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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 |
From Apr 2019 to Apr 2024
TIDMNFC
25 September 2018
Next Fifteen Communications Group plc
Interimresults for the six months ended 31 July 2018
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 2018.
Financial results for the six months to 31 July 2018 (unaudited)
Hot Features
Premium
Six months Six months ended 31 Growth in results
ended 31
July 2018 July 2017
GBPm GBPm
Adjusted results
Net revenue 106.8 93.5 14%
EBITDA 17.7 14.5 22%
Operating profit 15.4 12.3 25%
Operating profit 14.4% 13.2%
margin
Profit before tax 15.1 12.0 26%
Diluted EPS (p) 14.2p 11.4p 25%
Statutory results
Operating profit 10.5 7.2 47%
Profit before tax 10.3 5.2 97%
Diluted EPS (p) 9.4p 4.8p 96%
In order to assist shareholders' understanding of the underlying performance of the business, adjusted results have been presented. The items that are excluded from adjusted results are reconciled to statutory results within notes 2 and 3 to the interim results.
Highlights
-- Group net revenue growth of 14%, with organic revenue growth of 8.7%
-- Adjusted profit before tax up 26% to GBP15.1m
-- Adjusted diluted earnings per share increased by 25% to 14.2p
-- Strong balance sheet with net debt of GBP25.6m (2017: GBP20.8m)
-- Significant client wins including Capital One, Waze, Diageo and AIG
-- Brandwidth, a UK-based innovation agency acquired in February
-- Technical, a specialist technical content and digital marketing
business, acquired in July
-- Interim dividend up 20% from 1.8p to 2.16p per share
Commenting on the results, Chairman of Next 15, Richard Eyre said:
The pace of change in the marketing sector has shown no sign of slowing. Companies are increasingly focused on how consumers experience their brand through digital channels and especially mobile platforms. Next 15 remains committed to building and buying businesses that understand how to take advantage of these platforms, using technology and data to design and manage marketing programs. Our strong growth in the first half of the year is evidence of an effective strategy which we believe will continue to drive shareholder value.
For further information contact:
Next Fifteen Communications Group plc
Tim Dyson, Chief Executive Officer+1 415 350 2801
Peter Harris, Chief Financial Officer+44 (0) 20 7908 6444
Investec Bank plc
Keith Anderson, Neil Coleman, Darren Vickers+44 (0) 20 7597 5970
Notes:
Organic revenue growth
Organic revenue growth is defined as the net revenue growth at constant currency excluding the impact of acquisitions, and the impact of the disposal of our Story business in the prior period.
Operating profit margin
Operating profit margin is calculated based on the operating profit as a percentage of net revenue.
This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation.
Chairman and Chief Executive's Statement
Next 15, the digital communications group, is pleased to report its interim results for the six months ended 31 July 2018.
During the period the Group's net revenues increased by 14% to GBP106.8m (2017: GBP93.5m), while adjusted profit before tax increased by 26% to GBP15.1m (2017: GBP12.0m). Adjusted EBITDA for the six months period increased by 22% to GBP17.7m (2017: GBP14.5m), adjusted EPS increased by 25% to 14.2p and net debt remained relatively modest at GBP25.6m, following the acquisition of Brandwidth, an innovation consultancy, during the period. The group's operating margin increased to 14.4% from 13.2% in the prior period.
Organic revenue growth was 8.7% for the six months led by our UK based agencies which recorded organic revenue growth of 14.9%. On a constant currency basis, the Group's net revenue was up 19%.
The Group reported a statutory profit before tax of GBP10.3m compared with a statutory profit before tax of GBP5.2m in the prior period, while reported diluted earnings per share almost doubled to 9.4p compared with 4.8p in the prior period.
The strong trading performance has provided the Group with confidence that it is well placed to meet our expectations for the full year and as such the Board has increased the interim dividend by 20% to 2.16p per share.
Operational Review and Highlights
The group recently announced that it is merging its Text 100 and Bite businesses in the US and UK (Bite's mainland Europe and APAC businesses were merged into Text 100 two years ago). The new agency will be headed by Bite CEO, Helena Maus.
