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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Next Fifteen Communications Group Plc | LSE:NFC | London | Ordinary Share | GB0030026057 | ORD 2.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 799.00 | 795.00 | 803.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMNFC
Next Fifteen Communications Group plc
Interimresults for the six months ended 31 July 2016
Next Fifteen Communications Group plc ("Next 15" or the "Group"), the digital communications group, today announces its interim results for the six months ended 31 July 2016.
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Headline financial results for the six months to 31 July 2016
Six months ended Six months ended Growth
31 July 2016(Unaudited) 31 July 2015 %
(Unaudited)
Revenue GBP80.5m GBP61.8m 30.3
EBITDA GBP12.8m GBP8.5m 50.6
Operating Profit GBP11.1m GBP7.2m 54.2
Operating Profit Margin 13.8% 11.7%
PBT GBP10.6m GBP7.2m 47.2
Diluted EPS 10.5p 7.3p 43.8
Cash generated from operations GBP14.7m GBP7.4m 98.7
Dividend per share 1.5p 1.2p 25.0
Net debt GBP12.2m GBP8.9m
Headline results represent the performance for the 6 months to 31 July 2016 adjusted to exclude acquisition related costs, one-off and acquisitionrelated share based payment charges, amortisation and certain other non-recurring items. These are reconciled to the statutory numbers in note 3.
Highlights
-- Group organic revenue growth of 12.8% with organic growth of 17.2% in
the US
-- Headline PBT up 47.2% to GBP10.6m
-- Headline operating profit margin increased to 13.8%
-- Headline diluted earnings per share increased by 43.8% to 10.5p
-- Cash generated from operations increased by 98.7% to GBP14.7m
-- Significant clients wins including Tesco, Softbank Robotics and
Johnson & Johnson
-- Publitek and Twogether acquired during period and performing ahead of
expectations
-- Acquisition of Pinnacle announced today
Commenting on the results, Chairman of Next 15, Richard Eyre said:
Next 15 has had a very encouraging first half with headline profit before tax up almost 50% on revenues up over 30% at a record operating margin of 13.8%. These results have been driven by continued strong organic revenue growth in our North American business of 17.2%. However, we have also seen significant growth in profitability in all of our other regions, due to a combination of organic revenue growth, acquisitions and efficiency measures. Looking forward the Group is well placed to meet its expectations and as such the Board has increased the interim dividend by 25% to 1.5p per share.
Statutory financial results for the six months to 31 July 2016
Six months ended Six months ended
31 July 2016(Unaudited) 31 July 2015
(Unaudited)
Revenue GBP80.5m GBP61.8m
PBT GBP4.2m GBP4.2m
Diluted EPS 3.5p 3.9p
For further information contact:
Next Fifteen Communications Group plcTim Dyson, Chief Executive Officer+1 415 350 2801
Peter Harris, Chief Financial Officer+44 (0) 20 7908 6444
Investec Bank plcKeith Anderson, Matt Lewis, Dominic Emery+44 (0) 20 7597 4000
Bite Communications LimitedTony Faccenda+44 (0) 20 8834 3485NextFifteen@biteglobal.com
Notes:
Headline results
In order to help shareholders' understanding of the underlying performance of the business, the headline results have been presented based on the unaudited 6-month periods to 31 July 2016 and 2015.
The 6-month results are reconciled to statutory results within note 3 of this report.
The term 'headline' is not a defined term in IFRS. The items that are excluded from headline results include acquisition related costs, one-off and acquisition related share based payment charges, amortisation and certain other non-recurring items.
Organic revenue growth
Organic revenue growth is defined as the revenue growth at constant currency excluding acquisitions made since the start of the prior reporting period.
This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation.
Chairman and Chief Executive's Statement
Next 15 has made a strong start to the financial year with headline profit before tax up 47% to GBP10.6m, headline EBITDA up 51% to GBP12.8m and revenues up 30% to GBP80.5m. These results have been driven by continued, strong, organic revenue growth in our North American business of 17.2%. We continue to benefit from a reduction in our underlying tax rate. This, coupled with our profit growth, has resulted in a 44% improvement in our headline diluted earnings per share to 10.5p.
