Final Results
Next Fifteen Communications Plc
12 April 2016
Next Fifteen Communications Group plc
Final results for the year ended 31 January 2016
Next Fifteen Communications Group plc (“Next 15†or the “Groupâ€), the digital communications group, today announces its final results for the year ended 31 January 2016.
Headline financial results for the year to 31 January 2016
 |  |  |  |  |  |  |  |  |  | |||||
 |  |  |
Year ended
31 January 2016 (Audited) |
 |  |  |
Year ended
31 January 2015 (Unaudited) |
 |  |  |
Growth
% |
|||
Revenue |  |  | £129.8m |  |  |  | £109.2m |  |  |  | 18.9% | |||
EBITDA |  |  | £19.2m |  |  |  | £14.6m |  |  |  | 31.5% | |||
Operating Profit |  |  | £16.5m |  |  |  | £12.7m |  |  |  | 29.9% | |||
Operating Profit Margin | Â | Â | 12.7% | Â | Â | Â | 11.7% | Â | Â | Â | Â | |||
PBT |  |  | £16.1m |  |  |  | £12.5m |  |  |  | 28.8% | |||
Diluted EPS | Â | Â | 16.9p | Â | Â | Â | 13.2p | Â | Â | Â | 28.0% | |||
Dividend per share | Â | Â | 4.2p | Â | Â | Â | 3.5p | Â | Â | Â | 20.0% | |||
Net debt |  |  | £6.6m |  |  |  | £8.6m |  |  |  |  | |||
 |
Headline results represent the performance for the 12 months to 31 January 2016 adjusted to exclude acquisition related costs, one-off and acquisition related share based payment charges, amortisation and certain other non-recurring items. These are reconciled to the statutory numbers in note 2, 3 and the appendices.
Highlights
Commenting on the results, Chairman of Next 15, Richard Eyre said:
“These are good times for Next 15. Organically and through acquisition, we have built a strong portfolio of modern, technology-driven marketing businesses. Pursuit of the group’s digital strategy has again delivered increased organic revenues and an expanded operating margin. The 17 different businesses that now make up Next 15 operate in major markets around the globe for many of the world’s most important growth companies; they employ teams of people who we believe can rival any of the most progressive marketing organisations in the world. Taken with these results and encouraging current trading, your Board has confidence that the current financial year should also be a year of progress for the Group.â€
Statutory financial results for the year to 31 January 2016
 |  |  |
Year ended
31 January 2016 (Audited) |
 |  |  |
Eighteen months ended
31 January 2015 (Audited) |
 |  | |
Revenue |  |  | £129.8m |  |  |  | £158.5m | |||
Retained Profit |  |  | £4.5m |  |  |  | £0.9m | |||
Diluted EPS | Â | Â | 5.6p | Â | Â | Â | (0.2)p | |||
 |  |  |  |  |
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, Matt Lewis, Dominic Emery
+44
(0) 20 7597 4000
Bite Communications Limited
Tony Faccenda
+44 (0) 20
8834 3485
NextFifteen@biteglobal.com
Notes:
Headline results
In order to help shareholders’ understanding of the underlying performance of the business, due to the prior statutory period being 18 months, the headline results have been presented based on the audited 12-month period to 31 January 2016 and unaudited 12-month period to 31 January 2015.
The headline results are reconciled to statutory results within note 2, 3 and the appendices of this report.
The term ‘headline’ is not a defined term in IFRS. The items that are excluded from headline results include acquisition related costs, one-off and acquisition related share based payment charges, amortisation and certain other non-recurring items.
Chairman and Chief Executive’s Statement
In April 2014 the Group announced its intention to change its accounting reference date and financial year end from 31 July to 31 January. Accordingly, the statutory accounts cover the 12 months to 31 January 2016 and the comparative period is 18 months to 31 January 2015.
In order to better aid shareholders’ understanding of the underlying performance of the business, we have focused our comments on the headline performance of the business for the 12 months to 31 January 2016 compared with the 12 months to 31 January 2015. The commentary refers to financial measures which have been adjusted to take account of amortisation, impairments, restructuring charges and certain other non-recurring items. A reconciliation between the 12 months to January 2015 and 18 months to January 2015 is included in the appendices on pages 18 to 21.
Review of Headline results to 31 January 2016
The last 12 months have been another period of significant progress across the Group. We have succeeded in growing the revenues at our US businesses at a double-digit organic rate whilst achieving an operating margin in excess of 20%. M Booth and Beyond US have had stellar performances whilst OutCast, Connections Media and Blueshirt have continued to deliver strong performances.
In addition we have implemented a series of operational improvements which have resulted in an increase in the operating margins of our non-US operations. We have improved the efficiency of a number of our UK businesses whilst acquiring high-growth, high-margin agencies in Morar, Encore and ODD. Since the year end we have also acquired two technology-focused digital agencies in Publitek and Twogether.
We have also benefitted from the merger of our agencies in APAC and EMEA where trading improved as the year progressed in both markets.
In total for the 12 months to January 2016, the Group delivered headline revenue of £129.8m, headline operating profit of £16.5m, headline profit before income tax of £16.1m and headline diluted earnings per share of 16.9p. This compares with headline revenue of £109.2m, headline operating profit of £12.7m, headline profit before income tax of £12.5m and headline diluted earnings per share of 13.2p for the 12 months to 31 January 2015.
Regional Headline Performance
Our US businesses have continued to perform strongly led by our Beyond, Outcast, M Booth, Connections Media and Blueshirt agencies. In the year to 31 January 2016 revenues grew by 30% to £83.5m from £64.0m which equated to an organic growth rate of 14% taking account of movements in exchange rates and acquisitions over the last two years. Margins have remained consistently strong at above 20% but were impacted marginally by the acquisition of Story Worldwide, which had a disappointing performance. We incurred £0.5m in restructuring the business to align the cost base with the anticipated revenue and we are expecting an improved operating performance in the current financial year. The headline operating profit from our US businesses was £17.5m compared with £14.1m in the previous 12 months to 31 January 2015.
The UK businesses have shown a much-improved performance with revenue increasing by 17% to £27.9m from £23.8m in the prior period. Headline operating profit increased to £3.8m from £2.5m in the prior year with the headline operating margin increasing to 13.6% from 10.6% in the prior period. Lexis and Bite UK have continued to improve their operational performance, whilst we merged our agencies Text 100, Republic and IncrediBull under the Text 100 brand with effect from 1 February 2016, which will lead to a broader product offering and operational efficiencies going forward. We merged our two research agencies under the Morar brand during the year and this has led to an improved performance in the second half. Finally, in addition to our acquisition of Encore, which continues to trade at high margins and with strong growth rates, and IncrediBull, as discussed above, we acquired ODD, the fashion and lifestyle creative agency, in December 2015 and it has made an encouraging start.
We continued to focus our efforts in EMEA on markets of potential scale and therefore decided to exit both South Africa and Denmark and reduced the cost base in other markets in line with their operational performance. In so doing, we incurred an exceptional restructuring cost of £0.9m whilst delivering a much-improved underlying trading performance in EMEA in the second half and expect this to continue into the current financial year.
APAC produced an encouraging performance as we benefitted from the restructuring we undertook last year. The operating margin improved to 11.5% from 8% in the prior period and we see scope for further improvement in operating margin in the current financial year.
Investment activity
We completed two fundraisings during the year, which raised a net £12.1m for acquisitions and investments in the business. Over the year we invested £13.4m in acquisition related payments of which £5.2m fell in the second half.
Balance Sheet and Net Debt
The Group’s balance sheet remains in a healthy position with net debt as at 31 January 2016 of £6.6m (2015: £8.6m).
