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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
Next Fifteen Communications Group plc
("Next 15" or the "Group")
Results for the year ended 31 January 2021
Next 15, the digital communications group, today announces its final results for the year ended 31 January 2021.
Financial results for the year to 31 January 2021
Hot Features
Premium
Year ended 31 Year ended 31
January 2021 January 2020
GBPm GBPm % change year on year
Adjusted results(1)
Net revenue 266.9 248.5 7%
Operating profit after
interest on finance
lease liabilities 49.5 40.9 21%
Operating profit margin 18.5% 16.4%
Profit before tax 49.1 40.2 22%
Diluted earnings per
share (p) 40.7p 34.8p 17%
Net cash generated from
operations 72.9 49.5 47%
Statutory results
Revenue 323.7 300.7 8%
Operating profit 13.7 19.4 (29)%
(Loss)/profit before tax (1.3) 5.6 (123)%
Diluted (loss)/earnings
per share (p) (5.3)p 2.5p (312)%
(1) Adjusted results have been presented to provide additional information that may be useful to shareholders to understand the performance of the business by facilitating comparability both year on year and with industry peers. Adjusted results are reconciled to statutory results below and within notes 2, 3 and 8.
Highlights
-- Group net revenue growth of 7% to GBP266.9m and statutory revenue growth
of 8%, aided by acquisitions
-- Adjusted profit before tax up 22% to GBP49.1m
-- Adjusted diluted earnings per share increased by 17% to 40.7p
-- Net cash generated from operations increased by 47% to GBP72.9m
-- Strong balance sheet with net cash of GBP14.0m at 31 January 2021 (2020:
net debt of GBP9.3m)
-- Expanded briefs from a number of clients including Salesforce, IBM and
Amazon
-- Material step into innovation consulting through the acquisition of
Mach49 in August 2020 and the acquisition of CRE in July brought digital
optimisation skillset into the Group, with both being earnings accretive
in the year
-- Following a review of the property portfolio in the light of plans to
operate more flexible home working, a GBP10m property impairment charge
has been booked due to surplus office space which resulted in a statutory
loss before tax of GBP1.3m. This should yield approximately GBP5m in
annualised savings
-- Reinstatement of the dividend policy with a final dividend proposed for
the year ended 31 January 2021 of 7p per ordinary share
-- Post year end commitment to repay UK Government furlough support
Current trading and outlook
-- The Group has made a strong start to the new financial year and is
currently trading ahead of management expectations
-- The Group has recently announced the acquisition of Shopper Media Group
Ltd which specialises in commerce marketing activation, connecting
retailers and brands with shoppers at the point of purchase both online
and in-store
Commenting on the results, Chairman of Next 15, Penny Ladkin-Brand said:
In a year like no other, these are excellent results. As the first effects of the pandemic took hold at the start of the financial year, Tim said that he wanted Next 15 to come out of this year as a stronger business. He and the executive team have worked tirelessly in order to achieve that outcome. They have changed the way we operate, rethinking the offering to customers, how the businesses in the Group interact and how we interact with our people. Most importantly, the past year has shown that our people have the character to handle challenges that are thrown at them. This resilience displayed by our people doesn't appear on our balance sheet but it has proven to be an invaluable asset. We are grateful and proud of all the people in the Group for their efforts during the year to deliver these results.
Looking to the year ahead, the Board is optimistic about the prospects for the Group, despite the continued impact of Covid-19 on the economy. Covid-19 tested our business model but it also tested the character of the team that leads Next 15 and the people that work for the Group across the world. The Board remains confident of the Group's underlying prospects. We believe we have the quality of people, the strategy and the financial strength to continue to outperform our marketplace.
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
Numis
Mark Lander, Hugo Rubinstein
+44 (0)20 7260 1000
Berenberg
Ben Wright, Mark Whitmore, Tejas Padalkar
+44 (0)20 3207 7800
Notes:
Net revenue
Net revenue is calculated as revenue less direct costs as shown on the Consolidated Income Statement.
Organic net revenue growth
Organic net revenue growth is defined as the net revenue growth at constant currency excluding the impact of acquisitions and disposals in the last 12 months.
Adjusted operating profit margin
Adjusted operating profit margin is calculated based on the operating profit after interest on finance lease liabilities 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
Review of FY21
Next 15's evolution towards a data, digital and consulting Group has put us in a better place to deal with the impact of Covid-19. The Group delivered a very strong trading performance despite the uncertain trading environment brought on by the Covid pandemic. The Group was helped by the fact that we had limited exposure to the more heavily impacted sectors of leisure, travel, retail and hospitality, and we are not involved in the live events, traditional media buying or sports marketing sectors, which have suffered materially over the last twelve months. Approximately 60% of our revenue is derived from the tech sector and our B2B marketing agencies, which are focused on driving revenue for their clients, and which excelled despite the uncertain economic environment whilst our B2C agencies recovered well after initial Covid related client deferrals.
Strategy update
While our customers have been changing, so have we. We have refocused the Group so that it is set up to solve the biggest challenge facing all of our customers, which is driving growth. There are many ways we help our customers grow, but we believe we have a unique advantage in four areas:
-- Customer Insight
-- Customer Engagement
-- Customer Delivery
-- Business Transformation
Our customer insight business is set up to help customers understand the opportunities and challenges they face and arm them with the knowledge they need to make the best decisions.
Our customer engagement business is designed to help our customers optimize their brand reputation and build the mission-critical digital assets such as ecommerce platforms, apps and websites that are the window through which much of the world's commerce is now transacted.
