Half-year Report

LONDON--()-- 

Next Fifteen Communications Group plc

Interim results for the six months ended 31 July 2019

Next Fifteen Communications Group plc (“Next 15” or the “Group”), the digital communications group, today announces its interim results for the six months ended 31 July 2019.

Financial results for the six months to 31 July 2019 (unaudited)

 

Six months ended
31 July 2019
£m

Six months ended
31 July 2018
£m

Growth in results

Adjusted results

 

 

 

Net revenue

118.7

106.8

11%

Operating profit after interest on financial lease liabilities1

17.5

15.4

14%

Operating profit margin2

14.7%

14.4%

 

Profit before tax

17.2

15.1

14%

Diluted EPS (p)

15.2p

14.2p

7%

 

 

 

 

Statutory results

 

 

 

Revenue

145.2

127.9

 

Operating profit

7.6

10.5

 

Profit before tax

2.8

10.3

 

Net cash inflow from operating activities

19.3

7.7

 

Diluted EPS (p)

1.8p

9.4p

 

In order to assist shareholders’ understanding of the underlying performance of the business, adjusted results have been presented. The items that are excluded from adjusted results are reconciled to statutory results within notes 2 and 3 to the interim results.
1 The application of IFRS 16 has led to operating lease charges previously recognised within operating profit to now be partially recognised in interest costs. We have therefore presented the current period operating profit after interest on finance lease liabilities to give a comparable figure to the prior year.
2 Operating profit margin is calculated using the operating profit after interest on finance lease liabilities in the current period in order to be comparable to the prior period.

Highlights

  • Group net revenue growth of 11%
  • Adjusted profit before tax up 14% to £17.2m
  • Adjusted diluted earnings per share increased by 7% to 15.2p
  • Net cashflow inflow from operation increased to £19.3m (2018: £7.7m)
  • Strong balance sheet with net debt of £3.6m (2018: £25.6m)
  • Significant client wins including M&S, O2 and Purplebricks
  • Interim dividend up 15.7% from 2.16p to 2.5p per share
  • Acquisition of Health Unlimited, a NY based healthcare agency, for M Booth
  • Confident of meeting market expectations for this year and return to high single digit organic growth in the next financial year

Commenting on the results, Chairman of Next 15, Richard Eyre said:

Next 15 continues to make good progress, validating our strategic focus on marketing technology as our Data and Analytics based businesses lead our growth. With the acquisition of Health Unlimited announced today, we are confident of meeting our expectations for this year. Furthermore, we are increasingly confident about our next fiscal year as the changes at Archetype and Beyond work through alongside the full year impact of our more recently acquired businesses.

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

Notes:

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

Organic revenue growth
Organic 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

Next 15, the digital communications group, is pleased to report its interim results for the six months ended 31 July 2019.

During the period the Group’s net revenues increased by 11% to £118.7m (2018: £106.8m), while adjusted profit before tax increased by 14% to £17.2m (2018: £15.1m). The group’s adjusted operating margin increased to 14.7% from 14.4% in the prior period. Diluted adjusted EPS increased by 7% to 15.2p and the strong management of our working capital resulted in our net debt remaining very modest at £3.6m.

The Group’s organic revenue declined by 1.3% for the six months, held back by the previously announced restructuring at Archetype and the loss of Samsung and Just Eat as clients at Beyond. We are making progress with the relaunch of Archetype in the US and the UK, whilst Beyond has adjusted its cost base to reflect its reduced revenues, as well as focusing resources on winning clients such as the recently acquired Purplebricks. Excluding Archetype and Beyond Group’s organic revenue growth was 11.6% for the period reflecting the strong health of the rest of the portfolio of businesses.

The Group is pleased to announce the acquisition of Health Unlimited which is a global health consultancy and communications agency. Following the acquisition the business will report to Dale Bornstein, M Booth CEO and trade as M Booth Health. Clients range from Gilead Sciences Inc. and Global Blood Therapeutics to Foundation for the National Institutes of Health, International AIDS Society and American Society of Clinical Oncology.

The Group reported a statutory operating profit of £7.6m compared with £10.5m in the prior period, while reported diluted earnings per share were 1.8p compared with 9.4p in the prior period.

The Group’s recent acquisitions have performed strongly and the acquisition of Health Unlimited announced today is expected to be earnings enhancing in the current financial year. As a result of this, the Board expects to meet its current expectations for the full year. The Board has increased the interim dividend by 15.7% to 2.5p per share.

Segment adjusted performance

 

Brand
Marketing
£’000

Data and
Analytics
£’000

Creative
Technology
£’000

Head
Office
£’000

Total
£’000

6 months ended 31 July 2019

 

 

 

 

 

Net revenue

63,873

20,869

33,981

-

118,723

Operating profit after interest on finance lease liabilities1

13,080

5,734

3,278

(4,592)

17,500

Operating profit margin2

20.5%

27.5%

9.6%

-

14.7%

Organic revenue growth

(4.9%)

21.4%

(1.1%)

-

(1.3%)

6 months ended 31 July 2018

 

 

 

 

 

Net revenue

63,498

9,739

33,539

-

106,776

Operating profit

12,475

2,681

4,873

(4,663)

15,366

Operating profit margin

19.6%

27.5%

14.5%

-

14.4%

Organic revenue growth

1.8%

32.0%

24.1%

-

8.7%

1 Operating profit after interest on finance lease liabilities is presented as a comparable measure to the prior year operating profit following the adoption of IFRS 16 from 1st February 2019.
2 The operating profit margin is calculated on the operating profit after interest on finance lease liabilities to be comparable to the prior year.

