Tuesday 25 September, 2018
Next Fifteen Comm
Half-year Report
Half-year Report
Next Fifteen Communications Plc
25 September 2018
Next Fifteen Communications Group plc
Interim results 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)
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Six months ended 31
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Six months ended 31
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Growth in results
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July 2018
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July 2017
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£m
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£m
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Adjusted results
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Net revenue
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106.8
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93.5
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14%
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EBITDA
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17.7
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14.5
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22%
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Operating profit
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15.4
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12.3
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25%
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Operating profit margin
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14.4%
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13.2%
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Profit before tax
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15.1
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12.0
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26%
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Diluted EPS (p)
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14.2p
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11.4p
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25%
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Statutory results
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Operating profit
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10.5
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7.2
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47%
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Profit before tax
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10.3
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5.2
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97%
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Diluted EPS (p)
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9.4p
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4.8p
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96%
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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
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Group net revenue growth of 14%, with organic revenue growth of 8.7%
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Adjusted profit before tax up 26% to £15.1m
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Adjusted diluted earnings per share increased by 25% to 14.2p
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Strong balance sheet with net debt of £25.6m (2017: £20.8m)
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Significant client wins including Capital One, Waze, Diageo and AIG
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Brandwidth, a UK-based innovation agency acquired in February
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Technical, a specialist technical content and digital marketing
business, acquired in July
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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 £106.8m
(2017: £93.5m), while adjusted profit before tax increased by 26% to
£15.1m (2017: £12.0m). Adjusted EBITDA for the six months period
increased by 22% to £17.7m (2017: £14.5m), adjusted EPS increased by 25%
to 14.2p and net debt remained relatively modest at £25.6m, 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 £10.3m compared with
a statutory profit before tax of £5.2m 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 £55.8m from £57.0m. 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 £40.0m from
£25.5m and the operating profit increased to £9.5m from £5.2m 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.
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Adjusted results
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UK £’000
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Europe & Africa £’000