Customer delivery businesses are deeply specialised to use creativity, data, and analytics to create the connections with customers to drive sales and other forms of interaction. This link in the chain is increasingly digital. Businesses want to anticipate what their customers want and when they will want it. It is perhaps not surprising that this is a high growth area for our Group.
Business transformation is where customers need our help to either redesign their business model or create entirely new ventures. It is also the area where they need our help to understand how to maximise the value of the organisation.
Acquisitions
The Group has continued to grow its portfolio of businesses. In July, the Group acquired CRE, a web optimisation agency and in August Mach49, the Silicon Valley-based growth incubator for global businesses which becomes a cornerstone of our previously announced plan to create a $100m revenue innovation business. Last week we announced the acquisition of Shopper Media Group Ltd which specialises in commerce marketing activation, connecting retailers and brands with shoppers at the point of purchase both online and in-store. Their clients include The Co-op Group, Deliveroo, The Very Group, Pladis and McCain Foods.
Current trading and outlook
The Board is pleased to report that we have made a strong start to the new financial year and our trading performance is currently ahead of management expectations, despite the relative strength of sterling. With cash on the balance sheet, the Group is in a good position to execute on its investment strategy. Collectively this should drive another year of strong financial performance.
Review of Adjusted Results to 31 January 2021
Year Ended Year Ended
ADJUSTED RESULTS(1) 31 January 2021 31 January 2020
GBP'000 GBP'000
Net revenue 266,886 248,469
Operating profit after interest on lease
liabilities 49,486 40,860
Operating profit margin 18.5% 16.4%
Net finance expense (800) (827)
Share of profits from associate 431 204
Profit before income tax 49,117 40,237
Tax rate on adjusted profit 20.2% 20.0%
Diluted adjusted earnings per share 40.7p 34.8p
(1) Adjusted results have been presented to provide additional information that may be useful to shareholders to understand the performance of the business by facilitating comparability both year on year and with industry peers. Adjusted results are reconciled to statutory results below and within notes 2, 3 and 8
The last 12 months have been dominated by the impact of the Covid pandemic. When the seriousness of the situation became apparent in March 2020, we quickly took decisive actions to preserve the profitability of our businesses and our cash reserves by reducing our staff cost base in line with our expectations for reductions in revenue. We also looked at our property portfolio and determined that, with the changing nature of the working environment, we could significantly reduce our global property footprint with the medium-term ambition of reducing our annual property costs by approximately GBP5m. We saw organic declines in revenue by quarter of 4% in Q1, 8% in Q2, before recovering to down 3% in Q3 and up 2% in Q4. Our B2B agencies proved resilient throughout the year, whilst our B2C agencies saw a strong recovery in the second half as consumer confidence returned.
Our total Group net revenues increased by 7%, but declined by 3% on an organic basis, whilst our pro-active approach to managing our cost base resulted in an increase in the operating profit margin to a record 18.5% from 16.4% in the prior year. Our B2B agencies including Twogether, Agent 3 and Activate performed very strongly whilst our B2C agencies including Savanta and M Booth agencies recovered strongly in the final quarter after being significantly impacted by the pandemic in the first half.
Reconciliation between statutory and adjusted profit
For the year to 31 January 2021, the Group delivered net revenue of GBP266.9m (2020: GBP248.5m), adjusted operating profit of GBP49.5m (2020: GBP40.9m), adjusted profit before income tax of GBP49.1m (2020: GBP40.2m) and adjusted diluted earnings per share of 40.7p (2020: 34.8p). Statutory revenue for the year was GBP323.7m (2020: GBP300.7m) which resulted in operating profit of GBP13.7m compared with GBP19.4m in the previous year. Diluted loss per share was 5.3p, compared with earnings per share of 2.5p in the previous year.
While adjusted operating profit increased by 21% to GBP49.5m (2020: GBP40.9m), reflecting the strong trading of the Group, the statutory operating profit declined by 29% to GBP13.7m (2020: GBP19.4m). The statutory operating profit decline year on year is primarily due to the one-off property related impairment charge of GBP10m and an increase in acquisition related accounting charges in the year reflecting an increase in our earn-out payment liability as Activate in particular performed well.
Year ended Year ended
31 January 2021 31 January 2020
GBP'000 GBP'000
(Loss) / profit before income tax (1,306) 5,556
Acquisition accounting related
costs(1) 36,260 28,766
Share-based payment charge 2,424 374
Restructuring costs 2,746 4,596
Deal costs 371 945
Property impairment 10,018 -
UK furlough grant (1,396) -
Adjusted profit before income tax 49,117 40,237
(1) Acquisition accounting related costs includes unwinding of discount and change in estimate on deferred and contingent consideration and share purchase obligation payable, employment linked acquisition payments and amortisation of acquired intangibles. Refer to note 2 and 3 for further detail.
Segment adjusted performance
Brand Data and Creative Head
Marketing Analytics Technology Office Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31
January 2021
Net revenue 140,530 48,447 77,909 - 266,886
Adjusted operating
profit / (loss)
after interest on
lease
liabilities 34,573 13,254 13,053 (11,394) 49,486
Adjusted operating
profit margin 24.6% 27.4% 16.8% - 18.5%
Organic revenue
(decline) /
growth (5.5)% 8.2% (6.0)% - (3.4)%
Year ended 31
January 2020
Net revenue 135,036 45,054 68,379 -- 248,469
Adjusted operating
profit / (loss)
after interest on
lease
liabilities 29,930 12,697 7,774 (9,541) 40,860
Adjusted operating
profit margin 22.2% 28.2% 11.4% -- 16.4%
Organic revenue
(decline) /
growth (5.7)% 19.3% (2.1)% -- (2.0)%
Brand marketing includes Archetype, OutCast, Nectar, Publitek, which are our B2B tech focused agencies, M Booth, our B2C focused agency and Blueshirt, our IPO advisory agency. The B2B agencies performed well, whilst M Booth recovered in the second half after a Covid impacted first half as clients deferred spend. Blueshirt had a very strong year on the back of the US tech IPO market. Total net revenue increased by 4% to GBP140.5m with an organic decline of 5.5%, but the adjusted operating profit increased by 15.5% to GBP34.6m at an improved operating margin of 24.6%.