Our Brand Marketing segment produced a resilient performance with an increase in absolute profitability and adjusted operating profit margin, as we continued with the previously announced restructure of Archetype and benefitted from good trading from the rest of the segment. Our M Booth and Publitek agencies continued to perform strongly and we announced today that M Booth had acquired Health Unlimited to broaden their customer range into healthcare for the first time. The segment’s net revenue increased by 0.6% to £63.9m, with an organic decline of 4.9%. Excluding Archetype, the segment’s organic revenue growth was 4.8%. The increase in the adjusted operating margin to 20.5% resulted in the adjusted operating profit increasing by 4.8% to £13.1m.

Our Data and Analytics segment has performed very well with strong trading across our portfolio. Savanta has grown its revenue significantly following its relaunch as a single brand in February. Activate and Planning, our recent acquisitions, have both exceeded expectation, whilst Encore have recovered from the slowdown experienced last year which was as a result of the implementation of GDPR. Overall the segment’s net revenue increased by 114% to £20.9m, with organic revenue growth of 21.4%. The adjusted operating margin remained at 27.5%, resulting in a more than doubling in the adjusted operating profit to £5.7m.

Our Creative Technology segment has seen a mixed performance with strong growth from Twogether, Velocity and Agent3, whilst Beyond has suffered from a material drop in revenue and profitability principally due to a reduction in client spend from Samsung and Just Eat. Overall the segment’s net revenue increased by 1.3% to £34.0m, with an organic decline of 1.1%. Excluding Beyond, the segment’s organic revenue growth was 18.8%. The adjusted operating margin reduced to 9.6% due to the impact of the client losses and the adjusted operating profit reduced to £3.3m. We are anticipating a much stronger revenue, profit and margin performance in H2 for this segment.

Reconciliation of Adjusted Financial Measures

 

 

 

Six months ended

31 July 2019

(Unaudited)

 

Six months ended

31 July 2018

(Unaudited)

 

 

 

£’000

 

 

£’000

 

 

 

 

 

 

 

 

Profit before income tax

 

2,848

 

 

10,346

 

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

 

1,669

 

 

1,282

 

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

 

2,041

 

 

(1,367)

 

Share-based payment charge

 

-

 

 

365

 

Employment related acquisition payments

 

2,781

 

 

213

 

Restructuring costs

 

2,141

 

 

172

 

Deal costs

 

306

 

 

320

 

Amortisation of acquired intangibles

 

5,443

 

 

3,764

 

Adjusted profit before income tax

 

17,229

 

 

15,095

 

Adjusted financial measures are presented to provide additional information to best represent the underlying performance of the business. We incurred £2.0m of charges on contingent consideration, principally relating to the outperformance of our recent acquisition, Activate, which has resulted in an increased expectation for their earn-out payment. As a Group, we are moving towards the inclusion of employment conditions for certain acquisition related payments. As a result, we are required to build up a provision relating to these payments over time and therefore this has led to an accounting charge of £2.8m (2018: £0.2m).

We incurred £2.1m of restructuring costs in relation to the ongoing relaunch of the new Archetype brand in the UK and US along with the rebranding of the Savanta brand, in addition to other staff related redundancy costs at other brands in the Group. We incurred £0.3m of deal costs in relation to acquisitions, and the amortisation of acquired intangibles was £5.4m in the period.

Cashflow

The Group delivered an excellent cashflow performance with the net cash inflow from operating activities increasing to £19.3m from £7.7m in the prior period. This resulted in our net debt being only £3.6m as at 31 July 2019.

Dividend

The Board has resolved to pay an interim dividend of 2.5p per share, which is a 15.7% increase on the interim dividend for last year. This will be paid on 22 November 2019 to shareholders whose names appear on the register of members at close of business on 25 October 2019.

Current Trading and Outlook

Looking to the full year, the Board is encouraged by the performance of the data and analytics segment and our recent acquisitions and the prospects for the second half remain good. The Group’s recent acquisitions have performed strongly and the acquisition of Health Unlimited announced today is expected to be earnings enhancing in the current financial year. The Board therefore remains confident of meeting its expectations for the full year. The Board has increased the interim dividend by 15.7% to 2.5p per share. The Board also remains optimistic about the medium term outlook for the Group and is confident of a return to high single digit organic growth in the next financial year.

NEXT FIFTEEN COMMUNICATIONS GROUP PLC

CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTH PERIOD ENDED 31 July 2019

 

 

 

 

Six months
ended
31 July 2019
(Unaudited)

 

Six months
ended
31 July 2018
(Unaudited)

 

12 months
ended
31 January 2019
(Audited)

 

 

Note

 

 

 

£’000

 

£’000

 

 

 

 

 

 

 

 

 

Billings

 

 

 

156,477

 

135,577

 

291,037

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

145,192

 

127,931

 

272,413

Direct costs

 

 

 

(26,469)

 

(21,155)

 

(48,320)

Net revenue

 

2

 

118,723

 

106,776

 

224,093

 

 

 

 

 

 

 

 

 

Staff costs

 

 

 

83,693

 

73,070

 

153,247

Depreciation

 

 

 

6,302

 

2,076

 

4,199

Amortisation

 

 

 

5,915

 

4,004

 

9,624

Other operating charges

 

 

 

15,181

 

17,094

 

36,346

Total operating charges

 

 

 

(111,091)

 

(96,244)

 

(203,416)

Operating profit

 

2

 

7,632

 

10,532

 

20,677

 

 

 

 

 

 

 

 

 

Finance expense

 

6

 

(5,569)

 

(2,446)

 

(6,584)

Finance income

 

7

 

698

 

2,251

 

4,667

Share of profit from associate

 

 

 

87

 

9

 

65

 

 

 

 

 

 

 

 

 

Profit before income tax

 

3

 

2,848

 

10,346

 

18,825

 

 

 

 

 

 