On 8 March 2016 the Group entered into a new extended four-year £30m revolving credit facility with HSBC. The facility is primarily used for acquisitions and is due to be repaid out of the trading cash flows of the Group. The facility is available in a combination of sterling, US dollar and euro at an interest margin ranging from 1.60% to 2.0% dependent upon the level of gearing in the business. The Group also has a US facility of $6m, which is available for property rental guarantees and US-based working capital needs.
As part of the facility Next 15 is required to comply with a number of covenants, including maintaining the multiple of net bank debt before earn-out obligations to adjusted EBITDA below 1.75x and the level of net bank debt including earn-out obligations to adjusted EBITDA below 2.5x. Next 15 has ensured that it has complied with all of its covenant obligations with significant headroom.
Current trading and Outlook
Looking ahead, the Group has made a good start to the new financial year with trading patterns continuing as in the second half of our last fiscal year. The Group has made two further acquisitions in the UK of Publitek, a specialist content agency and Twogether, a technology-focused digital agency. As a result, the Board is recommending the payment of a final dividend for the 12 months to 31 January 2016 of 3p per share, which would represent a total dividend of 4.2p for the year to 31 January 2016 which reflects an increase on 20% on the pro-forma dividend in the prior year.
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
HEADLINE RESULTS: INCOME STATEMENT
 |  |
Year Ended
31 January 2016 £’000 (Audited) |
 |  |  |
Year Ended
31 January 2015 £’000 (Unaudited) |
 |  | ||
Revenue | 129,757 | Â | Â | Â | 109,194 | |||||
Total operating charges | (110,581) | Â | Â | Â | (94,585) | |||||
EBITDA | 19,176 | 14,609 | ||||||||
Depreciation and Amortisation | (2,657) | Â | Â | Â | (1,883) | |||||
Operating profit | 16,519 | 12,726 | ||||||||
Net finance expense | (422) | (459) | ||||||||
Share of (loss) / profit of associate | (5) | Â | Â | Â | 268 | |||||
Profit before income tax | 16,092 | 12,535 | ||||||||
Tax | (3,540) | Â | Â | Â | (2,998) | |||||
Retained profit | 12,552 | 9,537 | ||||||||
Profit Attributable to Owners | 12,082 | 8,948 | ||||||||
Profit Attributable to Minorities | 470 | 589 | ||||||||
 |  |  |  |  |  |  |  | |||
Weighted average number of ordinary shares | 66,298,503 | 60,949,534 | ||||||||
Dilutive weighted average number of ordinary shares | Â | Â | 71,637,907 | Â | Â | Â | 67,633,298 | |||
 |  |  |  |  |  |  |  | |||
Adjusted earnings per share | 18.2p | 14.7p | ||||||||
Diluted adjusted earnings per share | Â | Â | 16.9p | Â | Â | Â | 13.2p | |||
 |
HEADLINE RESULTS: CASH FLOW
 |  |
Year Ended
31 January 2016 £’000 (Audited) |
 |  |  |
Year Ended
31 January 2015 £’000 (Unaudited) |
 |  | ||
Cash and cash equivalents at beginning of the year | 9,315 | 6,217 | ||||||||
Net cash inflow from operating activities | 16,288 | 17,960 | ||||||||
Income taxes paid | (2,954) | (2,316) | ||||||||
Net cash outflow from investing activities | (20,158) | (14,842) | ||||||||
Net cash inflow from financing activities | 11,459 | 2,041 | ||||||||
Exchange gains on cash held | 182 | Â | Â | Â | 255 | |||||
Cash and cash equivalents at end of the year | 14,132 | 9,315 | ||||||||
 |
HEADLINE RESULTS: SEGMENTAL
 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | |
 |  |  |
UK £’000 |
 |  |  |
Europe & Africa £’000 |
 |  |  |
US £’000 |
 |  |  |
Asia Pacific £’000 |
 |  |  |
Head Office £’000 |
 |  |  |
Total £’000 |
|||
Year ended 31 January 2016 (Audited) | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | |||
Revenue | Â | Â | 27,885 | Â | Â | Â | 6,426 | Â | Â | Â | 83,456 | Â | Â | Â | 11,990 | Â | Â | Â | - | Â | Â | Â | 129,757 | |||
Operating profit / (loss) | Â | Â | 3,805 | Â | Â | Â | 452 | Â | Â | Â | 17,492 | Â | Â | Â | 1,380 | Â | Â | Â | (6,610) | Â | Â | Â | 16,519 | |||
Operating profit margin | Â | Â | 13.6% | Â | Â | Â | 7.0% | Â | Â | Â | 21.0% | Â | Â | Â | 11.5% | Â | Â | Â | Â | Â | Â | Â | 12.7% | |||
Year ended 31 January 2015 (Unaudited) | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | |||
Revenue | Â | Â | 23,754 | Â | Â | Â | 8,970 | Â | Â | Â | 63,966 | Â | Â | Â | 12,504 | Â | Â | Â | - | Â | Â | Â | 109,194 | |||
Operating profit / (loss) | Â | Â | 2,526 | Â | Â | Â | 822 | Â | Â | Â | 14,074 | Â | Â | Â | 998 | Â | Â | Â | (5,694) | Â | Â | Â | 12,726 | |||
Operating profit margin | Â | Â | 10.6% | Â | Â | Â | 9.2% | Â | Â | Â | 22.0% | Â | Â | Â | 8.0% | Â | Â | Â | Â | Â | Â | Â | 11.7% | |||
 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE TWELVE MONTH PERIOD ENDED 31 JANUARY 2016 AND EIGHTEEN MONTH PERIOD ENDED 31 JANUARY 2015
 |  |  |  |  |
Year ended
31 January 2016 (Audited) |
 |  |  |
Eighteen months ended
31 January 2015 |
 |  | |||
Note | £’000 | £’000 | ||||||||||||
 | ||||||||||||||
Billings | Â | Â | Â | Â | Â | Â | 151,658 | Â | Â | Â | 185,900 | |||
 | ||||||||||||||
Revenue | 2 | 129,757 | 158,495 | |||||||||||
 | ||||||||||||||
Staff costs | 92,721 | 110,626 | ||||||||||||
Depreciation | 2,348 | 2,332 | ||||||||||||
Amortisation | 3,796 | 2,812 | ||||||||||||
Impairment | - | 7,000 | ||||||||||||
Credits associated with misappropriation of assets | - | (65) | ||||||||||||
Other operating charges | 22,463 | Â | Â | Â | 32,149 | |||||||||
Total operating charges | (121,328) | (154,854) | ||||||||||||
 |  |  |  |  | ||||||||||
Operating profit | 2 | 8,429 | Â | Â | Â | 3,641 | ||||||||
 | ||||||||||||||
Finance expense | 6 | (4,905) | (4,699) | |||||||||||
Finance income | 7 | 2,059 | 1,129 | |||||||||||
Share of (loss) / profit of associate | (5) | 334 | ||||||||||||
 |  |  |  |  | ||||||||||
Profit before income tax | 3 | 5,578 | Â | Â | Â | 405 | ||||||||
 | ||||||||||||||
Income tax (expense) / credit | 4 | (1,116) | 516 | |||||||||||
 |  |  |  |  | ||||||||||
Profit for the period | 4,462 | Â | Â | Â | 921 | |||||||||
 | ||||||||||||||
Attributable to: | ||||||||||||||
Owners of the parent | 3,992 | (107) | ||||||||||||
Non-controlling interests | 470 | Â | Â | Â | 1,028 | |||||||||
