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Next Fifteen Comm (NFC)

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Tuesday 13 April, 2021

Next Fifteen Comm

Final Results

Final Results

Next Fifteen Communications Plc

 

Next Fifteen Communications Group plc

(“Next 15” or the “Group”)

Results for the year ended 31 January 2021

Next 15, the digital communications group, today announces its final results for the year ended 31 January 2021.

Financial results for the year to 31 January 2021

 

Year ended 31
January 2021
£m

Year ended 31
January 2020
£m

% change year on year

Adjusted results 1

 

 

 

Net revenue

266.9

248.5

7%

Operating profit after interest on finance lease liabilities

49.5

40.9

21%

Operating profit margin

18.5%

16.4%

 

Profit before tax

49.1

40.2

22%

Diluted earnings per share (p)

40.7p

34.8p

17%

Net cash generated from operations

72.9

49.5

47%

 

 

 

 

Statutory results

 

 

 

Revenue

323.7

300.7

8%

Operating profit

13.7

19.4

(29)%

(Loss)/profit before tax

(1.3)

5.6

(123)%

Diluted (loss)/earnings per share (p)

(5.3)p

2.5p

(312)%

1 Adjusted results have been presented to provide additional information that may be useful to shareholders to understand the performance of the business by facilitating comparability both year on year and with industry peers. Adjusted results are reconciled to statutory results below and within notes 2, 3 and 8.

Highlights

  • Group net revenue growth of 7% to £266.9m and statutory revenue growth of 8%, aided by acquisitions
  • Adjusted profit before tax up 22% to £49.1m
  • Adjusted diluted earnings per share increased by 17% to 40.7p
  • Net cash generated from operations increased by 47% to £72.9m
  • Strong balance sheet with net cash of £14.0m at 31 January 2021 (2020: net debt of £9.3m)
  • Expanded briefs from a number of clients including Salesforce, IBM and Amazon
  • Material step into innovation consulting through the acquisition of Mach49 in August 2020 and the acquisition of CRE in July brought digital optimisation skillset into the Group, with both being earnings accretive in the year
  • Following a review of the property portfolio in the light of plans to operate more flexible home working, a £10m property impairment charge has been booked due to surplus office space which resulted in a statutory loss before tax of £1.3m. This should yield approximately £5m in annualised savings
  • Reinstatement of the dividend policy with a final dividend proposed for the year ended 31 January 2021 of 7p per ordinary share
  • Post year end commitment to repay UK Government furlough support

Current trading and outlook

  • The Group has made a strong start to the new financial year and is currently trading ahead of management expectations
  • The Group has recently announced the acquisition of Shopper Media Group Ltd which specialises in commerce marketing activation, connecting retailers and brands with shoppers at the point of purchase both online and in-store

Commenting on the results, Chairman of Next 15, Penny Ladkin-Brand said:

In a year like no other, these are excellent results. As the first effects of the pandemic took hold at the start of the financial year, Tim said that he wanted Next 15 to come out of this year as a stronger business. He and the executive team have worked tirelessly in order to achieve that outcome. They have changed the way we operate, rethinking the offering to customers, how the businesses in the Group interact and how we interact with our people. Most importantly, the past year has shown that our people have the character to handle challenges that are thrown at them. This resilience displayed by our people doesn’t appear on our balance sheet but it has proven to be an invaluable asset. We are grateful and proud of all the people in the Group for their efforts during the year to deliver these results.

Looking to the year ahead, the Board is optimistic about the prospects for the Group, despite the continued impact of Covid-19 on the economy. Covid-19 tested our business model but it also tested the character of the team that leads Next 15 and the people that work for the Group across the world. The Board remains confident of the Group’s underlying prospects. We believe we have the quality of people, the strategy and the financial strength to continue to outperform our marketplace.

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

Numis
Mark Lander, Hugo Rubinstein
+44 (0)20 7260 1000

Berenberg
Ben Wright, Mark Whitmore, Tejas Padalkar
+44 (0)20 3207 7800

Notes:

Net revenue

Net revenue is calculated as revenue less direct costs as shown on the Consolidated Income Statement.

Organic net revenue growth

Organic net revenue growth is defined as the net revenue growth at constant currency excluding the impact of acquisitions and disposals in the last 12 months.

Adjusted operating profit margin

Adjusted operating profit margin is calculated based on the operating profit after interest on finance lease liabilities 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

Review of FY21

Next 15’s evolution towards a data, digital and consulting Group has put us in a better place to deal with the impact of Covid-19. The Group delivered a very strong trading performance despite the uncertain trading environment brought on by the Covid pandemic. The Group was helped by the fact that we had limited exposure to the more heavily impacted sectors of leisure, travel, retail and hospitality, and we are not involved in the live events, traditional media buying or sports marketing sectors, which have suffered materially over the last twelve months. Approximately 60% of our revenue is derived from the tech sector and our B2B marketing agencies, which are focused on driving revenue for their clients, and which excelled despite the uncertain economic environment whilst our B2C agencies recovered well after initial Covid related client deferrals.

Strategy update

While our customers have been changing, so have we. We have refocused the Group so that it is set up to solve the biggest challenge facing all of our customers, which is driving growth. There are many ways we help our customers grow, but we believe we have a unique advantage in four areas:

• Customer Insight

• Customer Engagement

• Customer Delivery

• Business Transformation

Our customer insight business is set up to help customers understand the opportunities and challenges they face and arm them with the knowledge they need to make the best decisions.

Our customer engagement business is designed to help our customers optimize their brand reputation and build the mission-critical digital assets such as ecommerce platforms, apps and websites that are the window through which much of the world’s commerce is now transacted.

Customer delivery businesses are deeply specialised to use creativity, data, and analytics to create the connections with customers to drive sales and other forms of interaction. This link in the chain is increasingly digital. Businesses want to anticipate what their customers want and when they will want it. It is perhaps not surprising that this is a high growth area for our Group.

Business transformation is where customers need our help to either redesign their business model or create entirely new ventures. It is also the area where they need our help to understand how to maximise the value of the organisation.