The Data and analytics segment includes Savanta, our market research agency, Activate, our lead generation agency and Planning-inc, our data platform agency. Activate produced an outstanding performance throughout the year whilst Savanta and Planning-inc each showed a strong recovery in the second half of our financial year on the back of a recovery in consumer confidence. The segment produced a positive performance overall with net revenue growing by 8% to GBP48.4m, with pleasing organic growth of 8.2%, and delivered an operating profit of GBP13.3m at an operating margin of 27.4%.
The Creative technology segment includes our ODD, Elvis, Brandwidth, Beyond, Twogether, CRE, Palladium, Mach49, Agent3 and Velocity agencies. CRE and Mach49 were acquired during the year. Overall, the segment delivered net revenue growth of 14% to GBP77.9m with an organic net revenue decline of 6%. The adjusted operating profit increased by 68% to GBP13.1m at an improved operating profit margin of 16.8%.
Regional adjusted performance
Europe & Asia Head
UK Africa US Pacific Office Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31
January 2021
Net revenue 106,247 8,610 138,383 13,646 - 266,886
Adjusted
operating profit
/ (loss) after
interest on
lease
liabilities 22,402 1,997 34,150 2,331 (11,394) 49,486
Adjusted
operating profit
margin 21.1% 23.2% 24.7% 17.1% - 18.5%
Organic revenue
decline (6.4)% (4.7)% (0.8)% (5.5)% - (3.4)%
Year ended 31
January 2020
Net revenue 97,377 8,820 127,563 14,709 -- 248,469
Adjusted
operating profit
/ (loss) after
interest on
lease
liabilities 20,094 1,587 26,421 2,299 (9,541) 40,860
Adjusted
operating profit
margin 20.6% 18.0% 20.7% 15.6% -- 16.4%
Organic revenue
growth/(decline) 0.3% 0.4% (4.6)% 4.8% -- (2.0)%
Our US businesses have proved resilient and continued to perform well, despite the challenges of the pandemic. In the year to 31 January 2021, total US net revenues grew by 8.5% to GBP138.4m from GBP127.6m which equated to an organic decline of 0.8%, taking account of movements in exchange rates and the acquisitions of Nectar, M Booth Health and Mach49. Organic growth was impacted by the pandemic, but our lead generation agency, Activate, had a very strong performance throughout the year, whilst our B2C agency M Booth recovered in the second half after initially suffering client deferrals as a result of the pandemic. We also took decisive action on the cost base with staff reductions and a property re-organisation in our key markets of New York and San Francisco. The adjusted operating profit from our US businesses increased by 29.3% to GBP34.2m compared with GBP26.4m in the previous 12 months to 31 January 2020, with the operating margin increasing to 24.7% from 20.7% in the prior year.
The UK businesses have delivered a resilient performance over the last 12 months, with net revenue increasing by 9.1% to GBP106.2m from GBP97.4m in the prior period. This growth was helped by the acquisition of CRE and the acquisitions of Future Thinking and ComRes into our Savanta business. Our UK businesses suffered an organic revenue decline of 6.4%,
with a recovery in the fourth quarter as consumer confidence recovered. The adjusted operating profit increased to GBP22.4m from GBP20.1m in the prior year with the adjusted operating margin increasing to 21.1% from 20.6% in the prior year.
The EMEA business delivered a solid trading performance. Net revenue decreased by 2% to GBP8.6m (2020: GBP8.8m) and adjusted operating profit increased to GBP2.0m at an improved adjusted operating margin of 23.2%, due to very tight cost control.
In the APAC region net revenue decreased by 7% to GBP13.6m (2020: GBP14.7m), however the operating margin increased to 17.1% from 15.6% in the prior period and the operating profit remained at a very credible GBP2.3m.
Government support
During the year to 31 January 2021, the Group utilised various government support schemes, primarily the UK furlough scheme and deferral of US social security. In total across the Group, GBP2.1m of government assistance has been recognised as a reduction in costs during the year ending 31 January 2021. Since the year end, we have committed to repaying the furlough monies received from the UK government in full of GBP1.4m, which will be treated as an exceptional item in the results for the year to 31 January 2022.
Balance Sheet and Net Debt
The Group's balance sheet remains in a very healthy position with net cash as at 31 January 2021 of GBP14.0m (2020: net debt of GBP9.3m). The net cash inflow from operating activities before changes in working capital for the year to 31 January 2021 increased to GBP66.4m from GBP52.8m in the prior period. Our management of working capital significantly improved with an inflow of GBP6.6m compared with outflow of GBP3.3m in the prior period. This resulted in our net cash generated from operations before tax being GBP72.9m (2020: GBP49.5m).
Over the year we invested GBP23.6m in acquisition-related payments and GBP4.1m in capital expenditure.