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US £’000
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Asia Pacific £’000
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Head Office £’000
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Total £’000
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6 months ended
31 July 2018
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Net revenue
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39,958
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4,202
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55,812
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6,804
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-
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106,776
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Operating profit
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9,451
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628
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9,433
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517
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(4,663)
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15,366
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Operating profit margin
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23.7%
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14.9%
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16.9%
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7.6%
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-
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14.4%
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Organic revenue growth
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14.9%
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9.0%
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7.0%
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0.2%
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-
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8.7%
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6 months ended
31 July 2017
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Net revenue
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25,542
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3,773
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57,040
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7,111
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-
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93,466
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Operating profit
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5,165
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287
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10,321
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602
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(4,063)
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12,312
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Operating profit margin
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20.2%
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7.6%
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18.1%
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8.5%
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-
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13.2%
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Organic revenue growth
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3.5%
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4.4%
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1.5%
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(0.8%)
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-
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1.9%
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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
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Six months ended
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Six months ended
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31 July 2018
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31 July 2017
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|
|
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(Unaudited)
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|
(Unaudited)
|
|
|
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|
£’000
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|
£’000
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|
|
Net revenue
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|
106,776
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|
93,466
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|
|
Total operating charges
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|
(89,094)
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(79,008)
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EBITDA
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|
17,682
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|
14,458
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|
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Depreciation and Amortisation
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|
(2,316)
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|
(2,146)
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|
Operating profit
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|
15,366
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|
12,312
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|
|
Operating profit margin
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14.4%
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13.2%
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Net finance expense
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|
(280)
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(333)
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Share of profits of associate
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9
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24
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Profit before income tax
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15,095
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12,003
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Tax
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(3,017)
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(2,401)
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Retained profit
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12,078
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9,602
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Weighted average number of ordinary shares
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77,891,708
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73,561,342
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Diluted weighted average number of ordinary shares
|
|
82,863,429
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81,544,242
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Adjusted earnings per share
|
|
15.1p
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|
12.6p
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|
Diluted adjusted earnings per share
|
|
14.2p
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|
11.4p
|
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|
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|
|
|
|
|
|
Cash inflow from operating activities
|
|
7,743
|
|
4,177
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|
Cash outflow on acquisition related payments
|
|
(15,527)
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|
(9,976)
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|
Net debt
|
|
25,565
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|
20,848
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|
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Dividend (per share)
|
|
2.16p
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1.8p
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NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTH PERIOD ENDED 31 JULY 2018
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Six months
|
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Six months
|
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12 months
|
|
|
|
|
|
|
ended
|
|
ended
|
|
ended
|
|
|
|
|
|
|
31 July 2018
|
|
31 July 2017
|
|
31 January 2018
|
|
|
|
|
|
|
(Unaudited)
|
|
*Restated
|
|
*Restated
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
(Audited)
|
|
|
|
|
Note
|
|
|
|
£’000
|
|
£’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 charges
|
|
|
|
17,094
|
|
15,075
|
|
31,842
|
|
|
Total operating charges
|
|
|
|
(96,244)
|
|
(86,314)
|
|
(179,586)
|
|
|
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 from associate
|
|
|
|
9
|
|
24
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before income tax
|
|
3
|
|
10,346
|
|
5,239
|
|
13,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
4
|
|
(2,265)
|
|
(1,044)
|
|
(4,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period
|
|
|
|
8,081
|
|
4,195
|
|
9,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
Owners of the parent
|
|
|
|
7,773
|
|
3,874
|
|
8,632
|
|
|
Non-controlling interests
|
|
|
|
308
|
|
321
|
|
664
|
|
|
|
|
|
|
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 MONTHS ENDED 31 JULY 2018
|
|
|
Six months
|
|
Six months
|
|
12 months
|
|
|
|
|
ended
|
|
ended
|
|
ended
|
|
|
|
|
31 July 2018
|
|
31 July 2017
|
|
31 January 2018
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Audited)
|
|
|
|
|
£’000
|
|
£’000
|
|