The Group has also announced the acquisition of Pinnacle, a technical content and digital marketing agency, which will be managed as one business alongside Publitek. The initial consideration for the acquisition is approximately GBP4.4m, of which approximately GBP4.0m is to be satisfied in cash with the balance to be satisfied by the issue to the vendors of 119,706 new ordinary shares in Next 15. As part of this acquisition the Group will settle GBP1.7m of the Publitek contingent consideration early in order to align the earn-outs of these two businesses.
The Group reported a statutory profit before tax of GBP4.2m compared with a statutory profit before tax of GBP4.2m in the prior period, while reported diluted earnings per share were 3.5p (2015 3.9p).
Looking forward, the Group is well placed to meet its expectations and as such the Board has increased the interim dividend by 25% to 1.5p per share.
Regional Headline Performance
Our US businesses have again performed strongly, led by our Outcast, M Booth, Beyond and Bite agencies. In total, our US revenues grew by 27% to GBP50.7m from GBP39.9m, which equated to an organic growth rate of 17.2%. US operating profit was GBP10.2m compared with GBP8.4m in the comparable six-month period. Operating margins have remained strong at 20.0% but were diluted by the acquisition of Story Worldwide, which made a loss during the six-month period.
The progress outside the US has continued since the end of the last full financial year. The UK business saw total revenue growth of 56% and operating profit growing to GBP3.6m from GBP1.5m as the operating margin improved from 11.5% to 17.8%. This was the result of strong performances by Morar and Encore in particular. The acquisitions of Publitek and Twogether in the period should see the UK business continue to deliver strong growth in the year ahead.
In EMEA and APAC we have seen a continued improvement in both revenue and profitability. EMEA has rebounded from a loss in the same period last year to deliver a 4.8% profit margin with 4.0% organic growth. APAC has delivered 6.6% organic growth and has seen margins improve from 13.2% to 13.5%.
Continued Investment
This has been another active period for business investment for the Group. At the end of the prior year we acquired the Digital Creative agency ODD, and in the current period we have acquired Twogether, a B2B digital content agency, and Publitek, a technical content marketing agency. All three businesses are UK-based but will be expanded in to the US market in the coming year. As referenced above, the Group has also just announced the acquisition of Pinnacle, a complimentary business to Publitek. These two firms will now be managed as one business going forwards. For the year ended March 31 2016, Pinnacle had revenues of GBP2.2m and adjusted profit before tax of GBP1.1m.
In addition to the initial consideration referenced above, further consideration may become payable based on the performance of Pinnacle in the next five years. Any deferred consideration that becomes payable may be satisfied by cash or up to 25 per cent in new ordinary shares, at the option of Next 15. The acquisition is expected to be earnings enhancing for the Group in the current financial year.
Like prior investments, the main benefits of all these investments should start to come through in the next financial year. We continue to actively review other investment opportunities with a focus on our chosen areas of content, insight and technology.
Balance Sheet and Net Debt
The Group generated cash flow of GBP14.7m from its trading operations during the six months to 31 July 2016 and ended the period with net debt of GBP12.2m.
Dividend
The Board has declared an interim dividend of 1.5p per share, which is a 25% increase on the interim dividend for last year. This will be paid to shareholders on 25 November 2016 who are registered on 28 October 2016.
Current Trading and Outlook
As stated earlier, the Group has made a good start to the financial year ending 31 January 2017. Current trading is encouraging with good activity levels across the Group and the benefit of recent acquisitions coming through. The Group is also benefitting from the relative strength of the US dollar. Given the Group derives 63% of revenues from its US businesses we anticipate a noticeable benefit from foreign exchange during the next six months. As a result of these factors, the board is confident that the Group is on track to meet expectations for the full year.