Year to Year to
31 January 31 January
2021 2020
Cash flow KPIs GBPm GBPm
Net cash inflow from operating activities before
changes in working capital 66.4 52.8
Working capital movement 6.6 (3.3)
Net cash generated from operations 72.9 49.5
Income tax paid (8.4) (6.0)
Investing activities (27.0) (28.3)
Dividend paid to shareholders - (6.8)
The Group operates a GBP40m revolving credit facility ("RCF") with HSBC available until July 2022 and has a GBP20m term loan with GBP5m left to be repaid in December 2021. The GBP40m facility is primarily used for acquisitions, although it could be used for working capital requirements and is due to be repaid from the trading cash flows of the Group. The facility is available in a combination of sterling, US dollar and euro at an interest margin dependent upon the level of gearing in the business. The Group also has a US facility of $7m (2020: $7m) which is available for property rental guarantees and US-based working capital needs.
As part of the facilities agreement, Next 15 must comply with a number of covenants, including maintaining the multiple of net bank debt before earn-out obligations to adjusted EBITDA below 1.75x and the level of net bank debt including earn-out obligations to adjusted EBITDA below 2.5x. Next 15 has ensured that it has complied with all of its covenant obligations with significant headroom.
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEARSED 31 JANUARY 2021 AND 31 JANUARY 2020
Year ended Year ended
31 January 2021 31 January 2020
Note GBP'000 GBP'000
Revenue 323,668 300,711
Direct costs (56,782) (52,242)
Net revenue 2 266,886 248,469
Staff costs 189,530 171,180
Depreciation 11,609 13,196
Amortisation 16,394 13,211
Other operating charges 35,665 31,469
Total operating charges (253,198) (229,056)
Operating profit 2 13,688 19,413
Finance expense 6 (16,884) (16,672)
Finance income 7 1,459 2,611
Share of profit from associate 431 204
(Loss)/profit before income tax 3 (1,306) 5,556
Income tax expense 4 (2,643) (2,717)
(Loss)/profit for the year (3,949) 2,839
Attributable to:
Owners of the parent (4,938) 2,262
Non-controlling interests 989 577
(3,949) 2,839
(Loss)/earnings per share
Basic (pence) 8 (5.5) 2.7
Diluted (pence) 8 (5.3) 2.5
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARSED 31 JANUARY 2021 AND 31 JANUARY 2020
Year ended Year ended
31 January 2021 31 January 2020
GBP'000 GBP'000
(Loss)/profit for the year (3,949) 2,839
Other comprehensive (expense) / income:
Items that may be reclassified into
profit or loss:
Exchange differences on translating
foreign operations (1,395) (136)
Net investment hedge - (411)
(1,395) (547)
Items that will not be reclassified
subsequently to profit or loss
Revaluation of investments (117) (562)
Total other comprehensive expense for
the year (1,512) (1,109)
Total comprehensive (expense)/income for
the year (5,461) 1,730
Attributable to:
Owners of the parent (6,450) 1,153
Non-controlling interests 989 577
(5,461) 1,730
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
ADJUSTED RESULTS: KEY PERFORMANCE INDICATORS (Unaudited)
Year ended Year ended
31 January 2021 31 January 2020
GBP'000 GBP'000
Net revenue 266,886 248,469
Operating charges (202,991) (191,705)
EBITDA 63,895 56,764
Depreciation and Amortisation (13,001) (14,308)
Operating profit 50,894 42,456
Interest on finance lease liabilities (1,408) (1,596)
Operating profit after interest on
finance lease liabilities 49,486 40,860
Operating profit margin 18.5% 16.4%
Net finance expense (800) (827)
Share of profits of associate 431 204
Profit before income tax 49,117 40,237
Tax (9,922) (8,046)
Profit after tax 39,195 32,191
Weighted average number of ordinary
shares 89,382,909 85,284,663
Diluted weighted average number of
ordinary shares 93,818,504 90,936,482
Adjusted earnings per share 42.7p 37.1p
Diluted adjusted earnings per share 40.7p 34.8p
Cash inflow from operating activities
before working capital changes 66,380 52,823
Cash outflow on acquisition-related
payments (23,636) (24,173)
Net cash/(debt) 14,021 (9,346)
Dividend (per share) 7.0p 2.5p
Adjusted results have been presented to provide additional information that may be useful to shareholders to understand the performance of the business by facilitating comparability both year on year and with industry peers. Adjusted results are reconciled to statutory results within notes 2, 3 and 8.