Our US businesses saw organic revenue growth of 7%, with revenues increasing from $70.7m to $76.2m. Sterling's strength against the US dollar and the disposal of most of the Story business resulted in a reduction in reported revenues of 2% to GBP55.8m from GBP57.0m. Beyond, M Booth, Outcast and Bite US grew their revenues significantly, whilst Text 100 US was held back after it ended its long-standing PR relationships with IBM and Lenovo. Operating margins reduced to 16.9% partly due to the investment in taking some of our UK brands to the US but also due to Beyond investing heavily in on-boarding a new signature client and in building out its capabilities in the US. We are expecting an improvement in our operating profit margin in our seasonally stronger second half.
Our UK businesses have increased revenues by 56% to almost GBP40.0m from GBP25.5m and the operating profit increased to GBP9.5m from GBP5.2m in the prior period. Operating margins have increased to 23.7% from 20.2% in the prior period due to a very strong performance from Beyond UK, Text UK, Twogether and our recent acquisitions. We have also benefitted from the operational restructuring we undertook in the prior period. Organic revenue growth was 14.9% in the period.
In EMEA we have seen an impressive improvement in both revenue and profitability, whilst in APAC we saw a modest decline in profitability due to client losses.
The Group is particularly pleased by the performance of its data and insight business, MIG Global, which accounted for approximately 8% of the Group's revenue and is in an area of continued investment for Next 15.
Adjusted UK Europe US Asia Pacific Head Office Total results GBP'000 &AfricaGBP'000 GBP'000 GBP'000 GBP'000 GBP'000 6 months ended 31 July 2018 Net revenue 39,958 4,202 55,812 6,804 - 106,776 Operating 9,451 628 9,433 517 (4,663) 15,366 profit Operating 23.7% 14.9% 16.9% 7.6% - 14.4% profit margin Organic 14.9% 9.0% 7.0% 0.2% - 8.7% revenue growth 6 months ended 31 July 2017 Net revenue 25,542 3,773 57,040 7,111 - 93,466 Operating 5,165 287 10,321 602 (4,063) 12,312 profit Operating 20.2% 7.6% 18.1% 8.5% - 13.2% profit margin Organic 3.5% 4.4% 1.5% (0.8%) - 1.9% revenue growth
Dividend
The Board has resolved to pay an interim dividend of 2.16p per share, which is a 20% increase on the interim dividend for last year. This will be paid to shareholders on 23 November 2018 who are registered at close of business on 26 October 2018.
Current Trading and Outlook
Looking to the full year, the Board is encouraged by recent trading and the prospects for the second half remain good. As a result, the Board remains optimistic about the outlook for the Group and is confident that it will meet its expectations for the full year.
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
ADJUSTED RESULTS: KEY PERFORMANCE INDICATORS
Six months ended Six months ended
31 July 2018 31 July 2017
(Unaudited) (Unaudited)
GBP'000 GBP'000
Net revenue 106,776 93,466
Total operating charges (89,094) (79,008)
EBITDA 17,682 14,458
Depreciation and Amortisation (2,316) (2,146)
Operating profit 15,366 12,312
Operating profit margin 14.4% 13.2%
Net finance expense (280) (333)
Share of profits of associate 9 24
Profit before income tax 15,095 12,003
Tax (3,017) (2,401)
Retained profit 12,078 9,602
Weighted average number 77,891,708 73,561,342
of ordinary shares
Diluted weighted average number 82,863,429 81,544,242
of ordinary shares
Adjusted earnings per share 15.1p 12.6p