 

 

 

Income tax expense

 

4

 

(1,273)

 

(2,265)

 

(4,299)

 

 

 

 

 

 

 

 

 

Profit for the period

 

 

 

1,575

 

8,081

 

14,526

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

Owners of the parent

 

 

 

1,317

 

7,773

 

13,887

Non-controlling interests

 

 

 

258

 

308

 

639

 

 

 

 

1,575

 

8,081

 

14,526

Earnings per share

 

 

 

 

 

 

 

 

Basic (pence)

 

8

 

1.9

 

10.0

 

17.5

Diluted (pence)

 

8

 

1.8

 

9.4

 

16.3

NEXT FIFTEEN COMMUNICATIONS GROUP PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31 July 2019

 

 

Six months
ended
31 July 2019
(Unaudited)

 

Six months
ended
31 July 2018
(Unaudited)

 

12 months
ended
31 January 2019
(Audited)

 

 

£’000

 

£’000

 

£’000

 

 

 

 

 

 

 

Profit for the period

 

1,575

 

8,081

 

14,526

 

 

 

 

 

 

 

Other comprehensive income / (expense):

 

 

 

 

 

 

Items that may be reclassified into profit or loss

 

 

 

 

 

 

Exchange differences on translating foreign operations

 

3,568

 

3,074

 

2,886

Net investment hedge

 

(372)

 

(616)

 

(700)

 

 

3,196

 

2,458

 

2,186

Items that will not be reclassified subsequently to profit or loss

 

 

 

 

 

 

Revaluation of investments

 

(335)

 

(430)

 

(682)

Total other comprehensive income / (expense) for the period

 

2,861

 

2,028

 

1,504

Total comprehensive income for the period

 

4,436

 

10,109

 

16,030

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

Owners of the parent

 

4,178

 

9,801

 

15,391

Non-controlling interests

 

258

 

308

 

639

 

 

4,436

 

10,109

 

16,030

NEXT FIFTEEN COMMUNICATIONS GROUP PLC

ADJUSTED RESULTS: KEY PERFORMANCE INDICATORS

 

 

Six months
ended
31 July 2019
(Unaudited)

 

Six months
ended
31 July 2018
(Unaudited)

£’000

£’000

Net revenue

 

118,723

 

106,776

Total operating charges

 

(93,646)

 

(89,094)

Depreciation and amortisation

 

(6,774)

 

(2,316)

Operating profit

 

18,303

 

15,366

Interest on finance lease liabilities

 

(803)

 

-

Operating profit after interest on finance lease liabilities

 

17,500

 

15,366

Operating profit margin

 

14.7%

 

14.4%

Net finance expense excluding interest on finance lease liabilities

 

(358)

 

(280)

Share of profits of associate

 

87

 

9

Profit before income tax

 

17,229

 

15,095

Tax

 

(3,446)

 

(3,017)

Retained profit

 

13,783

 

12,078

 

 

 

 

 

Weighted average number of ordinary shares

 

84,480,836

 

77,891,708

Diluted weighted average number of ordinary shares

 

89,070,220

 

82,863,429

 

 

 

 

 

Adjusted earnings per share

 

16.0p

 

15.1p

Diluted adjusted earnings per share

 

15.2p

 

14.2p

 

 

 

 

 

Cash inflow from operating activities

 

19,340

 

7,743

Cash outflow on acquisition related payments

 

(4,673)

 

(15,527)

Net debt

 

3,552

 

25,565

 

 

 

 

 

Dividend (per share)

 

2.5p

 

2.16p

NEXT FIFTEEN COMMUNICATIONS GROUP PLC

CONSOLIDATED BALANCE SHEET AS AT 31 July 2019

 

 

 

 

31 July 2019
(Unaudited)

 

31 July 2018
(Unaudited)

 

31 January 2019
(Audited)

 

 

 

 

       

 

 

Note

 

£’000

 

£’000

 

£’000

 

Assets

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

 

16,002

 

15,931

 

15,870

 

Right-of-use assets

 

 

 

42,341

 

-

 

-

 

Intangible assets

 

 

 

132,274

 

102,242

 

126,149

 

Investment in equity-accounted associate

 

 

 

131

 

118

 

98

 

Investments in financial assets

 

 

 

1,308

 

1,387

 

1,587

 

Deferred tax asset

 

 

 

11,391

 

9,806

 

10,521

 

Other receivables

 

 

 

863

 

671

 

803

 

Total non-current assets

 

 

 

204,310

 

130,155

 

155,028

 

 

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

 

 

76,642

 

64,996

 

66,123

 

Cash and cash equivalents

 

9

 

21,268

 

21,527

 

20,501

 

Corporation tax asset

 

 

 

1,195

 

807

 

799

 

Total current assets

 

 

 

99,105

 

87,330

 

87,423

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

303,415

 

217,485

 

242,451

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

Loans and borrowings

 

9

 

19,820

 

40,031

 

20,678

 

Deferred tax liabilities

 

 

 

3,877

 

4,216

 

4,503

 

Lease liabilities

 

 

 

46,223

 

-

 

-

 

Other payables

 

 

 

18

 

4,934

 

4,622

 

Provisions

 

 

 

3,867

 

439

 

1,825

 

Deferred consideration

 

10

 

-

 

1,657

 

2,464

 

Contingent consideration

 

10

 

18,622

 

10,421

 

20,147

 

Share purchase obligation

 

10

 

133

 

1,020

 

128

 

Total non-current liabilities

 

 

 

92,560

 

62,718

 

54,367

 

 

 

 

 

 

 

 

 

 

 

Loans and borrowings

 

9

 

5,000

 

7,058

 

5,000

 

Trade and other payables

 

 

 

66,454

 

54,903

 

60,173

 