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED BALANCE SHEET AS AT 31 JANUARY 2021 AND 2020
31 January 2021 31 January 2020
Note GBP'000 GBP'000
Assets
Property, plant and equipment 8,904 14,224
Right-of-use assets 26,008 41,655
Intangible assets 163,777 155,408
Investment in equity accounted
associate 254 232
Investments in financial
assets 955 1,075
Deferred tax asset 15,314 10,967
Other receivables 860 809
Total non-current assets 216,072 224,370
Trade and other receivables 77,530 70,260
Cash and cash equivalents 9 26,831 28,661
Corporation tax asset 1,215 734
Total current assets 105,576 99,655
Total assets 321,648 324,025
Liabilities
Loans and borrowings 9 7,810 33,007
Deferred tax liabilities 3,229 3,538
Lease liabilities 31,812 43,023
Other payables 1,576 16
Provisions 7,140 4,942
Contingent consideration 10 36,194 26,815
Share purchase obligation 10 5,302 2,098
Total non-current liabilities 93,063 113,439
Loans and borrowings 9 5,000 5,000
Trade and other payables 77,319 59,620
Lease liabilities 10,957 11,210 Provisions 5,656 1,522 Corporation tax liability 604 1,173 Deferred consideration 10 1,262 2,715 Contingent consideration 10 9,700 15,366 Share purchase obligation 10 1,206 1,269 Total current liabilities 111,704 97,875 Total liabilities 204,767 211,314 TOTAL NET ASSETS 116,881 112,711 Equity Share capital 2,274 2,163 Share premium reserve 92,408 76,019 Share purchase reserve (2,673) (2,673) Foreign currency translation reserve 6,166 7,561 Other reserves 608 608 Retained earnings 18,174 29,618 Total equity attributable to owners of the parent 116,957 113,296 Non-controlling interests (76) (585) TOTAL EQUITY 116,881 112,711
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARSED 31 JANUARY 2021 AND 31 JANUARY 2020
Foreign Equity
Share Share currency attributable Non-
Share premium purchase translation Other Retained to owners of controlling Total
capital reserve reserve reserve reserves(1) earnings the Company interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 January
2019 as
previously
stated 2,089 62,993 (2,673) 7,697 1,019 41,404 112,529 (1,076) 111,453
Change in
accounting
policy (IFRS
16) - - - - - (1,794) (1,794) - (1,794)
Deferred tax on
accounting
policy change - - - - - 400 400 - 400
At 1 February
2019 as
restated 2,089 62,993 (2,673) 7,697 1,019 40,010 111,135 (1,076) 110,059
Profit for the
year - - - - - 2,262 2,262 577 2,839
Other
comprehensive
income /
(expense) for
the year - - - (136) (411) (562) (1,109) - (1,109)
Total
comprehensive
income /
(expense) for
the year - - - (136) (411) 1,700 1,513 577 1,730
Shares issued on
satisfaction of
vested
performance
shares 38 5,388 - - - (5,426) - - -
Shares issued on
acquisitions 36 7,638 - - - - 7,674 - 7,674
Movement in
relation to
share-based
payments - - - - - 600 600 - 600
Tax on
share-based
payments - - - - - 167 167 - 167
Dividends to
owners of the
parent - - - - - (6,759) (6,759) - (6,759)
Movement due to
ESOP share
purchases - - - - (15) - (15) - (15)
Movement due to
ESOP share
option
exercises - - - - 15 - 15 - 15
Movement on
reserves for
non-controlling
interests - - - - - (674) (674) 674 -
Non-controlling
dividend - - - - - - - (760) (760)
At 31 January
2020 2,163 76,019 (2,673) 7,561 608 29,618 113,296 (585) 112,711
(Loss)/profit
for the year - - - - - (4,938) (4,938) 989 (3,949)
Other
comprehensive
expense for the
year - - - (1,395) - (117) (1,512) - (1,512)
Total
comprehensive
(expense) /
income for the
year - - - (1,395) - (5,055) (6,450) 989 (5,461)
Shares issued on
satisfaction of
vested
performance
shares 69 10,162 - - - (10,231) - - -
Shares issued on
acquisitions 42 6,227 - - - - 6,269 - 6,269
Movement in
relation to
share-based
payments - - - - - 3,557 3,557 - 3,557
Tax on
share-based
payments - - - - - 491 491 - 491
Movement due to
ESOP share
purchases - - - - (5) - (5) - (5)
Movement due to
ESOP share
option
exercises - - - - 5 - 5 - 5
Movement on
reserves for
non-controlling
interests - - - - - (206) (206) 206 -
Non-controlling
dividend - - - - - - - (686) (686)
At 31 January
2021 2,274 92,408 (2,673) 6,166 608 18,174 116,957 (76) 116,881
(1) Other reserves include ESOP reserve, the treasury reserve, the merger reserve and the hedging reserve.
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE YEARSED 31 JANUARY 2021 AND 31 JANUARY 2020
Year ended Year ended
31 January 2021 31 January 2020
GBP'000 GBP'000
Cash flows from operating activities
(Loss)/profit for the year (3,949) 2,839
Adjustments for:
Depreciation 3,880 4,505
Right of use depreciation 7,729 8,691
Amortisation 16,394 13,211
Finance expense 16,884 16,672
Finance income (1,459) (2,611)
Share of profit from equity accounted
associate (431) (204)
Impairment of RoU assets 8,503 -
Loss on sale/impairment of property,
plant and equipment 6,885 1,360
(Gain)/loss on exit of finance lease (2,317) 14
Income tax expense 2,643 2,717
Employment linked acquisition
provision charge 8,041 5,029
Share-based payment charge 3,587 600
Net cash inflow from operating
activities before changes in working
capital 66,380 52,823
Change in trade and other receivables (5,692) 1,971
Change in trade and other payables 12,942 (1,950)
Change in other liabilities (697) (3,343)
6,553 (3,322)
Net cash generated from operations
before tax outflows 72,933 49,501
Income taxes paid (8,423) (5,993)
Net cash inflow from operating
activities 64,510 43,508
Cash flows from investing activities
Acquisition of subsidiaries and trade
and assets, net of cash acquired (8,097) (18,501)
Payment of contingent and deferred
consideration (15,539) (5,622)
Purchase of equity investments
designated at FVTOCI - (50)
Acquisition of property, plant and
equipment (1,998) (3,460)
Proceeds on disposal of property,
plant and equipment 4 23
Proceeds on disposal of subsidiary - 466
Acquisition of intangible assets (2,109) (1,831)
Net movement in long-term cash
deposits (82) (24)
Income from finance lease receivables 780 547
Interest received 47 112
Net cash outflow from investing
activities (26,994) (28,340)
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOW (Continued)
FOR THE YEARSED 31 JANUARY 2021 AND 31 JANUARY 2020
Year ended Year ended
31 January 2021 31 January 2020
GBP'000 GBP'000
Cash flows from financing activities
Capital element of finance lease
rental repayment (12,647) (11,367)
Increase in bank borrowings and
overdrafts - 27,045
Repayment of bank borrowings and
overdrafts (24,912) (14,006)
Interest paid (881) (979)
Dividend and profit share paid to
non-controlling interest partners (686) (760)
Dividends paid to shareholders of the
parent - (6,759)
Net cash outflow from financing
activities (39,126) (6,826)
Net (decrease)/ increase in cash and
cash equivalents (1,610) 8,342
Cash and cash equivalents at beginning
of the year 28,661 20,501
Exchange losses on cash held (220) (182)
Cash and cash equivalents at end of
the year 26,831 28,661
NOTES TO THE YEAR RESULTS
FOR THE YEARSED 31 JANUARY 2021 AND 31 JANUARY 2020
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 United Kingdom (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 2021.