£’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 on translating foreign operations
|
|
3,074
|
|
(1,804)
|
|
(5,427)
|
|
|
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 investments
|
|
(430)
|
|
-
|
|
-
|
|
|
Total other comprehensive income / (expense) for the period
|
|
2,028
|
|
(1,253)
|
|
(4,237)
|
|
|
Total comprehensive income for the period
|
|
10,109
|
|
2,942
|
|
5,059
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
£’000
|
|
£’000
|
|
£’000
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
|
15,931
|
|
14,819
|
|
13,567
|
|
|
Intangible assets
|
|
|
|
102,242
|
|
91,926
|
|
94,843
|
|
|
Investment in equity accounted associate
|
|
|
|
118
|
|
139
|
|
132
|
|
|
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 assets
|
|
|
|
130,155
|
|
119,155
|
|
120,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
|
|
64,996
|
|
54,762
|
|
49,538
|
|
|
Cash and cash equivalents
|
|
9
|
|
21,527
|
|
16,589
|
|
24,283
|
|
|
Corporation tax asset
|
|
|
|
807
|
|
940
|
|
784
|
|
|
Total current assets
|
|
|
|
87,330
|
|
72,291
|
|
74,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
217,485
|
|
191,446
|
|
194,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
Loans and borrowings
|
|
9
|
|
40,031
|
|
35,911
|
|
34,465
|
|
|
Deferred tax liabilities
|
|
|
|
4,216
|
|
3,426
|
|
3,869
|
|
|
Other payables
|
|
|
|
4,934
|
|
4,683
|
|
4,290
|
|
|
Provisions
|
|
|
|
439
|
|
116
|
|
141
|
|
|
Deferred consideration
|
|
10
|
|
1,657
|
|
-
|
|
1,784
|
|
|
Contingent consideration
|
|
10
|
|
10,421
|
|
15,228
|
|
13,271
|
|
|
Share purchase obligation
|
|
10
|
|
1,020
|
|
2,839
|
|
955
|
|
|
Total non-current liabilities
|
|
|
|
62,718
|
|
62,203
|
|
58,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and borrowings
|
|
9
|
|
7,058
|
|
1,517
|
|
1,406
|
|
|
Trade and other payables
|
|
|
|
54,903
|
|
46,128
|
|
45,003
|
|
|
Provisions
|
|
|
|
651
|
|
699
|
|
1,405
|
|
|
Corporation tax liability
|
|
|
|
2,009
|
|
2,617
|
|
2,154
|
|
|
Deferred consideration
|
|
10
|
|
1,651
|
|
-
|
|
4,255
|
|
|
Contingent consideration
|
|
10
|
|
2,359
|
|
6,053
|
|
5,368
|
|
|
Share purchase obligation
|
|
10
|
|
630
|
|
-
|
|
-
|
|
|
Total current liabilities
|
|
|
|
69,261
|
|
57,014
|
|
59,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 reserve
|
|
|
|
39,639
|
|
27,856
|
|
28,611
|
|
|
Foreign currency translation reserve
|
|
|
|
7,885
|
|
8,434
|
|
4,811
|
|
|
Other reserves
|
|
|
|
(1,570)
|
|
(1,593)
|
|
(954)
|
|
|
Retained earnings
|
|
|
|
39,175
|
|
35,335
|
|
42,604
|
|
|
Total equity attributable to owners of the parent
|
|
|
|
87,094
|
|
71,880
|
|
76,964
|
|
|
Non-controlling interests
|
|
|
|
(1,588)
|
|
349
|
|
(643)
|
|
|
TOTAL EQUITY
|
|
|
|
85,506
|
|
72,229
|
|
76,321
|
|
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTH PERIOD ENDED 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
|
|
|
|
|
£’000
|
|
£’000
|
|
£’000
|
|
£’000
|
|
£’000
|
|
£’000
|
|
£’000
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 February 2017 (audited)
|
|
1,834
|
|
25,681
|
|
10,238
|
|
(2,144)
|
|
31,962
|
|
67,571
|
|
926
|
|
68,497
|
|
|
Profit for the period
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3,874
|
|
3,874
|
|
321
|
|
4,195
|
|
|
Other comprehensive income / (expense) for the period
|
|
-
|
|
-
|
|
(1,804)
|
|
551
|
|
-
|
|
(1,253)
|
|
-
|
|
(1,253)
|
|
|
Total comprehensive income / (expense) for the period
|
|
-
|
|
-
|
|
(1,804)
|
|
551
|
|
3,874
|
|
2,621
|
|
321
|
|
2,942
|
|
|
Shares issued on satisfaction of vested share options
|
|
1
|
|
-
|
|
-
|
|
-
|
|
(1)
|
|
-
|
|
-
|
|
-
|
|
|
Shares issued on acquisitions
|
|
13
|
|
2,175
|
|
-
|
|
-
|
|
-
|
|
2,188
|
|
-
|
|
2,188
|
|
|
Movement in relation to share-based payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2,493
|
|
2,493
|
|
-
|
|
2,493
|
|
|
Dividends to owners of the parent
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(2,761)
|
|
(2,761)
|
|
-
|
|
(2,761)
|
|
|
Movement on reserves for non-controlling interests
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(232)
|
|
(232)
|
|
232
|
|
-
|
|
|
Non-controlling interest dividend
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1,130)
|
|
(1,130)
|
|
|
At 31 July 2017 (unaudited)
|
|
1,848
|
|
27,856
|
|
8,434
|
|
(1,593)
|
|
35,335
|
|
71,880
|
|
349
|
|
72,229
|
|
|
Profit for the period
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4,758
|
|
4,758
|
|
343
|
|
5,101
|
|
|
Other comprehensive income / (expense) for the period
|
|
-
|
|
-
|
|
(3,623)
|
|
639
|
|
-
|
|
(2,984)
|
|
-
|
|
(2,984)
|
|
|
Total comprehensive income / (expense) for the period
|
|
-
|
|
-
|
|
(3,623)
|
|
639
|
|
4,758
|
|
1,774
|
|
343
|
|
2,117
|
|
|
Shares issued on satisfaction of vested share options
|
|
39
|
|
-
|
|
-
|
|
-
|
|
(76)
|
|
(37)
|
|
-
|
|
(37)
|
|
|
Shares issued on acquisitions
|
|
5
|
|
755
|
|
-
|
|
-
|
|
-
|
|