4,462 | Â | Â | Â | 921 | ||||||||||
Earnings / (loss) per share | ||||||||||||||
Basic (pence) | 8 | 6.0p | (0.2)p | |||||||||||
Diluted (pence) | 8 | 5.6p | (0.2)p | |||||||||||
 |
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE TWELVE MONTH PERIOD ENDED 31 JANUARY 2016 AND EIGHTEEN MONTH PERIOD ENDED 31 JANUARY 2015
 |  |
Year ended
31 January 2016 (Audited) |
 |  |  |
Eighteen months ended
31 January 2015 |
 |  | ||
£’000 | £’000 | |||||||||
 | ||||||||||
Profit for the period | 4,462 | 921 | ||||||||
 | ||||||||||
Other comprehensive income / (expense): | ||||||||||
Items that may be reclassified into profit or loss | ||||||||||
Exchange differences on translating foreign operations | 1,585 | 418 | ||||||||
Translation differences on long-term intercompany loans | - | (77) | ||||||||
Loss on net investment hedge | (662) | Â | Â | Â | (104) | |||||
923 | 237 | |||||||||
Amounts reclassified and reported in the Income Statement | ||||||||||
Profit / (loss) on net investment hedge | 4 | Â | Â | Â | (44) | |||||
Other Comprehensive income for the period | 927 | Â | Â | Â | 193 | |||||
Total comprehensive income for the period | 5,389 | Â | Â | Â | 1,114 | |||||
 | ||||||||||
Attributable to: | ||||||||||
Owners of the parent | 4,919 | 86 | ||||||||
Non-controlling interests | 470 | Â | Â | Â | 1,028 | |||||
5,389 | Â | Â | Â | 1,114 | ||||||
 |
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED BALANCE SHEET AS AT 31 JANUARY 2016 AND 2015
 |  |  |  |
31 January 2016 |
 |  |  |
31 January 2015 |
 |  | ||||
 | ||||||||||||||
Note | £’000 | £’000 | ||||||||||||
Assets | ||||||||||||||
Property, plant and equipment | 9,988 | 5,451 | ||||||||||||
Intangible assets | 53,555 | 44,915 | ||||||||||||
Investment in equity accounted associate | 465 | 294 | ||||||||||||
Trade investment | 235 | 211 | ||||||||||||
Deferred tax asset | 6,485 | 6,012 | ||||||||||||
Other receivables | 702 | Â | Â | Â | 575 | |||||||||
Total non-current assets | 71,430 | 57,458 | ||||||||||||
 | ||||||||||||||
Trade and other receivables | 40,924 | 31,254 | ||||||||||||
Cash and cash equivalents | 9 | 14,132 | 9,315 | |||||||||||
Corporation tax asset | 1,097 | Â | Â | Â | 788 | |||||||||
Total current assets | 56,153 | 41,357 | ||||||||||||
 |  |  |  |  |  | |||||||||
Total assets | 127,583 | 98,815 | ||||||||||||
 | ||||||||||||||
Liabilities | ||||||||||||||
Loans and borrowings | 9 | 20,683 | 17,712 | |||||||||||
Deferred tax liabilities | - | 177 | ||||||||||||
Other payables | 5,739 | 2,295 | ||||||||||||
Provisions | 450 | 642 | ||||||||||||
Contingent consideration | 10 | 5,701 | 3,333 | |||||||||||
Share purchase obligation | 10 | 2,225 | Â | Â | Â | 4,990 | ||||||||
Total non-current liabilities | (34,798) | (29,149) | ||||||||||||
 | ||||||||||||||
Loans and borrowings | 9 | - | 100 | |||||||||||
Trade and other payables | 34,088 | 25,909 | ||||||||||||
Provisions | 989 | 926 | ||||||||||||
Corporation tax liability | 765 | 742 | ||||||||||||
Deferred consideration | 10 | - | 94 | |||||||||||
Share purchase obligation | 10 | 1,509 | 852 | |||||||||||
Contingent consideration | 10 | 2,643 | Â | Â | Â | 3,841 | ||||||||
Total current liabilities | (39,994) | (32,464) | ||||||||||||
 |  |  |  |  | ||||||||||
Total liabilities | (74,792) | (61,613) | ||||||||||||
 |  |  |  |  | ||||||||||
TOTAL NET ASSETS | 52,791 | Â | Â | Â | 37,202 | |||||||||
 |
Equity | Â | Â | Â | Â | Â | Â | Â | Â | |||
Share capital | 1,763 | 1,545 | |||||||||
Share premium reserve | 21,523 | 8,272 | |||||||||
Merger reserve | 3,075 | 3,075 | |||||||||
Share purchase reserve | (2,673) | (2,673) | |||||||||
Foreign currency translation reserve | 5,110 | 3,525 | |||||||||
Other reserves | (1,168) | (510) | |||||||||
Retained earnings | 24,418 | Â | Â | Â | 24,741 | ||||||
Total equity attributable to owners of the parent | 52,048 | 37,975 | |||||||||
Non-controlling interests | 743 | (773) | |||||||||
 |  |  |  |  | |||||||
TOTAL EQUITY | 52,791 | Â | Â | Â | 37,202 | ||||||
 |
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE TWELVE MONTH PERIOD ENDED 31 JANUARY 2016 AND EIGHTEEN MONTH PERIOD ENDED 31 JANUARY 2015
 |
Share capital |
 | Share premium reserve |  | Merger reserve |  | Share purchase reserve |  |
Foreign |
 | Other reserves1 |  | Retained earnings |  |
Equity |
 |
Non- |
 | Total equity | ||
 | |||||||||||||||||||||
£’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | ||||||||||||
 | |||||||||||||||||||||
At 1 July 2013 (audited) | 1,494 | 7,557 | 3,075 | (2,673) | 3,184 | (583) | 23,954 | 36,008 | 2,185 | 38,193 | |||||||||||
 | |||||||||||||||||||||
(Loss) / profit for the period | - | - | - | - | - | - | (107) | (107) | 1,028 | 921 | |||||||||||
Other comprehensive income for the period | Â | - | Â | - | Â | - | Â | - | Â | 341 | Â | (148) | Â | - | Â | 193 | Â | - | Â | 193 | |
Total comprehensive income / (expense) for the period | Â | - | Â | - | Â | - | Â | - | Â | 341 | Â | (148) | Â | (107) | Â | 86 | Â |
1,028 |
 |
1,114 |
|
Shares issued on satisfaction of vested share options | 35 | 82 | - | - | - | - | - | 117 |
- |
117 |
|||||||||||
Shares issued on acquisitions | 16 | 633 | - | - | - | - | - | 649 | - | 649 | |||||||||||
Movement due to ESOP share purchases | - | - | - | - | - | (35) | - | (35) | - | (35) | |||||||||||
Movement due to ESOP share exercises | - | - | - | - | - | 256 | - | 256 | - | 256 | |||||||||||
Movement in relation to share-based payments | - | - | - | - | - | - | 580 | 580 |
- |
580 |
|||||||||||
Deferred tax on share based payments | - | - | - | - | - | - | 208 | 208 | - | 208 | |||||||||||
Share-based payment charge for disposal of equity in a subsidiary to employees | - | - | - | - | - | - | 684 | 684 |
- |
684 |
|||||||||||
Share options issued on acquisition of subsidiary | - | - | - | - | - | - | 1,222 | 1,222 |
- |
1,222 |
|||||||||||
Movement on reserves for non-controlling interests | - | - | - | - | - | - | 1,206 | 1,206 |
(1,206) |
- |
|||||||||||
Non-controlling interest on business combination | - | - | - | - | - | - | - | - |
(1,896) |
(1,896) |
|||||||||||