Diluted adjusted earnings 14.2p 11.4p
per share
Cash inflow from operating 7,743 4,177
activities
Cash outflow on acquisition (15,527) (9,976)
related payments
Net debt 25,565 20,848
Dividend (per share) 2.16p 1.8p
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTH PERIODED 31 JULY 2018
Six months Six months 12 months
ended ended ended
31 July 2018 31 July 2017 31 January 2018
(Unaudited) *Restated *Restated
(Unaudited) (Audited)
Note GBP'000 GBP'000
Billings 135,577 113,921 243,485
Revenue 127,931 108,473 233,922
Direct costs (21,155) (15,007) (37,111)
Net revenue 2 106,776 93,466 196,811
Staff costs 73,070 65,880 136,346
Depreciation 2,076 1,978 3,985
Amortisation 4,004 3,381 7,413
Other operating 17,094 15,075 31,842
charges
Total operating (96,244) (86,314) (179,586)
charges
Operating profit 2 10,532 7,152 17,225
Finance expense 6 (2,446) (2,405) (5,833)
Finance income 7 2,251 468 1,878
Share of profit 9 24 26
from associate
Profit before 3 10,346 5,239 13,296
income tax
Income tax expense 4 (2,265) (1,044) (4,000)
Profit for 8,081 4,195 9,296
the period
Attributable to:
Owners of the parent 7,773 3,874 8,632
Non-controlling 308 321 664
interests
8,081 4,195 9,296
Earnings per share
Basic (pence) 8 10.0 5.3 11.6
Diluted (pence) 8 9.4 4.8 10.5
* See note 13 for details regarding the restatement following the adoption of IFRS 15
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 31 JULY 2018
Six months Six months 12 months
ended ended ended
31 July 2018 31 July 2017 31 January 2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Profit for the period 8,081 4,195 9,296
Other comprehensive
income
/ (expense):
Items that may be
reclassified
into profit or loss
Exchange differences 3,074 (1,804) (5,427)
on translating
foreign operations
Net investment hedge (616) 551 1,190
2,458 (1,253) (4,237)
Items that will not
be reclassified
subsequently to
profit or loss
Revaluation of (430) - -
investments
Total other comprehensive 2,028 (1,253) (4,237)
income
/ (expense) for
the period
Total comprehensive 10,109 2,942 5,059
income
for the period
Attributable to:
Owners of the parent 9,801 2,621 4,395
Non-controlling interests 308 321 664
10,109 2,942 5,059
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED BALANCE SHEET AS AT 31 JULY 2018
31 July 2018(Unaudited) 31 July 2017(Unaudited) 31 January 2018(Audited)
Note GBP'000 GBP'000 GBP'000
Assets
Property, plant 15,931 14,819 13,567
and equipment
Intangible assets 102,242 91,926 94,843
Investment 118 139 132
in equity
accounted associate
Trade investment 1,387 1,216 1,211
Deferred tax asset 9,806 10,515 9,794
Other receivables 671 540 535
Total non-current 130,155 119,155 120,082
assets
Trade and other 64,996 54,762 49,538
receivables
Cash and cash 9 21,527 16,589 24,283
equivalents
Corporation 807 940 784
tax asset
Total current 87,330 72,291 74,605
assets
Total assets 217,485 191,446 194,687
Liabilities
Loans 9 40,031 35,911 34,465
and borrowings
Deferred tax 4,216 3,426 3,869
liabilities
Other payables 4,934 4,683 4,290
Provisions 439 116 141
Deferred 10 1,657 - 1,784
consideration
Contingent 10 10,421 15,228 13,271
consideration
Share purchase 10 1,020 2,839 955
obligation
Total non-current 62,718 62,203 58,775
liabilities
Loans 9 7,058 1,517 1,406
and borrowings
Trade and other 54,903 46,128 45,003
payables
Provisions 651 699 1,405
Corporation tax 2,009 2,617 2,154
liability
Deferred 10 1,651 - 4,255
consideration
Contingent 10 2,359 6,053 5,368
consideration