760
|
|
-
|
|
760
|
|
|
Movement in relation to share-based payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3,031
|
|
3,031
|
|
-
|
|
3,031
|
|
|
Dividends to owners of the parent
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1,360)
|
|
(1,360)
|
|
-
|
|
(1,360)
|
|
|
Movement on reserves for non-controlling interests
|
|
-
|
|
-
|
|
-
|
|
-
|
|
916
|
|
916
|
|
(916)
|
|
-
|
|
|
Non-controlling interest dividend
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(419)
|
|
(419)
|
|
|
At 31 January 2018 as previously stated (audited)
|
|
1,892
|
|
28,611
|
|
4,811
|
|
(954)
|
|
42,604
|
|
76,964
|
|
(643)
|
|
76,321
|
|
|
Change in accounting policy (IFRS 9)2
|
|
-
|
|
-
|
|
-
|
|
-
|
|
48
|
|
48
|
|
-
|
|
48
|
|
|
At 1 February 2018 as restated
|
|
1,892
|
|
28,611
|
|
4,811
|
|
(954)
|
|
42,652
|
|
77,012
|
|
(643)
|
|
76,369
|
|
|
Profit for the period
|
|
-
|
|
-
|
|
-
|
|
-
|
|
7,773
|
|
7,773
|
|
308
|
|
8,081
|
|
|
Other comprehensive income / (expense) for the period
|
|
-
|
|
-
|
|
3,074
|
|
(616)
|
|
(430)
|
|
2,028
|
|
-
|
|
2,028
|
|
|
Total comprehensive income / (expense) for the period
|
|
-
|
|
-
|
|
3,074
|
|
(616)
|
|
7,343
|
|
9,801
|
|
308
|
|
10,109
|
|
|
Shares issued on satisfaction of vested share options
|
|
55
|
|
7,764
|
|
-
|
|
-
|
|
(7,819)
|
|
-
|
|
-
|
|
-
|
|
|
Shares issued on acquisitions
|
|
18
|
|
3,264
|
|
-
|
|
-
|
|
-
|
|
3,282
|
|
-
|
|
3,282
|
|
|
Obligation to purchase non-controlling interest
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(630)
|
|
(630)
|
|
|
Movement in relation to share-based payments
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1,105
|
|
1,105
|
|
-
|
|
1,105
|
|
|
Dividends to owners of the parent
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(3,535)
|
|
(3,535)
|
|
-
|
|
(3,535)
|
|
|
Movement on reserves for non-controlling interests
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(571)
|
|
(571)
|
|
571
|
|
-
|
|
|
Non-controlling interest purchased in the period
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(135)
|
|
(135)
|
|
|
Non-controlling interest dividend
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1,059)
|
|
(1,059)
|
|
|
At 31 July 2018 (unaudited)
|
|
1,965
|
|
39,639
|
|
7,885
|
|
(1,570)
|
|
39,175
|
|
87,094
|
|
(1,588)
|
|
85,506
|
|
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 PERIOD ENDED 31 JULY 2018
|
|
|
|
|
|
|
|
Twelve months
|
|
|
|
|
|
Six months ended
|
|
Six months ended
|
|
ended
|
|
|
|
|
|
31 July 2018
|
|
31 July 2017
|
|
31 January 2018
|
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Audited)
|
|
|
|
|
|
£’000
|
|
£’000
|
|
£’000
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
Profit for the period
|
|
|
8,081
|
|
4,195
|
|
9,296
|
|
|
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 from equity accounted associate
|
|
|
(9)
|
|
(24)
|
|
(26)
|
|
|
Loss on sale of property, plant and equipment
|
|
|
230
|
|
10
|
|
147
|
|
|
Income tax expense
|
|
|
2,265
|
|
1,044
|
|
4,000
|
|
|
Share-based payment charge
|
|
|
1,078
|
|
2,019
|
|
4,284
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow from operating activities before changes in
working capital
|
|
|
17,920
|
|
14,540
|
|
33,054
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in trade and other receivables
|
|
|
(9,430)
|
|
(11,514)
|
|
(5,860)
|
|
|
Change in trade and other payables
|
|
|
2,677
|
|
795
|
|
2,143
|
|
|
Change in other liabilities
|
|
|
(289)
|
|
2,261
|
|
(472)
|
|
|
|
|
|
(7,042)
|
|
(8,458)
|
|
(4,189)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash generated from operations before tax outflows
|
|
|
10,878
|
|
6,082
|
|
28,865
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
|
(3,135)
|
|
(1,905)
|
|
(4,284)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow from operating activities
|
|
|
7,743
|
|
4,177
|
|
24,581
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
Acquisition of subsidiaries and trade and assets, net of cash
acquired
|
|
|
(6,358)
|
|
(5,073)
|
|
(9,824)
|
|
|
Payment of contingent and deferred consideration
|
|
|
(8,617)
|
|
(4,439)
|
|
(5,062)
|
|
|
Purchase of investment
|
|
|
(552)
|
|
(464)
|
|
(464)
|
|
|
Acquisition of property, plant and equipment
|
|
|
(3,667)
|
|
(1,460)
|
|
(2,974)
|
|
|
Proceeds on disposal of property, plant and equipment
|
|
|
23
|
|
3
|
|
7
|
|
|
Acquisition of intangible assets
|
|
|
(927)
|
|
(504)
|
|
(1,193)
|
|
|
Net movement in long-term cash deposits
|
|
|
(83)
|
|
120
|
|
(6)
|
|
|
Interest received
|
|
|
188
|
|
42
|
|
117
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash outflow from investing activities
|
|
|
(19,993)
|
|
(11,775)
|
|
(19,399)
|
|
|
|
|
|
|
|
|
|
|
|
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOW (Continued)
FOR THE SIX MONTH PERIOD ENDED 31 JULY 2018
|
|
|
|
|
|
|
|
Twelve months
|
|
|
|
|
|
Six months ended