Acquisitions

The Group has continued to grow its portfolio of businesses. In July, the Group acquired CRE, a web optimisation agency and in August Mach49, the Silicon Valley-based growth incubator for global businesses which becomes a cornerstone of our previously announced plan to create a $100m revenue innovation business. Last week we announced the acquisition of Shopper Media Group Ltd which specialises in commerce marketing activation, connecting retailers and brands with shoppers at the point of purchase both online and in-store. Their clients include The Co-op Group, Deliveroo, The Very Group, Pladis and McCain Foods.

Current trading and outlook

The Board is pleased to report that we have made a strong start to the new financial year and our trading performance is currently ahead of management expectations, despite the relative strength of sterling. With cash on the balance sheet, the Group is in a good position to execute on its investment strategy. Collectively this should drive another year of strong financial performance.

Review of Adjusted Results to 31 January 2021

ADJUSTED RESULTS 1

Year Ended
31 January 2021

 

Year Ended
31 January 2020

 

£000

 

£000

Net revenue

266,886

 

248,469

Operating profit after interest on lease liabilities

49,486

 

40,860

Operating profit margin

18.5%

 

16.4%

Net finance expense

(800)

 

(827)

Share of profits from associate

431

 

204

Profit before income tax

49,117

 

40,237

Tax rate on adjusted profit

20.2%

 

20.0%

Diluted adjusted earnings per share

40.7p

 

34.8p

1 Adjusted results have been presented to provide additional information that may be useful to shareholders to understand the performance of the business by facilitating comparability both year on year and with industry peers. Adjusted results are reconciled to statutory results below and within notes 2, 3 and 8

The last 12 months have been dominated by the impact of the Covid pandemic. When the seriousness of the situation became apparent in March 2020, we quickly took decisive actions to preserve the profitability of our businesses and our cash reserves by reducing our staff cost base in line with our expectations for reductions in revenue. We also looked at our property portfolio and determined that, with the changing nature of the working environment, we could significantly reduce our global property footprint with the medium-term ambition of reducing our annual property costs by approximately £5m. We saw organic declines in revenue by quarter of 4% in Q1, 8% in Q2, before recovering to down 3% in Q3 and up 2% in Q4. Our B2B agencies proved resilient throughout the year, whilst our B2C agencies saw a strong recovery in the second half as consumer confidence returned.

Our total Group net revenues increased by 7%, but declined by 3% on an organic basis, whilst our pro-active approach to managing our cost base resulted in an increase in the operating profit margin to a record 18.5% from 16.4% in the prior year. Our B2B agencies including Twogether, Agent 3 and Activate performed very strongly whilst our B2C agencies including Savanta and M Booth agencies recovered strongly in the final quarter after being significantly impacted by the pandemic in the first half.

Reconciliation between statutory and adjusted profit

For the year to 31 January 2021, the Group delivered net revenue of £266.9m (2020: £248.5m), adjusted operating profit of £49.5m (2020: £40.9m), adjusted profit before income tax of £49.1m (2020: £40.2m) and adjusted diluted earnings per share of 40.7p (2020: 34.8p). Statutory revenue for the year was £323.7m (2020: £300.7m) which resulted in operating profit of £13.7m compared with £19.4m in the previous year. Diluted loss per share was 5.3p, compared with earnings per share of 2.5p in the previous year.

While adjusted operating profit increased by 21% to £49.5m (2020: £40.9m), reflecting the strong trading of the Group, the statutory operating profit declined by 29% to £13.7m (2020: £19.4m). The statutory operating profit decline year on year is primarily due to the one-off property related impairment charge of £10m and an increase in acquisition related accounting charges in the year reflecting an increase in our earn-out payment liability as Activate in particular performed well.

 

 

Year ended
31 January 2021

 

Year ended
31 January 2020

 

 

£000

 

 

£000

(Loss) / profit before income tax

 

(1,306)

 

 

5,556

Acquisition accounting related costs1

 

36,260

 

 

28,766

Share-based payment charge

 

2,424

 

 

374

Restructuring costs

 

2,746

 

 

4,596

Deal costs

 

371

 

 

945

Property impairment

 

10,018

 

 

-

UK furlough grant

 

(1,396)

 

 

-

Adjusted profit before income tax

 

49,117

 

 

40,237

1 Acquisition accounting related costs includes unwinding of discount and change in estimate on deferred and contingent consideration and share purchase obligation payable, employment linked acquisition payments and amortisation of acquired intangibles. Refer to note 2 and 3 for further detail.

Segment adjusted performance

 

Brand
Marketing

£000

Data and
Analytics

£000

Creative
Technology

£000

Head
Office

£000

Total
£000

Year ended 31 January 2021

 

 

 

 

 

Net revenue

140,530

48,447

77,909

-

266,886

Adjusted operating profit / (loss) after interest on lease liabilities

34,573

13,254

13,053

(11,394)

49,486

Adjusted operating profit margin

24.6%

27.4%

16.8%

-

18.5%

Organic revenue (decline) / growth

(5.5)%

8.2%

(6.0)%

-

(3.4)%

Year ended 31 January 2020

 

 

 

 

 

Net revenue

135,036

45,054

68,379

248,469

Adjusted operating profit / (loss) after interest on lease liabilities

29,930

12,697

7,774

(9,541)

40,860

Adjusted operating profit margin

22.2%

28.2%

11.4%

16.4%

Organic revenue (decline) / growth

(5.7)%

19.3%

(2.1)%

(2.0)%

Brand marketing includes Archetype, OutCast, Nectar, Publitek, which are our B2B tech focused agencies, M Booth, our B2C focused agency and Blueshirt, our IPO advisory agency. The B2B agencies performed well, whilst M Booth recovered in the second half after a Covid impacted first half as clients deferred spend. Blueshirt had a very strong year on the back of the US tech IPO market. Total net revenue increased by 4% to £140.5m with an organic decline of 5.5%, but the adjusted operating profit increased by 15.5% to £34.6m at an improved operating margin of 24.6%.