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
HEADLINE RESULTS: INCOME STATEMENT
Six months ended Six months ended
31 July 2016(Unaudited) 31 July 2015
GBP'000 (Unaudited)
GBP'000
Revenue 80,471 61,759
Total operating charges (67,655) (53,272)
EBITDA 12,816 8,487
Depreciation and Amortisation (1,737) (1,241)
Operating profit 11,079 7,246
Net finance expense (281) (200)
Share of (losses) / profits (163) 177
of associate
Profit before income tax 10,635 7,223
Tax (2,327) (1,628)
Retained profit 8,308 5,595
Profit Attributable to Owners 8,064 5,215
Profit Attributable 244 380
to Minorities
Weighted average number 71,039,309 64,654,163
of ordinary shares
Dilutive weighted 76,480,282 71,257,417
average number
of ordinary shares
Adjusted earnings per share 11.4p 8.1p
Diluted adjusted earnings 10.5p 7.3p
per share
HEADLINE RESULTS: CASH FLOW
Six months ended Six months ended
31 July 2016(Unaudited) 31 July 2015
GBP'000 (Unaudited)
GBP'000
Cash and cash equivalents at 14,132 9,315
beginning of the period
Net cash from operating 15,430 8,670
activities
Income taxes paid (692) (1,301)
Net cash outflow from (19,432) (11,107)
investing activities
Net cash inflow from 10,333 5,568
financing activities
Exchange gains / (losses) 830 (325)
on cash held
Cash and cash equivalents 20,601 10,820
at end of the period
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
HEADLINE RESULTS: SEGMENTAL (Unaudited)
UK GBP'000 Europe & US GBP'000 Asia Head Total GBP'000
Africa Pacific Office
GBP'000 GBP'000 GBP'000
6 months
ended
31 July
2016
Revenue 19,977 3,320 50,706 6,468 - 80,471
Operating 3,555 160 10,161 874 (3,671) 11,079
profit
Operating 17.8% 4.8% 20.0% 13.5% - 13.8%
profit
margin
Organic 2.9% 4.0% 17.2% 6.6% - 12.8%
revenue
growth
6 months
ended
31 July
2015
Revenue 12,799 3,207 39,917 5,836 - 61,759
Operating 1,478 (113) 8,355 768 (3,242) 7,246
profit
Operating 11.5% (3.5)% 20.9% 13.2% - 11.7%
profit
margin
Organic (0.9)% (9.0)% 10.3% (8.4)% - 4.1%
revenue
growth
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTH PERIODED 31 JULY 2016
Six monthsended Six monthsended 12 monthsended
31 July 2016(Unaudited) 31 July 2015 31 January 2016(Audited)
GBP'00094,625 (Unaudited) GBP'000151,658
GBP'00070,696
Note
Billings
Revenue 2 80,471 61,759 129,757
Staff costs 54,559 42,877 92,721
Depreciation 1,564 1,098 2,348
Amortisation 2,550 1,344 3,796
Other operating 15,167 11,658 22,463
charges
Total operating (73,840) (56,977) (121,328)
charges
Operating profit 2 6,631 4,782 8,429
Finance expense 6 (2,469) (1,463) (4,905)
Finance income 7 163 734 2,059
Share of (losses) (163) 177 (5)
/ profits
of associate
Profit before 2,3 4,162 4,230 5,578
income tax
Income tax expense 4 (1,273) (1,062) (1,116)
Profit for the period 2,889 3,168 4,462
Attributable to:
Owners of the parent 2,645 2,788 3,992
Non-controlling 244 380 470
interests
2,889 3,168 4,462
Earnings per share
Basic (pence) 8 3.7p 4.3p 6.0
Diluted (pence) 8 3.5p 3.9p 5.6
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 31 JULY 2016
Six monthsended Six monthsended 12 monthsended
31 31 July 2015 31 January2016
July 2016(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Profit for 2,889 3,168 4,462
the period
Other
comprehensive
income
/ (expense):
Items that
may be
reclassified
into profit
or loss
Exchange 2,583 (1,379) 1,585
differences
on translating
foreign
operations
Net investment (753) 237 (662)
hedge
1,830 (1,142) 923
Amounts
reclassified
and reported
in the Income
Statement
Net Investment - - 4
Hedge
Other - (1,142) 927
Comprehensive
(expense)
/ income for
the period
Total 4,719 2,026 5,389
comprehensive
income
for the period
Attributable
to:
Owners of the 4,475 1,646 4,919
parent
Non-controlling 244 380 470
interests
4,719 2,026 5,389
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED BALANCE SHEET AS AT 31 JULY 2016
31 July 2016(Unaudited) 31 July 2015 31 January 2016(Audited)
(Unaudited)
Note GBP'000 GBP'000 GBP'000
Assets
Property, plant 15,548 7,275 9,988
and equipment
Intangible 73,574 47,500 53,555
assets
Investment in equity 485 877 465
accounted associate
Trade 736 276 235
investment
Deferred tax 4,693 5,538 6,485
asset
Other 1,034 989 702
receivables