|
|
Six months ended
|
|
ended
|
|
|
|
|
|
31 July 2018
|
|
31 July 2017
|
|
31 January 2018
|
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Audited)
|
|
|
|
|
|
£’000
|
|
£’000
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
Capital element of finance lease rental repayment
|
|
|
(3)
|
|
(13)
|
|
(17)
|
|
|
Net movement in bank borrowings
|
|
|
10,512
|
|
3,970
|
|
4,484
|
|
|
Interest paid
|
|
|
(469)
|
|
(375)
|
|
(831)
|
|
|
Dividend and profit share paid to non-controlling interest partners
|
|
|
(1,059)
|
|
(1,130)
|
|
(1,549)
|
|
|
Dividends paid to shareholders of the parent
|
|
|
-
|
|
-
|
|
(4,121)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow / (outflow) from financing activities
|
|
|
8,981
|
|
2,452
|
|
(2,034)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) / increase in cash and cash equivalents
|
|
|
(3,269)
|
|
(5,146)
|
|
3,148
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of the period
|
|
|
24,283
|
|
22,072
|
|
22,072
|
|
|
Exchange gains / (losses) on cash held
|
|
|
513
|
|
(337)
|
|
(937)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the period
|
|
|
21,527
|
|
16,589
|
|
24,283
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHS ENDED 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
|
|
|
|
|
£’000
|
|
£’000
|
|
£’000
|
|
£’000
|
|
£’000
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended 31 July 2018 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
39,958
|
|
4,202
|
|
55,812
|
|
6,804
|
|
-
|
|
106,776
|
|
|
Adjusted operating profit / (loss)
|
|
9,451
|
|
628
|
|
9,433
|
|
517
|
|
(4,663)
|
|
15,366
|
|
|
Adjusted operating profit margin
|
|
23.7%
|
|
14.9%
|
|
16.9%
|
|
7.6%
|
|
-
|
|
14.4%
|
|
|
Organic revenue growth
|
|
14.9%
|
|
9.0%
|
|
7.0%
|
|
0.2%
|
|
-
|
|
8.7%
|
|
|
Six months ended 31 July 2017 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
25,542
|
|
3,773
|
|
57,040
|
|
7,111
|
|
-
|
|
93,466
|
|
|
Adjusted operating profit / (loss)
|
|
5,165
|
|
287
|
|
10,321
|
|
602
|
|
(4,063)
|
|
12,312
|
|
|
Adjusted operating profit margin
|
|
20.2%
|
|
7.6%
|
|
18.1%
|
|
8.5%
|
|
-
|
|
13.2%
|
|
|
Organic revenue growth
|
|
3.5%
|
|
4.4%
|
|
1.5%
|
|
(0.8%)
|
|
-
|
|
1.9%
|
|
|
Twelve months ended 31 January 2018 (Audited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
58,329
|
|
7,851
|
|
115,941
|
|
14,690
|
|
–
|
|
196,811
|
|
|
Adjusted operating profit / (loss)
|
|
12,984
|
|
752
|
|
23,181
|
|
2,002
|
|
(8,893)
|
|
30,026
|
|
|
Adjusted operating profit margin
|
|
22.3%
|
|
9.6%
|
|
20.0%
|
|
13.6%
|
|
–
|
|
15.3%
|
|
|
Organic revenue growth
|
|
7.6%
|
|
3.4%
|
|
5.1%
|
|
(0.7%)
|
|
–
|
|
5.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE INTERIM RESULTS (Continued)
FOR THE SIX MONTHS ENDED 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)
|
|
|
|
|
£’000
|
|
£’000
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
Segment adjusted operating profit
|
|
15,366
|
|
12,312
|
|
30,026
|
|
|
Amortisation of acquired intangibles
|
|
(3,764)
|
|
(3,212)
|
|
(7,036)
|
|
|
Share based payment charge (note 3)
|
|
(578)
|
|
(1,452)
|
|
(3,050)
|
|
|
Charges associated with office moves (note 3)
|
|
-
|
|
-
|
|
(525)
|
|
|
Restructuring costs (note 3)
|
|
(172)
|
|
(427)
|
|
(1,700)
|
|
|
Deal costs (note 3)
|
|
(320)
|
|
(69)
|
|
(490)
|
|
|
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)
|
|
|
|
|
£’000
|
|
£’000
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
Profit before income tax
|
|
10,346
|
|
5,239
|
|
13,296
|
|
|
Unwinding of discount on deferred and contingent consideration and
share purchase obligation payable
|
|
1,282
|
|
1,068
|
|
2,510
|
|
|
Change in estimate of future contingent consideration and share
purchase obligation payable
|
|
(1,367)
|
|
536
|
|
731
|
|
|
Share-based payment charge1
|
|
578
|
|
1,452
|
|
3,050
|
|
|
Restructuring costs
|
|
172
|
|
427
|
|
1,700
|
|
|
Charge associated with office moves
|
|
-
|
|
-
|
|
525
|
|
|
Deal costs2
|
|
320
|
|
69
|
|
490
|
|
|
Amortisation of acquired intangibles
|
|
3,764
|
|
3,212
|
|
7,036
|
|
|
Adjusted profit before income tax
|
|
15,095
|
|
12,003
|
|
29,338
|
|
|
|
|
|
|
|
|
|
|
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 MONTHS ENDED 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) DIVIDENDS
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)
|
|
|
|
|
£’000
|
|
£’000
|
|
£’000
|
|
|
Financial liabilities at amortised cost
|
|
|
|
|
|
|
|
|
Bank interest payable
|
|
467
|
|
375
|
|
831
|
|
|
Financial liabilities at fair value through profit and loss
|
|
|
|
|
|
|
|
|
Unwinding of discount on future deferred and contingent
consideration and share purchase obligation payable
|
|
1,282
|
|
1,068
|
|
2,510
|
|
|
Change in estimate of future contingent consideration and share
purchase obligation payable
|
|
695
|
|
962
|
|
2,492
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