The Data and analytics segment includes Savanta, our market research agency, Activate, our lead generation agency and Planning-inc, our data platform agency. Activate produced an outstanding performance throughout the year whilst Savanta and Planning-inc each showed a strong recovery in the second half of our financial year on the back of a recovery in consumer confidence. The segment produced a positive performance overall with net revenue growing by 8% to £48.4m, with pleasing organic growth of 8.2%, and delivered an operating profit of £13.3m at an operating margin of 27.4%.

The Creative technology segment includes our ODD, Elvis, Brandwidth, Beyond, Twogether, CRE, Palladium, Mach49, Agent3 and Velocity agencies. CRE and Mach49 were acquired during the year. Overall, the segment delivered net revenue growth of 14% to £77.9m with an organic net revenue decline of 6%. The adjusted operating profit increased by 68% to £13.1m at an improved operating profit margin of 16.8%.

Regional adjusted performance

 

UK
£000

Europe &
Africa

£000

US
£000

Asia Pacific
£000

Head
Office

£000

Total
£000

Year ended 31 January 2021

 

 

 

 

 

 

Net revenue

106,247

8,610

138,383

13,646

-

266,886

Adjusted operating profit / (loss) after interest on lease liabilities

22,402

1,997

34,150

2,331

(11,394)

49,486

Adjusted operating profit margin

21.1%

23.2%

24.7%

17.1%

-

18.5%

Organic revenue decline

(6.4)%

(4.7)%

(0.8)%

(5.5)%

-

(3.4)%

Year ended 31 January 2020

 

 

 

 

 

 

Net revenue

97,377

8,820

127,563

14,709

248,469

Adjusted operating profit / (loss) after interest on lease liabilities

20,094

1,587

26,421

2,299

(9,541)

40,860

Adjusted operating profit margin

20.6%

18.0%

20.7%

15.6%

16.4%

Organic revenue growth/(decline)

0.3%

0.4%

(4.6)%

4.8%

(2.0)%

Our US businesses have proved resilient and continued to perform well, despite the challenges of the pandemic. In the year to 31 January 2021, total US net revenues grew by 8.5% to £138.4m from £127.6m which equated to an organic decline of 0.8%, taking account of movements in exchange rates and the acquisitions of Nectar, M Booth Health and Mach49. Organic growth was impacted by the pandemic, but our lead generation agency, Activate, had a very strong performance throughout the year, whilst our B2C agency M Booth recovered in the second half after initially suffering client deferrals as a result of the pandemic. We also took decisive action on the cost base with staff reductions and a property re-organisation in our key markets of New York and San Francisco. The adjusted operating profit from our US businesses increased by 29.3% to £34.2m compared with £26.4m in the previous 12 months to 31 January 2020, with the operating margin increasing to 24.7% from 20.7% in the prior year.

The UK businesses have delivered a resilient performance over the last 12 months, with net revenue increasing by 9.1% to £106.2m from £97.4m in the prior period. This growth was helped by the acquisition of CRE and the acquisitions of Future Thinking and ComRes into our Savanta business. Our UK businesses suffered an organic revenue decline of 6.4%,

with a recovery in the fourth quarter as consumer confidence recovered. The adjusted operating profit increased to £22.4m from £20.1m in the prior year with the adjusted operating margin increasing to 21.1% from 20.6% in the prior year.

The EMEA business delivered a solid trading performance. Net revenue decreased by 2% to £8.6m (2020: £8.8m) and adjusted operating profit increased to £2.0m at an improved adjusted operating margin of 23.2%, due to very tight cost control.

In the APAC region net revenue decreased by 7% to £13.6m (2020: £14.7m), however the operating margin increased to 17.1% from 15.6% in the prior period and the operating profit remained at a very credible £2.3m.

Government support

During the year to 31 January 2021, the Group utilised various government support schemes, primarily the UK furlough scheme and deferral of US social security. In total across the Group, £2.1m of government assistance has been recognised as a reduction in costs during the year ending 31 January 2021. Since the year end, we have committed to repaying the furlough monies received from the UK government in full of £1.4m, which will be treated as an exceptional item in the results for the year to 31 January 2022.

Balance Sheet and Net Debt

The Group’s balance sheet remains in a very healthy position with net cash as at 31 January 2021 of £14.0m (2020: net debt of £9.3m). The net cash inflow from operating activities before changes in working capital for the year to 31 January 2021 increased to £66.4m from £52.8m in the prior period. Our management of working capital significantly improved with an inflow of £6.6m compared with outflow of £3.3m in the prior period. This resulted in our net cash generated from operations before tax being £72.9m (2020: £49.5m).

Over the year we invested £23.6m in acquisition-related payments and £4.1m in capital expenditure.

Cash flow KPIs

Year to
31 January
2021
£m

Year to
31 January
2020
£m

Net cash inflow from operating activities before changes in working capital

66.4

52.8

Working capital movement

6.6

(3.3)

Net cash generated from operations

72.9

49.5

Income tax paid

(8.4)

(6.0)

Investing activities

(27.0)

(28.3)

Dividend paid to shareholders

-

(6.8)

The Group operates a £40m revolving credit facility (“RCF”) with HSBC available until July 2022 and has a £20m term loan with £5m left to be repaid in December 2021. The £40m facility is primarily used for acquisitions, although it could be used for working capital requirements and is due to be repaid from the trading cash flows of the Group. The facility is available in a combination of sterling, US dollar and euro at an interest margin dependent upon the level of gearing in the business. The Group also has a US facility of $7m (2020: $7m) which is available for property rental guarantees and US-based working capital needs.

As part of the facilities agreement, Next 15 must 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.

