17th Apr 2007 07:02
Next Fifteen Communications Grp PLC17 April 2007 17 April 2007 Next Fifteen Communications Group plc Interim results Next Fifteen Communications Group plc ("Next Fifteen" or "the Group"), theinternational public relations consultancy group, today reports recordprofitability and revenues for its financial results for the six months to 31January 2007. Financial highlights: •Revenues up 11% to £29.4 million (2006: £26.5 million) •Adjusted profit before tax increased by 53% to £2.6 million (2006: £1.7 million) •EBITDA up 41% to £3.6 million (2006: £2.5 million) •Adjusted earnings per share rose by 47% to 3.36p (2006: 2.28p) •Interim dividend increased 9.6% to 0.4p (2006: 0.365p) •Adjusted operating profit margin before net central costs increased to 12.2% (2006: 10.9%) following a reduction in staff costs to 68.8% of revenue (2006: 70.2%) Corporate progress: •Strong overall performance by the Group's technology and non-technology businesses; growth of existing client revenue and significant new client wins including Boots, Cisco, Raytheon and Polycom •Growing revenue contribution from the Group's new "Clean Technologies" practices which focus on "green" technology clients including those in the bio fuels sector •Organic revenue growth in Asia up 11%; helped by launch of Vox PR and a new Text 100 office in Kuala Lumpur •Stake in Lexis Public Relations increased to 76%, further strengthening the Group's presence beyond the technology sector. Remaining equity to be purchased over the next three years •UK business has performed well with Lexis revenue consolidated, and 12% growth in Bite London following the successful integration of Credo •OutCast, acquired in June 2005, continues to perform strongly with revenue growth of 22% in $ terms •Post-period end, successful merger of August One and Text 100 businesses to strengthen Text 100's consumer and technology offering. Commenting on the results, Will Whitehorn, Chairman of Next Fifteen, said: "Overall, the Group has generated strong results for the period and continues tomake good progress. The Group is well placed to expand its business further dueto its operations in high growth markets such as China and India and itsoperations in North America. "Significant new client wins were achieved in both technology and non-technologysectors; these include Boots, Cisco, Raytheon and Polycom. Outcast, acquired inJune 2005, performed exceptionally well, growing revenue by 22% in dollarterms. In addition, the Group has created practices in all three pf its USbusinesses (Outcast, Bite and Text 100) to service the rapidly expanding CleanTechnology market in areas such as bio fuels. "We remain optimistic about the growth potential of the PR market and, inparticular, high growth markets such as India and China as well as moreestablished markets such as the UK and US. Beyond the current financial year,the Board remains confident that the Group will continue to generate goodorganic growth given its sector focus and geographic reach. In addition, theGroup is actively seeking selected acquisitions to expand its serviceofferings." - Ends - For further information:Next FifteenTim Dyson, Chief Executive 001 415 350 2801David Dewhurst, Finance Director 07974 161 183 Merlin 020 7653 6620Vanessa Maydon 07802 961 902Anja Kharlamova 07887 788 4788 Attached: Chairman and Chief Executive's Statement Consolidated Profit & Loss Account Consolidated Statement of Total Recognised Gains & Losses Consolidated Balance Sheet Consolidated Cash Flow Statement Notes to the Interim Statement Chairman and Chief Executive's Statement Next Fifteen is pleased to report once again record results for the six monthsto 31 January 2007. Revenues increased by 11% to £29.4m (2006: £26.5m) andearnings before interest, tax, depreciation and amortisation rose by 41% to£3.6m (2006: £2.5m). Adjusted profit before