Other interest payable
|
|
2
|
|
-
|
|
-
|
|
|
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)
|
|
|
|
|
£’000
|
|
£’000
|
|
£’000
|
|
|
Financial assets at amortised cost
|
|
|
|
|
|
|
|
|
Bank interest receivable
|
|
45
|
|
29
|
|
98
|
|
|
Financial assets at fair value through profit and loss
|
|
|
|
|
|
|
|
|
Change in estimate of future contingent consideration and share
purchase obligation payable
|
|
2,062
|
|
426
|
|
1,761
|
|
|
Other interest receivable
|
|
144
|
|
13
|
|
19
|
|
|
Finance income
|
|
2,251
|
|
468
|
|
1,878
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE INTERIM RESULTS (Continued)
FOR THE SIX MONTHS ENDED 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)
|
|
|
|
|
£’000
|
|
£’000
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
Earnings attributable to ordinary shareholders
|
|
7,773
|
|
3,874
|
|
8,632
|
|
|
Unwinding of discount on future deferred and contingent
consideration and share purchase obligation payable
|
|
1,264
|
|
1,019
|
|
2,445
|
|
|
Change in estimate of future contingent consideration and share
purchase obligation payable
|
|
(1,349)
|
|
607
|
|
822
|
|
|
Share based payment charge
|
|
572
|
|
899
|
|
2,498
|
|
|
Restructuring costs
|
|
139
|
|
345
|
|
1,241
|
|
|
Costs associated with office moves
|
|
-
|
|
-
|
|
354
|
|
|
Amortisation of acquired intangibles
|
|
3,053
|
|
2,468
|
|
5,506
|
|
|
US rate change
|
|
-
|
|
-
|
|
817
|
|
|
Deal costs
|
|
317
|
|
69
|
|
489
|
|
|
Adjusted earnings attributable to ordinary shareholders
|
|
11,769
|
|
9,281
|
|
22,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Number
|
|
Number
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares
|
|
77,891,708
|
|
73,561,342
|
|
74,344,883
|
|
|
Dilutive LTIP shares
|
|
1,156,602
|
|
2,737,223
|
|
1,297,444
|
|
|
Dilutive Growth Deal shares
|
|
3,084,835
|
|
4,338,031
|
|
5,336,533
|
|
|
Other potentially issuable shares
|
|
730,284
|
|
907,646
|
|
1,099,352
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average number of ordinary shares
|
|
82,863,429
|
|
81,544,242
|
|
82,078,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
10.0p
|
|
5.3p
|
|
11.6p
|
|
|
Diluted earnings per share
|
|
9.4p
|
|
4.8p
|
|
10.5p
|
|
|
Adjusted earnings per share
|
|
15.1p
|
|
12.6p
|
|
30.7p
|
|
|
Diluted adjusted earnings per share
|
|
14.2p
|
|
11.4p
|
|
27.8p
|
|
|
|
|
|
|
|
|
|
|
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 £40m expires in 2022 and
therefore the outstanding balance has been classified in non-current
borrowings. The £20m 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)
|
|
|
|
|
£’000
|
|
£’000
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and borrowings
|
|
47,089
|
|
37,428
|
|
35,871
|
|
|
Obligations under finance leases
|
|
3
|
|
9
|
|
5
|
|
|
Less: cash and cash equivalents
|
|
(21,527)
|
|
(16,589)
|
|
(24,283)
|
|
|
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
|
|
|
|
|
£’000
|
|
£’000
|
|
£’000
|
|
|
|
|
|
|
|
|
|
|
|
At 1 February 2017 (Audited)
|
|
-
|
|
14,905
|
|
3,433
|
|
|
Arising during the period
|
|
-
|
|
7,578
|
|
-
|
|
|
Change in estimate
|
|
-
|
|
859
|
|
(323)
|
|
|
Exchange differences
|
|
-
|
|
(40)
|
|
(50)
|
|
|
Utilised
|
|
-
|
|
(2,910)
|
|
(400)
|
|
|
Unwinding of discount
|
|
-
|
|
889
|
|
179
|
|
|
At 31 July 2017 (Unaudited)
|
|
-
|
|
21,281
|
|
2,839
|
|
|
Arising during the period
|
|
500
|
|
708
|
|
-
|
|
|
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 (Audited)
|
|
6,039
|
|
18,639
|
|
955
|
|
|
Arising during the period
|
|
842
|
|
973
|
|
630
|
|
|
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 (Unaudited)
|
|
3,308
|
|
12,780
|
|
1,650
|
|
|
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 £20m in addition to the RCF of £40m which is
available until 5 July 2022. The £20m 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 £6.2m. Further consideration is payable based
on the profit before interest and tax of Brandwidth for the year to 30
June 2018 of up to £3.3m in September 2018 and £0.8m 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 £2.2m.
Further deferred consideration of £0.6m 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 Contracts with
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 stated at
|
|
Adjustment required
|
|
As restated at 1
|
|
|
|
|
31 January 2018
|
|
under IFRS 9
|
|
February 2018
|
|
|
|
|
£’000
|
|
£’000
|
|
£’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 the period / year
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Increase due to principal versus agent considerations (i)
|
|
15,007
|
|
37,111
|
|
|
|
|
|
|
|
|
|
Direct costs
|
|
|
|
|
|
|
Increase due to principal versus agent considerations (i)
|
|
15,007
|
|
37,111
|
|
|
|
|
.
|
|
|
|
|
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/
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