute against its cross-sell objective has been very successful. In H1 23% of group revenue was derived from customers using two or more group companies. This is an astounding start given some wins are not even at full run rate. The number of multi-company clients has risen to ten (H1:6) and seems likely to continue to rise as the group level sell has commenced and already been successful under a new Chief Growth Officer. The Company is now seeking to scale further with another acquisition. This acquisition boosts earnings and enhances financial scale, as well as helping deepen the quality of the offering and increase cross-selling potential. Subject to approval and completion it lifts 2018 and 2019 EPS by 14.0% and 13.6%. The transaction will be financed via a placing of £2.2m of shares and issue of £4m convertible loan notes. The transaction is conditional on General Meeting approval.
Be Heard Group, the digital marketing services group, has announced this morning that it has been selected by Addison Lee to help drive the business' expansion in the UK. Be Heard's digital media and analytics agency agenda21 has been appointed lead digital marketing agency, effective immediately. Addison Lee is one of the world's largest managed car operations, providing a premium service through its' fleet of 5,000 vehicles. The company counts 80 percent of the FTSE 100 Index as customers, provides up to 30,000 rides a day in London alone, and is investing in new business, technology and fleet as it looks to grow both in the UK and internationally.
The outstanding point from the results is that the cohesive offering has gained incredible traction. 23% of group revenues in H1 were from customers taking services from two group companies. The proposition strategy is delivering and the outlook for further development is excellent. So much so that Be Heard is having to accelerate capacity investment and has added a group level Chief Growth Officer to support the selling of the multi-service offering. The trading outlook is unsurprisingly positive with the group having increased its level of full year revenue visibility to over 85% (from 73% in August) and the number of multi-service clients rising to eight. We maintain our expectations, flag the attractive valuation and reiterate our belief in the fundamental commercial strength of the Be Heard proposition in a poorly served, difficult and complex digital marketing environment.
Be Heard is a digital marketing services group with a no-nonsense future focused approach to delivering services clients need for the modern online environment. It offers the key components of the digital marketing mix that are fundamental to execution and has the ability to deliver them in integrated form making marketing management simpler and lower risk. The company has significant scale and by year end will have c250 digital specialists offering services on a standalone and integrated basis. While there is a plethora of niche digital marketing services providers, clients typically want projects to be easily and consistently executed rather than having to oversee how competitive suppliers work together. Be Heard is set up to meet clients needs in this way. Be Heard stands out from the marketing services pack due to its end-to-end solution offering that enables it to do everything from devising and consulting on strategy all the way through to generating e-commerce transactions.
Net revenues are indicated to have risen 155% to £8.4m in H1 with the largest and longest owned units, agenda21 (+21%) and MMT Digital (+44%), leading the organic charge with many new business wins as well as additional existing client work. The smallest unit, 75% owned Freemavens, had an understandable blip in H1 due to the election but is already back on track. Visibility is excellent with 73% of current budget already billed or committed and the Company is justifiably confident on the outlook for the full year. Even with this in mind perhaps the strongest indicator for the future though is the progress on cross-group work. Be Heard is very young (only 2 of the 4 agencies have been in the group a year) but it is now serving 6 clients with 2 or more of its units. This goes right to the heart of the power of the Be Heard proposition, the laser-like focus on delivering through a range of targeted services what matters to clients in the modern digital world, and critically, return on marketing investment. MMT has been so successful that the group substantially has and is boosting its investment with headcount now expected to double to c130. The group has also added a Chief Growth Officer targeting cross-group work (which is typically more lucrative than new client work) and additional finance resource. The shares have been soft ahead of the update and should respond well to the excellent progress and modest valuation (11.8x P/E based on consensus).
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