NEXT FIFTEEN COMMUNICATIONS GROUP PLC

CONSOLIDATED INCOME STATEMENT

FOR THE YEARS ENDED 31 JANUARY 2021 AND 31 JANUARY 2020

 

 

 

Year ended
31 January 2021

 

 

Year ended
31 January 2020

 

 

Note

 

£000

 

£000

 

 

 

 

 

 

Revenue

 

 

323,668

 

300,711

Direct costs

 

 

(56,782)

 

(52,242)

Net revenue

2

 

266,886

 

248,469

 

 

 

 

 

 

Staff costs

 

 

189,530

 

171,180

Depreciation

 

 

11,609

 

13,196

Amortisation

 

 

16,394

 

13,211

Other operating charges

 

 

35,665

 

31,469

Total operating charges

 

 

(253,198)

 

(229,056)

Operating profit

2

 

13,688

 

19,413

 

 

 

 

 

 

Finance expense

6

 

(16,884)

 

(16,672)

Finance income

7

 

1,459

 

2,611

Share of profit from associate

 

 

431

 

204

 

 

 

 

 

 

(Loss)/profit before income tax

3

 

(1,306)

 

5,556

 

 

 

 

 

 

Income tax expense

4

 

(2,643)

 

(2,717)

 

 

 

 

 

 

(Loss)/profit for the year

 

 

(3,949)

 

2,839

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

Owners of the parent

 

 

(4,938)

 

2,262

Non-controlling interests

 

 

989

 

577

 

 

 

(3,949)

 

2,839

(Loss)/earnings per share

 

 

 

 

 

Basic (pence)

8

 

(5.5)

 

2.7

Diluted (pence)

8

 

(5.3)

 

2.5

   

NEXT FIFTEEN COMMUNICATIONS GROUP PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED 31 JANUARY 2021 AND 31 JANUARY 2020

 

Year ended
31 January 2021

 

 

Year ended
31 January 2020

 

 

£000

 

£000

 

 

 

 

(Loss)/profit for the year

(3,949)

 

2,839

 

 

 

 

Other comprehensive (expense) / income:

 

 

 

Items that may be reclassified into profit or loss:

 

 

 

Exchange differences on translating foreign operations

(1,395)

 

(136)

Net investment hedge

-

 

(411)

 

(1,395)

 

(547)

Items that will not be reclassified subsequently to profit or loss

 

 

 

Revaluation of investments

(117)

 

(562)

Total other comprehensive expense for the year

(1,512)

 

(1,109)

Total comprehensive (expense)/income for the year

(5,461)

 

1,730

 

 

 

 

Attributable to:

 

 

 

Owners of the parent

(6,450)

 

1,153

Non-controlling interests

989

 

577

 

(5,461)

 

1,730

 

NEXT FIFTEEN COMMUNICATIONS GROUP PLC

ADJUSTED RESULTS: KEY PERFORMANCE INDICATORS (Unaudited)

 

Year ended
31 January 2021
£000

 

Year ended
31 January 2020
£000

Net revenue

266,886

 

248,469

Operating charges

(202,991)

 

(191,705)

EBITDA

63,895

 

56,764

Depreciation and Amortisation

(13,001)

 

(14,308)

Operating profit

50,894

 

42,456

Interest on finance lease liabilities

(1,408)

 

(1,596)

Operating profit after interest on finance lease liabilities

49,486

 

40,860

Operating profit margin

18.5%

 

16.4%

Net finance expense

(800)

 

(827)

Share of profits of associate

431

 

204

Profit before income tax

49,117

 

40,237

Tax

(9,922)

 

(8,046)

Profit after tax

39,195

 

32,191

 

 

 

 

Weighted average number of ordinary shares

89,382,909

 

85,284,663

Diluted weighted average number of ordinary shares

93,818,504

 

90,936,482

 

 

 

 

Adjusted earnings per share

42.7p

 

37.1p

Diluted adjusted earnings per share

40.7p

 

34.8p

 

 

 

 

Cash inflow from operating activities before working capital changes

66,380

 

52,823

Cash outflow on acquisition-related payments

(23,636)

 

(24,173)

Net cash/(debt)

14,021

 

(9,346)

 

 

 

 

Dividend (per share)

7.0p

 

2.5p

Adjusted results have been presented to provide additional information that may be useful to shareholders to understand the performance of the business by facilitating comparability both year on year and with industry peers. Adjusted results are reconciled to statutory results within notes 2, 3 and 8.

NEXT FIFTEEN COMMUNICATIONS GROUP PLC

CONSOLIDATED BALANCE SHEET AS AT 31 JANUARY 2021 AND 2020

 

 

 

31 January 2021

 

31 January 2020

 

 

   

 

Note

 

£000

 

£000

Assets

 

 

 

 

 

Property, plant and equipment

 

 

8,904

 

14,224

Right-of-use assets

 

 

26,008

 

41,655

Intangible assets

 

 

163,777

 

155,408

Investment in equity accounted associate

 

 

254

 

232

Investments in financial assets

 

 

955

 

1,075

Deferred tax asset

 

 

15,314

 

10,967

Other receivables

 

 

860

 

809

Total non-current assets

 

 

216,072

 

224,370

 

 

 

 

 

 

Trade and other receivables

 

 

77,530

 

70,260

Cash and cash equivalents

9

 

26,831

 

28,661

Corporation tax asset

 

 

1,215

 

734

Total current assets

 

 

105,576

 

99,655

 

 

 

 

 

 

 

Total assets

 

 

321,648

 

324,025

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Loans and borrowings

9

 

7,810

 

33,007

Deferred tax liabilities

 

 

3,229

 

3,538

Lease liabilities

 

 

31,812

 

43,023

Other payables

 

 

1,576

 

16

Provisions

 

 

7,140

 

4,942

Contingent consideration

10

 

36,194

 

26,815

Share purchase obligation

10

 

5,302

 

2,098

Total non-current liabilities

 

 

93,063

 

113,439

 

 

 

 

 

 

Loans and borrowings

9

 

5,000

 

5,000

Trade and other payables

 

 

77,319

 

59,620

Lease liabilities

 

 

10,957

 

11,210

Provisions

 

 

5,656

 

1,522

Corporation tax liability

 

 

604

 

1,173

Deferred consideration

10

 

1,262

 

2,715

Contingent consideration

10

 

9,700

 

15,366

Share purchase obligation

10

 

1,206

 

1,269

Total current liabilities

 

 

111,704

 

97,875

 

 

 

 

 

 

Total liabilities

 

 

204,767

 

211,314

 

 

 

 

 

 

TOTAL NET ASSETS

 

 

116,881

 

112,711

 

Equity

 

 

 

 

 

Share capital

 

 

2,274

 

2,163

Share premium reserve

 

 

92,408

 

76,019

Share purchase reserve

 

 

(2,673)

 