Lease liabilities

 

 

 

8,938

 

-

 

-

 

Provisions

 

 

 

327

 

651

 

1,118

 

Corporation tax liability

 

 

 

2,197

 

2,009

 

1,985

 

Deferred consideration

 

10

 

2,994

 

1,651

 

2,182

 

Contingent consideration

 

10

 

12,757

 

2,359

 

4,565

 

Share purchase obligation

 

10

 

1,328

 

630

 

1,608

 

Total current liabilities

 

 

 

99,995

 

69,261

 

76,631

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

192,555

 

131,979

 

130,998

 

 

 

 

 

 

 

 

 

 

 

TOTAL NET ASSETS

 

 

 

110,860

 

85,506

 

111,453

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Share capital

 

 

2,130

 

1,965

 

2,089

 

Share premium reserve

 

 

68,956

 

39,639

 

62,993

 

Foreign currency translation reserve

 

 

11,265

 

7,885

 

7,697

 

Other reserves

 

 

(2,026)

 

(1,570)

 

(1,654)

 

Retained earnings

 

 

31,229

 

39,175

 

41,404

 

Total equity attributable to owners of the parent

 

 

111,554

 

87,094

 

112,529

 

Non-controlling interests

 

 

(694)

 

(1,588)

 

(1,076)

 

TOTAL EQUITY

 

 

110,860

 

85,506

 

111,453

 
         

NEXT FIFTEEN COMMUNICATIONS GROUP PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTH PERIOD ENDED 31 July 2019

 

 

Share
capital

Share
premium
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

 

 

 

 

 

 

 

 

 

At 31 January 2018 as previously stated (audited)

1,892

28,611

4,811

(954)

42,604

76,964

(643)

76,321

Change in accounting policy (IFRS 9)

-

-

-

-

48

48

-

48

At 1 February 2018 as restated

1,892

28,611

4,811

(954)

42,652

77,012

(643)

76,369

Profit for the period

-

-

-

-

7,773

7,773

308

8,081

Other comprehensive income / (expense) for the period

-

-

3,074

(616)

(430)

2,028

-

2,028

Total comprehensive income / (expense) for the period

-

-

3,074

(616)

7,343

9,801

308

10,109

Shares issued on satisfaction of vested share options

55

7,764

-

-

(7,819)

-

-

-

Shares issued on acquisitions

18

3,264

-

-

-

3,282

-

3,282

Obligation to purchase non-controlling interest

-

-

-

-

-

-

(630)

(630)

Movement in relation to share-based payments

-

-

-

-

1,105

1,105

-

1,105

Dividends to owners of the parent

-

-

-

-

(3,535)

(3,535)

-

(3,535)

Movement on reserves for non-controlling interests

-

-

-

-

(571)

(571)

571

-

Non-controlling interest purchased in the period

-

-

-

-

-

-

(135)

(135)

Non-controlling interest dividend

-

-

-

-

-

-

(1,059)

(1,059)

At 31 July 2018 (unaudited)

1,965

39,639

7,885

(1,570)

39,175

87,094

(1,588)

85,506

Profit for the period

-

-

-

-

6,114

6,114

331

6,445

Other comprehensive income / (expense) for the period

-

-

(188)

(84)

(252)

(524)

-

(524)

Total comprehensive income / (expense) for the period

-

-

(188)

(84)

5,862

5,590

331

5,921

Shares issued on satisfaction of vested share options

13

2,829

-

-

(2,878)

(36)

-

(36)

Shares issued on acquisitions

6

1,169

-

-

-

1,175

-

1,175

Shares issued on placing

105

19,356

-

-

-

19,461

-

19,461

Obligation to purchase non-controlling interest

-

-

-

-

-

-

115

115

Movement in relation to share-based payments

-

-

-

-

1,608

1,608

-

1,608

Dividends to owners of the parent

-

-

-

-

(1,708)

(1,708)

-

(1,708)

Movement on reserves for non-controlling interests

-

-

-

-

(655)

(655)

655

-

Non-controlling interest purchased in the period

-

-

-

-

-

-

(248)

(248)

Non-controlling interest dividend

-

-

-

-

-

-

(341)

(341)

At 31 January 2019 (audited)

2,089

62,993

7,697

(1,654)

41,404

112,529

(1,076)

111,453

Change in accounting policy (IFRS 16) 2

-

-

-

-

(1,794)

(1,794)

-

(1,794)

Deferred tax on accounting policy change (IFRS 16)

-

-

-

-

400

400

-

400

At 1 February 2019 as restated

2,089

62,993

7,697

(1,654)

40,010

111,135

(1,076)

110,059

Profit for the period

-

-

-

-

1,317

1,317

258

1,575

Other comprehensive income / (expense) for the period

-

-

3,568

(372)

(335)

2,861

-

2,861

Total comprehensive income / (expense) for the period

-

-

3,568

(372)

982

4,178

258

4,436

Shares issued on satisfaction of vested share options

36

4,829

-

-

(4,865)

-

-

-

Shares issued on acquisitions

5

1,134

-

-

-

1,139

-

1,139

Obligation to purchase non-controlling interest

-

-

-

-

-

-

-

-

Movement in relation to share-based payments

-

-

-

-

437

437

-

437

Dividends to owners of the parent

-

-

-

-

(4,595)

(4,595)

-

(4,595)

Movement on reserves for non-controlling interests

-

-

-

-

(740)

(740)

740

-

Non-controlling interest purchased in the period

-

-

-

-

-

-

-

-

Non-controlling interest dividend

-

-

-

-

-

-

(616)

(616)

At 31 July 2019 (unaudited)

2,130

68,956

11,265

(2,026)

31,229

111,554

(694)