Total non-current 96,070 62,455 71,430
assets
Trade and other 42,928 33,616 40,924
receivables
Cash and cash 9 20,601 10,820 14,132
equivalents
Corporation 1,317 729 1,097
tax asset
Total current 64,846 45,165 56,153
assets
Total 160,916 107,620 127,583
assets
Liabilities
Loans 9 31,231 19,669 20,683
and borrowings
Deferred tax - 159 -
liabilities
Other 6,156 56 5,739
payables
Provisions 54 341 450
Contingent 10 9,816 4,902 5,701
consideration
Share purchase 10 2,740 3,572 2,225
obligation
Total non-current 49,997 28,699 34,798
liabilities
Loans 9 1,507 - -
and borrowings
Trade and other 40,527 32,301 34,088
payables
Provisions 2,499 - 989
Corporation tax 1,451 770 765
liability
Share purchase 10 - 181 1,509
obligation
Contingent 10 5,210 2,420 2,643
consideration
Total current 51,194 35,672 39,994
liabilities
Total 101,191 64,371 74,792
liabilities
TOTAL NET 59,725 43,249 52,791
ASSETS
Equity
Share 1,804 1,639 1,763
capital
Share premium 24,976 13,678 21,523
reserve
Foreign currency 7,693 2,146 5,110
translation
reserve
Other (1,519) 129 (766)
reserves
Retained 25,847 26,116 24,418
earnings
Total equity 58,801 43,708 52,048 attributable to owners of the parent Non-controlling 924 (459) 743 interests TOTAL 59,725 43,249 52,791 EQUITY
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTH PERIODED 31 JULY 2016
Sharecapital Sharepremiumreserve Foreigncurrencytranslationreserve Otherreserves1 Retainedearnings Equityattributableto owners ofthe Company Non-controllinginterests Totalequity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 February 2015 (unaudited) 1,545 8,272 3,525 (108) 24,741 37,975 (773) 37,202
Profit for the period - - - - 2,788 2,788 380 3,168
Other comprehensive income - - (1,379) 237 - (1,142) - (1,142)
/ (expense) for theperiod
Total comprehensive income - - (1,379) 237 2,788 1,646 380 2,026
/ (expense) for theperiod
Shares issued on acquisitions 17 1,178 - - - 1,195 - 1,195
Shares issued on placing 77 4,228 - - - 4,305 - 4,305
Movement in relation to share-based payments - - - - 1,104 1,104 - 1,104
Movement on reserves for - - - - (2,517) (2,517) 2,517 -
non-controllinginterests
Non-controlling interest on acquisition - - - - - - (2,236) (2,236)
Non-controlling interest dividend - - - - - - (347) (347)
At 31 July 2015 (unaudited) 1,639 13,678 2,146 129 26,116 43,708 (459) 43,249
Profit for the period - - - - 1,204 1,204 90 1,294
Other comprehensive income - - 2,964 (895) - 2,069 - 2,069
/ (expense) for theperiod
Total comprehensive income - - 2,964 (895) 1,204 3,273 90 3,363
/ (expense) for theperiod
Shares issued on satisfaction 38 - - - - 38 - 38
of vested shareoptions
Shares issued on acquisitions 2 153 - - - 155 - 155
Shares issued on placing 84 7,692 - - - 7,776 - 7,776
Movement in relation to share-based payments - - - - 170 170 - 170
Deferred tax on share-based payments - - - - 239 239 - 239
Dividends to owners of the parent - - - - (2,441) (2,441) - (2,441)
Movement due to ESOP share purchases - - - (38) - (38) - (38)
Movement due to ESOP share option exercise - - - 38 - 38 - 38
Movement on reserves for - - - - (977) (977) 977 -
non-controllinginterests
Share options issued on acquisition - - - - 107 107 - 107
of subsidiary
Non-controlling interest arising on acquisition - - - - - - 348 348
Non-controlling interest dividend - - - - - - (213) (213)
At 31 January 2016 (audited) 1,763 21,523 5,110 (766) 24,418 52,048 743 52,791
Profit for the period - - - - 2,645 2,645 244 2,889
Other comprehensive income - - 2,583 (753) - 1,830 - 1,830
/ (expense) for theperiod
Total comprehensive income - - 2,583 (753) 2,645 4,475 244 4,719
/ (expense) for theperiod
Shares issued on satisfaction 3 - - - - 3 - 3
of vested shareoptions
Shares issued on acquisitions 38 3,453 - - - 3,491 - 3,491
Movement in relation to share-based payments - - - - 1,498 1,498 - 1,498
Dividends to owners of the parent - - - - (2,165) (2,165) - (2,165)
Movement on reserves for - - - - (549) (549) 549 -
non-controllinginterests
Non-controlling interest dividend - - - - - - (612) (612)
At 31 July 2016 (unaudited) 1,804 24,976 7,693 (1,519) 25,847 58,801 924 59,725
1 Other reserves include ESOP reserve, hedging reserve,
share purchase reserve and merger reserve.