(2,673)

Foreign currency translation reserve

 

 

6,166

 

7,561

Other reserves

 

 

608

 

608

Retained earnings

 

 

18,174

 

29,618

Total equity attributable to owners of the parent

 

 

116,957

 

113,296

Non-controlling interests

 

 

(76)

 

(585)

TOTAL EQUITY

 

 

116,881

 

112,711

     

NEXT FIFTEEN COMMUNICATIONS GROUP PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEARS ENDED 31 JANUARY 2021 AND 31 JANUARY 2020

 

 

Share
capital

Share
premium
reserve

Share
purchase
reserve

Foreign
currency
translation
reserve

Other
reserves1

Retained
earnings

Equity
attributable
to owners of
the Company

Non-
controlling
interests

Total
equity

 

 

 

 

 

 

 

 

 

 

 

£000

£000

£000

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

 

 

 

At 31 January 2019 as previously stated

2,089

62,993

(2,673)

7,697

1,019

41,404

112,529

(1,076)

111,453

Change in accounting policy (IFRS 16)

-

-

-

-

-

(1,794)

(1,794)

-

(1,794)

Deferred tax on accounting policy change

-

-

-

-

-

400

400

-

400

At 1 February 2019 as restated

2,089

62,993

(2,673)

7,697

1,019

40,010

111,135

(1,076)

110,059

 

Profit for the year

-

-

-

-

-

2,262

2,262

577

2,839

Other comprehensive income / (expense) for the year

-

-

-

(136)

(411)

(562)

(1,109)

-

(1,109)

Total comprehensive income / (expense) for the year

-

-

-

(136)

(411)

1,700

1,513

577

1,730

Shares issued on satisfaction of vested performance shares

38

5,388

-

-

-

(5,426)

-

-

-

Shares issued on acquisitions

36

7,638

-

-

-

-

7,674

-

7,674

Movement in relation to share-based payments

-

-

-

-

-

600

600

-

600

Tax on share-based payments

-

-

-

-

-

167

167

-

167

Dividends to owners of the parent

-

-

-

-

-

(6,759)

(6,759)

-

(6,759)

Movement due to ESOP share purchases

-

-

-

-

(15)

-

(15)

-

(15)

Movement due to ESOP share option exercises

-

-

-

-

15

-

15

-

15

Movement on reserves for non-controlling interests

-

-

-

-

-

(674)

(674)

674

-

Non-controlling dividend

-

-

-

-

-

-

-

(760)

(760)

At 31 January 2020

2,163

76,019

(2,673)

7,561

608

29,618

113,296

(585)

112,711

 

(Loss)/profit for the year

-

-

-

-

-

(4,938)

(4,938)

989

(3,949)

Other comprehensive expense for the year

-

-

-

(1,395)

-

(117)

(1,512)

-

(1,512)

Total comprehensive (expense) / income for the year

-

-

-

(1,395)

-

(5,055)

(6,450)

989

(5,461)

Shares issued on satisfaction of vested performance shares

69

10,162

-

-

-

(10,231)

-

-

-

Shares issued on acquisitions

42

6,227

-

-

-

-

6,269

-

6,269

Movement in relation to share-based payments

-

-

-

-

-

3,557

3,557

-

3,557

Tax on share-based payments

-

-

-

-

-

491

491

-

491

Movement due to ESOP share purchases

-

-

-

-

(5)

-

(5)

-

(5)

Movement due to ESOP share option exercises

-

-

-

-

5

-

5

-

5

Movement on reserves for non-controlling interests

-

-

-

-

-

(206)

(206)

206

-

Non-controlling dividend

-

-

-

-

-

-

-

(686)

(686)

At 31 January 2021

2,274

92,408

(2,673)

6,166

608

18,174

116,957

(76)

116,881

 

 

 

 

 

 

 

 

 

 

1 Other reserves include ESOP reserve, the treasury reserve, the merger reserve and the hedging reserve.

NEXT FIFTEEN COMMUNICATIONS GROUP PLC

CONSOLIDATED STATEMENT OF CASH FLOW

FOR THE YEARS ENDED 31 JANUARY 2021 AND 31 JANUARY 2020

 

 

Year ended
31 January 2021

 

 

Year ended
31 January 2020

 

 

 

£000

 

£000

Cash flows from operating activities

 

 

 

 

(Loss)/profit for the year

 

(3,949)

 

2,839

Adjustments for:

 

 

 

 

Depreciation

 

3,880

 

4,505

Right of use depreciation

 

7,729

 

8,691

Amortisation

 

16,394

 

13,211

Finance expense

 

16,884

 

16,672

Finance income

 

(1,459)

 

(2,611)

Share of profit from equity accounted associate

 

(431)

 

(204)

Impairment of RoU assets

 

8,503

 

-

Loss on sale/impairment of property, plant and equipment

 

6,885

 

1,360

(Gain)/loss on exit of finance lease

 

(2,317)

 

14

Income tax expense

 

2,643

 

2,717

Employment linked acquisition provision charge

 

8,041

 

5,029

Share-based payment charge

 

3,587

 

600

 

 

 

 

 

Net cash inflow from operating activities before changes in working capital

 

66,380

 

52,823

 

 

 

 

 

Change in trade and other receivables

 

(5,692)

 

1,971

Change in trade and other payables

 

12,942

 

(1,950)

Change in other liabilities

 

(697)

 

(3,343)

 

 

6,553

 

(3,322)

 

 

 

 

 

Net cash generated from operations before tax outflows

 

72,933

 

49,501

 

 

 

 

 

Income taxes paid

 

(8,423)

 

(5,993)

 

 

 

 

 

Net cash inflow from operating activities

 

64,510

 

43,508

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Acquisition of subsidiaries and trade and assets, net of cash acquired

 

(8,097)

 

(18,501)

Payment of contingent and deferred consideration

 

(15,539)

 

(5,622)

Purchase of equity investments designated at FVTOCI

 

-

 

(50)

Acquisition of property, plant and equipment

 

(1,998)

 

(3,460)

Proceeds on disposal of property, plant and equipment

 

4

 

23

Proceeds on disposal of subsidiary

 

-

 