110,860

1 Other reserves include ESOP reserve, hedging reserve, share purchase reserve and merger reserve.
2 Refer to Note 12.

NEXT FIFTEEN COMMUNICATIONS GROUP PLC

CONSOLIDATED STATEMENT OF CASH FLOW

FOR THE SIX MONTH PERIOD ENDED 31 July 2019

 

 

 

Six months ended
31 July 2019
(Unaudited)

 

Six months ended
31 July 2018
(Unaudited)

 

Twelve months ended
31 January 2019
(Audited)

 

 

 

 

£’000

 

£’000

 

£’000

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Profit for the period

 

 

1,575

 

8,081

 

14,526

 

Adjustments for:

 

 

 

 

 

 

 

 

Depreciation

 

 

6,302

 

2,076

 

4,199

 

Amortisation

 

 

5,915

 

4,004

 

9,624

 

Finance expense

 

 

5,569

 

2,446

 

6,584

 

Finance income

 

 

(698)

 

(2,251)

 

(4,667)

 

Share of profit from equity accounted associate

 

 

(87)

 

(9)

 

(65)

 

Impairment of intangibles

 

 

297

 

-

 

-

 

Loss on sale of property, plant and equipment

 

 

357

 

230

 

202

 

Loss on disposal of subsidiary

 

 

5

 

-

 

-

 

Income tax expense

 

 

1,273

 

2,265

 

4,299

 

Share-based payment charge

 

 

161

 

1,078

 

2,510

 

 

 

 

 

 

 

 

 

 

Net cash inflow from operating activities before changes in working capital

 

 

20,669

 

17,920

 

37,212

 

 

 

 

 

 

 

 

 

 

Change in trade and other receivables

 

 

(5,680)

 

(9,430)

 

(8,013)

 

Change in trade and other payables

 

 

6,279

 

2,677

 

7,629

 

Change in other liabilities

 

 

1,080

 

(289)

 

1,554

 

 

 

 

1,679

 

(7,042)

 

1,170

 

 

 

 

 

 

 

 

 

 

Net cash generated from operations before tax and interest outflows

 

 

22,348

 

10,878

 

38,382

 

 

 

 

 

 

 

 

 

 

Income taxes paid

 

 

(3,008)

 

(3,135)

 

(6,237)

 

 

 

 

 

 

 

 

 

 

Net cash inflow from operating activities

 

 

19,340

 

7,743

 

32,145

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

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

 

 

(1,333)

 

(6,358)

 

(19,281)

 

Payment of contingent and deferred consideration

 

 

(3,290)

 

(8,617)

 

(9,265)

 

Purchase of investment

 

 

(50)

 

(552)

 

(1,008)

 

Acquisition of property, plant and equipment

 

 

(1,841)

 

(3,667)

 

(5,648)

 

Proceeds on disposal of property, plant and equipment

 

 

13

 

23

 

71

 

Proceeds on disposal of subsidiary

 

 

466

 

-

 

-

 

Acquisition of intangible assets

 

 

(878)

 

(927)

 

(2,384)

 

Net movement in long-term cash deposits

 

 

(39)

 

(83)

 

132

 

Interest received

 

 

56

 

188

 

229

 

 

 

 

 

 

 

 

 

 

Net cash outflow from investing activities

 

 

(6,896)

 

(19,993)

 

(37,154)

 

NEXT FIFTEEN COMMUNICATIONS GROUP PLC

CONSOLIDATED STATEMENT OF CASH FLOW (Continued)

FOR THE SIX MONTH PERIOD ENDED 31 July 2019

 

 

 

Six months ended
31 July 2019
(Unaudited)

 

Six months ended
31 July 2018
(Unaudited)

 

Twelve months ended
31 January 2019
(Audited)

 

 

 

£’000

 

£’000

 

£’000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Proceeds on issue of share capital

 

 

-

 

-

 

20,000

Issue costs on issue of Ordinary Shares

 

 

-

 

-

 

(539)

Repayment of lease liabilities

 

 

(5,337)

 

(3)

 

(5)

Net movement in bank borrowings

 

 

(1,311)

 

10,512

 

(10,922)

Interest on borrowings paid

 

 

(414)

 

(469)

 

(1,246)

Dividend and profit share paid to non-controlling interest partners

 

 

(616)

 

(1,059)

 

(1,400)

Dividends paid to shareholders of the parent

 

 

(4,595)

 

-

 

(5,243)

 

 

 

 

 

 

 

 

Net cash (outflow) / inflow from financing activities

 

 

(12,273)

 

8,981

 

645

 

 

 

 

 

 

 

 

Net increase / (decrease) in cash and cash equivalents

 

 

171

 

(3,269)

 

(4,364)

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of the period

 

 

20,501

 

24,283

 

24,283

Exchange gains on cash held

 

 

596

 

513

 

582

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of the period

 

 

21,268

 

21,527

 

20,501

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 July 2019

1) BASIS OF PREPARATION

The financial information in these results has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The principal accounting policies used in preparing the results are those the Group has applied in its financial statements for the year ended 31 January 2019 except for the adoption of the following accounting standards effective for the Group from 1 February 2019:

  • IFRS 16 Leases

Refer to note 12 for further details on the impact on the Group’s results.

The comparative financial information for the year ended 31 January 2019 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 auditor’s report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.

2) SEGMENT INFORMATION

Measurement of operating segment profit

The Board of Directors assesses the performance of the operating segments based on a measure of adjusted operating profit before intercompany recharges, which reflects the internal reporting measure used by the Board of Directors. This measurement basis excludes the effects of certain acquisition related costs and goodwill impairment charges. Other information provided to them is measured in a manner consistent with that in the financial statements. Head office costs relate to group costs before allocation of intercompany charges to the operating segments. Intersegment transactions have not been separately disclosed as they are not material. The Board of Directors does not review the assets and liabilities of the Group on a segmental basis and therefore this is not separately disclosed.