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE SIX MONTH PERIODED 31 JULY 2016
Six months Six months ended Twelve
ended 31 July 2015 monthsended
31 (Unaudited) 31
July January
2016(Unaudited) 2016(Audited)
GBP'000 GBP'000 GBP'000
Cash flows from
operating
activities
Profit for 2,889 3,168 4,462
the period
Adjustments for:
Depreciation 1,564 1,098 2,348
Amortisation 2,550 1,344 3,796
Finance expense 2,469 1,463 4,905
Finance income (163) (734) (2,059)
Share of loss / 163 (177) 5
(profit) from
equity
accountedassociate
Loss on sale 139 49 156
of property,
plant
and equipment
Income tax 1,273 1,062 1,116
expense
Share-based 1,025 1,362 1,393
payment
charge
Net cash inflow 11,909 8,635 16,122
from
operating
activities
before changes
in
working capital
Change in trade 3,363 (2,427) (6,740)
and
other receivables
Change in trade (858) 2,819 6,447
and
other payables
Change 1,016 (357) 459
in provision
3,521 35 166
Net 15,430 8,670 16,288
cash generated
from operations
before tax
outflows
Income taxes paid (692) (1,301) (2,954)
Net cash inflow 14,738 7,369 13,334
from
operating
activities
Cash flows from
investing
activities
Acquisition of (9,718) (1,647) (4,190)
subsidiaries
and trade
and assets,
net ofcash
acquired
Payment of (2,216) (6,461) (9,160)
contingent
and
deferred
consideration
Purchase of (662) - -
investment
Acquisition of (6,453) (2,676) (6,411)
property,
plant
and equipment
Proceeds on - - 7
disposal
of property,
plant
andequipment
Acquisition of (95) (171) (562)
intangible
assets
Net movement (332) (177) 109
in long-term
cash deposits
Interest received 44 25 49
Net cash outflow (19,432) (11,107) (20,158)
from
investing
activities
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOW (Continued)
FOR THE SIX MONTH PERIODED 31 JULY 2016
Six months ended Six months ended Twelve monthsended
31 July 2016(Unaudited) 31 July 2015 31
(Unaudited) January 2016(Audited)
GBP'000 GBP'000 GBP'000
Cash flows from
financing
activities
Proceeds from sale - 4,480 12,540
of own shares
Issue costs - (175) (457)
on issue
of ordinary shares
Capital element (29) (21) (23)
of finance
lease rental
repayment
Net movement 11,302 1,857 2,871
in bank
borrowings
Interest paid (328) (226) (471)
Dividend and (612) (347) (560)
profit
share paid
to
non-controllinginterest
partners
Dividends paid to - - (2,441)
shareholders
of the parent
Net cash inflow 10,333 5,568 11,459
from
financing
activities
Net increase 5,639 1,830 4,635
in cash
and
cash equivalents
Cash and cash 14,132 9,315 9,315
equivalents
at
beginning of
the period
Exchange gains 830 (325) 182
/ (losses)
on cash held
Cash and cash 20,601 10,820 14,132
equivalents
at end of the
period
NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHSED 31 JULY 2016
1)BASIS OF PREPARATION
The financial information in these results has 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 results are those the Group has applied in its financial statements for the period ending 31 January 2016. The comparative financial information for the period ended 31 January 2016 has been derived from the audited statutory financial statements for that period. A copy of those statutory financial statements has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.