466

Acquisition of intangible assets

 

(2,109)

 

(1,831)

Net movement in long-term cash deposits

 

(82)

 

(24)

Income from finance lease receivables

 

780

 

547

Interest received

 

47

 

112

 

 

 

 

 

Net cash outflow from investing activities

 

(26,994)

 

(28,340)

 

NEXT FIFTEEN COMMUNICATIONS GROUP PLC

CONSOLIDATED STATEMENT OF CASH FLOW (Continued)

FOR THE YEARS ENDED 31 JANUARY 2021 AND 31 JANUARY 2020

 

 

Year ended
31 January 2021

 

 

Year ended
31 January 2020

 

 

 

£000

 

£000

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Capital element of finance lease rental repayment

 

(12,647)

 

(11,367)

Increase in bank borrowings and overdrafts

 

-

 

27,045

Repayment of bank borrowings and overdrafts

 

(24,912)

 

(14,006)

Interest paid

 

(881)

 

(979)

Dividend and profit share paid to non-controlling interest partners

 

(686)

 

(760)

Dividends paid to shareholders of the parent

 

-

 

(6,759)

 

 

 

 

 

Net cash outflow from financing activities

 

(39,126)

 

(6,826)

 

 

 

 

 

Net (decrease)/ increase in cash and cash equivalents

 

(1,610)

 

8,342

 

 

 

 

 

Cash and cash equivalents at beginning of the year

 

28,661

 

20,501

Exchange losses on cash held

 

(220)

 

(182)

 

 

 

 

 

Cash and cash equivalents at end of the year

 

26,831

 

28,661

 

 

 

 

 

 

 

 

 

 

NOTES TO THE YEAR END RESULTS

FOR THE YEARS ENDED 31 JANUARY 2021 AND 31 JANUARY 2020

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 United Kingdom (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 2021.

The financial information set out above does not constitute the Group’s statutory accounts for the years ended 31 January 2021 or 2020, but is derived from those accounts. Statutory accounts for 2020 have been delivered to the Registrar of Companies and those for 2021 will be delivered following the company's annual general meeting. The auditors have reported on those accounts: their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498(2) or (3) of the Companies Act 2006.

Going concern statement

The Directors have, at the time of approving this financial information, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing this financial information. The Directors have made this assessment in light of reviewing the Group’s budget and cash requirements for a period in excess of one year from the date of signing of the annual report and considered outline plans for the Group thereafter.

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 fair value accounting charges, amortisation of acquired intangibles, brand equity incentive scheme charges and other costs not associated with the underlying business. 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

EMEA

US

Asia Pacific

Head Office

Total

 

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

Year ended 31 January 2021

 

 

 

 

 

 

Revenue

126,811

9,621

170,467

16,769

 

323,668

Net revenue

106,247

8,610

138,383

13,646

-

266,886

Adjusted operating profit / (loss) after interest on lease liabilities

22,402

1,997

34,150

2,331

(11,394)

49,486

Adjusted operating profit margin¹

21.1%

23.2%

24.7%

17.1%

-

18.5%

Organic net revenue decline

(6.4)%

(4.7)%

(0.8)%

(5.5)%

-

(3.4)%

Year ended 31 January 2020

 

 

 

 

 

Revenue

119,551

10,631

153,481

17,048

300,711

Net revenue

97,377

8,820

127,563

14,709

248,469

Adjusted operating profit / (loss) after interest on lease liabilities

20,094

1,587

26,421

2,299

(9,541)

40,860

Adjusted operating profit margin¹

20.6%

18.0%

20.7%

15.6%

16.4%

Organic net revenue growth/(decline)

0.3%

0.4%

(4.6)%

4.8%

(2.0)%

1 Adjusted operating profit margin is calculated based on the operating profit after interest on finance lease liabilities as a percentage of net revenue.

NOTES TO THE YEAR END RESULTS (Continued)

FOR THE YEARS ENDED 31 JANUARY 2021 AND 31 JANUARY 2020

During the year, the Board of Directors also received information on the performance of the Group by operating segment in additional to regional performance.

 

Brand
marketing

Data and
analytics

Creative
technology

Head
Office

Total

 

£000

£000

£000

£000

£000

 

 

 

 

 

 

Year ended 31 January 2021

 

 

 

 

 

Revenue

168,921

66,684

88,063

 

323,668

Net revenue

140,530

48,447

77,909

-

266,886

Adjusted operating profit / (loss) after interest on lease liabilities

34,573

13,254

13,053

(11,394)

49,486

Adjusted operating profit margin¹

24.6%

27.4%

16.8%

-

18.5%

Organic net revenue growth/(decline)

(5.5)%

8.2%

(6.0)%

-

(3.4)%

Year ended 31 January 2020

 

 

 

 

Revenue

160,242

59,446

81,023

300,711

Net revenue

135,036

45,054

68,379

248,469

Adjusted operating profit / (loss) after interest on lease liabilities¹

29,930

12,697

7,774

(9,541)

40,860

Adjusted operating profit margin¹

22.2%

28.2%

11.4%

16.4%

Organic net revenue growth/(decline)

(5.7)%

19.3%

(2.1)%

(2.0)%

1 Adjusted operating profit margin is calculated based on the operating profit after interest on finance lease liabilities as a percentage of net revenue.