Share purchase 10 630 - -
obligation
Total current 69,261 57,014 59,591
liabilities
Total liabilities 131,979 119,217 118,366
TOTAL NET ASSETS 85,506 72,229 76,321
Equity
Share capital 1,965 1,848 1,892
Share premium 39,639 27,856 28,611
reserve
Foreign currency 7,885 8,434 4,811
translation
reserve
Other reserves (1,570) (1,593) (954)
Retained earnings 39,175 35,335 42,604
Total equity 87,094 71,880 76,964
attributable
to owners of
the parent
Non-controlling (1,588) 349 (643)
interests
TOTAL EQUITY 85,506 72,229 76,321
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTH PERIODED 31 JULY 2018
Foreign Equity
Share currency attributable Non-
Share premium translation Other Retained to owners of controlling Total
capital reserve reserve reserves1 earnings the Company interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1,834 25,681 10,238 (2,144) 31,962 67,571 926 68,497
1 February
2017
(audited)
Profit for - - - - 3,874 3,874 321 4,195
the period
Other - - (1,804) 551 - (1,253) - (1,253)
comprehensive
income
/ (expense)
for
the period
Total - - (1,804) 551 3,874 2,621 321 2,942
comprehensive
income
/ (expense)
for
the period
Shares 1 - - - (1) - - -
issued
on
satisfaction
of vested
share
options
Shares 13 2,175 - - - 2,188 - 2,188
issued
on
acquisitions
Movement - - - - 2,493 2,493 - 2,493
in
relation
to
share-based
payments
Dividends - - - - (2,761) (2,761) - (2,761)
to
owners
of the
parent
Movement - - - - (232) (232) 232 -
on
reserves
for
non-controlling
interests
Non-controlling - - - - - - (1,130) (1,130)
interest
dividend
At 31 July 1,848 27,856 8,434 (1,593) 35,335 71,880 349 72,229
2017
(unaudited)
Profit for - - - - 4,758 4,758 343 5,101
the period
Other - - (3,623) 639 - (2,984) - (2,984)
comprehensive
income
/ (expense)
for
the period
Total - - (3,623) 639 4,758 1,774 343 2,117
comprehensive income / (expense) for the period Shares 39 - - - (76) (37) - (37) issued on satisfaction of vested share options Shares 5 755 - - - 760 - 760 issued on acquisitions Movement - - - - 3,031 3,031 - 3,031 in relation to share-based payments Dividends - - - - (1,360) (1,360) - (1,360) to owners of the parent Movement - - - - 916 916 (916) - on reserves for non-controlling interests Non-controlling - - - - - - (419) (419) interest dividend At 1,892 28,611 4,811 (954) 42,604 76,964 (643) 76,321 31 January 2018 as previously stated (audited) Change - - - - 48 48 - 48 in accounting policy (IFRS 9)2 At 1,892 28,611 4,811 (954) 42,652 77,012 (643) 76,369 1 February 2018 as restated Profit for - - - - 7,773 7,773 308 8,081 the period Other - - 3,074 (616) (430) 2,028 - 2,028 comprehensive income / (expense) for the period Total - - 3,074 (616) 7,343 9,801 308 10,109 comprehensive income / (expense) for the period Shares 55 7,764 - - (7,819) - - - issued on satisfaction of vested share options Shares 18 3,264 - - - 3,282 - 3,282 issued on acquisitions Obligation - - - - - - (630) (630) to purchase non-controlling interest Movement - - - - 1,105 1,105 - 1,105 in relation to share-based payments Dividends - - - - (3,535) (3,535) - (3,535) to owners of the parent Movement - - - - (571) (571) 571 - on reserves for non-controlling interests Non-controlling - - - - - - (135) (135) interest purchased in the period Non-controlling - - - - - - (1,059) (1,059) interest dividend At 31 July 1,965 39,639 7,885 (1,570) 39,175 87,094 (1,588) 85,506 2018 (unaudited)
1 Other reserves include ESOP reserve, hedging reserve, share purchase reserve and merger reserve.2 Refer to note 13
