Be Heard profits to be below forecasts

Be Heard, the digital marketing services group, has warned that profitability for 2017 would be below market forecasts due to a number of unexpected factors.

The group said revenue growth remained strong, with the second half of 2017 expected to outperform the first half significantly.

It said that across the group the organic revenue growth of the operating companies in 2017 was 24% up on 2016.

A trading update said: '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.

But it said that while annualised revenues and new business wins provided an excellent platform for 2018, profitability for 2017 was expected to be below market forecasts.

It said: ' 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.'

Be Heard said that since launch two years ago, it had built an integrated marketing services group via acquisition.

Phase one of the strategy - delivering a platform to offer connected, digital marketing services - was now well advanced.

It said: '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.