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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
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)
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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