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE SIX MONTH PERIODED 31 JULY 2018
Twelve months
Six months ended Six months ended ended
31 July 2018 31 July 2017 31 January 2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cash flows from
operating
activities
Profit for 8,081 4,195 9,296
the period
Adjustments for:
Depreciation 2,076 1,978 3,985
Amortisation 4,004 3,381 7,413
Finance expense 2,446 2,405 5,833
Finance income (2,251) (468) (1,878)
Share of profit (9) (24) (26)
from equity
accounted
associate
Loss on sale 230 10 147
of property,
plant
and equipment
Income tax 2,265 1,044 4,000
expense
Share-based 1,078 2,019 4,284
payment
charge
Net cash inflow 17,920 14,540 33,054
from
operating
activities
before changes in
working capital
Change in trade (9,430) (11,514) (5,860)
and
other receivables
Change in trade 2,677 795 2,143
and
other payables
Change in other (289) 2,261 (472)
liabilities
(7,042) (8,458) (4,189)
Net 10,878 6,082 28,865
cash generated
from operations
before tax
outflows
Income taxes paid (3,135) (1,905) (4,284)
Net cash inflow 7,743 4,177 24,581
from
operating
activities
Cash flows from
investing
activities
Acquisition of (6,358) (5,073) (9,824)
subsidiaries
and trade
and assets,
net of
cash acquired
Payment of (8,617) (4,439) (5,062)
contingent
and
deferred
consideration
Purchase of (552) (464) (464)
investment
Acquisition of (3,667) (1,460) (2,974)
property,
plant
and equipment
Proceeds on 23 3 7
disposal
of property,
plant
and equipment
Acquisition of (927) (504) (1,193)
intangible
assets
Net movement (83) 120 (6)
in long-term
cash deposits
Interest received 188 42 117
Net cash outflow (19,993) (11,775) (19,399)
from
investing
activities
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOW (Continued)
FOR THE SIX MONTH PERIODED 31 JULY 2018
Twelve months
Six months ended Six months ended ended
31 July 2018 31 July 2017 31 January 2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cash flows from
financing
activities
Capital element (3) (13) (17)
of finance
lease rental
repayment
Net movement 10,512 3,970 4,484
in bank
borrowings
Interest paid (469) (375) (831)
Dividend and (1,059) (1,130) (1,549)
profit share
paid
to
non-controlling
interest
partners
Dividends - - (4,121)
paid to
shareholders
of the parent
Net cash inflow 8,981 2,452 (2,034)
/ (outflow)
from financing
activities
Net (decrease) (3,269) (5,146) 3,148
/ increase in
cash and cash
equivalents
Cash and cash 24,283 22,072 22,072
equivalents
at
beginning of
the period
Exchange gains 513 (337) (937)
/ (losses)
on cash held
Cash and cash 21,527 16,589 24,283
equivalents
at end of the
period
NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHSED 31 JULY 2018
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 year ended 31 January 2018 except for the adoption of the following accounting standards effective for the Group from 1 February 2018:
-- IFRS 15 Revenue from contracts with customers
-- IFRS 9 Financial instruments
Refer to note 13 for further details on the impact on the Group's results and the adjustments made to prior periods.
The comparative financial information for the year ended 31 January 2018 has been derived from the audited statutory financial statements for that period, adjusted as detailed in note 13. A copy of those statutory financial statements has been delivered to the Registrar of Companies. The auditor's 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.