tax increased by 53% to £2.6m (2006:£1.7m). At the same time, adjusted earnings per share rose by 47% to 3.36p(2006: 2.28p). As a result of this strong performance, the Board has decided toincrease the interim dividend by 9.6% to 0.4p (2006: 0.365p). The Group's strategy remains focused on generating organic growth from itsexisting PR brands and supplementing this with targeted acquisitions that offergrowth potential and complement the existing PR businesses. Overall, the Group has generated strong results for the period and continues tomake good progress. The Group is well placed to expand its business further dueto its operations in high-growth markets such as China and India and itsoperations in North America. In India, we launched a new PR brand, Vox PR, as analternative technology-focused business, with offices in Delhi, Mumbai andBangalore. The growth from Vox PR and a new office for Text 100 in Malaysiahelped grow APAC region revenues by 11%. Significant new client wins were achieved in both technology and non-technologysectors; these include Boots, Cisco, Raytheon and Polycom. OutCast, acquired inJune 2005, performed exceptionally well, growing revenue by 22% in dollar terms. In addition the Group has created practices in all three of its US businesses(Outcast, Bite and Text 100) to service the rapidly expanding Clean Technologymarket in areas such as bio fuels. Clients in this area include Novazone, KhoslaVentures, and PARC. In November 2006, the Group acquired a further 25% of Lexis Public Relations,thereby increasing its holding to 76%. This adds to the UK revenue and profitsand further strengthens the Group's presence beyond the technology sector. Theremaining equity will be purchased over the next three years. The acquisitions of OutCast and Lexis have helped the Group reduce its relianceon key clients, with the top 10 clients now representing less than 40% of totalrevenue. The successful integration of Credo Communications into Bite London(acquired in December 2005) has helped the business grow by 12% in the firsthalf of the year. Prospects Shortly after the period-end, the Board decided to merge its August One businessinto Text 100 to strengthen Text 100's consumer technology and corporate PRservices. This merger has gone smoothly and the expanded operations have alreadyseen significant new business opportunities emerge as a result. The merger willresult in some costs related to duplicated resources and office space in thesecond half. However, the Group remains fully confident of meeting its targetsfor the current financial year. Turnover growth has been held back again by an8.2% weakening of the dollar over the first half of the year, and with 40% ofthe Group's revenue coming from the US this will also affect the second half.The impact on profit growth is significantly mitigated by matching dollar costsand some currency protection. We remain optimistic about the growth potential of the PR market and, inparticular, high-growth markets such as India and China as well as moreestablished markets such as the UK and US. Beyond the current financial year,the Board remains confident that the Group will continue to generate goodorganic growth given its sector focus and geographic reach. In addition, theGroup is actively seeking selected acquisitions to expand its service offerings. Will Whitehorn Tim Dyson Chairman Chief Executive Officer 17 April 2007 NEXT FIFTEEN COMMUNICATIONS GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 31 JANUARY 2007 Six months Six months Year ended ended 31 ended 31 31 July 2006 January 2007 January 2006 (Audited) (Unaudited) (Unaudited) (restated)(1) (restated)(1) Note £'000 £'000 £'000 Turnover 2 34,797 29,551 63,278 Other externalcharges (5,354) (3,065) (7,271) ------ ------- ------Net revenue 29,443 26,486 56,007 Staff costs 20,258 18,583 38,848Depreciation 746 700 