A reconciliation of segment adjusted operating profit after interest on finance lease liabilities to segment adjusted operating profit and statutory operating profit is provided as follows:

 

 

Year ended
31 January 2021

 

Year ended
31 January 2020


 

£000

 

 

£000

Segment adjusted operating profit after interest on finance lease liabilities

 

49,486

 

 

40,860

Interest on finance lease liabilities

 

1,408

 

 

1,596

Segment adjusted operating profit

 

50,894

 

 

42,456

Amortisation of acquired intangibles (note 3)

 

(15,002)

 

 

(12,099)

Share based payment charge and charges associated with equity transactions accounted for as share-based payments (note 3)

 

(2,424)

 

 

(374)

Employment linked acquisition payments (note 3)

 

(8,041)

 

 

(5,029)

Property impairment (note 3)

 

(10,018)

 

 

-

Restructuring costs (note 3)

 

(2,746)

 

 

(4,596)

UK furlough grant (note 3)

 

1,396

 

 

-

Deal costs (note 3)

 

(371)

 

 

(945)

Total operating profit

 

13,688

 

 

19,413

NOTES TO THE YEAR END RESULTS (Continued)

FOR THE YEARS ENDED 31 JANUARY 2021 AND 31 JANUARY 2020

3) RECONCILIATION OF ADJUSTED RESULTS

 

 

Year ended
31 January 2021

Year ended
31 January 2020


 

£000

 

£000

(Loss)/profit before income tax

 

(1,306)

 

5,556

Unwinding of discount on deferred and contingent consideration and share purchase obligation payable1

 

5,153

 

3,552

Change in estimate of future contingent consideration and share purchase obligation payable1

 

8,064

 

8,086

Share-based payment charge2

 

2,424

 

374

Employment linked acquisition payments3

 

8,041

 

5,029

Restructuring costs4

 

2,746

 

4,596

Deal costs5

 

371

 

945

Property impairment 6

 

10,018

 

-

UK furlough grant7

 

(1,396)

 

-

Amortisation of acquired intangibles8

 

15,002

 

12,099

Adjusted profit before income tax

 

49,117

 

40,237

 

 

 

Operating profit

 

13,688

 

19,413

Depreciation of property, plant and equipment

 

3,880

 

4,505

Depreciation of right-of-use assets

 

7,729

 

8,691

Amortisation of intangible assets

 

16,394

 

13,211

EBITDA

 

41,691

 

45,820

Share-based payment charge2

 

2,424

 

374

Employment linked acquisition payments3

 

8,041

 

5,029

Restructuring costs4

 

2,746

 

4,596

Deal costs5

 

371

 

945

Property impairment 6

 

10,018

 

-

UK furlough grant7

 

(1,396)

 

-

Adjusted EBITDA

 

63,895

 

56,764

 

 

 

 

 

 

1 The Group adjusts for the remeasurement of the acquisition-related liabilities within the adjusted performance measures in order to aid comparability of the Group’s results year on year as the charge/credit from remeasurement can vary significantly depending on the underlying brand’s performance. It is non-cash and its directional impact to the income statement is opposite to the brand’s performance driving the valuations. The unwinding of discount on these liabilities is also excluded from underlying performance on the basis that it is non-cash and the balance is driven by the Group’s assessment of the time value of money and this exclusion ensures comparability.

2 This charge relates to transactions whereby a restricted grant of brand equity was given to key management in M Booth & Associates LLC, Twogether Creative Limited, Savanta Group Limited and ODD London Limited (2020: M Booth & Associates 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-off share-based payment in the income statement in the year of grant as the agreements do not include service requirements, thus the cost accounting is not aligned with the timing of the anticipated benefit of the incentive, namely the growth of the relevant brands. It also includes £239,000 of charges associated with equity transactions accounted for as share-based payments. The Group determines that these brand appreciation rights (or growth shares) should be excluded from underlying performance as the cost accounting is not aligned to the timing of the anticipated benefit of the incentive, namely growth of the relevant brands.

3This charge relates to payments linked to the continuing employment of the sellers which is being recognised over the required period of employment. Although these costs are not exceptional or non-recurring, the Group determined they should be excluded from the underlying performance as the costs solely relate to acquiring the sellers business.

4In the current year the Group has incurred restructuring costs which primarily relates to Covid-19 redundancy costs taken in the year in response to the pandemic in addition to writing off intangibles. These costs relate to these specific transformational events; they do not relate to underlying trading of the relevant brand and therefore have been added back to aid comparability of performance year on year. These costs are made up of £2.5m staff-related costs and £0.2m of other costs relating to the intangible write offs.

5This charge relates to third party professional fees incurred during acquisitions.

NOTES TO THE YEAR END RESULTS (Continued)

FOR THE YEARS ENDED 31 JANUARY 2021 AND 31 JANUARY 2020

6In the current year the Group has recognised charges relating to the reorganisation of the property space across the Group. The majority of the charge is impairment of right-of-use assets and leasehold improvements. As a result of Covid-19, the Group has identified excess property space within the portfolio and therefore taken an impairment charge relating to those offices. The Group has adjusted for this cost, as the additional one-off impairment charge does not relate to the underlying trading of the business and therefore added back to aid comparability.

7As a result of Covid-19, a number of the UK agencies received government support from the UK furlough scheme which has been accounted for as a reduction in staff costs. Subsequent to the balance sheet date, the Group has repaid all amounts received from the UK government. As a result of the receipt and repayment being accounted for in two separate years, the amounts are added back to aid comparability of the Group’s profitability year on year.

8In line with its peer group, the Group adds back amortisation of acquired intangibles. Judgement is applied in the allocation of the purchase price between intangibles and goodwill, and in determining the useful economic lives of the acquired intangibles. The judgements made by the Group are inevitably different to those made by our peers and as such amortisation of acquired intangibles been added back to aid comparability.

Adjusted profit before income tax and adjusted EBITDA have been presented to provide additional information which may be useful to the reader. Adjusted profit before income tax 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.

4) TAXATION

The tax charge on adjusted profit for the year ended 31 January 2021 is £9,922,000, equating to an adjusted effective tax rate of 20.2%, compared to 20.0% in the prior year. The Group’s underlying 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. The Group notes that Governments around the world are likely to increase their rates of corporation tax materially over the next few years to help pay for the cost of economic support in light of the pandemic. Therefore, it is likely that the Group’s adjusted effective rate of tax will increase materially over the next few years reflecting these increases.

The statutory tax charge for the year ended 31 January 2021 is £2,643,000.

5) DIVIDENDS

A final dividend of 7p per ordinary share will be paid on 13 August 2021 to shareholders listed on the register of members on 9 July 2021. Shares will go ex-dividend on 8 July 2021. In the prior year, given the macroeconomic backdrop due to Covid-19, the Group decided to suspend the final dividend. This makes the total dividend for the year 7p per share (2020: 2.5p).