Europe and Asia Head
UK Africa US Pacific Office Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months
ended
31 July
2018
(Unaudited)
Net revenue 39,958 4,202 55,812 6,804 - 106,776
Adjusted 9,451 628 9,433 517 (4,663) 15,366
operating
profit /
(loss)
Adjusted 23.7% 14.9% 16.9% 7.6% - 14.4%
operating
profit margin
Organic 14.9% 9.0% 7.0% 0.2% - 8.7%
revenue
growth
Six months
ended
31 July
2017
(Unaudited)
Net revenue 25,542 3,773 57,040 7,111 - 93,466
Adjusted 5,165 287 10,321 602 (4,063) 12,312
operating
profit /
(loss)
Adjusted 20.2% 7.6% 18.1% 8.5% - 13.2%
operating
profit margin
Organic 3.5% 4.4% 1.5% (0.8%) - 1.9%
revenue
growth
Twelve months
ended 31
January 2018
(Audited)
Net revenue 58,329 7,851 115,941 14,690 - 196,811
Adjusted 12,984 752 23,181 2,002 (8,893) 30,026
operating
profit /
(loss)
Adjusted 22.3% 9.6% 20.0% 13.6% - 15.3%
operating
profit margin
Organic 7.6% 3.4% 5.1% (0.7%) - 5.2%
revenue
growth
NOTES TO THE INTERIM RESULTS (Continued)
FOR THE SIX MONTHSED 31 JULY 2018
A reconciliation of segment adjusted operating profit to operating profit is provided as follows:
Twelve months
Six months ended Six months ended ended
31 July 2018 31 July 2017 31 January 2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Segment adjusted 15,366 12,312 30,026
operating profit
Amortisation (3,764) (3,212) (7,036)
of acquired
intangibles
Share based (578) (1,452) (3,050)
payment
charge (note 3)
Charges associated - - (525)
with
office moves
(note 3)
Restructuring (172) (427) (1,700)
costs
(note 3)
Deal costs (320) (69) (490)
(note 3)
Operating profit 10,532 7,152 17,225
3)RECONCILIATION OF ADJUSTED FINANCIAL MEASURES
Twelve months
Six months ended Six months ended ended
31 July 2018 31 July 2017 31 January 2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Profit before 10,346 5,239 13,296
income tax
Unwinding of 1,282 1,068 2,510
discount
on deferred
and contingent
consideration
and share
purchase
obligation
payable
Change in (1,367) 536 731
estimate
of future
contingent
consideration
and share
purchase
obligation
payable
Share-based 578 1,452 3,050
payment
charge1
Restructuring 172 427 1,700
costs
Charge associated - - 525
with
office moves
Deal costs2 320 69 490
Amortisation 3,764 3,212 7,036
of acquired
intangibles
Adjusted profit 15,095 12,003 29,338
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. The adjusting items are consistent with those in the prior period.
1 This charge relates to transactions whereby a restricted grant of brand equity was given to key management in ODD Communications Limited and Twogether Creative Limited (2017: Text 100 LLC, Bite Communications LLC 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-
NOTES TO THE INTERIM RESULTS (Continued)
FOR THE SIX MONTHSED 31 JULY 2018
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 tax charge for the six months ended 31 July 2018 is based on the Group's estimated effective tax rate for the year ending 31 January 2019 (20%).
5)DIVIDS
An interim dividend of 2.16p (six months ended 31 July 2017: 1.8p) per ordinary share will be paid on 23 November 2018 to shareholders listed on the register of members on 26 October 2018. Shares will go ex-dividend on 25 October 2018.
6)FINANCE EXPENSE
Twelve months
Six months ended Six months ended ended
31 July 2018 31 July 2017 31 January 2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Financial
liabilities
at amortised cost
Bank interest 467 375 831
payable
Financial
liabilities
at fair value
through profit
and loss
Unwinding of 1,282 1,068 2,510
discount
on future
deferred and
contingent
consideration and
share purchase
obligation payable
Change in estimate 695 962 2,492
of future
contingent
consideration
and share purchase
obligation payable
Other
Other interest 2 - -
payable
Finance expense 2,446 2,405 5,833
7)FINANCE INCOME
Twelve months
Six months ended Six months ended ended
31 July 2018 31 July 2017 31 January 2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Financial assets at
amortised cost