2)SEGMENT INFORMATION
Measurement of operating segment profit
The Board of Directors assesses the performance of the operating segments based on a measure of adjusted operating profit before intercompany recharges, which reflects the internal reporting measure used by the Board of Directors. This measurement basis excludes the effects of certain acquisition related costs and goodwill impairment charges. Other information provided to them is measured in a manner consistent with that in the financial statements. Head office costs relate to group costs before allocation of intercompany charges to the operating segments. Intersegment transactions have not been separately disclosed as they are not material. The Board of Directors does not review the assets and liabilities of the Group on a segmental basis and therefore this is not separately disclosed.
UKGBP'000 Europe and Africa USGBP'000 Asia Pacific Head Office TotalGBP'000
GBP'000 GBP'000 GBP'000
Six months
ended
31 July
2016
(Unaudited)
Revenue 19,977 3,320 50,706 6,468 - 80,471
Adjusted 3,555 160 10,161 874 (3,671) 11,079
operating
profit /
(loss)
Six months
ended
31 July
2015
(Unaudited)
Revenue 12,799 3,207 39,917 5,836 - 61,759
Adjusted 1,478 (113) 8,355 768 (3,242) 7,246
operating
profit /
(loss)
Twelve months
ended 31
January 2016
(Audited)
Revenue 27,885 6,426 83,456 11,990 - 129,757
Adjusted 3,805 452 17,492 1,380 (6,610) 16,519
operating
profit /
(loss)
A reconciliation of segment adjusted operating profit to profit before income tax is provided as follows:
Six months ended Six months ended Twelve months
31 July 2016 31 July 2015 ended
(Unaudited) (Unaudited) 31 January
2016
(Audited)
GBP'000 GBP'000 GBP'000
Segment adjusted 11,079 7,246 16,519
operating profit
Amortisation (2,378) (1,201) (3,487)
of acquired
intangibles
Charge associated - - (1,492)
with prior
period
restructure
Share based (1,883) (1,059) (1,549)
payment
charge (note 3)
Charge associated - - (1,354)
with
office moves
Deal costs (187) (204) (208)
(note 3)
Total operating 6,631 4,782 8,429
profit
Unwinding of (1,032) (756) (1,512)
discount
on acquisition
related
liabilities
Change in (993) 227 (912)
estimate
on acquisition
related
liabilities
Share of (loss) (163) 177 (5)
/ profit
from associate
Other finance (327) (225) (471)
expense
Other finance 46 25 49
income
Profit before 4,162 4,230 5,578
income tax
NOTES TO THE INTERIM RESULTS (Continued)
FOR THE SIX MONTHSED 31 JULY 2016
3)RECONCILIATION OF PRO-FORMA FINANCIAL MEASURES
Six months ended Six months ended Twelve months ended
31 July 2016 31 July 2015 31 January 2016
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Profit before 4,162 4,230 5,578
income tax
Unwinding of 1,032 756 1,512
discount
on deferred
and
contingentconsideration
and share purchase
obligation payable
Change in estimate 993 (227) 912
of future
contingent
considerationand
share purchase
obligation
payable
Share-based 1,883 1,059 1,549
payment
charge1
Charge associated - - 1,492
with prior
period restructure
Charge associated - - 1,354
with
office moves
Deal costs2 187 204 208
Amortisation 2,378 1,201 3,487
of acquired
intangibles
Adjusted profit 10,635 7,223 16,092
before
income tax
Adjusted profit before income tax has been presented to provide additional information which may be useful to the reader, and it is a measure of performance used in the calculation of the adjusted earnings per share. This measure is considered to best represent the underlying performance of the business and so it is used for the vesting of employee performance shares.
1 This charge relates to the acquisition of the 20% minority interest in Bourne whereby performance shares were issued as partial consideration, and a transaction whereby a restricted grant of Brand equity was given to key management in Agent3 Limited, The Lexis Agency Limited, M Booth & Associates LLC and Vrge Strategies LLC (6 months to 31 July 2015: Bite Communications Limited and The OutCast Agency LLC) at nil cost which holds value in the form of access to future profit distributions as well as any future sale value under the performance-related mechanism set out in the share sale agreement. This value is recognised as a one-off share-based payment in the income statement. The charge also includes acquisition related payments linked to the continuing employment of the sellers which is being recognised over the required period of employment.2 This charge relates to third party professional fees incurred during acquisitions, see note 11.
