4th Apr 2006 07:01
Next Fifteen Communications Grp PLC04 April 2006 4 April 2006 Next Fifteen Communications Group plc Interim Results for six months to 31 January 2006 Record half-year revenues, profits and earnings 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 2006. Financial highlights: • Revenues up 29.6% to £26.5 million (2005: £20.4 million)• Adjusted profit before tax increased by 22.4% to £1.8 million (2005: £1.5 million)• Adjusted earnings per share up by 17.6% to 2.47p (2005: 2.10p)• Interim dividend increased 10.6% to 0.365p (2005: 0.33p) Corporate progress: • Acquisition of Credo Communications in the UK and Parachute Marketing in the US; successful integration into Bite Communications• Strong overall performance by the Group's technology and non-technology focused businesses; growth of existing client mandates and significant new client wins• Significant revenue growth from US operations; up 58% year on year following acquisition of OutCast in 2005• Organic revenue growth in Asia up 32%• Stake in Lexis Public Relations to increase to 51% in April; further strengthening Group's presence beyond technology sector. Remaining equity to be purchased over next four years. Commenting on the results, Will Whitehorn, Chairman of Next Fifteen, said: "Next Fifteen Communications Group plc is pleased to report record half yearresults for the six months to 31 January 2006, achieving record revenues,profitability and earnings. "The Group's strategy remains focused on driving organic growth from itsexisting PR brands and supplementing this with targeted acquisitions that offergrowth potential and complement the existing PR businesses. "The Group is pleased to report strong performances from its operatingsubsidiaries. In particular, its Bite and OutCast businesses have shown strongrevenue and profit growth. "We are confident that the Group's strong organic growth prospects and recentacquisitions coupled with further structural changes being made to the Group,will provide a good platform from which to generate further growth at the topand bottom line in the next financial year." - Ends - For further information: Next Fifteen Communications GroupTim Dyson, Chief Executive 001 415 350 2801David Dewhurst, Finance Director 07974 161183 Merlin 020 7653 6620Vanessa Maydon Mob. 07802 961 902Rebecca Penney Mob. 07795 108 178 Attached: Chairman and Chief Executive 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 OFFICER'S STATEMENT Next Fifteen Communications Group plc is pleased to report record half yearresults for the six months to 31 January 2006, achieving record revenues,profitability and earnings. Revenues increased by 29.6% to £26.5m (2005:£20.4m), while adjusted profit before tax increased by 22.4% to £1.8m (2005:£1.5m) (See Note 3). At the same time adjusted earnings per share rose 17.6% to2.47p (2005: 2.10p) (See Note 5). As a result of this record performance, theBoard has decided to increase the interim dividend by 10.6% to 0.365p (2005:0.33p). The Group's strategy remains focused on driving organic growth from its existingPR brands and supplementing this with targeted acquisitions that offer growthpotential and complement the existing PR businesses. Since the Group reported its last full-year results it has completed two smallacquisitions. The acquisition of Credo Communications in the UK was completed inDecember 2005 and in February 2006, the Group completed the acquisition of thePR assets of Parachute Marketing in the US. Both businesses were acquired tostrengthen Bite's management team and product offering in the UK and USrespectively and the operations have been successfully integrated into BiteCommunications. The Group is pleased to report a strong overall performance from its operatingsubsidiaries. In particular, its Bite and OutCast businesses have shown strongrevenue and profit growth following increased assignments from existing clientsand the addition of new clients including Virgin Lifecare, Autonomy, OQO, GettyImages, Navio, TrustedID and Ingres. Text 100, the Group's largest business has added two global clients, Philips andMathworks, during the period. It has also added Adobe, Tacit Networks and Par 3Communications. During the period, Text 100 worked with its largest client, IBM,to reallocate budgets from developed markets such as the US and EMEA to emergingmarkets such as China. This has slowed Text 100's growth in these developedmarkets; however, with a strong new business climate we anticipate a return togrowth in the second