Bank interest 45 29 98
receivable
Financial assets
at fair value
through profit
and loss
Change in estimate 2,062 426 1,761
of future
contingent
consideration
and share purchase
obligation payable
Other interest 144 13 19
receivable
Finance income 2,251 468 1,878
NOTES TO THE INTERIM RESULTS (Continued)
FOR THE SIX MONTHSED 31 JULY 2018
8)EARNINGS PER SHARE
Twelve months
Six months ended Six months ended ended
31 July 2018 31 July 2017 31 January 2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Earnings 7,773 3,874 8,632
attributable
to
ordinary
shareholders
Unwinding of 1,264 1,019 2,445
discount
on future
deferred and
contingent
consideration
and
share purchase
obligation
payable
Change in (1,349) 607 822
estimate
of future
contingent
consideration
and share
purchase
obligation
payable
Share based 572 899 2,498
payment
charge
Restructuring 139 345 1,241
costs
Costs associated - - 354
with
office moves
Amortisation 3,053 2,468 5,506
of acquired
intangibles
US rate change - - 817
Deal costs 317 69 489
Adjusted 11,769 9,281 22,804
earnings
attributable
to
ordinary
shareholders
Number Number Number
Weighted average 77,891,708 73,561,342 74,344,883
number
of ordinary
shares
Dilutive LTIP 1,156,602 2,737,223 1,297,444 shares Dilutive Growth 3,084,835 4,338,031 5,336,533 Deal shares Other 730,284 907,646 1,099,352 potentially issuable shares Diluted weighted 82,863,429 81,544,242 82,078,212 average number of ordinary shares Basic earnings 10.0p 5.3p 11.6p per share Diluted earnings 9.4p 4.8p 10.5p per share Adjusted 15.1p 12.6p 30.7p earnings per share Diluted adjusted 14.2p 11.4p 27.8p 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 notes 2 and 3 is the tax effect of those adjusting items.
NOTES TO THE INTERIM RESULTS (Continued)
FOR THE SIX MONTHS ENDED 31 JULY 2018
9)NET DEBT
The HSBC Bank revolving credit facility of GBP40m expires in 2022 and therefore the outstanding balance has been classified in non-current borrowings. The GBP20m loan drawn from HSBC is repayable in annual instalments (see note 11) and is classified in non-current borrowings with the exception of the instalment due in less than one year.
31 July 2018 31 July 2017 31 January 2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Total loans and borrowings 47,089 37,428 35,871
Obligations under 3 9 5
finance leases
Less: cash and cash (21,527) (16,589) (24,283)
equivalents
Net debt 25,565 20,848 11,593
Share purchase obligation 1,650 2,839 955
Contingent consideration 12,780 21,281 18,639
Deferred consideration 3,308 - 6,039
43,303 44,968 37,226
10)OTHER FINANCIAL LIABILITIES
Deferred Contingent Share purchase
consideration consideration obligation
GBP'000 GBP'000 GBP'000
At 1 February 2017 - 14,905 3,433
(Audited)
Arising during - 7,578 -
the period
Change in estimate - 859 (323)
Exchange differences - (40) (50)
Utilised - (2,910) (400)
Unwinding of discount - 889 179
At 31 July 2017 - 21,281 2,839
(Unaudited)
Arising during 500 708 -
the period
Change in estimate - 281 (86)
Exchange differences - (65) (77)
Utilised (360) (809) -
Written off - (21) -
Reclassification 5,586 (3,789) (1,797)
Unwinding of discount 313 1,053 76
At 31 January 2018 6,039 18,639 955
(Audited)
Arising during 842 973 630
the period
Change in estimate - (1,293) (74)
Exchange differences - 16 79
Utilised (4,255) (6,095) -
Reclassification 445 (445) -
Unwinding of discount 237 985 60
At 31 July 2018 3,308 12,780 1,650
(Unaudited)
Current 1,651 2,359 630
Non-current 1,657 10,421 1,020
NOTES TO THE INTERIM RESULTS (Continued)
FOR THE SIX MONTHS ENDED 31 JULY 2018
11)ACQUISITIONS AND OTHER SIGNIFICANT TRANSACTIONS
HSBC Facility
On 5 February 2018 the Group extended its facilities agreement with HSBC to include a loan of GBP20m in addition to the RCF of GBP40m which is available until 5 July 2022. The GBP20m was drawn down on 9 February 2018 and is repayable in equal annual instalments. The last repayment is due in December 2021 and the loan bears interest at the same margin plus LIBOR as the RCF.