4)TAXATION
The headline tax rate for the period was 22 per cent (six months ended 31 July 2015: 23 per cent). The headline rate has fallen slightly from 2015, largely as a result of the resolution of a number of historic tax issues.
In future periods we would expect the headline tax rate to be slightly higher, due to the increasing proportion of Group profits realised in overseas tax jurisdictions with higher rates of tax, combined with the impact of legislative change.
Further to the enactment of Finance Act 2016 on 15 September 2016, the UK corporation tax rate will reduce to 17% from 1 April 2020. As the reduction was not substantively enacted at 31 July 2016, the impact of this is not reflected in the above numbers.
NOTES TO THE INTERIM RESULTS (Continued)
FOR THE SIX MONTHSED 31 JULY 2016
5)DIVIDS
An interim dividend of 1.5p (six months ended 31 July 2015: 1.2p) per ordinary share will be paid on 25 November 2016 to shareholders listed on the register of members on 28 October 2016. Shares will go ex-dividend on 27 October 2016.
6)FINANCE EXPENSE
Six months ended Six months ended Twelve months ended
31 July 2016 31 July 2015 31 January 2016
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Financial
liabilities
at amortised cost
Bank interest 313 214 445
payable
Financial
liabilities
at fair value
through profit
and loss
Unwinding of 1,032 756 1,512
discount
on deferred
andcontingent
consideration
and
share
purchaseobligation
payable
Change in estimate 1,110 482 2,922
of future
contingentconsideration
and share
purchase
obligationpayable
Other
Finance lease 4 3 8
interest
Other interest 10 8 18
payable
Finance expense 2,469 1,463 4,905
7)FINANCE INCOME
Six monthsended Six months ended Twelve monthsended
31 July 2016 31 July 2015 31 January 2016
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Financial assets
at
amortised cost
Bank interest 23 17 42
receivable
Financial assets
at fair value
through profit
and loss
Change in estimate 117 709 2,010
of future
contingentconsideration
and share
purchase
obligation payable
Other interest 23 8 7
receivable
Finance income 163 734 2,059
NOTES TO THE INTERIM RESULTS (Continued)
FOR THE SIX MONTHSED 31 JULY 2016
8)EARNINGS PER SHARE
Six months ended Six months ended31 July Twelve monthsended
31 July 2016(Unaudited) 2015(Unaudited) 31 January 2016
(Audited)
GBP'000 GBP'000 GBP'000
Earnings 2,645 2,788 3,992
attributable
to
ordinary
shareholders
Unwinding of 935 646 1,312
discount
on future
deferredand
contingent
consideration and
sharepurchase
obligation payable
Change in estimate 825 (56) 912
of future
contingentconsideration
and
share
purchaseobligation
payable
Share based 1,651 826 1,237
payment
charge
Costs associated - - 995
with prior
periodrestructure
Costs associated - - 863
with
office moves
Amortisation 1,821 878 2,563
of acquired
intangibles
Deal costs 187 133 208
Adjusted earnings 8,064 5,215 12,082
attributable
toordinary
shareholders
Number Number Number
Weighted average 71,039,309 64,654,163 66,298,503
number
of ordinaryshares
Dilutive LTIP 2,483,255 4,603,298 2,904,335
shares
Dilutive Growth 1,755,159 1,473,699 1,689,729
Deal shares
Other potentially 1,202,559 526,257 745,340
issuable shares
Diluted weighted 76,480,282 71,257,417 71,637,909
average
number ofordinary
shares
Basic earnings 3.7p 4.3p 6.0p
per share
Diluted earnings 3.5p 3.9p 5.6p
per share
Adjusted earnings 11.4p 8.1p 18.2p
per share
Diluted adjusted 10.5p 7.3p 16.9p
earnings
per share
Adjusted and diluted adjusted earnings per share have been presented to provide additional useful information. The adjusted earnings per share is the performance measure used for the vesting of employee performance shares. The only difference between the adjusting items in this note and the figures in note 3 is the tax effect of those adjusting items.