The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 January 2021 or 2020, but is derived from those accounts. Statutory accounts for 2020 have been delivered to the Registrar of Companies and those for 2021 will be delivered following the company's annual general meeting. The auditors have reported on those accounts: their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498(2) or (3) of the Companies Act 2006.
Going concern statement
The Directors have, at the time of approving this financial information, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing this financial information. The Directors have made this assessment in light of reviewing the Group's budget and cash requirements for a period in excess of one year from the date of signing of the annual report and considered outline plans for the Group thereafter.
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 fair value accounting charges, amortisation of acquired intangibles, brand equity incentive scheme charges and other costs not associated with the underlying business. 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.
Asia
UK EMEA US Pacific Head Office Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31
January 2021
Revenue 126,811 9,621 170,467 16,769 323,668
Net revenue 106,247 8,610 138,383 13,646 - 266,886
Adjusted
operating profit
/ (loss) after
interest on
lease
liabilities 22,402 1,997 34,150 2,331 (11,394) 49,486
Adjusted
operating profit
margin(1) 21.1% 23.2% 24.7% 17.1% - 18.5%
Organic net
revenue decline (6.4)% (4.7)% (0.8)% (5.5)% - (3.4)%
Year ended 31 January 2020
Revenue 119,551 10,631 153,481 17,048 -- 300,711
Net revenue 97,377 8,820 127,563 14,709 -- 248,469
Adjusted
operating profit
/ (loss) after
interest on
lease
liabilities 20,094 1,587 26,421 2,299 (9,541) 40,860
Adjusted
operating profit
margin(1) 20.6% 18.0% 20.7% 15.6% -- 16.4%
Organic net
revenue
growth/(decline) 0.3% 0.4% (4.6)% 4.8% -- (2.0)%
(1) Adjusted operating profit margin is calculated based on the operating profit after interest on finance lease liabilities as a percentage of net revenue.
NOTES TO THE YEAR RESULTS (Continued)
FOR THE YEARSED 31 JANUARY 2021 AND 31 JANUARY 2020
During the year, the Board of Directors also received information on the performance of the Group by operating segment in additional to regional performance.
Brand Data and Creative Head
marketing analytics technology Office Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 January
2021
Revenue 168,921 66,684 88,063 323,668
Net revenue 140,530 48,447 77,909 - 266,886
Adjusted operating
profit / (loss) after
interest on lease
liabilities 34,573 13,254 13,053 (11,394) 49,486
Adjusted operating
profit margin(1) 24.6% 27.4% 16.8% - 18.5%
Organic net revenue
growth/(decline) (5.5)% 8.2% (6.0)% - (3.4)%
Year ended 31 January 2020
Revenue 160,242 59,446 81,023 -- 300,711
Net revenue 135,036 45,054 68,379 -- 248,469
Adjusted operating
profit / (loss) after
interest on lease
liabilities(1) 29,930 12,697 7,774 (9,541) 40,860
Adjusted operating
profit margin(1) 22.2% 28.2% 11.4% -- 16.4%
Organic net revenue
growth/(decline) (5.7)% 19.3% (2.1)% -- (2.0)%
(1) Adjusted operating profit margin is calculated based on the operating profit after interest on finance lease liabilities as a percentage of net revenue.