Dividends to owners of the parent | - | - | - | - | - | - | (3,006) | (3,006) | - | (3,006) | |||||||||||
Non-controlling interest dividend | Â | - | Â | - | Â | - | Â | - | Â | - | Â | - | Â | - | Â | - | Â | (884) | Â | (884) | |
At 31 January 2015 (audited) | Â | 1,545 | Â | 8,272 | Â | 3,075 | Â | (2,673) | Â | 3,525 | Â | (510) | Â | 24,741 | Â | 37,975 | Â | (773) | Â | 37,202 | |
Profit for the year |
- | - | - | - | - | - | 3,992 | 3,992 |
470 |
4,462 |
|||||||||||
Other comprehensive income / (expense) for the year | Â | - | Â | - | Â | - | Â | - | Â | 1,585 | Â | (658) | Â | - | Â | 927 | Â |
- |
 |
927 |
|
Total comprehensive income / (expense) for the year | Â | - | Â | - | Â | - | Â | - | Â | 1,585 | Â | (658) | Â | 3,992 | Â | 4,919 | Â |
470 |
 |
5,389 |
|
Shares issued on satisfaction of vested share options | 38 | - | - | - | - | - | - | 38 |
- |
38 |
|||||||||||
Shares issued on acquisitions | 19 | 1,331 | - | - | - | - | - | 1,350 | - | 1,350 | |||||||||||
Shares issued on placing | 161 | 11,920 | - | - | - | - | - | 12,081 | - | 12,081 | |||||||||||
Movement in relation to share-based payments | - | - | - | - | - | - | 1,274 | 1,274 |
- |
1,274 | |||||||||||
Deferred tax on share-based payments | - | - | - | - | - | - | 239 | 239 | - | 239 | |||||||||||
Dividends to owners of the parent | - | - | - | - | - | - | (2,441) | (2,441) | - | (2,441) | |||||||||||
Movement due to ESOP share purchases | - | - | - | - | - | (38) | - | (38) | - | (38) | |||||||||||
Movement due to ESOP share option exercise | - | - | - | - | - | 38 | - | 38 | - | 38 | |||||||||||
Movement on reserves for non-controlling interests | - | - | - | - | - | - | (3,494) | (3,494) |
3,494 |
- |
|||||||||||
Share options issued on acquisition of subsidiary | 107 | 107 |
- |
107 |
|||||||||||||||||
Non-controlling interest arising on acquisition | - | - | - | - | - | - | - | - | (1,888) | (1,888) | |||||||||||
Non-controlling interest dividend | Â | - | Â | - | Â | - | Â | - | Â | - | Â | - | Â | - | Â | - | Â | (560) | Â | (560) | |
At 31 January 2016 (audited) | Â | 1,763 | Â | 21,523 | Â | 3,075 | Â | (2,673) | Â | 5,110 | Â | (1,168) | Â | 24,418 | Â | 52,048 | Â | 743 | Â | 52,791 | |
1 Other reserves include ESOP reserve and hedging reserve. |
|||||||||||||||||||||
 |
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE TWELVE MONTH PERIOD ENDED 31 JANUARY 2016 AND EIGHTEEN MONTH PERIOD ENDED 31 JANUARY 2015
 |  |  |
Year ended 31 January 2016 (Audited) |
 |  |  |
Eighteen months ended |
 |  | ||
£’000 | £’000 | ||||||||||
Cash flows from operating activities | |||||||||||
Profit for the period | 4,462 | 921 | |||||||||
Adjustments for: | |||||||||||
Depreciation | 2,348 | 2,332 | |||||||||
Amortisation | 3,796 | 2,812 | |||||||||
Impairment | - | 7,000 | |||||||||
Finance expense | 4,905 | 4,699 | |||||||||
Finance income | (2,059) | (1,129) | |||||||||
Share of loss / (profit) from equity accounted associate | 5 | (285) | |||||||||
Loss on sale of property, plant and equipment | 156 | 73 | |||||||||
Income tax expense / (credit) | 1,116 | (516) | |||||||||
Share-based payment charge | 1,393 | 2,486 | |||||||||
 |  |  |  |  | |||||||
Net cash inflow from operating activities before changes in working capital | 16,122 | 18,393 | |||||||||
 | |||||||||||
Change in trade and other receivables | (6,740) | (1,705) | |||||||||
Change in trade and other payables | 6,447 | 2,234 | |||||||||
Change in provision | 459 | Â | Â | Â | 285 | ||||||
166 | 814 | ||||||||||
 |  |  |  |  | |||||||
Net cash generated from operations | 16,288 | 19,207 | |||||||||
 | |||||||||||
Income taxes paid | (2,954) | (3,031) | |||||||||
 |  |  |  |  | |||||||
Net cash inflow from operating activities | 13,334 | 16,176 | |||||||||
 | |||||||||||
Cash flows from investing activities | |||||||||||
Acquisition of subsidiaries and trade and assets, net of cash acquired | (4,190) | (5,597) | |||||||||
Payment of contingent and deferred consideration | (9,160) | (8,217) | |||||||||
Acquisition of property, plant and equipment | (6,411) | (3,712) | |||||||||
Proceeds on disposal of property, plant and equipment | 7 | 24 | |||||||||
Acquisition of intangible assets | (562) | (691) | |||||||||
Net movement in long-term cash deposits | 109 | 230 | |||||||||
Interest received | 49 | 62 | |||||||||
 |  |  |  |  | |||||||
Net cash outflow from investing activities | (20,158) | (17,901) | |||||||||
 |
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOW (Continued)
FOR THE TWELVE MONTH PERIOD ENDED 31 JANUARY 2016 AND EIGHTEEN MONTH PERIOD ENDED 31 JANUARY 2015
 |  |
Year ended 31 January 2016 (Audited) |
 |
Eighteen months ended |
||
£’000 | £’000 | |||||
 | ||||||
Cash flows from financing activities | ||||||
Proceeds from sale of own shares | 12,540 | 90 | ||||
Issue costs on issue of ordinary shares | (457) | (5) | ||||
Purchase of own shares | - | (34) | ||||
Capital element of finance lease rental repayment | (23) | (103) | ||||
Increase in bank borrowings and overdrafts | 6,661 | 16,698 | ||||
Repayment of bank borrowings and overdrafts | (3,790) | (8,608) | ||||
Interest paid | (471) | (743) | ||||
Non-controlling interest dividend paid | (560) | (884) | ||||
Dividends paid to shareholders of the parent | (2,441) | (3,006) | ||||
 |  |  | ||||
Net cash inflow from financing activities | 11,459 | 3,405 | ||||
 |  |  | ||||
Net increase in cash and cash equivalents | 4,635 | Â | 1,680 | |||
 | ||||||
Cash and cash equivalents at beginning of the period | 9,315 | 8,064 | ||||
Exchange gains / (losses) on cash held | 182 | (429) | ||||
 |  |  | ||||
Cash and cash equivalents at end of the period | 14,132 | Â | 9,315 | |||
 |
NOTES TO THE RESULTS
FOR THE TWELVE MONTH PERIOD ENDED 31 JANUARY 2016 AND EIGHTEEN MONTH PERIOD ENDED 31 JANUARY 2015
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 period ending 31 January 2016. The comparative financial information for the period ended 31 January 2015 has been derived from the audited statutory financial statements for that period. A copy of those statutory financial statements has been delivered to the Registrar of Companies. The auditors’ 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.