6) FINANCE EXPENSE

 

 

Year ended

31 January 2021

 

Year ended

31 January 2020

 

 

£000

 

 

£000

Financial liabilities at amortised cost

 

 

 

 

 

Bank interest payable

 

877

 

 

977

Interest on lease liabilities1

 

1,408

 

 

1,596

 

Financial liabilities at fair value through profit and loss

 

 

 

 

 

Unwinding of discount on deferred and contingent consideration and share purchase obligation payable1

 

5,153

 

 

3,552

Change in estimate of future contingent consideration and share purchase obligation payable1

 

9,442

 

 

10,545

 

 

 

 

 

 

Other

 

 

 

 

 

Other interest payable

 

4

 

 

2

Finance expense

 

16,884

 

 

16,672

1These items are adjusted for in calculating the adjusted net finance expense.

NOTES TO THE YEAR END RESULTS (Continued)

FOR THE YEARS ENDED 31 JANUARY 2021 AND 31 JANUARY 2020

7) FINANCE INCOME

 

 

Year ended

31 January 2021

 

Year ended

31 January 2020

 

£000

 

 

£000

 

 

 

 

 

Financial assets at amortised cost

 

 

 

 

Bank interest receivable

43

 

 

99

Finance lease interest receivable

34

 

 

40

 

Financial liabilities at fair value through profit and loss

 

 

 

 

Change in estimate of future contingent consideration and share purchase obligation payable1

1,378

 

 

2,459

Other interest receivable

4

 

 

13

Finance income

1,459

 

 

2,611

1These items are adjusted for in calculating the adjusted net finance expense.

8) EARNINGS PER SHARE

 

 

Year ended

31 January 2021

 

Year ended

31 January 2020

 

 

£000

 

£000

 

 

 

 

 

(Loss)/earnings attributable to ordinary shareholders

 

(4,938)

 

2,262

Unwinding of discount on future deferred and contingent consideration and share purchase obligation payable

 

5,153

 

3,552

Change in estimate of future contingent consideration and share purchase obligation payable

 

8,064

 

8,086

Share based payment charge

 

2,424

 

374

Restructuring costs

 

2,746

 

4,596

Property impairment

 

10,018

 

-

UK furlough grant

 

(1,396)

 

-

Amortisation of acquired intangibles

 

15,002

 

12,099

Employment linked acquisition payments

 

8,041

 

5,029

Deal costs

 

371

 

945

Tax effect of adjusting items above

 

(7,280)

 

(5,331)

Adjusted earnings attributable to ordinary shareholders

 

38,205

 

31,612

 

 

 

 

 

 

 

Number

 

Number

 

 

 

 

 

Weighted average number of ordinary shares

 

89,382,909

 

85,284,663

Dilutive LTIP shares

 

820,997

 

755,018

Dilutive growth deal shares

 

1,552,359

 

2,983,371

Other potentially issuable shares

 

2,062,239

 

1,913,430

 

 

 

 

 

Diluted weighted average number of ordinary shares

 

93,818,504

 

90,936,482

NOTES TO THE YEAR END RESULTS (Continued)

FOR THE YEARS ENDED 31 JANUARY 2021 AND 31 JANUARY 2020

8) EARNINGS PER SHARE (Continued)

Basic (loss)/earnings per share

 

(5.5)p

 

2.7p

Diluted (loss)/earnings per share

 

(5.3)p

 

2.5p

Adjusted earnings per share

 

42.7p

 

37.1p

Diluted adjusted earnings per share

 

40.7p

 

34.8p

 

 

 

 

 

Adjusted and diluted adjusted earnings per share have been presented to provide additional information which may be useful to shareholders to understand the performance of the business by facilitating comparability both year on year and with industry peers. The adjusted earnings per share is the performance measure used for the vesting of employee performance shares.

9) NET DEBT

The HSBC Bank revolving credit facility of £40m expires in July 2022 and therefore the outstanding balance of £7.8m has been classified in non-current borrowings. The £20m loan drawn from HSBC is repayable in annual instalments and is classified in non-current borrowings with the exception of the instalment due in less than one year.

31 January 2021

 

31 January 2020

£000

 

£000

 

 

 

Total loans and borrowings

12,810

 

38,007

Less: cash and cash equivalents

(26,831)

 

(28,661)

Net (cash)/debt

(14,021)

 

9,346

Share purchase obligation

6,508

 

3,367

Contingent consideration

45,894

 

42,181

Deferred consideration

1,262

 

2,715

Net debt and acquisition related liabilities

39,643

 

57,609

 

10) OTHER FINANCIAL LIABILITIES

Deferred consideration

Contingent consideration

Share purchase obligation

 

 

 

 

£000

£000

£000

At 31 January 2019

4,646

24,712

1,736

Arising during the year

350

14,445

-

Exchange differences

-

(726)

7

Utilised

(2,667)

(5,425)

(453)

Unwinding of discount

386

3,008

158

Change in estimate

-

6,167

1,919

At 31 January 2020

2,715

42,181

3,367

Arising during the year

-

12,885

-

Exchange differences

-

(1,979)

(50)

Utilised

(4,037)

(14,635)

-

Unwinding of discount

179

4,515

459

Change in estimate

-

5,332

2,732

Reclassification

2,405

(2,405)

-

At 31 January 2021

1,262

45,894

6,508

Current

1,262

9,700

1,206

Non-current

-

36,194

5,302

NOTES TO THE YEAR END RESULTS (Continued)

FOR THE YEARS ENDED 31 JANUARY 2021 AND 31 JANUARY 2020

11) EVENTS AFTER THE BALANCE SHEET DATE

On 9 April 2021 Next 15 purchased the entire issued share capital of Shopper Media Group Ltd (“SMG”) and its subsidiaries, a UK based agency specialising in commerce marketing activation, connecting retailers and brands with shoppers at the point of purchase both online and in-store. The initial consideration is approximately £15.7m and further consideration is payable around June 2023 and June 2025 based on the EBITDA performance of SMG in the two year periods ending 31 January 2023 and 31 January 2025. We expect to recognise goodwill on this acquisition due to the anticipated profitability and operating synergies. Due to the recent timing of the acquisition, the IFRS 3 acquisition accounting has not yet been completed.


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