 

 

UK

 

Europe
and Africa

 

US

 

Asia
Pacific

 

Head
Office

 

Total

 

 

£’000

 

£’000

 

£’000

 

£’000

 

£’000

 

£’000

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended 31 July 2019 (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

47,974

 

4,332

 

59,361

 

7,056

 

-

 

118,723

Adjusted operating profit / (loss)

 

9,466

 

763

 

11,541

 

866

 

(4,333)

 

18,303

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

 

9,324

 

747

 

11,188

 

833

 

(4,592)

 

17,500

Adjusted operating profit margin2

 

19.4%

 

17.2%

 

18.8%

 

11.8%

 

-

 

14.7%

Organic revenue growth

 

4.6%

 

(0.6%)

 

(6.0%)

 

2.1%

 

-

 

(1.3%)

Six months ended 31 July 2018 (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

39,958

 

4,202

 

55,812

 

6,804

 

-

 

106,776

Adjusted operating profit / (loss)

 

9,451

 

628

 

9,433

 

517

 

(4,663)

 

15,366

Adjusted operating profit margin

 

23.7%

 

14.9%

 

16.9%

 

7.6%

 

-

 

14.4%

Organic revenue growth

 

14.9%

 

9.0%

 

7.0%

 

0.2%

 

-

 

8.7%

Twelve months ended 31 January 2019 (Audited)

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

83,528

 

8,735

 

117,911

 

13,919

 

-

 

224,093

Adjusted operating profit / (loss)

 

20,482

 

1,504

 

22,047

 

2,207

 

(9,284)

 

36,956

Adjusted operating profit margin

 

24.5%

 

17.2%

 

18.7%

 

15.9%

 

-

 

16.5%

Organic revenue growth

 

15.5%

 

7.3%

 

2.8%

 

(2.1%)

 

-

 

6.4%

1 Operating profit after interest on finance lease liabilities is presented as a comparable measure to the prior year operating profit following the adoption of IFRS 16 from 1st February 2019.
2 The operating profit margin is calculated on the operating profit after interest on finance lease liabilities to be comparable to the prior year.

NOTES TO THE INTERIM RESULTS (Continued)

FOR THE SIX MONTHS ENDED 31 July 2019

2) SEGMENT INFORMATION (continued)

 

 

Brand
marketing

 

Data and
analytics

 

Creative
technology

 

Head
Office

 

Total

 

 

£’000

 

£’000

 

£’000

 

£’000

 

£’000

 

 

 

 

 

 

 

 

 

 

 

Six months ended 31 July 2019 (Unaudited)

 

 

 

 

 

 

 

 

 

 

Net revenue

 

63,873

 

20,869

 

33,981

 

-

 

118,723

Adjusted operating profit / (loss)

 

13,478

 

5,744

 

3,414

 

(4,333)

 

18,303

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

 

13,080

 

5,734

 

3,278

 

(4,592)

 

17,500

Adjusted operating profit margin2

 

20.5%

 

27.5%

 

9.6%

 

-

 

14.7%

Organic net revenue growth

 

(4.9%)

 

21.4%

 

(1.1%)

 

-

 

(1.3%)

Six months ended 31 July 2018 (Unaudited)

 

 

 

 

 

 

 

 

 

 

Net revenue

 

63,498

 

9,739

 

33,539

 

-

 

106,776

Adjusted operating profit / (loss)

 

12,475

 

2,681

 

4,873

 

(4,663)

 

15,366

Adjusted operating profit margin

 

19.6%

 

27.5%

 

14.5%

 

-

 

14.4%

Organic net revenue growth

 

1.8%

 

32.0%

 

24.1%

 

-

 

8.7%

Year ended 31 January 2019 (Audited)

 

 

 

 

 

 

 

 

 

 

Net revenue

 

133,163

 

23,209

 

67,721

 

 

224,093

Adjusted operating profit / (loss)

 

29,580

 

7,171

 

9,489

 

(9,284)

 

36,956

Adjusted operating profit margin

 

22.2%

 

30.9%

 

14.0%

 

 

16.5%

Organic net revenue growth

 

0.1%

 

30.6%

 

17.0%

 

 

6.4%

1 Operating profit after interest on finance lease liabilities is presented as a comparable measure to the prior year operating profit following the adoption of IFRS 16 from 1st February 2019.
2 The operating profit margin is calculated on the operating profit after interest on finance lease liabilities to be comparable to the prior year.

A reconciliation of segment adjusted operating profit to operating profit is provided as follows:

 

 

Six months ended
31 July 2019
(Unaudited)

Six months ended
31 July 2018
(Unaudited)

Twelve months ended
31 January 2019
(Audited)

 

£’000

 

£’000

 

£’000

 

 

 

 

 

 

Segment adjusted operating profit after interest on finance lease liabilities

17,500

 

15,366

 

36,956

Interest on finance lease liabilities

803

 

-

 

-

Segment adjusted operating profit

18,303

 

15,366

 

36,956

Amortisation of acquired intangibles

(5,443)

 

(3,764)

 

(9,046)

Share based payment charge (note 3)

-

 

(365)

 

(1,311)

Employment related acquisition payments (note 3)

(2,781)

 

(213)

 

(821)

Restructuring costs (note 3)

(2,141)

 

(172)

 

(4,526)

Deal costs (note 3)

(306)

 

(320)

 

(575)

Operating profit

7,632

 

10,532

 

20,677

NOTES TO THE INTERIM RESULTS (Continued)

FOR THE SIX MONTHS ENDED 31 July 2019

3) RECONCILIATION OF ADJUSTED FINANCIAL MEASURES

 