1,449Amortisationand amountswritten offintangibleassets 404 288 727Reorganisationcosts - - 700Otheroperatingcharges 5,667 5,468 11,302 ------- ------ ------ (27,075) (25,039) 53,026 ------- ------- ------Groupoperatingprofit 2,368 1,447 2,981 Share ofoperatingprofit ofassociate 32 74 174 ------- ------- ------Operatingprofitincludingassociate 2,400 1,521 3,155 Interestreceivable andsimilar income 52 16 47Interestpayable andsimilarcharges (290) (217) (312) ------- ------- -------Profit onordinaryactivitiesbeforetaxation 2,3 2,162 1,320 2,890 Taxation onprofit onordinaryactivities 4 (888) (558) (1,494) ------- ------- ------ Profit onordinaryactivitiesafter taxation 1,274 762 1,396 Minorityinterest (97) (26) (179) ------- ------- ------ Profitattributabletoshareholders 6 1,177 736 1,217 ======= ======= ====== Earnings pershare 6Basic 2.43p 1.59p 2.62pDiluted 2.29p 1.50p 2.48p (1) See note 1 for details. NEXT FIFTEEN COMMUNICATIONS GROUP PLC CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE SIX MONTHS ENDED 31 JANUARY 2007 Six months Six months Year ended ended ended 31 January 2007 31 January 2006 31 July 2006 (Unaudited) (Unaudited) (Audited) (restated)(1) (restated)(1) £'000 £'000 £'000 Profit attributable toshareholders 1,177 736 1,217 Translation differences onforeign currency netinvestments (587) 7 (72)Translation differences onlong-term foreign currencyinter-company loans 301 (73) (110) -------- ------ ------Total recognised gains andlosses related to theperiod 891 670 1,035 ======== ====== ====== (1) See note 1 for details. NEXT FIFTEEN COMMUNICATIONS GROUP PLC CONSOLIDATED BALANCE SHEET AS AT 31 JANUARY 2007 31 January 2007 31 January 2006 31 January 2006 (Unaudited) (Unaudited) (Audited) (restated)(1) (restated)(1) Note £'000 £'000 £'000 Fixed assets Intangibleassets 12,551 8,239 11,188Tangible assets 3,037 2,872 3,063Investments 124 1,555 92 ------ ------ ------ 15,712 12,666 14,343Current assets Debtors - due within one year 16,338 13,486 15,434 - due after more than one year 355 404 335 ------ ------ ------ 16,693 13,890 15,769 Cash at bank and in hand 2,604 756 4,018 ------ ------ ------ 19,297 14,646 19,787 Creditors:amountsfalling duewithin oneyear 11,490 8,093 12,554 ------ ------ ------ Net currentassets 7,807 6,553 7,233 ------ ------ ------ Total assetsless currentliabilities 23,519 19,219 21,576 Creditors:amountsfalling dueafter morethan one year 7,361 5,440 6,834 ------ ------ ------ Net assets 2 16,158 13,779 14,742 ------ ------ ------ Capital and reservesCalled upshare capital 1,334 1,281 1,303Shares to beissued 240 553 558Share premiumaccount 5,157 5,907 5,157Merger reserve 2,158 81 1,353Share-basedpaymentreserve 516 171 342ESOP reserve (1,280) (1,559) (1,487)Profit andloss account 7,978 7,345 7,516 ------ ------ ------ Equityshareholders'funds 16,103 13,779 14,742 Minorityinterests 55 - - ------ ------ ------ 16,158 13,779 14,742 ------ ------ ------ (1) See note 1 for details. NEXT FIFTEEN COMMUNICATIONS GROUP PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 JANUARY 2007 Six months Six months Year ended ended 31 ended 31 January 2007 January 2006 (Unaudited) (Unaudited) 31 July 2006 (Audited) Note £'000 £'000 £'000Net cashinflow fromoperatingactivities 7 1,897 608 4,948 Returns oninvestmentsand servicingof financeInterestreceived 52 18 47Interest paid (213) (126) (303)Minorityinterestdividend paid - (69) (69) ------ ------ ------Net cashoutflow fromreturns oninvestmentsand servicingof finance (161) (177) (325) Taxation (1,560) (1,215) (2,430) Capitalexpenditureand financialinvestment(Paymentsfor)/receiptsfrom long-termdeposits (31) 6 60Payments toacquiretangible fixedassets (699) (625) (1,280)Proceeds fromsale oftangible fixedassets 6 9 17 ------ ------ ------ Net cashoutflow fromcapitalexpenditureand financialinvestment (724) (610) (1,203) Acquisitionsand disposalsAcquisitionexpenses 