 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | ||||||||
UK |
Europe |
US |
Asia |
Head |
Total | |||||||||||||||||||||
£’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |||||||||||||||||||||
 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | |||
Year ended 31 January 2016 (Audited) | ||||||||||||||||||||||||||
Revenue | 27,885 | 6,426 | 83,456 | 11,990 | - | 129,757 | ||||||||||||||||||||
Adjusted operating profit / (loss) | Â | Â | 3,805 | Â | Â | Â | 452 | Â | Â | Â | 17,492 | Â | Â | Â | 1,380 | Â | Â | Â | (6,610) | Â | Â | Â | 16,519 | |||
Eighteen months ended 31 January 2015 (Audited) | ||||||||||||||||||||||||||
Revenue | 33,460 | 13,778 | 92,358 | 18,899 | - | 158,495 | ||||||||||||||||||||
Adjusted operating profit / (loss) | Â | Â | 3,299 | Â | Â | Â | 584 | Â | Â | Â | 21,018 | Â | Â | Â | 1,208 | Â | Â | Â | (8,150) | Â | Â | Â | 17,959 | |||
 |
A reconciliation of segment adjusted operating profit to statutory operating profit is provided as follows:
 |
 |
Year ended |
 |  |
Eighteen months ended |
|||||
 |  | £’000 |  |  | £’000 | |||||
 | ||||||||||
Segment adjusted operating profit | 16,519 | 17,959 | ||||||||
 | ||||||||||
Amortisation of acquired intangibles | (3,487) | (2,375) | ||||||||
Impairment of goodwill | - | (7,000) | ||||||||
Charge associated with prior period restructure | - | (2,001) | ||||||||
Share based payment charge (note 3) | (1,549) | (1,906) | ||||||||
Charge associated with office moves | (1,354) | (1,036) | ||||||||
Current period restructure (note 3) | (1,492) | - | ||||||||
Deal costs (note 3) | (208) | - | ||||||||
 |  | |||||||||
Total operating profit | 8,429 | 3,641 | ||||||||
 |
NOTES TO THE RESULTS (Continued)
FOR THE TWELVE MONTH PERIOD ENDED 31 JANUARY 2016 AND EIGHTEEN MONTH PERIOD ENDED 31 JANUARY 2015
3) RECONCILIATION OF PRO-FORMA FINANCIAL MEASURES
 |
 |
Year ended
31 January 2016 (Audited) |
 |  |
Eighteen months ended |
|||||
 | ||||||||||
 |  | £’000 |  |  | £’000 | |||||
Profit before income tax | 5,578 | 405 | ||||||||
Movement in fair value of interest rate
cap-and-collar contract |
- | (206) | ||||||||
Unwinding of discount on deferred and contingent consideration |
1,512 | 2,452 | ||||||||
Change in estimate of future contingent consideration and share |
912 | 643 | ||||||||
Share-based payment charge1 | 1,549 | 1,906 | ||||||||
Charge associated with prior period restructure | - | 2,001 | ||||||||
Charge associated with current period restructure | 1,492 | - | ||||||||
Charge associated with office moves | 1,354 | 1,036 | ||||||||
Deal costs2 | 208 | - | ||||||||
Amortisation of acquired intangibles | 3,487 | 2,375 | ||||||||
Impairment of goodwill | - | 7,000 | ||||||||
Adjusted profit before income tax | 16,092 | 17,612 | ||||||||
 |
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.
1 This charge relates to the acquisition of the 20% minority interest in Bourne whereby performance shares were issued as partial consideration, a transaction whereby a restricted grant of Brand equity was given to key management in Bite Communications Limited, Bite Communications LLC and The OutCast Agency LLC (2015: Story Worldwide, MBooth and Bite NA) at nil cost which holds value in the form of access to future profit distributions as well as any future sale value under the performance-related mechanism set out in the share sale agreement. This value is recognised as a one-off share-based payment in the income statement. It also includes charges associated with equity transactions accounted for as share based payments.
2 This charge relates to 3rd party professional fees incurred during acquisitions and restructures, note 11.
4) TAXATION
The tax charge on adjusted profit for the year ended 31 January 2016 is £3,540k (2015: £4,378k), equating to an effective tax rate of 22% (2015: £25%). The Group’s effective tax rate has reduced due to a higher proportion of profit coming from lower tax regimes such as the UK, the reduction in the rate of corporation tax in the UK to 20% and the successful resolution of a number of historic tax queries. The Group’s corporation tax rate is expected to remain higher than the standard UK rate for the foreseeable future due to the higher rate of tax the Group suffers on its overseas profits.
5) DIVIDENDS
A final dividend of 3p (2015: 2.5p) per ordinary share will be paid on 05 August 2016 to shareholders listed on the register of members on 01 July 2016. Shares will go ex-dividend on 30 June 2016.
NOTES TO THE RESULTS (Continued)
FOR THE TWELVE MONTH PERIOD ENDED 31 JANUARY 2016 AND EIGHTEEN MONTH PERIOD ENDED 31 JANUARY 2015
6) FINANCE EXPENSE
 |
 |
Year ended
31 January 2016 (Audited) |
 |  |
Eighteen months ended
31 January 2015 (Audited) |
|||||
 |  |  |  | |||||||
£’000 | £’000 | |||||||||
 | ||||||||||
Financial liabilities at amortised cost | ||||||||||
Bank interest payable | 445 | 720 | ||||||||
 | ||||||||||
Financial liabilities at fair value through profit and loss |
||||||||||
 | ||||||||||
Unwinding of discount on deferred and contingent |
1,512 | 2,452 | ||||||||
 | ||||||||||
Change in estimate of future contingent consideration and |
2,922 | 1,504 | ||||||||
 | ||||||||||
Other | ||||||||||
Finance lease interest | 8 | 5 | ||||||||
Other interest payable | 18 | 18 | ||||||||
Finance expense | 4,905 | 4,699 | ||||||||
 |
7) FINANCE INCOME
 |
 |
Year ended
31 January 2016 (Audited) |
 |  |
Eighteen months ended
31 January 2015 (Audited) |
|||||
 |  |  |  | |||||||
£’000 | £’000 | |||||||||
 | ||||||||||
Financial assets at amortised cost |
 |
|||||||||
Bank interest receivable | 42 | 46 | ||||||||
 | ||||||||||
Financial assets at fair value through profit and loss |
||||||||||
 | ||||||||||
Movement in fair value of interest rate cap-and-collar |
- | 206 | ||||||||
Change in estimate of future contingent consideration and |
2,010 | 861 | ||||||||
 | ||||||||||
Other interest receivable | 7 | 16 | ||||||||
Finance income | 2,059 | 1,129 | ||||||||
 |
NOTES TO THE RESULTS (Continued)
FOR THE TWELVE MONTH PERIOD ENDED 31 JANUARY 2016 AND EIGHTEEN MONTH PERIOD ENDED 31 JANUARY 2015
8) EARNINGS PER SHARE
 |  |  |
Year ended
31 January 2016 (Audited) |
 |  |  |  |  |  |  |  |  |
Eighteen months ended
31 January 2015 (Audited) |
 |  | ||
£’000 | £’000 | ||||||||||||||||
 | |||||||||||||||||
Earnings attributable to ordinary shareholders | 3,992 | (107) | |||||||||||||||
Movement in fair value of interest rate cap-and-collar |
- | (165) | |||||||||||||||
Unwinding of discount on future deferred |
1,312 | 730 | |||||||||||||||
Change in estimate of future contingent consideration |
912 | (397) | |||||||||||||||
Share based payment charge | 1,237 | 1,175 | |||||||||||||||
Costs associated with prior period restructure | - | 1,918 | |||||||||||||||
Costs associated with current period restructure | 995 | - | |||||||||||||||
Costs associated with office moves | 863 | 622 | |||||||||||||||
Amortisation of acquired intangibles | 2,563 | 1,433 | |||||||||||||||
Deal costs | 208 | - | |||||||||||||||
Impairment of intangibles | - | 7,000 | |||||||||||||||
Adjusted earnings attributable to ordinary shareholders | 12,082 | 12,209 | |||||||||||||||
 | |||||||||||||||||
Number | Number | ||||||||||||||||
 | |||||||||||||||||
Weighted average number of ordinary shares | 66,298,503 | 60,825,828 | |||||||||||||||
Dilutive LTIP shares | 2,904,335 | 4,868,493 | |||||||||||||||
Dilutive Growth Deal shares | 1,689,729 | 1,126,939 | |||||||||||||||
Other potentially issuable shares | 745,340 | 570,657 | |||||||||||||||
 |  | ||||||||||||||||
Diluted weighted average number of ordinary shares | 71,637,907 | 67,391,917 | |||||||||||||||
 | |||||||||||||||||
 | |||||||||||||||||
Basic earnings / (loss) per share | 6.0p | (0.2)p | |||||||||||||||
Diluted earnings / (loss) per share | 5.6p | (0.2)p | |||||||||||||||
Adjusted earnings per share | 18.2p | 20.1p | |||||||||||||||
Diluted adjusted earnings per share | 16.9p | 18.1p | |||||||||||||||
 |
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 note 3 is the tax effect of those adjusting items.