A reconciliation of segment adjusted operating profit after interest on finance lease liabilities to segment adjusted operating profit and statutory operating profit is provided as follows:
Year ended Year ended
31 January 2021 31 January 2020
GBP'000 GBP'000
Segment adjusted operating profit
after interest on finance lease
liabilities 49,486 40,860
Interest on finance lease
liabilities 1,408 1,596
Segment adjusted operating profit 50,894 42,456
Amortisation of acquired intangibles
(note 3) (15,002) (12,099)
Share based payment charge and
charges associated with equity
transactions accounted for as
share-based payments (note 3) (2,424) (374)
Employment linked acquisition
payments (note 3) (8,041) (5,029)
Property impairment (note 3) (10,018) -
Restructuring costs (note 3) (2,746) (4,596)
UK furlough grant (note 3) 1,396 -
Deal costs (note 3) (371) (945)
Total operating profit 13,688 19,413
NOTES TO THE YEAR RESULTS (Continued)
FOR THE YEARSED 31 JANUARY 2021 AND 31 JANUARY 2020
3) RECONCILIATION OF ADJUSTED RESULTS
Year ended Year ended
31 January 2021 31 January 2020
GBP'000 GBP'000
(Loss)/profit before income tax (1,306) 5,556
Unwinding of discount on deferred
and contingent consideration and
share purchase obligation
payable(1) 5,153 3,552
Change in estimate of future
contingent consideration and share
purchase obligation payable(1) 8,064 8,086
Share-based payment charge(2) 2,424 374
Employment linked acquisition
payments(3) 8,041 5,029
Restructuring costs(4) 2,746 4,596
Deal costs(5) 371 945
Property impairment (6) 10,018 -
UK furlough grant(7) (1,396) -
Amortisation of acquired
intangibles(8) 15,002 12,099
Adjusted profit before income tax 49,117 40,237
Operating profit 13,688 19,413
Depreciation of property, plant and
equipment 3,880 4,505
Depreciation of right-of-use assets 7,729 8,691
Amortisation of intangible assets 16,394 13,211
EBITDA 41,691 45,820 Share-based payment charge(2) 2,424 374 Employment linked acquisition payments(3) 8,041 5,029 Restructuring costs(4) 2,746 4,596 Deal costs(5) 371 945 Property impairment (6) 10,018 - UK furlough grant(7) (1,396) - Adjusted EBITDA 63,895 56,764
(1) The Group adjusts for the remeasurement of the acquisition-related liabilities within the adjusted performance measures in order to aid comparability of the Group's results year on year as the charge/credit from remeasurement can vary significantly depending on the underlying brand's performance. It is non-cash and its directional impact to the income statement is opposite to the brand's performance driving the valuations. The unwinding of discount on these liabilities is also excluded from underlying performance on the basis that it is non-cash and the balance is driven by the Group's assessment of the time value of money and this exclusion ensures comparability.
(2) This charge relates to transactions whereby a restricted grant of brand equity was given to key management in M Booth & Associates LLC, Twogether Creative Limited, Savanta Group Limited and ODD London Limited (2020: M Booth & Associates 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 in the year of grant as the agreements do not include service requirements, thus the cost accounting is not aligned with the timing of the anticipated benefit of the incentive, namely the growth of the relevant brands. It also includes GBP239,000 of charges associated with equity transactions accounted for as share-based payments. The Group determines that these brand appreciation rights (or growth shares) should be excluded from underlying performance as the cost accounting is not aligned to the timing of the anticipated benefit of the incentive, namely growth of the relevant brands.
(3) This charge relates to payments linked to the continuing employment of the sellers which is being recognised over the required period of employment. Although these costs are not exceptional or non-recurring, the Group determined they should be excluded from the underlying performance as the costs solely relate to acquiring the sellers business.
(4) In the current year the Group has incurred restructuring costs which primarily relates to Covid-19 redundancy costs taken in the year in response to the pandemic in addition to writing off intangibles. These costs relate to these specific transformational events; they do not relate to underlying trading of the relevant brand and therefore have been added back to aid comparability of performance year on year. These costs are made up of GBP2.5m staff-related costs and GBP0.2m of other costs relating to the intangible write offs.
(5) This charge relates to third party professional fees incurred during acquisitions.
NOTES TO THE YEAR RESULTS (Continued)
FOR THE YEARSED 31 JANUARY 2021 AND 31 JANUARY 2020
(6) In the current year the Group has recognised charges relating to the reorganisation of the property space across the Group. The majority of the charge is impairment of right-of-use assets and leasehold improvements. As a result of Covid-19, the Group has identified excess property space within the portfolio and therefore taken an impairment charge relating to those offices. The Group has adjusted for this cost, as the additional one-off impairment charge does not relate to the underlying trading of the business and therefore added back to aid comparability.
(7) As a result of Covid-19, a number of the UK agencies received government support from the UK furlough scheme which has been accounted for as a reduction in staff costs. Subsequent to the balance sheet date, the Group has repaid all amounts received from the UK government. As a result of the receipt and repayment being accounted for in two separate years, the amounts are added back to aid comparability of the Group's profitability year on year.
(8) In line with its peer group, the Group adds back amortisation of acquired intangibles. Judgement is applied in the allocation of the purchase price between intangibles and goodwill, and in determining the useful economic lives of the acquired intangibles. The judgements made by the Group are inevitably different to those made by our peers and as such amortisation of acquired intangibles been added back to aid comparability.
Adjusted profit before income tax and adjusted EBITDA have been presented to provide additional information which may be useful to the reader. Adjusted profit before income tax 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.
4) TAXATION
The tax charge on adjusted profit for the year ended 31 January 2021 is GBP9,922,000, equating to an adjusted effective tax rate of 20.2%, compared to 20.0% in the prior year. The Group's underlying corporation tax rate is expected to remain higher than the standard UK rate for the foreseeable future due to the higher rate of tax the Group suffers on its overseas profits. The Group notes that Governments around the world are likely to increase their rates of corporation tax materially over the next few years to help pay for the cost of economic support in light of the pandemic. Therefore, it is likely that the Group's adjusted effective rate of tax will increase materially over the next few years reflecting these increases.
The statutory tax charge for the year ended 31 January 2021 is GBP2,643,000.
5) DIVIDS
A final dividend of 7p per ordinary share will be paid on 13 August 2021 to shareholders listed on the register of members on 9 July 2021. Shares will go ex-dividend on 8 July 2021. In the prior year, given the macroeconomic backdrop due to Covid-19, the Group decided to suspend the final dividend. This makes the total dividend for the year 7p per share (2020: 2.5p).
