for the year ended 31 July 2007
The directors present their annual report together with the audited financial statements of Next Fifteen Communications Group plc (the “Company”) and its subsidiaries (the “Group”) for the year ended 31 July 2007.
Principal activity
The principal activity of the Group during the year continued to be that of the provision of public and press relations services. Its clients are predominantly in the technology sector, although the Group strategy has evolved to pursue non-technology clients also.
The Group consists of five independent subsidiary PR brands that operate as autonomous businesses thus enabling them to service competing clients. These are Text 100, Bite, Inferno, OutCast and Lexis (a 76% stake has been owned in Lexis since 30 November 2006). It also has two research businesses, Redshift Research and Context Analytics, and an investment in 463 Communications, a policy communications business.
Review of business and future prospects
A detailed review of the business, current trading and future developments of the Group is given in the Chairman’s Statement, the Chief Executive Officer’s Review and the Financial Review. Details of the Group’s principal risks and uncertainties are detailed in the Directors’ Statement on Corporate Governance.
Results and dividends
The Group’s Financial Statements for the year ended 31 July 2007 are set out in the Financials section and show that profit before tax for the financial year was £4,473,000 (2006: £3,003,000). The Group made a profit attributable to shareholders of the Company for the year of £2,486,000 (2006: £1,330,000). The interim dividend paid during the year was 0.4p per share (2006: 0.365p). A final dividend of 1.1 p (2006: 1.0p) per share has been proposed, making the total for the year 1.5p (2006: 1.365p).
Company’s listing
The Company continues to be listed on the Alternative Investment Market (AIM) of the London Stock Exchange.
Acquisitions and disposals
On 30 November 2006, the Company acquired a further 25% stake in Panther Communications Group Limited (“Panther”), the parent company of the UK public relations company Lexis Public Relations Limited (“Lexis”). This takes the Company’s total stake to 76%.
It is the intention of the Company to acquire the whole of Panther by 2010 and Panther’s existing management has agreed to sell further stakes in the company over the next three years. Under the terms of the acquisition, the Company paid consideration of £1.27million for the initial 25% of Panther, £1.69million for the second stake of 26%, and £2.07million for the 25% acquired in November 2006 (see note 23). This was satisfied through a combination of cash and shares in the Company. Further purchases will be made over the next three years based on the performance of Panther, with total consideration capped at £10m.
On 31 August 2006, Bite Communications Limited (a wholly owned subsidiary of the Company) sold the business and assets of its online division, “Bullet”, to a newly incorporated company owned by Alex Shaw, one of the founders of Bullet. The total consideration for the disposal was £175,000, payable over three years following completion (see note 7).
Share capital
Details of changes in the issued ordinary share capital of the Company during the year are set out in note 18 of the Financial Statements.
Financial instruments
Information on both the Group’s financial risk management objectives and the Group’s policies on the exposure of the Group to relevant risks in respect of financial instruments is set out in note 28.
Directors and their interests
The names and biographical details of the directors who held office at the date of this report appear here. Brendan Magee retired from the Board on 23 January 2007.
In accordance with the Company’s Articles of Association, Ian Taylor will retire from the Board at the next Annual General Meeting of the Company and offer himself for re-election. Ian is engaged pursuant to a letter of appointment and continues to be an effective non-executive director and demonstrates commitment to the role.
Additional information relating to directors’ remuneration, service agreements and interests in the Company’s shares is given in the remuneration report.
Substantial shareholdings
On 9 November 2007 the following interests in 3% or more of the issued share capital had been notified to the Company:
Table 1
Substantial shareholdings On 9 November 2007 the following interests in 3% or more of the issued share capital had been notified to the Company:
|
Ordinary shares
of 2.5p each |
% of ordinary share capital |
|
| Tim Dyson |
5,782,804 |
10.79% |
|
| Liontrust Asset Management |
5,781,783 |
10.79% |
|
| Black Rock Investments Management (UK) Limited |
5,187,304 |
9.68% |
|
| Thomas Lewis |
5,089,684 |
9.50% |
|
| Matthew Ravden1 |
3,319,294 |
6.19% |
|
| FMR Corp |
3,089,720 |
5.76% |
|
| SG Hambros Trust Company (Guernsey) Limited |
2,105,596 |
3.93% |
|
| Norges Bank |
1,657,700 |
3.09% |
|
1 Includes 116,126 shares owned by Matthew Ravden's wife, Sophie Brooks.
| The market price of the Company's shares during the year, was as follows: |
|
|
| Price at 1 August 2006 |
55.0p |
|
| Highest price |
98.5p |
|
| Lowest price |
55.0p |
|
| Price at 31 July 2007 |
82.0p |
|
Charitable donations
During the year the Group made charitable donations of £16,000 (2006: £15,000).
Political donations
It is not the Group’s policy to make donations for political purposes.
Payments to suppliers
It is the policy of the Group to agree suitable terms and conditions for its business transactions with all suppliers. These terms and conditions range from standard written terms to individually drafted contracts. Once such terms are agreed, it is the Group’s policy to adhere fully to them, including payment schedules, provided the supplier has also complied with the terms and conditions. The number of days taken by the Company to pay suppliers on the basis of trade creditors at 31 July 2007 and average daily purchases for the year was 32 days (2006: 32 days).
Employee involvement
The Group operates a policy of regularly informing all employees of the Group’s financial performance through a combination of meetings and electronic communication. In addition, the Group’s employee share option schemes, long-term incentive schemes and bonus schemes encourage employees at all levels to contribute to the achievement of the Group’s short-term and long-term goals.
The Group gives full and fair consideration to all applications for employment made by disabled persons, having regard to their particular aptitudes and abilities. The Group’s policies for training, career development and promotion do not disadvantage these employees. The Group seeks to recruit, develop and employ throughout the organisation suitably qualified, capable and experienced people, irrespective of sex, age, race, religion or sexual orientation.
Auditors
A resolution to reappoint BDO Stoy Hayward LLP as the Company’s auditor will be proposed at the forthcoming Annual General Meeting.
Annual General Meeting
The Annual General Meeting of the Company will be held at The Soho Hotel, 4 Richmond Mews, London, W1D 3DH on Tuesday 29 January 2008 at 2.30 p.m. A notice convening the meeting will be sent to shareholders by a separate mailing shortly.
By order of the Board
Mark Sanford
Company Secretary
13 November 2007