 

 

Six months ended
31 July 2019
(Unaudited)

Six months ended
31 July 2018
(Unaudited)

Twelve months ended
31 January 2019
(Audited)

 

 

£’000

 

£’000

 

£’000

 

 

 

 

 

 

 

Profit before income tax

 

2,848

 

10,346

 

18,825

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

 

1,669

 

1,282

 

2,806

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

 

2,041

 

(1,367)

 

(1,906)

Share-based payment charge2

 

-

 

365

 

1,311

Employment related acquisition payments3

 

2,781

 

213

 

821

Restructuring costs4

 

2,141

 

172

 

4,526

Deal costs5

 

306

 

320

 

575

Amortisation of acquired intangibles6

 

5,443

 

3,764

 

9,046

Adjusted profit before income tax

 

17,229

 

15,095

 

36,004

Adjusted profit before income tax has been presented to provide additional information which may be useful to the reader, and it is a measure of performance used in the calculation of the adjusted earnings per share. This measure is considered to best represent the underlying performance of the business and so it is used for the vesting of employee performance shares. The adjusting items are consistent with those in the prior period.

1 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. (2018: ODD Communications Limited and Twogether Creative Limited) 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.
3The charge includes acquisition related payments linked to the continuing employment of the sellers which is being recognised over the required period of employment.
4In the current period the Group has incurred restructuring costs in relation to the ongoing relaunch of the new Archetype brand in the UK and US along with the rebranding of the Savanta brans, in addition to other staff related redundancy costs. These costs relate to these specific transformational events; they do not relate to underlying trading and therefore have been added back to aid comparability of performance year on year.
5 This charge relates to third party professional fees incurred during acquisitions.
6The Group determines that amortisation of acquired intangibles is not reflective of underlying performance. 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.

4) TAXATION

The tax charge for the six months ended 31 July 2019 is based on the Group’s estimated effective tax rate for the year ending 31 January 2019 (20%).

5) DIVIDENDS

An interim dividend of 2.5p (six months ended 31 July 2018: 2.16p) per ordinary share will be paid on 22 November 2019 to shareholders listed on the register of members on 25 October 2019. Shares will go ex-dividend on 24 October 2019. The last date for DRIP elections to be returned to the registrar is 8 November 2019.

NOTES TO THE INTERIM RESULTS (Continued)

FOR THE SIX MONTHS ENDED 31 July 2019

6) FINANCE EXPENSE

 

 

 

Six months ended
31 July 2019
(Unaudited)

Six months ended
31 July 2018
(Unaudited)

Twelve months ended
31 January 2019
(Audited)

 

 

£’000

 

£’000

 

£’000

Financial liabilities at amortised cost

 

 

 

 

 

 

Bank interest payable

 

411

 

467

 

1,235

Interest on finance lease liabilities

 

803

 

-

 

-

Financial liabilities at fair value through profit and loss

 

 

 

 

 

 

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

 

1,669

 

1,282

 

2,806

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

 

 

2,683

 

 

695

 

 

2,532

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

Other interest payable

 

3

 

2

 

11

Finance expense

 

5,569

 

2,446

 

6,584

7) FINANCE INCOME

 

 

 

Six months ended
31 July 2019
(Unaudited)

Six months ended
31 July 2018
(Unaudited)

Twelve months ended
31 January 2019
(Audited)

 

 

£’000

 

£’000

 

£’000

Financial assets at amortised cost

 

 

 

 

 

 

Bank interest receivable

 

20

 

45

 

82

Finance lease interest receivable

 

24

 

-

 

-

Financial assets at fair value through profit and loss

 

 

 

 

 

 

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

 

642

 

2,062

 

4,438

Other interest receivable

 

12

 

144

 

147

Finance income

 

698

 

2,251

 

4,667

NOTES TO THE INTERIM RESULTS (Continued)

FOR THE SIX MONTHS ENDED 31 July 2019

8) EARNINGS PER SHARE

 

 

Six months ended
31 July 2019
(Unaudited)

 

Six months ended
31 July 2018
(Unaudited)

 

Twelve months ended
31 January 2019
(Audited)

 

 

£’000

 

£’000

 

£’000

 

 

 

 

 

 

 

Earnings attributable to ordinary shareholders

 

1,575

 

7,773

 

13,887

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

 

1,468

 

1,264

 

2,698

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

 

1,554

 

(1,349)

 

(1,959)

Share based payment charge

 

2,781

 

572

 

2,042

Restructuring costs

 

1,757

 

139

 

3,501

Costs associated with office moves

 

-

 

-

 

136

Amortisation of acquired intangibles

 

4,342

 

3,053

 

7,300

Deal costs

 

306

 

317

 

560

Adjusted earnings attributable to ordinary shareholders

 

13,525

 

11,769

 

28,165

 

 

 

 

 

 

 

 

 

Number

 

Number

 

Number

 

 

 

 

 

 

 

Weighted average number of ordinary shares

 

84,480,836

 

77,891,708

 

79,225,075

Dilutive LTIP shares

 

777,184

 

1,156,602

 

1,193,361

Dilutive Growth Deal shares

 

2,415,165

 

3,084,835

 

3,733,183

Other potentially issuable shares

 

1,397,035

 

730,284

 

864,585

 

 

 

 

 

 

 

Diluted weighted average number of ordinary shares

 

89,070,220

 

82,863,429

 

85,016,204

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

1.9p

 

10.0p

 

17.5p

Diluted earnings per share

 

1.8p

 

9.4p

 

16.3p

Adjusted earnings per share

 

16.0p

 

15.1p

 

35.6p

Diluted adjusted earnings per share

 

15.2p

 

14.2p

 

33.1p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 notes 2 and 3 is the tax effect of those adjusting items.