8 (10) (594) (720)Purchase ofassociateundertaking - (1,272) (11)Purchase ofsubsidiaryundertaking 8 (1,946) (216) (2,749)Cash at bankand in handacquired withsubsidiary - 132 1,388Payments toacquire tradeand assets - (74) (262) ------ ------ ------Net cashoutflow fromacquisitionsand disposals (1,956) (2,024) (2,354) Equitydividends paid (492) (417) (590) ------ ------ ------ Net cashoutflow beforefinancing (2,996) (3,835) (1,954) FinancingIssue of newshare capital - 27 49Proceeds fromsale of ownshares 272 115 183Cash inflowfrom long-termbank loan 7 839 2,605 3,716Capitalelement offinance leaserentalrepayments 7 (34) - (20)Redemption ofminorities - (1,108) (1,009) ------ ------ ------ Cash inflowfrom financing 1,077 1,639 2,919 ------ ------ ------ (Decrease)/increase in cashin the period 7 (1,919) (2,196) 965 ------ ------ ------ NOTES TO THE INTERIM ACCOUNTS FOR THE SIX MONTHS ENDED 31 JANUARY 2007 1) FINANCIAL INFORMATION The financial information is for the six months ended 31 January 2007 and is notaudited as defined by APB Bulletin 1993/1 and 1998/6. The financial informationin this report does not constitute statutory financial statements within themeaning of section 240 of the Companies Act 1985 (as amended). The results forthe year ended 31 July 2006 have been extracted from the financial statements ofthe Group on which an unqualified audit report has been received which did notcontain a statement under section 237 of the Companies Act 1985 and which havebeen filed with the Registrar of Companies. The interim statement is prepared on the basis of the accounting policies as setout in the last annual report, except for the following: FRS20 "Share-based Payment" has been adopted in these interim financialstatements. The main impact of FRS20 is the recognition of a profit and losscharge based upon the fair value of share options. This contrasts with theprevious accounting treatment prescribed by UITF 17 "Employee Share Schemes",under which no profit and loss charge was incurred as the option price was equalto the share price on date of grant. The prior full and half year comparativeshave been restated to reflect the change. The effect of this change in accounting policy on the comparatives is that theLTIP and conditional share award charges, reported within staff costs, haveincreased by £85,000 and £113,000 for the 6 months ended 31 January 2006 and theyear ended 31 July 2006 respectively. There is no impact on the net assets ofeither comparative period as the charges are offset by a corresponding movementin the share-based payment reserve. FRS23 "The Effects of Changes in Foreign Exchange Rates", adopted at 31 July2006 is no longer being implemented, and instead the provisions of SSAP20 apply.This impacts the treatment of foreign exchange differences on long-term foreigncurrency inter-company loans, which under SSAP20 are taken directly to reservesrather than through the profit and loss account. The 31 July 2006 full yearcomparatives have been restated to reflect the change, reducing the interestpayable figure in the profit and loss account by £110,000 after the transfer of£110,000 of foreign exchange loss to reserves. There is no impact on the netassets at 31 July 2006. NOTES TO THE INTERIM ACCOUNTS FOR THE SIX MONTHS ENDED 31 JANUARY 2007 2) SEGMENTAL INFORMATION Analysis of turnover, profit before taxation and net assets by geographic originand destination are stated below. The turnover relates to one class of business,being the provision of public relations services. Turnover Profit before Net assets taxation (restated)(1) (restated)(1) £'000 £'000 £'000Six months ended 31 January 2007 (Unaudited)Continuing activities:UK 12,205 832 733EMEA* 5,011 245 1,219North America 13,623 2,144 12,423Asia Pacific 3,896 327 2,119Head Office 62 (1,386) (336) --------- --------- --------- 34,797 2,162 16,158 ========= ========= ========= Six