NOTES TO THE RESULTS (Continued)
FOR THE TWELVE MONTH PERIOD ENDED 31 JANUARY 2016 AND EIGHTEEN MONTH PERIOD ENDED 31 JANUARY 2015
9) NET DEBT
The HSBC Bank revolving credit facility expires in 2020 and therefore the outstanding balance has been classified in non-current borrowings.
 |
 |
31 January 2016 |
 |  |
31 January 2015 |
 | |||||
 |
£’000 |
£’000 | |||
 | |||||
Total loans and borrowings | 20,683 | 17,812 | |||
Obligations under finance leases | 72 | 70 | |||
Less: cash and cash equivalents | Â | (14,132) | Â | Â | (9,315) |
Net debt | Â | 6,623 | Â | Â | 8,567 |
Share purchase obligation | 3,734 | 5,842 | |||
Contingent consideration | 8,344 | 7,174 | |||
Deferred consideration | Â | - | Â | Â | 94 |
 |  | 18,701 |  |  | 21,677 |
 |
10) OTHER FINANCIAL LIABILITIES
 |
 |  |
Deferred consideration |
 |  |  |
Contingent |
 |  |  |
Share purchase |
 |  | |
 | ||||||||||||||
 |
 |  |
£’000 |
 |  |  | £’000 |  |  |  | £’000 | |||
At 31 July 2013 (Audited) | Â | Â | 1,319 | Â | Â | Â | 6,152 | Â | Â | Â | 3,546 | |||
Reclassification | 1,241 | (1,241) | - | |||||||||||
Arising during the period | - | 4,562 | 3,439 | |||||||||||
Changes in assumptions | - | 1,253 | (610) | |||||||||||
Exchange differences | (65) | (37) | (88) | |||||||||||
Utilised | (2,642) | (4,747) | (1,424) | |||||||||||
Unwinding of discount | Â | Â | 241 | Â | Â | Â | 1,232 | Â | Â | Â | 979 | |||
At 31 January 2015 (Audited) | Â | Â | 94 | Â | Â | Â | 7,174 | Â | Â | Â | 5,842 | |||
Arising during the year | - | 4,092 | 916 | |||||||||||
Exchange differences | - | 223 | 93 | |||||||||||
Utilised | (95) | (4,519) | (4,166) | |||||||||||
Unwinding of discount | 1 | 935 | 576 | |||||||||||
Change in estimate | Â | Â | - | Â | Â | Â | 439 | Â | Â | Â | 473 | |||
At 31 January 2016 (Audited) | Â | Â | - | Â | Â | Â | 8,344 | Â | Â | Â | 3,734 | |||
Current | - | 2,643 | 1,509 | |||||||||||
Non-current | - | 5,701 | 2,225 | |||||||||||
 |
11) ACQUISITIONS AND OTHER SIGNIFICANT TRANSACTIONS
IncrediBull
On 2 July 2015 Next 15 acquired the entire issued share capital of IncrediBull World Limited (“IncrediBullâ€), a brand marketing consultancy based in London. Initial consideration consisted of cash on completion of £1.3m and an additional £0.3m satisfied in Next 15 shares. Further consideration has been paid post yearend based on the profit of IncrediBull for the year to 31 December 2015.
Republic
Further to the acquisition of the 51% interest in Republic on 21 January 2014, on 2 April 2015, Next 15 purchased the remaining minority interest in Republic for an aggregate consideration of £3m. The consideration comprises £1.8m in cash, 0.3m shares in Next 15 and a deferred payment of £0.7m which is due to be settled in 2016.
NOTES TO THE RESULTS (Continued)
FOR THE TWELVE MONTH PERIOD ENDED 31 JANUARY 2016 AND EIGHTEEN MONTH PERIOD ENDED 31 JANUARY 2015
11) ACQUISITIONS AND OTHER SIGNIFICANT TRANSACTIONS (cont.)
Beyond
On 2 April 2015, Next 15 acquired the remaining 32.8% minority interests in Beyond Corporation Limited and Beyond International Corporation “Beyondâ€, its digital experience design agency, for an aggregate consideration of £2.4m. The consideration comprises £2m in cash with the balance being satisfied in Next 15 shares.
Encore
On 27 April 2015, Next 15 purchased 75% of the issued share capital of Encore Digital Media Limited, a programmatic advertising technology business, for initial cash consideration of £0.7m, with a right to purchase the remaining shares over a five year period.
Animl
On 11 March 2015, Next 15 purchased 30% of the issued share capital of Animl Limited, a two-year old creative business, for £0.1m. It was founded to deliver “a newer, better response to conventional marketing spend†by fusing great storytelling and digital innovation and will work closely alongside The Lexis Agency Ltd, Bite DA and N15’s recent acquisition, Morar Consulting. There is a put and call option to buy the remaining 70% over the next five years.
Placing
On 29 January 2015 the Group announced its intention to place 3,089,862 new ordinary shares of 2.5p each in the capital of the Company at a price of 145p per Placing Share. On 29 January 2015 the Group further announced the successful placing of the new capital by Investec Bank plc. On 10 December 2015 the Group announced its intention to place a further 3,358,366 new ordinary shares of 2.5p each in the capital of the Company at a price of 240p per Placing Share. On 10 December 2015 the Group further announced the successful placing of the new capital by Investec Bank plc. The Placing Shares rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of issue
ODD
On the 10 December 2015, Next 15 purchased the entire issued share capital of ODD Communications Limited, a London-based digital agency that specialises in consumer-facing communications for fashion and lifestyle brands. The initial consideration was £3.74m which was settled in cash. Deferred consideration may be payable over the course of the next six years subject to the achievement of certain revenue and profit performance targets.
12) EVENTS AFTER THE BALANCE SHEET DATE
Morar
On 26 February 2016, Next 15 acquired the remaining 25% minority interests in Morar Consulting Limited, its research and advisory agency, and settled in full the remaining obligation for the original purchase of 75% of the issued share capital made on 3 December 2014. The aggregate consideration for the minority interest and remaining obligation was £3.55m.
HSBC Facility
On 8 March 2016 the Group entered into a new extended four-year £30m revolving credit facility with HSBC. The facility is primarily used for acquisitions and is due to be repaid out of the trading cash flows of the Group. The facility is available in a combination of sterling, US dollar and euro at an interest margin ranging from 1.60% to 2.0% dependent upon the level of gearing in the business.
Publitek
On 11 March 2016, Next 15 purchased the entire issued share capital of Publitek Limited, a specialist technical content marketing business that services customers in the global semiconductor and electronic component market, for initial cash consideration of £6.2m. Further consideration may become payable based on the average profits of Publitek for the years ending 31 January 2018, 2019, 2020 and 2021.
Twogether
On 31 March 2016, Next 15 purchased the entire issued share capital of Twogether Creative Limited, a B2B creative and digital marketing agency with a focus on technology clients, for initial consideration of £6.6m. Further consideration may become payable based on the average profits of Twogether for the years ending 31 January 2018, 2019, 2020 and 2021.