NOTES TO THE INTERIM RESULTS (Continued)

FOR THE SIX MONTHS ENDED 31 July 2019

9) NET DEBT

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

 

 

31 July 2019
(Unaudited)

 

31 July 2018
(Unaudited)

 

31 January 2019
(Audited)

£’000

 

£’000

 

£’000

 

 

 

 

 

Total loans and borrowings

 

24,820

 

47,089

 

25,678

Obligations under finance leases1

 

-

 

3

 

-

Less: cash and cash equivalents

 

(21,268)

 

(21,527)

 

(20,501)

Net debt

 

3,552

 

25,565

 

5,177

Share purchase obligation

 

1,461

 

1,650

 

1,736

Contingent consideration

 

31,379

 

12,780

 

24,712

Deferred consideration

 

2,994

 

3,308

 

4,646

 

 

39,386

 

43,303

 

36,271

1 In the current period the obligations under finance leases, which following the application of IFRS 16 include obligations for the Group’s property leases, have not been included in the calculation of net debt.

10) OTHER FINANCIAL LIABILITIES

 

 

Deferred
consideration

 

Contingent
consideration

 

Share purchase
obligation

 

 

£’000

 

£’000

 

£’000

 

 

 

 

 

 

 

At 31 January 2018 (Audited)

 

6,039

 

18,639

 

955

Arising during the period

 

842

 

973

 

630

Change in estimate

 

-

 

(1,293)

 

(74)

Exchange differences

 

-

 

16

 

79

Utilised

 

(4,255)

 

(6,095)

 

-

Reclassification

 

445

 

(445)

 

-

Unwinding of discount

 

237

 

985

 

60

At 31 July 2018 (Unaudited)

 

3,308

 

12,780

 

1,650

Arising during the period

 

-

 

14,543

 

135

Change in estimate

 

-

 

(673)

 

134

Exchange differences

 

-

 

(328)

 

(1)

Utilised

 

(1,653)

 

(76)

 

(249)

Reclassification

 

2,627

 

(2,627)

 

-

Unwinding of discount

 

364

 

1,093

 

67

At 31 January 2019 (Audited)

 

4,646

 

24,712

 

1,736

Arising during the period

 

350

 

4,194

 

-

Change in estimate

 

-

 

2,038

 

3

Exchange differences

 

-

 

1,069

 

103

Utilised

 

(2,205)

 

(2,028)

 

(453)

Unwinding of discount

 

203

 

1,394

 

72

At 31 July 2019 (Unaudited)

 

2,994

 

31,379

 

1,461

Current

 

2,994

 

12,757

 

1,328

Non-current

 

-

 

18,622

 

133

NOTES TO THE INTERIM RESULTS (Continued)

FOR THE SIX MONTHS ENDED 31 July 2019

11) EVENTS AFTER THE BALANCE SHEET DATE

On 30 September 2019 Next 15 purchased the entire issued share capital of Creston Plc US Holdings Inc and its subsidiary Health Unlimited LLC (“Health Unlimited”), a global health consultancy and communications agency, for initial consideration of $27.7m. Following the acquisition, Health Unlimited will trade as a member of the M Booth group. Further deferred consideration may be payable in May 2020 and May 2021 dependent on the EBITDA performance of Health Unlimited for the years ending 31 March 2020 and 31 March 2021 respectively. We expect there to be goodwill arising as a result of this acquisition due to the anticipated profitability and operating synergies.

12) CHANGE IN ACCOUNTING POLICY

This note explains the impact of the adoption of IFRS 16 Leases on the Group’s financial statements and discloses the new accounting policies that have been applied from 1 February 2019, where they are different to those applied in prior periods.

IFRS 16

The Group applied IFRS 16 with a date of initial application of 1 February 2019. IFRS 16 requires lessees to account for all leases on-balance sheet, recognising a right-of-use asset and a lease liability at the lease commencement date. The Group has adopted IFRS 16 using the modified retrospective approach therefore comparative information has not been restated and the Group has recognised the cumulative effect of adopting IFRS 16 as an adjustment to equity at the start of the current period. The comparative information continues to be reported under IAS 17.

On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. It applied IFRS 16 only to transactions that were previously identified as leases. Therefore, the definition of a lease under IFRS 16 was only applied to contracts entered into or changed from 1 February 2019.

As a lessee the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all the risks and rewards of the ownership of the asset to the Group. Under IFRS 16 the Group recognised a right-of-use asset and lease liability i.e. all leases are recognised on-balance sheet.

At transition, the lease liabilities were measured at the present value of the remaining lease payments using the Group’s incremental borrowing rate of 3% as at 1 February 2019. The right-of-use assets are measured at their carrying amount as if IFRS 16 had been applied since the commencement date, discounted using the lessee’s borrowing rate at the 1 February 2019. The Group used the following practical expedients when applying IFRS 16:

- Adjusted the right-of-use assets for any onerous lease provisions immediately before the date of initial application rather than perform an impairment review
- Applied the exemption not to recognise a right-of-use asset or lease liability for leases of low value or with lease terms with less than 12 months remaining at 1 February 2019
- Excluded initial direct costs from measuring the right-of-use asset at the date of initial application

Impact of the financial statements

On transition to IFRS 16 the Group recognised an additional £44.3m of right-of-use assets and £55.6m of lease liabilities, with a reduction in other creditors and provisions with regard to amounts relating to property leases, which are now recognised in the right-of-use asset. These movements resulted in a decrease to retained earnings of £1.8m and the recognition of a deferred tax asset of £0.4m.

Short Name: Next Fifteen Comm
Category Code: IR
Sequence Number: 677141
Time of Receipt (offset from UTC): 20191001T024710+0100

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