months ended 31 January 2006 (Unaudited)Continuing activities:UK 6,076 (170) 2,483EMEA* 4,746 105 1,098North America 15,231 2,068 6,256Asia Pacific 3,498 213 1,900Head Office - (896) 2,042 --------- --------- --------- 29,551 1,320 13,779 ========= ========= ========= Year ended 31 July 2006 (Audited)Continuing activities:UK 15,935 294 1,367EMEA* 9,776 465 1,108North America 30,476 3,940 10,839Asia Pacific 7,091 552 1,946Head Office - (2,361) (518) --------- --------- --------- 63,278 2,890 14,742 ========= ========= ========= *EMEA means Europe (excluding the UK), Middle East and Africa. (1) See note 1 for details. NOTES TO THE INTERIM ACCOUNTS FOR THE SIX MONTHS ENDED 31 JANUARY 2007 3) RECONCILIATION OF PRO-FORMA FINANCIAL MEASURES Six months Six months Year ended ended ended 31 January 2007 31 January 2006 31 July 2006 (Unaudited) (Unaudited) (Audited) (restated)(1) (restated)(1) £'000 £'000 £'000 Profit on ordinaryactivities before taxation 2,162 1,320 2,890Reorganisation costs - - 700Amortisation and amountswritten off intangibleassets 404 313 727Unwinding of discount ondeferred consideration(2) 77 91 - ---------- ---------- ---------- Adjusted profit on ordinaryactivities before taxation 2,643 1,724 4,317 ========== ========== ========== Adjusted profit on ordinary activities before taxation has been presented toprovide additional information which may be useful to the reader. (1) See note 1 for details. (2) As required by FRS12 - "Provisions, Contingent Liabilities and Assets", aninterest charge of £77,000 has been recognised during the period in relation tothe deferred consideration payable for OutCast Communications. 4) TAXATION ON PROFIT ON ORDINARY ACTIVITIES The tax charge is based on the forecast effective tax rate for the year and ishigher than a standard UK rate as a result of profits being generated in hightax regimes. 5) DIVIDENDS An interim dividend of 0.4p (2006: 0.365p) per ordinary share will be paid on 31May 2007 to shareholders on the register of members on 27 April 2007. Shareswill go ex dividend on 25 April 2007. The Employee Share Ownership Trust haswaived its rights to dividends of £18,000 in the six months ended 31 January2007 (Interim 2006: £18,000; Full year 2006: £62,000). NOTES TO THE INTERIM ACCOUNTS FOR THE SIX MONTHS ENDED 31 JANUARY 2007 6) EARNINGS PER SHARE Six months Six months Year ended 31 ended 31 ended 31 July 2006 January 2007 January 2006 (Audited) (Unaudited) (Unaudited) (restated)(1) (restated)(1) £'000 £'000 £'000 Basic anddilutedearningsattributableto ordinaryshareholders 1,177 736 1,217Reorganisationcosts aftertaxation - - 470Amortisationof goodwillafter taxation 372 227 670Unwinding ofdiscount ondeferredconsideration 77 91 - ----------- ----------- ----------Adjusted anddilutedadjustedearningsattributableto ordinaryshareholders 1,626 1,054 2,357 =========== =========== ========== Number Number Number Weightedaverage numberof ordinaryshares 48,346,868 46,183,526 46,457,657Dilutive shares 3,036,054 2,888,972 2,601,295 ----------- ----------- ----------Dilutedweightedaverage numberof ordinaryshares 51,382,922 49,072,498 49,058,952 ----------- ----------- ---------- Basic earningsper share 2.43p 1.59p 2.62pDilutedearnings pershare 2.29p 1.50p 2.48pAdjustedearnings pershare 3.36p 2.28p 5.07pDilutedadjustedearnings pershare 3.16p 2.15p 4.80p Adjusted and diluted adjusted earnings per share have been presented to provideadditional useful information. The adjusted earnings per share is theperformance measure used for the vesting of employee share options andperformance shares. (1) See note 1 for details. NOTES TO THE INTERIM ACCOUNTS FOR THE SIX MONTHS ENDED 31 JANUARY 2007 7) NOTES TO THE CASH FLOW STATEMENT (1) Reconciliation of operating profit to net cash inflow from operatingactivities Six months Six months Year ended ended ended 31 January 2007 31 January 