half of 2006. Inferno, the Group's third technology PR business in the UK, has continued toexpand and new clients include Voice over IP leader, Vonage. The Group's non-technology businesses, August One and now Lexis both addedsignificant clients including nPower, Network Rail, Kerry Foods and NorwichUnion. Looking at the performance of the Group by region, North America continues togenerate strong revenue growth and now accounts for over 50% of Group turnover.With the acquisition of OutCast towards the end of the last financial year, theGroup saw North American revenues rise by 58% year on year. Even without theseacquired revenues, the Group's North American business generated revenue growthof 29%. In the period, the Group has also demonstrated strong organic revenuegrowth in Asia of 32%. Revenues in EMEA remained relatively flat overall in thefirst half, although we are encouraged by the improvement in revenue prospectsfor the second half. Prospects In early April, the Group will complete the next stage of its acquisition of oneof the UK's leading consumer PR agencies, Lexis Public Relations. Followingthis, Next Fifteen will own 51% of Lexis. The remaining 49% will be acquiredover the next four years in line with agreements already signed. The acquisitionof Lexis has successfully strengthened the Group's presence beyond thetechnology sector. The Group has recently embarked on a restructuring of the business to furtherreduce its cost base and also improve its overall tax position. This will resultin one-off expenses in the second half. We are confident, however, that thesechanges, in addition to the Group's strong organic growth prospects and recentacquisitions, will provide a good platform from which to generate further growthin the next financial year. Will Whitehorn Tim Dyson Chairman Chief Executive Officer 4 April 2006 NEXT FIFTEEN COMMUNICATIONS GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 31 JANUARY 2006 Six months ended 31 Six months ended 31 Year ended January 2006 January 2005 31 July 2005 (Unaudited) (Unaudited) (Audited) Note £'000 £'000 £'000TurnoverExistingoperations 2 29,516 23,035 48,516Acquisitions 2 35 - - ------- ------ ------Continuingoperations 29,551 23,035 48,516 Otherexternal (3,065) (2,606) (5,290)charges ------- ------- ------Net revenue 26,486 20,429 43,226 Staff costs 18,498 14,183 30,100Depreciation 700 583 1,115Amortisationand amountswritten offintangibleassets 288 100 232Otheroperatingcharges 5,468 4,194 8,746 ------- ------ ------ (24,954) (19,060) (40,193)GroupoperatingprofitExistingoperations 1,514 1,369 3,033Acquisitions 8 18 - - ------- ------- ------Continuingoperations 1,532 1,369 3,033 Share ofoperatingprofit ofacquiredassociate 8 74 - - ------- ------- ------Operatingprofitincludingassociate 1,606 1,369 3,033 Interestreceivableand 16 25 46similarincomeInterestpayable andsimilarcharges (217) (16) (25) ------- ------- ------Profit onordinaryactivitiesbeforetaxation 2 1,405 1,378 3,054 Taxation onprofit onordinaryactivities 4 (558) (601) (1,332) ------- ------- ------ Profit onordinaryactivitiesafter 847 777 1,722taxation Minorityinterest (26) (53) (183) ------- ------- ------ Profitattributableto members 821 724 1,539 ------- ------- ------ Earnings pershare 6Basic 1.78p 1.85p 3.87pDiluted 1.67p 1.77p 3.73pAdjusted 2.47p 2.10p 4.45p NEXT FIFTEEN COMMUNICATIONS GROUP PLC CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE SIX MONTHS ENDED 31 JANUARY 2006 Six months ended Six months ended Year ended 31 January 2006 31 January 2005 31 July 2005 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Profit attributable tomembers 821 724 1,539 Translation differences onforeign currency netinvestments 7 (73) 124Translation differences onlong-term foreign currencyloans used to financeoverseas subsidiaries (73) 20 146 -------- ------ ------Total recognised gains andlosses relating to theperiod 755 671 1,809 ======== ====== ====== NEXT FIFTEEN COMMUNICATIONS GROUP PLC CONSOLIDATED BALANCE SHEET AS AT 31 JANUARY 2006 31 January 2006 31 January 2005* 31 July 2005* (Unaudited) (Unaudited) (Audited) Note £'000 £'000 £'000 Fixed assets Intangible assets 8,239 700 6,917 Tangible assets 2,872 2,399 2,961 Investment in associate 1,555 - - ------ ------ ------ 12,666 3,099 9,878 Current assets Debtors -due within one year 13,486 9,377 11,602-due after more 404 221 418than one year ------ ------ ------ 13,890 9,598 12,020 Cash at bank and in hand 756 2,723 2,960 ------ ------ ------ 14,646 12,321 14,980 Creditors: amounts