NOTES TO THE INTERIM RESULTS (Continued)
FOR THE SIX MONTHSED 31 JULY 2016
9)NET DEBT
The HSBC Bank revolving credit facility expires in 2020 and therefore the outstanding balance has been classified in non-current borrowings with the exception of GBP1.5m which is due for repayment within one year.
31 July 2016 31 31 January 2016
(Unaudited) July 2015(Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Total loans and 32,738 19,669 20,683
borrowings
Obligations under 46 61 72
finance leases
Less: cash and cash (20,601) (10,820) (14,132)
equivalents
Net debt 12,183 8,910 6,623
Share purchase 2,740 3,753 3,734
obligation
Contingent 15,026 7,322 8,344
consideration
29,949 19,985 18,701
10)OTHER FINANCIAL LIABILITIES
Deferred consideration Contingentconsideration Share
purchaseobligation
GBP'000 GBP'000 GBP'000
At 1 February 2015 94 7,174 5,842
(Audited)
Arising during - 2,426 889
the year
Change in estimate - (313) 86
Exchange - (111) (49)
differences
Utilised (95) (2,254) (3,370)
Unwinding of 1 400 355
discount
At 31 July 2015 - 7,322 3,753
(Unaudited)
Reclassification - - -
Arising during - 1,666 27
the year
Change in estimate - 752 387
Exchange - 334 142
differences
Utilised - (2,265) (796)
Unwinding of - 535 221
discount
At 31 January 2016 - 8,344 3,734
(Audited)
Arising during - 5,951 -
the period
Change in estimate - 779 214
Exchange - 192 88
differences
Utilised - (1,059) (1,509)
Unwinding of - 819 213
discount
At 31 July 2016 - 15,026 2,740
(Unaudited)
Current - 5,210 -
Non-current - 9,816 2,740
NOTES TO THE INTERIM RESULTS (Continued)
FOR THE SIX MONTHS ENDED 31 JULY 2016
11)ACQUISITIONS AND OTHER SIGNIFICANT TRANSACTIONS
Morar
On 26 February 2016, Next 15 acquired the remaining 25% minority interest in Morar Consulting Limited, its research and advisory agency and settled in full the remaining obligation for the original purchase of 75% of the issued share capital made on 3 December 2014. The aggregate consideration for the minority interest and remaining obligation was GBP3.55m of which GBP1.5m is payable in February 2017 subject to the remaining employment of the sellers.
Publitek
On 10 March 2016, Next 15 purchased the entire share capital of Publitek Limited ("Publitek"), a specialist technical content marketing business that services customers in the global semiconductor and electronic component market, for initial consideration of GBP6.2m. Further consideration is payable based on the average profits of Publitek for the years ending 31 January 2018, 2019, 2020 and 2021.
Twogether
On 31 March 2016, Next 15 purchased the entire share capital of Twogether Creative Limited ("Twogether"), a B2B creative and digital marketing agency with a focus on technology clients, for initial consideration of GBP6.6m. Further consideration is payable based on the average profits of Twogether for the years ending 31 January 2018, 2019, 2020 and 2021.
Phrasee
On 14 July 2016 Next 15 purchased 10% of the share capital in Phrasee Limited ("Phrasee"), a marketing software company for consideration of GBP0.7m.
HSBC Facility
On 8 March 2016 the Group entered into a new extended four year GBP30m revolving credit facility with HSBC. The facility is primarily used for acquisitions and is due to be repaid out of the trading cash flows of the Group. The facility is available in a combination of sterling, US dollar and euro at an interest margin ranging from 1.6% to 2.0% dependent on the level of gearing in the business.
12)EVENTS AFTER THE BALANCE SHEET DATE
Pinnacle
On 26 September 2016 Next 15 purchased the entire share capital of Pinnacle, a technical content and digital marketing agency, for initial consideration of GBP4.4m. Further consideration is payable based on average profits of Pinnacle, for the years ending 31 January 2018, 2019, 2020 and 2021. As part of this acquisition Next 15 has settled GBP1.7m of the Publitek contingent consideration early in order to align the earn-outs of these two businesses which will be managed as one business going forward.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160926006516/en/
This information is provided by Business Wire
(END) Dow Jones Newswires
September 27, 2016 02:00 ET (06:00 GMT)
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