Brandwidth
On 6 February 2018, Next 15 purchased the entire issued share capital of Brandwidth Group Limited and its subsidiaries ('Brandwidth"), a UK-based innovation agency bringing significant digital skills to the Group, for initial consideration of GBP6.2m. Further consideration is payable based on the profit before interest and tax of Brandwidth for the year to 30 June 2018 of up to GBP3.3m in September 2018 and GBP0.8m in April 2020.
Technical
On 12 July 2018, Next 15 purchased Technical Associates Group ("TAG") through the entire issued share capital of Technical Publicity Limited, a specialist technical content and digital marketing business focused on the industrial engineering sector, for initial consideration of GBP2.2m. Further deferred consideration of GBP0.6m is payable in April 2020. Contingent consideration based on the combined EBIT performance of TAG and Publitek, an existing Next 15 business, is also payable in April 2020.
12)EVENTS AFTER THE BALANCE SHEET DATE
The group announced that it is merging its Text 100 and Bite businesses in the UK and US (having previously merged the businesses in APAC and continental Europe). This action is likely to lead to material restructuring costs in the second half.
13)CHANGE IN ACCOUNTING POLICY
This note explains the impact of the adoption of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contractswith Customers on the group's financial statements and also discloses the new accounting policies that have been applied from 1 February 2018, where they are different to those applied in prior periods.
IFRS 9
IFRS 9 has been adopted without restating comparative information. The adjustments arising from the impact of IFRS 9 are not reflected in the balance sheet at 31 January 2018 however they are recognised in the opening balance sheet on 1 February 2018.
The adoption of IFRS 9 from 1 February 2018 resulted in the following changes for the Group.
The Group's financial assets that are subject to IFRS 9's new expected credit loss model are its trade and other receivables and cash balances. The Group has revised its impairment methodology as a result. The impact of the change in impairment methodology on the Group's brought forward retained earnings is immaterial.
The Group has opted to continue to account for its net investment hedges under IAS 39 rather than transition to IFRS 9.
NOTES TO THE INTERIM RESULTS (Continued)
FOR THE SIX MONTHS ENDED 31 JULY 2018
The Group has opted to designate its investment in equity instruments at fair value through other comprehensive income ("FVTOCI") as allowed under IFRS 9 as they are not held for trading. An adjustment has been made to opening retained earnings to reflect the adjustment to fair value for these unquoted investments at 1 February 2018:
As previously Adjustment As restated at 1
stated at required
31 January 2018 under IFRS 9 February 2018
GBP'000 GBP'000 GBP'000
Trade investments 1,211 48 1,259
IFRS 15
The group has adopted IFRS 15 Revenue from Contracts with Customers from 1 February 2018 which resulted in changes in accounting policies and adjustments to the amounts recognised in the financial statements. In accordance with the transition provisions in IFRS 15, the group has adopted IFRS 15 retrospectively and has restated comparatives for the 2018 financial year. In summary, the following adjustments were made to the reported financial performance.
Six months ended Twelve months ended
31 July 2017 31 January 2018
Impact on profit for GBP'000 GBP'000
the period / year
Revenue
Increase due to principal versus 15,007 37,111
agent considerations (i)
Direct costs
Increase due to principal versus 15,007 37,111
agent considerations (i)
.
Impact on net revenue - -
(i) Under IFRS 15 the group is considered principal for certain third-party costs which are billed onto clients, where the Group previously accounted for these costs as agent. An adjustment to increase revenue has therefore been made to reflect this change, with a corresponding increase in direct costs. As a result, there has been no impact to net revenue or profit for the prior periods.
The Group also assessed whether the adoption of IFRS 15 had any impact on the timing of revenue recognition. Under IAS 18 the Group recognised revenue based on stage of completion whereas under IFRS 15 the recognition should be when a customer obtains control of the goods or service. Following assessment of the contracts held by the Group, it was determined that the impact of aligning the Group's revenue recognition with performance obligations to the customer did not have a material impact on the revenue in the prior periods. Therefore, no restatement has been made.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180924005912/en/
This information is provided by Business Wire
(END) Dow Jones Newswires
September 25, 2018 02:00 ET (06:00 GMT)
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