falling duewithin one year 8,093 6,997 8,821 ------ ------ ------ Net current assets 6,553 5,455 6,159 ------ ------ ------ Total assetsless currentliabilities 19,219 8,554 16,037 Creditors: amounts falling dueafter more than one year 5,440 99 3,259 Provision for liabilitiesand charges - 70 5 ------ ------ ------ Net assets 2 13,779 8,385 12,773 ------ ------ ------ Capital and reservesCalled up share capital 1,281 1,123 1,244 Shares to be issued 553 - 568Share premium account 5,988 2,723 5,112ESOP reserve (1,559) (1,842) (1,667)Profit and loss account 7,516 6,073 7,068 ------ ------ ------ Equity shareholders' funds 13,779 8,077 12,325 Minority interests - 308 448 ------ ------ ------ 13,779 8,385 12,773 ------ ------ ------ * as re-stated under FRS 21. See Note 1. NEXT FIFTEEN COMMUNICATIONS GROUP PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 JANUARY 2006 Six months ended Six months ended Year ended 31 January 2006 31 January 2005 31 July 2005 (Unaudited) (Unaudited) (Audited) Note £'000 £'000 £'000 Net cashinflow fromoperatingactivities 7 608 1,638 3,818 Returns oninvestments andservicing offinanceInterestreceived 18 25 46Interest paid (126) (8) (12)Minorityinterestdividend paid (69) (10) (26) ------ ------ ------Net cash(outflow)/inflow fromreturns oninvestmentsand servicingof finance (177) 7 8 Taxation (1,215) (416) (996) Capitalexpenditure andfinancialinvestmentReceiptsfrom/(paymentsfor) long-termdeposits 6 63 (40)Payments toacquiretangible fixedassets (625) (967) (1,932)Proceeds fromsale oftangible fixedassets 9 4 17 ------ ------ ------ Net cashoutflow fromcapitalexpenditureand financialinvestment (610) (900) (1,955) Acquisitions anddisposalsPurchase ofassociateundertaking 8 (1,272) - -Purchase ofsubsidiaryundertaking 8 (216) - (3,408)Cash at bankand in handacquired withsubsidiary 8 132 - 85Acquisitionexpenses 8 (594) - -Payments toacquire tradeand assets (74) (217) (311) ------ ------ ------Net cashoutflow fromacquisitionsand disposals (2,024) (217) (3,634) Equitydividends paid (417) (314) (444) ------ ------ ------ Net cashoutflow beforefinancing (3,835) (202) (3,203) FinancingIssue of newshare capital 27 10 2,431Issue ofshares tominorities - 2 68Proceeds fromsale of ownshares 115 11 169Long-term loan 2,605 - 511Capitalelement offinance leaserentalrepayments - (56) (69)Redemption ofminorities (1,108) (4) (4) ------ ------ ------ Cashinflow/(outflow) fromfinancing 1,639 (37) 3,106 ------ ------ ------ Decrease incash in theperiod 7 (2,196) (239) (97) ------ ------ ------ NOTES TO THE INTERIM ACCOUNTS FOR THE SIX MONTHS ENDED 31 JANUARY 2006 1) FINANCIAL INFORMATION The financial information is for the six months ended 31 January 2006 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 2005 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: FRS 21 'Events after the balance sheet date' has been adopted in these interimfinancial statements. The main change is that dividends are only recorded whenan obligation exists at the period end date. Consequently, dividends which thecompany proposes, but are not approved as at the balance sheet date, are nolonger accrued but are required to be disclosed in the notes to the financialstatements. The prior year comparative figures have been restated to reflect theadoption of FRS 21. The effect of this change in accounting policy on the comparatives is that netassets have increased by £401,000 at 31 July 2005 and by £131,000 as at 31January 2005. Dividends for the year as reported in the profit and loss account previouslyhave decreased by £89,000 for the year ended 31 July 2005 and increased by£181,000 for the period ended 31 January 2005. FRS25 'Financial Instruments: Disclosure and Presentation', dividends are nolonger shown on the face of the Profit &Loss account but are shown in theshareholder's funds note to the year end financial statements. NOTES TO THE INTERIM ACCOUNTS FOR THE SIX MONTHS ENDED 31 JANUARY 2006 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 £'000 £'000 £'000Six months ended 31 January 2006(Unaudited) Continuing activities:UK 6,041 (249) 1,803EMEA* 4,746 110 1,103North America 15,231 2,123 6,311Asia Pacific 3,498 222 1,909Head office - (891) 1,962 --------- --------- --------- 29,516 1,315 13,088 Acquisitions: UK(1) 35 90 691 --------- --------- --------- 29,551 1,405 13,779 ========= ========= ========= Year ended 31 July 2005(Audited) Continuing activities:UK 12,269 551 3,673EMEA* 9,581 584 1,310North America 21,214 2,442 4,983Asia Pacific 5,452 644 1,537Head office - (1,167) 1270 --------- --------- --------- 48,516 3,054 12,773 ========= ========= ========= Six months ended 31 January 2005(Unaudited) Continuing activities:UK 6,038 221 1,823EMEA* 4,703 295 1,134North America 9,640 935 3,258Asia Pacific 2,654 281 1,432Head office - (354) 738 --------- --------- --------- 23,035 1,378 8,385 ========= ========= ========= *EMEA means Europe (excluding the UK), Middle East and Africa. The directorsconsider these regions to be separate geographic markets and the markets withinwhich the Group operates. (1) The turnover from acquisitions all relates to Credo Communications("Credo"). The profit before tax from acquisitions includes £18,000 ofapportioned Credo profit, with the remaining £72,000 generated by Lexis afterdeduction of £2,000 external interest expense. The net assets from acquisitionscomprise £571,000 in respect of Lexis and £120,000 related to Credo. NOTES TO THE INTERIM ACCOUNTS FOR THE SIX MONTHS ENDED 31 JANUARY 2006 3) RECONCILIATION OF PRO FORMA FINANCIAL MEASURES Six months ended Six months ended Year ended 31 January 2006 31 January 2005 31 July2005 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Profit on ordinaryactivities before taxation 1,405 1,378 3,054Amortisation and amountswritten off intangibleassets (1) 313 100 232Unwinding of discount ondeferred consideration (1) 91 - - ---------- ---------- ---------- Adjusted profit on ordinaryactivities before taxation 1,809 1,478 3,286 ========== ========== ========== Adjusted profit on ordinary activities before taxation has been presented toprovide additional information which may be useful to the readers of thestatement. (1) See Note 6 for details. 4) TAX 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 0.365p (2005: 0.33p) will be paid on 26 May 2006 toshareholders on the register of members on 28 April 2006. Shares will go exdividend on 26 April 2006. The Employee Share Ownership Trust has waived itsrights to dividends of £18,000 in the six months ended 31 January 2006 (Interim2005: £18,000; Full year 2005: £54,000). The total interim dividend paid isexpected to be £190,000. NOTES TO THE INTERIM ACCOUNTS FOR THE SIX MONTHS ENDED 31 JANUARY 2006 6) EARNINGS PER SHARE Six months ended Six months ended Year ended 31 31 January 2006 31 January 2005 July 2005 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Basic and dilutedearnings attributableto ordinaryshareholders 821 724 1,539Amortisationof goodwill after taxation 227 100 232Unwinding ofdiscount on deferredconsideration 91 - - ---------- ---------- ----------Adjusted earningsattributable to ordinaryshareholders 1,139 824 1,771 ---------- ---------- ---------- Number Number Number Weighted average numberof ordinaryshares 46,183,526 39,178,138 39,806,952 Dilutive shareoptions 2,888,972 1,782,661 1,477,007 ---------- ---------- ----------Diluted weightedaverage numberof ordinaryshares 49,072,498 40,960,799 41,283,959 ---------- ---------- ---------- Basic earnings pershare 1.78p 1.85p 3.87pDiluted earnings pershare 1.67p 1.77p 3.73pAdjusted earnings pershare 2.47p 2.10p 4.45p Adjusted earnings per share has been presented to provide additional informationwhich may be useful to the readers of the statement. (1) includes £25,000 of amortisation on the goodwill arising from theacquisition of the 25% stake in Lexis during the period. In compliance with FRS9 - "Associates and Joint Ventures", the Lexis amortisation has been treated asa reduction to the operating profit of Lexis, as reported within the Groupprofit and loss account under "Operating profit from acquired associate". (2) as required by FRS 12 - "Provisions, Contingent Liabilities and Assets", aninterest charge of £91,000 has been recognised during the period in relation tothe deferred consideration payable for OutCast Communications. NOTES TO THE INTERIM ACCOUNTS FOR THE SIX MONTHS ENDED 31 JANUARY 2006 7) NOTES TO THE CASH FLOW STATEMENT (1) Reconciliation of operating profit to net cash inflow from operatingactivities Six months ended Six months ended Year ended 31 January 2006 31 January 2005 31 July 2005 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Groupoperatingprofit 1,532 1,369 3,033Depreciation,amortisationand amountswritten offintangibleassets 988 683 1,347Loss on saleof tangiblefixed assets 3 4 15(Profit)/losson sale ofminorityinterest* (100) - 15LTIP andconditionalshare awardcharge 86 - -Increase indebtors (1,516) (667) (2,425)(Decrease)/increase increditors (380) 375 2,024Decrease inprovisions (5) (126) (191) ----------- ----------- -----------Net cashinflow fromoperatingactivities 608 1,638 3,818 =========== =========== ===========*See note 8 for details. (2) Reconciliation of net cash flow to movement in net (debt)/ funds Six months ended Six months ended Year ended 31 January 2006 31 January 2005 31 July 2005 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Decrease in cash in theperiod (2,196) (239) (97)Cash outflowfrom decrease in leasefinancing - 56 69Cash inflow from increasein debt (2,605) - (511) ----------- ----------- -----------Change in net fundsresulting fromcashflows (4,801) (183) (539) Translationdifferences (8) 21 115 ----------- ----------- ----------- Movement in net funds inthe period (4,809) (162) (424) Net funds at beginning ofperiod 2,449 2,873 2,873 ----------- ----------- ----------- Net(debt)/fundsat period end (2,360) 2,711 2,449 =========== =========== =========== NOTES TO THE INTERIM ACCOUNTS FOR THE SIX MONTHS ENDED 31 JANUARY 2006 8) ACQUISITIONS During the period the Group made three acquisitions: 1.On 4 August 2005, the Company acquired a 25% stake in the UK publicrelations company Lexis Public Relations Limited ("Lexis") by the purchase of a25% stake in Panther Communications Group Limited ("Panther"), the parentcompany of Lexis. The consideration of £1,507,000, including professional feescapitalised of £235,000 (reported within "Acquisition expenses" in the GroupCashflow Statement) was fully satisfied in cash. Lexis has been treated as anassociate undertaking in the Group accounts under the equity method ofaccounting as required by FRS 9 - "Associates and Joint Ventures". Based upon the provisional acquisition balance sheet, goodwill of £1,009,000 hasbeen capitalised, being reported within the "Investment in associate" balance inthe Group balance sheet, and is being amortised over its useful economic life of20 years. £25,000 of amortisation on the Lexis goodwill has been recognisedsince acquisition, being treated as a reduction to the operating profit fromassociate in the Group profit and loss account as required by FRS 9. Further purchases of Panther will be made over the next four years based uponthe performance of Lexis. The next purchase, due on 6 April 2006, will take theCompany's ownership in Panther to a minimum of 51%, after which the results ofLexis will be fully consolidated into the Group accounts. 2. Between 10 August 2005 and 24 October 2005 the Company purchased theminority interest in Bite Communications Group Limited ("Bite"). As at 31January 2006 the Company controlled 100% of Bite. Under the terms of theagreement and prior to the purchase of the minority interest, all existing shareoptions over Bite shares were exercised, increasing the minority interest andeffecting a part disposal of Bite by Next Fifteen Group, on which a £100,000gain was made at Group level. The total consideration payable for the minorityinterest was £2,212,000, of which £1,108,000 was satisfied in cash and theremainder in shares. The goodwill of £1,520,000 arising on the purchase has beencapitalised and is being amortised over its useful economic life of 20 years. 3. On 31 December 2005, the Company indirectly purchased 100% of theshare capital of Credo Communications Limited ("Credo"). The total considerationpayable to the previous shareholders of Credo is £373,000 with £218,000 paid incash on completion (including £2,000 stamp duty, reported within "Acquisitionexpenses" in the Group Cashflow Statement) and the balance to be satisfied inboth cash and shares by the 31 December 2006. Based upon the provisionalcompletion balance sheet, cash in hand and at bank of £132,000 was acquired withCredo, which is shown on the face of the Group Cashflow Statement. Theoperations of Credo have since been transferred into Bite CommunicationsLimited. The operating profit apportioned to the Credo trade and assets inJanuary 2006 has been calculated as £18,000. Goodwill of £254,000 has beenrecognised on the acquisition and is being amortised over its useful economiclife of 5 years. £357,000 of acquisition costs were paid in the period which related to thepurchase of OutCast Communications ("OutCast") in June 2005. All these costshave been capitalised as part of the OutCast acquisition and £326,000 wereaccrued in the July 2005 balance sheet. The £357,000 comprises a tax charge of£250,000 resulting from the conversion of OutCast from an S Corp to a C Corp and£107,000 of legal and accounting fees. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
NFC.L