Appendix 1: Results for the 12 months to 31 January 2016 and 2015
1.1 Consolidated income statement
 |  |  |  |  |  | |
 |  |
12 Months Ended
31 January 2016 (Audited) £’000 |
 |  |
12 Months Ended
31 January 2015 (Unaudited) £’000 |
|
Billings | Â | 151,658 | Â | Â | 126,159 | |
Revenue | Â | 129,757 | Â | Â | 109,194 | |
Adjusted total operating charges | Â | (110,581) | Â | Â | (94,585) | |
Adjusted EBITDA | Â | 19,176 | Â | Â | 14,609 | |
Depreciation and Amortisation | Â | (2,657) | Â | Â | (1,883) | |
Adjusted operating profit | Â | 16,519 | Â | Â | 12,726 | |
Adjusted net finance expense | Â | (422) | Â | Â | (459) | |
Share of (losses)/profits of associate | Â | (5) | Â | Â | 268 | |
Adjusted profit before income tax | Â | 16,092 | Â | Â | 12,535 | |
Tax on Adjusted Profit | Â | (3,540) | Â | Â | (2,998) | |
Adjusted Retained Profit | Â | 12,552 | Â | Â | 9,537 | |
Profit Attributable to Owners | Â | 12,082 | Â | Â | 8,948 | |
Profit Attributable to Minorities | Â | 470 | Â | Â | 589 | |
 |  |  |  |  |  | |
Weighted average number of ordinary shares | Â | 66,298,503 | Â | Â | 60,949,534 | |
Dilutive weighted average number of ordinary shares | Â | 71,637,907 | Â | Â | 67,633,298 | |
 |  |  |  |  |  | |
Adjusted earnings per share | Â | 18.2 | Â | Â | 14.7 | |
Diluted adjusted earnings per share | Â | 16.9 | Â | Â | 13.2 | |
 |  |  |  |  |  | |
Revenue | Â | 129,757 | Â | Â | 109,194 | |
Operating costs | Â | (115,184) | Â | Â | (106,179) | |
EBITDA | Â | 14,573 | Â | Â | 3,015 | |
Depreciation and Amortisation | Â | (6,144) | Â | Â | (3,570) | |
Operating profit / (loss) | Â | 8,429 | Â | Â | (555) | |
Net finance expenses | Â | (2,846) | Â | Â | (2,577) | |
Share of (losses) / profits of associate | Â | (5) | Â | Â | 268 | |
Profit / (loss) before income tax | Â | 5,578 | Â | Â | (2,864) | |
Taxation | Â | (1,116) | Â | Â | 1,486 | |
Retained profit / (loss) | Â | 4,462 | Â | Â | (1,378) | |
Profit / (loss) attributable to owners | Â | 3,992 | Â | Â | (1,967) | |
Profit attributable to minorities | Â | 470 | Â | Â | 589 | |
 |  |  |  |  |  | |
Basic earnings / (loss) (pence) | Â | 6.0 | Â | Â | (3.2) | |
Diluted earnings / (loss) (pence) | Â | 5.6 | Â | Â | (2.9) | |
 |  |  |
Appendix 1 (cont.): Results for the 12 months to 31 January 2016 and 2015
1.2: Consolidated statement of cash flow
 |  |  |  |  |  | |
 |  |
12 Months Ended
31 January 2016 £’000 |
 |  |
12 Months Ended
31 January 2015 £’000 |
|
Cash and cash equivalents at beginning of the year | Â | 9,315 | Â | Â | 6,217 | |
Net cash from operations | Â | 16,288 | Â | Â | 17,960 | |
Income taxes paid | Â | (2,954) | Â | Â | (2,316) | |
Net cash outflow from investing activities | Â | (20,158) | Â | Â | (14,842) | |
Net cash inflow from financing activities | Â | 11,459 | Â | Â | 2,041 | |
Exchange gains on cash held | Â | 182 | Â | Â | 255 | |
Cash and cash equivalents at end of the year | Â | 14,132 | Â | Â | 9,315 | |
 |  |  |
1.3: Segment information
 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | |
 |  |  |
UK £’000 |
 |  |  |
Europe & Africa £’000 |
 |  |  |
US £’000 |
 |  |  |
Asia Pacific £’000 |
 |  |  |
Head Office £’000 |
 |  |  |
Total £’000 |
|||
12 months ended 31 January 2016 | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | |||
Revenue | Â | Â | 27,885 | Â | Â | Â | 6,426 | Â | Â | Â | 83,456 | Â | Â | Â | 11,990 | Â | Â | Â | - | Â | Â | Â | 129,757 | |||
Adjusted operating profit / (loss) | Â | Â | 3,805 | Â | Â | Â | 452 | Â | Â | Â | 17,492 | Â | Â | Â | 1,380 | Â | Â | Â | (6,610) | Â | Â | Â | 16,519 | |||
12 months ended 31 January 2015 | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | |||
Revenue | Â | Â | 23,754 | Â | Â | Â | 8,970 | Â | Â | Â | 63,966 | Â | Â | Â | 12,504 | Â | Â | Â | - | Â | Â | Â | 109,194 | |||
Adjusted operating profit / (loss) | Â | Â | 2,526 | Â | Â | Â | 822 | Â | Â | Â | 14,074 | Â | Â | Â | 998 | Â | Â | Â | (5,694) | Â | Â | Â | 12,726 | |||
 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
1.4: Reconciliation of adjusted items
 |  | ||||
 |  |
12 Months Ended
31 January 2016 £’000 |
 |
12 Months Ended
31 January 2015 £’000 |
|
Profit / (loss) before income tax | Â | 5,578 | Â | (2,864) | |
Movement in fair value of interest rate cap-and-collar contract | Â | - | Â | (135) | |
Unwinding of discount on deferred and contingent consideration and
share |
 | 1,512 |  | 1,911 | |
Income from recovery and sale of misappropriated assets | Â | - | Â | (53) | |
Change in estimate of future contingent consideration and share
purchase |
 | 912 |  | 342 | |
Share-based payment charge | Â | 1,549 | Â | 1,852 | |
Charge associated with current period restructure | Â | 1,492 | Â | 1,758 | |
Charge associated with office moves | Â | 1,354 | Â | 1,036 | |
Amortisation of acquired intangibles | Â | 3,487 | Â | 1,688 | |
Impairment of goodwill | Â | - | Â | 7,000 | |
Deal costs | Â | 208 | Â | - | |
Adjusted profit before income tax | Â | 16,092 | Â | 12,535 | |
 |
Appendix 2: Results for the 12 month period to 31 January 2015 and 31 January 2014 (Unaudited)
2.1 Consolidated income statement
 |  |  |  |  |  |  |  |  |  |  |  |  |  | |
 |  |  |
18 Months Ended
31 January 2015 £’000 (Audited) |
 |  |  |
12 Months Ended
31 January 2015 £’000 (Unaudited) |
 |  |  |
6 Months Ended
31 January 2014 £’000 (Unaudited) |
|||
Billings | Â | Â | 185,900 | Â | Â | Â | 126,159 | Â | Â | Â | 59,741 | |||
Revenue | Â | Â | 158,495 | Â | Â | Â | 109,194 | Â | Â | Â | 49,301 | |||
Adjusted total operating charges | Â | Â | (137,767) | Â | Â | Â | (94,585) | Â | Â | Â | (43,182) | |||
Adjusted EBITDA | Â | Â | 20,728 | Â | Â | Â | 14,609 | Â | Â | Â | 6,119 | |||
Depreciation and amortisation | Â | Â | (2,769) | Â | Â | Â | (1,883) | Â | Â | Â | (886) | |||
Adjusted operating profit | Â | Â | 17,959 | Â | Â | Â | 12,726 | Â | Â | Â | 5,233 | |||
Adjusted net finance expense | Â | Â | (681) | Â | Â | Â | (459) | Â | Â | Â | (222) | |||
Share of profits of associate | Â | Â | 334 | Â | Â | Â | 268 | Â | Â | Â | 66 | |||
