Next Fifteen Communications Group plc ('Next Fifteen' or 'the Group'), the global public relations consultancy Group, is pleased to announce its results for the year to 31 July 2007. The Group continues to perform well and has produced record results, with net revenue increasing 5.8% to £59.3m (2006: £56.0m) and adjusted profit before tax increasing 26.7% to £5.61m (2006: £4.43m) before goodwill amortisation, reorganisation costs and profit on disposal of a non-core business (see note 7). Adjusted earnings per share have increased 33% to 7.08p (2006: 5.32p), while basic earnings per share have increased 78% to 5.08p (2006: 2.86p).
The Group has significantly improved its cash position, with net debt reduced from £1.4m last year to just £68,000 at the year-end. The Group’s results were affected by currency movements during the year, particularly the weakness of the US dollar. Using exchange rates prevailing for the year ended 31 July 2006, the Group would have shown net revenues of £62.1m, an increase of 11%. On the back of these results the Board has proposed a final dividend of 1.1p per share, bringing the total dividend for the year to 1.5p, which represents an increase of 10% (2006: 1.365p).
Revenue growth
The Group has experienced growth in three of its four regions, most notably the UK, which grew 41%. The US business was affected by the weakness of the US dollar and the full-year effect of the change that took place in the IBM account during the previous financial year. Excluding the IBM account, the US businesses showed organic growth of 11.6% in dollar terms. Continued investment in new operations During the final quarter of the year, the Group established Redshift Research, a UK-based market research agency, and expanded its Bite business into Hong Kong and Beijing. The start-up costs for these businesses did not have a material impact on the Group’s performance, and we expect that they will become profit-generative in the current financial year. Redshift has made a promising start and, even though our Bite business in mainland China is still in the investment phase, we are pleased that it has been appointed by such clients as Informatica and VMware.
Rise of social media
The expansion of social media, such as blogs and social networking sites, has provided significant growth opportunities for the PR industry, through both new client opportunities and the expansion of the services now required by clients. The Group is pleased to report that two of the most important social networking companies, MySpace and Facebook are now significant clients. The vast majority of clients are now including social media services in their PR activities.
Margin improvement
The Group saw its adjusted net profit margin improve from 7.9% to 9.5% (see note 7) during the year despite the investments made in new operations as mentioned above. Before head office costs disclosed in note 2, the businesses improved their operating margin from 11.9% to 13.7%. 39 Offices worldwide Growth strategy The Group’s strategic focus continues to be on organic growth and selected acquisitions of specialist agencies that will either extend the international reach of our existing businesses, or provide new markets or marketshare for the Group. In November 2006, the Group acquired a further 25% of Lexis, taking its ownership of this UK consumer PR business to 76%. With minimal net debt, acquisition facilities now in place and the Group’s EBITDA having risen 33% to £7.2m, the Group has considerable flexibility to pursue appropriate acquisition opportunities.
Prospects
The Group is well placed to benefit from the current expansion of the PR industry in the UK and other markets such as China, India and North America. During the last twelve months the addition of new clients, that include Nokia, Boots, Facebook and Cisco, has fuelled momentum and we are optimistic about our prospects for the current year.
Will Whitehorn
Chairman
13 November 2007