2006 31 July 2006 (Unaudited) (Unaudited) (Audited) (restated)(1) (restated)(1) £'000 £'000 £'000 Groupoperatingprofit 2,368 1,447 2,981Depreciation,amortisationand amountswritten offintangibleassets 1,150 988 2,176Loss on saleof tangiblefixed assets 7 3 4Profit on saleof minorityinterest - (100) (100)LTIP andconditionalshare awardcharge 174 171 342Increase indebtors (840) (1,516) (2,668)(Decrease)/increase increditors (962) (380) 2,218Decrease inprovisions - (5) (5) ----------- ----------- -----------Net cashinflow fromoperatingactivities 1,897 608 4,948 =========== =========== =========== (2) Reconciliation of net cash flow to movement in net debt/funds Six months Six months Year ended ended ended 31 January 2007 31 January 2006 31 July 2006 (Unaudited) (Unaudited) (Audited) (restated)(1) (restated)(1) £'000 £'000 £'000 (Decrease)/increase in cashat bank and inhand (1,331) (2,196) 1,192Increase inbank overdraft (588) - (227) ----------- ----------- -----------(Decrease)/increase in cashin the period (1,919) (2,196) 965Cash outflowfrom decreasein leasefinancing 34 - 20Cash inflowfrom increasein bank loansrepayableafter morethan one year (839) (2,605) (3,716) ----------- ----------- -----------Change in netdebt/fundsresulting fromcashflows (2,724) (4,801) (2,731)Increase inleasefinancing (88) - (299)Bank loansacquired withsubsidiary - - (724)Translationdifferences (73) (8) (134) ----------- ----------- -----------Change in netdebt/fundsresulting fromnon-cashmovements (161) (8) (1,157)Movement innet debt/fundsin the period (2,885) (4,809) (3,888) ----------- ----------- ----------- Net(debt)/fundsat beginningof period (1,439) 2,449 2,449 Net debt atperiod end (4,324) (2,360) (1,439) =========== =========== =========== (1) See note 1 for details. NOTES TO THE INTERIM ACCOUNTS FOR THE SIX MONTHS ENDED 31 JANUARY 2007 7) NOTES TO THE CASH FLOW STATEMENT (continued) (3) Analysis of net debt At 31 July 2006 Cashflow Exchange Non cash At 31 January movement movements 2007 £'000 £'000 £'000 £'000 £'000 Cash at bankand in hand 4,018 (1,331) (83) - 2,604Bank overdraft (227) (588) 10 - (805) --------- --------- -------- -------- --------- 3,791 (1,919) (73) - 1,799 Obligationsunder financeleases (279) 34 - (88) (333)Bank loansrepayablewithin oneyear (320) - - - (320)Bank loansrepayableafter morethan one year (4,631) (839) - - (5,470) --------- --------- -------- -------- --------- (1,439) (2,724) (73) (88) (4,324) ========= ========= ======== ======== ========= 8) ACQUISITIONS 1. On 31 October 2006, the Company paid £566,000 ($1,078,000) relating to thedeferred consideration for the purchase of OutCast Communications Limited("OutCast") in June 2005. £321,000 ($613,000) of the £566,000 was settled incash and the remainder in shares. 2. On 30 November 2006, the Company acquired a further 25% stake in the UKpublic relations company Lexis Public Relations Limited ("Lexis") by thepurchase of a 25% stake in Panther Communications Group Limited ("Panther"), theparent company of Lexis. The stake was acquired for a total consideration of£2,071,000 of which £1,553,000 was satisfied in cash and the remainder inshares, taking the Company's total stake to 76%. Based upon the acquisition balance sheet at 30 November 2006, goodwill of£2,039,000 has been capitalised including £10,000 of legal and professionalfees. The goodwill will be amortised over its useful economic life of 20 years.It is the intention of the Company to acquire the whole of Panther by 2010 andPanther's existing management has agreed to sell further stakes in the companyover the next three years. 3. On 1 January 2007, the Company paid £143,000 as deferred consideration forthe purchase of Credo Communications Limited ("Credo") in December 2005. £72,000of the £143,000 was settled in cash and the remainder in shares. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
NFC.L