6) FINANCE EXPENSE
Year ended Year ended
31 January 2021 31 January 2020
GBP'000 GBP'000
Financial liabilities at amortised
cost
Bank interest payable 877 977
Interest on lease liabilities(1) 1,408 1,596
Financial liabilities at fair value
through profit and loss
Unwinding of discount on deferred
and contingent consideration and
share purchase obligation
payable(1) 5,153 3,552
Change in estimate of future
contingent consideration and share
purchase obligation payable(1) 9,442 10,545
Other
Other interest payable 4 2
Finance expense 16,884 16,672
(1) These items are adjusted for in calculating the adjusted net finance expense.
NOTES TO THE YEAR RESULTS (Continued)
FOR THE YEARSED 31 JANUARY 2021 AND 31 JANUARY 2020
7) FINANCE INCOME
Year ended Year ended
31 January 2021 31 January 2020
GBP'000 GBP'000
Financial assets at amortised cost
Bank interest receivable 43 99
Finance lease interest receivable 34 40
Financial liabilities at fair value
through profit and loss
Change in estimate of future
contingent consideration and share
purchase obligation payable(1) 1,378 2,459
Other interest receivable 4 13
Finance income 1,459 2,611
(1) These items are adjusted for in calculating the adjusted net finance expense.
8) EARNINGS PER SHARE
Year ended Year ended
31 January 2021 31 January 2020
GBP'000 GBP'000
(Loss)/earnings attributable to
ordinary shareholders (4,938) 2,262
Unwinding of discount on future
deferred and contingent consideration
and share purchase obligation
payable 5,153 3,552
Change in estimate of future
contingent consideration and share
purchase obligation payable 8,064 8,086
Share based payment charge 2,424 374
Restructuring costs 2,746 4,596
Property impairment 10,018 -
UK furlough grant (1,396) -
Amortisation of acquired intangibles 15,002 12,099
Employment linked acquisition payments 8,041 5,029
Deal costs 371 945
Tax effect of adjusting items above (7,280) (5,331)
Adjusted earnings attributable to
ordinary shareholders 38,205 31,612
Number Number
Weighted average number of ordinary
shares 89,382,909 85,284,663
Dilutive LTIP shares 820,997 755,018
Dilutive growth deal shares 1,552,359 2,983,371
Other potentially issuable shares 2,062,239 1,913,430
Diluted weighted average number of
ordinary shares 93,818,504 90,936,482
NOTES TO THE YEAR END RESULTS (Continued)
FOR THE YEARS ENDED 31 JANUARY 2021 AND 31 JANUARY 2020
8) EARNINGS PER SHARE (Continued)
Basic (loss)/earnings per share (5.5)p 2.7p Diluted (loss)/earnings per share (5.3)p 2.5p Adjusted earnings per share 42.7p 37.1p Diluted adjusted earnings per share 40.7p 34.8p
Adjusted and diluted adjusted earnings per share have been presented to provide additional information which may be useful to shareholders to understand the performance of the business by facilitating comparability both year on year and with industry peers. The adjusted earnings per share is the performance measure used for the vesting of employee performance shares.
9) NET DEBT
The HSBC Bank revolving credit facility of GBP40m expires in July 2022 and therefore the outstanding balance of GBP7.8m has been classified in non-current borrowings. The GBP20m loan drawn from HSBC is repayable in annual instalments and is classified in non-current borrowings with the exception of the instalment due in less than one year.
31 January 2021 31 January 2020 GBP'000 GBP'000 Total loans and borrowings 12,810 38,007 Less: cash and cash equivalents (26,831) (28,661) Net (cash)/debt (14,021) 9,346 Share purchase obligation 6,508 3,367 Contingent consideration 45,894 42,181 Deferred consideration 1,262 2,715 Net debt and acquisition related liabilities 39,643 57,609
10) OTHER FINANCIAL LIABILITIES
Contingent Share purchase
Deferred consideration consideration obligation
GBP'000 GBP'000 GBP'000
At 31 January 2019 4,646 24,712 1,736
Arising during the year 350 14,445 -
Exchange differences - (726) 7
Utilised (2,667) (5,425) (453)
Unwinding of discount 386 3,008 158
Change in estimate - 6,167 1,919
At 31 January 2020 2,715 42,181 3,367
Arising during the year - 12,885 -
Exchange differences - (1,979) (50)
Utilised (4,037) (14,635) -
Unwinding of discount 179 4,515 459
Change in estimate - 5,332 2,732
Reclassification 2,405 (2,405) -
At 31 January 2021 1,262 45,894 6,508
Current 1,262 9,700 1,206
Non-current - 36,194 5,302
NOTES TO THE YEAR END RESULTS (Continued)
FOR THE YEARS ENDED 31 JANUARY 2021 AND 31 JANUARY 2020
11) EVENTS AFTER THE BALANCE SHEET DATE
On 9 April 2021 Next 15 purchased the entire issued share capital of Shopper Media Group Ltd ("SMG") and its subsidiaries, a UK based agency specialising in commerce marketing activation, connecting retailers and brands with shoppers at the point of purchase both online and in-store. The initial consideration is approximately GBP15.7m and further consideration is payable around June 2023 and June 2025 based on the EBITDA performance of SMG in the two year periods ending 31 January 2023 and 31 January 2025. We expect to recognise goodwill on this acquisition due to the anticipated profitability and operating synergies. Due to the recent timing of the acquisition, the IFRS 3 acquisition accounting has not yet been completed.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210412005982/en/
CONTACT:
Next Fifteen Communications Plc
SOURCE: Next Fifteen Comm
Copyright Business Wire 2021
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