Adjusted profit before income tax | Â | Â | 17,612 | Â | Â | Â | 12,535 | Â | Â | Â | 5,077 | |||
Tax on adjusted profit | Â | Â | (4,377) | Â | Â | Â | (2,998) | Â | Â | Â | (1,379) | |||
Adjusted retained profit | Â | Â | 13,235 | Â | Â | Â | 9,537 | Â | Â | Â | 3,698 | |||
Profit attributable to owners | Â | Â | 12,207 | Â | Â | Â | 8,948 | Â | Â | Â | 3,259 | |||
Profit attributable to minorities | Â | Â | 1,028 | Â | Â | Â | 589 | Â | Â | Â | 439 | |||
 |  |  |  |  |  |  |  |  |  |  |  | |||
Revenue | Â | Â | 158,495 | Â | Â | Â | 109,194 | Â | Â | Â | 49,301 | |||
Operating costs | Â | Â | (149,711) | Â | Â | Â | (106,179) | Â | Â | Â | (43,532) | |||
EBITDA | Â | Â | 8,784 | Â | Â | Â | 3,015 | Â | Â | Â | 5,769 | |||
Depreciation and amortisation | Â | Â | (5,143) | Â | Â | Â | (3,570) | Â | Â | Â | (1,573) | |||
Operating profit / (loss) | Â | Â | 3,641 | Â | Â | Â | (555) | Â | Â | Â | 4,196 | |||
Net finance expenses | Â | Â | (3,570) | Â | Â | Â | (2,577) | Â | Â | Â | (993) | |||
Share of profits of associate | Â | Â | 334 | Â | Â | Â | 268 | Â | Â | Â | 66 | |||
Profit / (loss) before income tax | Â | Â | 405 | Â | Â | Â | (2,864) | Â | Â | Â | 3,269 | |||
Taxation | Â | Â | 516 | Â | Â | Â | 1,486 | Â | Â | Â | (970) | |||
Retained profit / (loss) | Â | Â | 921 | Â | Â | Â | (1,378) | Â | Â | Â | 2,299 | |||
(Loss) / profit attributable to owners | Â | Â | (107) | Â | Â | Â | (1,967) | Â | Â | Â | 1,860 | |||
Profit attributable to minorities | Â | Â | 1,028 | Â | Â | Â | 589 | Â | Â | Â | 439 | |||
 |  |  |  |  |  |  |  |
2.2: Consolidated statement of cash flow
 |  |  |  |  |  |  |  |  |  |  |  |  |  | |
 |  |  |
18 Months Ended
31 January 2015 £’000 (Audited) |
 |  |  |
12 Months Ended
31 January 2015 £’000 (Unaudited) |
 |  |  |
6 Months Ended
31 January 2014 £’000 (Unaudited) |
|||
Net cash from operating activities | Â | Â | 16,176 | Â | Â | Â | 15,644 | Â | Â | Â | 532 | |||
Net cash outflow from investing activities | Â | Â | (17,901) | Â | Â | Â | (14,842) | Â | Â | Â | (3,059) | |||
Net cash inflow from financing activities | Â | Â | 3,405 | Â | Â | Â | 2,041 | Â | Â | Â | 1,364 | |||
Cash and cash equivalents at beginning of the year | Â | Â | 8,064 | Â | Â | Â | 6,217 | Â | Â | Â | 8,064 | |||
Exchange (losses) / gains on cash held | Â | Â | (429) | Â | Â | Â | 255 | Â | Â | Â | (684) | |||
Cash and cash equivalents at end of the year | Â | Â | 9,315 | Â | Â | Â | 9,315 | Â | Â | Â | 6,217 | |||
 |  |  |  |  |  |  |  |
2.3: Segment information
 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | |
 |  |  |
UK £’000 |
 |  |  |
Europe & Africa £’000 |
 |  |  |
US £’000 |
 |  |  |
Asia Pacific £’000 |
 |  |  |
Head Office £’000 |
 |  |  |
Total £’000 |
|||
18 Months ended 31 January 2015 (Audited) | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | |||
Revenue | Â | Â | 33,460 | Â | Â | Â | 13,778 | Â | Â | Â | 92,358 | Â | Â | Â | 18,899 | Â | Â | Â | - | Â | Â | Â | 158,495 | |||
Adjusted operating profit / (loss) | Â | Â | 3,299 | Â | Â | Â | 584 | Â | Â | Â | 21,016 | Â | Â | Â | 1,208 | Â | Â | Â | (8,148) | Â | Â | Â | 17,959 | |||
12 months ended 31 January 2015 (Unaudited) | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | |||
Revenue | Â | Â | 23,754 | Â | Â | Â | 8,970 | Â | Â | Â | 63,966 | Â | Â | Â | 12,504 | Â | Â | Â | - | Â | Â | Â | 109,194 | |||
Adjusted operating profit / (loss) | Â | Â | 2,526 | Â | Â | Â | 822 | Â | Â | Â | 14,074 | Â | Â | Â | 998 | Â | Â | Â | (5,694) | Â | Â | Â | 12,726 | |||
6 months ended 31 January 2014 (Unaudited) | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | |||
Revenue | Â | Â | 9,706 | Â | Â | Â | 4,808 | Â | Â | Â | 28,392 | Â | Â | Â | 6,395 | Â | Â | Â | - | Â | Â | Â | 49,301 | |||
Adjusted operating profit / (loss) | Â | Â | 773 | Â | Â | Â | (238) | Â | Â | Â | 6,942 | Â | Â | Â | 210 | Â | Â | Â | (2,454) | Â | Â | Â | 5,233 | |||
 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2.4: Reconciliation of adjusted items
 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | |
 |  |  |  |
18 Months Ended
31 January 2015 £’000 (Audited) |
 |  |  |
12 Months Ended
31 January 2015 £’000 (Unaudited) |
 |  |  |
6 Months Ended
31 January 2014 £’000 (Unaudited) |
|||
Profit / (loss) before income tax | Â | Â | Â | 405 | Â | Â | Â | (2,864) | Â | Â | Â | 3,269 | |||
Movement in fair value of interest rate cap-and-collar contract | Â | Â | Â | (206) | Â | Â | Â | (135) | Â | Â | Â | (71) | |||
Unwinding of discount on deferred and contingent consideration and
share |
 |  |  | 2,452 |  |  |  | 1,911 |  |  |  | 541 | |||
Charges associated with misappropriation of assets | Â | Â | Â | - | Â | Â | Â | - | Â | Â | Â | - | |||
Income from recovery and sale of misappropriated assets | Â | Â | Â | (65) | Â | Â | Â | (53) | Â | Â | Â | (12) | |||
Cost associated with investigation and response to fraudulent activity | Â | Â | Â | - | Â | Â | Â | - | Â | Â | Â | - | |||
Change in estimate of future contingent consideration and share
purchase |
 |  |  | 643 |  |  |  | 342 |  |  |  | 301 | |||
Charges associated with equity transactions accounted for as share
based |
 |  |  | 1,222 |  |  |  | 1,168 |  |  |  | 54 | |||
Share-based payment charge for disposal of equity in a subsidiary to employees | Â | Â | Â | 684 | Â | Â | Â | 684 | Â | Â | Â | - | |||
Charge associated with current period restructure | Â | Â | Â | 2,066 | Â | Â | Â | 1,758 | Â | Â | Â | 308 | |||
Restructuring and reorganisation costs associated with integrated
digital |
 |  |  | - |  |  |  | - |  |  |  | - | |||
Charge associated with office moves in San Francisco | Â | Â | Â | 1,036 | Â | Â | Â | 1,036 | Â | Â | Â | - | |||
Amortisation of acquired intangibles | Â | Â | Â | 2,375 | Â | Â | Â | 1,688 | Â | Â | Â | 687 | |||
Impairment of goodwill | Â | Â | Â | 7,000 | Â | Â | Â | 7,000 | Â | Â | Â | - | |||
Adjusted profit before income tax | Â | Â | Â | 17,612 | Â | Â | Â | 12,535 | Â | Â | Â | 5,077 | |||
 |  |  |  |  |  |  |  |  |
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