REG-Next Fifteen Comm Final ResultsReleased: 20/10/2009
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LONDON--(Business Wire)--
Next Fifteen Communications Group plc
Preliminary Results for the year ended 31 July 2009 (Unaudited)
Investment and further global expansion in a challenging environment
Next Fifteen Communications Group plc ("Next Fifteen" or "the Group"), the
global public relations consultancy group, today announces its preliminary
results for the year ended 31 July 2009.
Financial Highlights:
* Revenues increased by 3.6% to £65.4m (2008: £63.1m)
* Adjusted* profit before tax of £5.2m (2008: £6.6m) (see note 3)
* Profit before tax of £3.2m (2008: £5.5m)
* Staff costs controlled in line with revenue at 67.0% (2008: 67.3%)
* Adjusted* earnings per share of 6.48p (2008: 8.62p) (see note 7)
* Basic earnings per share of 3.67p (2008: 7.08p)
* Final dividend of 1.25p (2008: 1.25p) making a total dividend maintained at
1.7p
* Net cash of £1.8m (2008: £3.4m) (see note 8)
* before one-off costs - see note 3
Corporate Progress:
* Acquired remaining stake in Panther Communications Group Limited, parent of
Lexis, in October 2008, making the agency a wholly-owned subsidiary of the Group
* Merged London-based Inferno with Bite in May 2009, to create strong client
proposition
* In August 2009, acquired 100% of M Booth & Associates as a step to building
global consumer PR brand
* In October 2009, entered into contracts to acquire 55% of Upstream Asia to
give Bite a strong APAC regional offer
* In October 2009, entered into agreement to acquire a further 30% of 463
Communications, taking Next Fifteen`s ownership to 70%
* Expanded relationship with a number of clients including IBM, AMD and Cisco
and won new retained clients including Skype, SanDisk, Intuit Inc and HP
* Planned launch of new digital communications agency
Commenting on the results, Chairman of Next Fifteen, Will Whitehorn, said:
"Next Fifteen has continued to make progress over the last year in developing
the company`s global reach and breadth of client services against a difficult
economic impact from which it has not been immune. During the year revenues
continued to grow but profits were impacted by both restructuring and adverse
currency movements. However, despite £4.5m of acquisition related payments the
Group maintained a healthy net cash position well ahead of forecasts, closing
the year with £1.8m of net cash. This was primarily due to very careful control
of costs throughout the group.
We also made good progress with acquisitions which will put Next Fifteen in a
very strong position to benefit from the upturn in the economy, when it fully
materialises, and already our own client base is indicating a tentative recovery
in both the tech sector and consumer spending. Since the year end we have
completed the acquisition of M Booth in New York, which is a leading blue chip
consumer PR agency in the US market whose business model is very complementary
to that of Lexis in the UK. The Group has also entered agreements to buy
Upstream Asia thus providing Bite with a very strong platform for the expansion
of its brand in the Asia Pacific region.
In conclusion we face the year ahead with increased confidence of a continued
recovery and a business well placed to benefit from the increasingly global
client base we have carried on developing during the downturn."
For further information contact:
Next Fifteen Communications Group
Tim Dyson, Chief Executive
001 415 350 2801
David Dewhurst, Finance Director
07974 161183
Bite PR
Liam Jacklin
020 8735 9727
liam.jacklin@bitepr.com
Elijah Lawal
020 8735 9718
elijah.lawal@bitepr.com
Canaccord Adams
(Nominated Adviser)
0207 050 6500
Mark Williams / Henry Fitzgerald-O`Connor
Attached:
Chairman and Chief Executive`s Statement
Consolidated Income Statement
Consolidated Statement of Recognised Income and Expense
Consolidated Balance Sheet
Consolidated Statement of Cash Flow
Notes to the Accounts
Next Fifteen Communications Group plc
Preliminary Results for the year ended 31 July 2009 (Unaudited)
Chairman and Chief Executive`s Statement
Next Fifteen Communications Group plc (`Next Fifteen` or `the Group`) (AIM:
NFC), the global public relations consultancy group, is pleased to report its
results for the year to 31 July 2009. The Group, like many businesses has been
impacted by the global economic down turn. Despite this the Group has reported
revenues up 3.6% to £65.4m (2008: £63.1m). Profitability was more sensitive to
the economic slowdown with profit before tax down to £3.2m (2008: £5.5m), but
the adjusted profit was £5.2m (2008: £6.6m) (see note 3). Earnings per share was
similarly impacted at 3.67p (2008: 7.08p), with the adjusted earnings per share
being 6.48p (2008: 8.62p) (see note 7). The Group continues to have a strong
balance sheet, ending the year with net cash of £1.8m (2008: £3.4m) (see note
8), achieved after making £4.5m of acquisition-related payments. In view of this
and the improving outlook overall, the Board has proposed a final dividend of
1.25p per share, which maintains the total dividend for the year at 1.7p.
The Group`s results were significantly impacted by the currency contracts placed
before the start of the year, which matured during the year. These protection
contracts effectively locked the Group into what became unfavourable rates after
sterling fell sharply against both the US dollar and euro. These maturing
contracts created an additional loss of £1.7m above their fair value at the
beginning of the year, which is included in other operating charges within head
office costs but not shown as an adjustment to profit (note 3).
Corporate activity
Just after the year ended the Group announced the acquisition of New York-based
consumer agency M Booth and in recent weeks it has also announced its intention
to acquire the Asian PR assets of AIM-listed Upstream Marketing & Communications
Inc., which will give the Group`s Bite business a strong Asia Pacific operation,
to complement its existing US and European operations. Today, the Group is also
announcing its intention to purchase a further 30% stake in 463 Communications,
a US-based policy communication consultancy, in which it already has a 40%
interest. Lastly the Group also announces that it intends to open a digital
communications agency in the next three months. Two executives from Bite are
moving over to lead this venture.
Cost control
During the year the Group made some significant headcount reductions following
the slowdown in most of its markets. Following a strategic review, decisions
were also taken to merge London-based Inferno into Bite and to close the Text
100 offices in Seattle and Dublin. These actions resulted in one-time charges of
£1.95m, of which £0.4m related to the cost of surplus office space. Setting
these aside, the Group continued to keep staff costs as a percentage of revenue
at 67%. The close management of staff costs should help the business to restore
its profit margins in the coming year as revenue growth begins to recover.
Strengthened client base
The Group already has an enviable client base that includes IBM, Microsoft,
Cisco, Facebook, AMD, Unilever and Coca Cola. Just after the year end, the Group
added HP as a significant client in the US which helped make up for the loss of
Sun Microsystems, following the announcement that it was being acquired by
Oracle. The Group also added Autodesk and VM Ware as clients during this period.
Growth strategy
The Group has continued to explore organic growth opportunities supported by
selective acquisitions of specialist agencies in growth sectors. This is
demonstrated by the acquisition of M Booth who are working with the existing UK
business of Lexis, to create a global consumer agency for the Group. The pending
acquisition of Upstream`s PR agencies in China, Singapore and Australia will
enable Bite to offer its existing and new clients a single-agency solution in
Europe, North America and Asia Pacific. Lastly, the creation of a digital agency
to leverage the Group`s existing capabilities in social media and related
digital services is further evidence that the Group continues to focus on long
term growth. With strong cash-generation from operations and existing
acquisition facilities, the Group remains well placed to make additional
targeted acquisitions of a size that would not lead to a significantly geared
balance sheet, an approach that the Board continues to feel is prudent given the
current economic climate.
Prospects
The Group has managed its cost base and balance sheet well during this difficult
economic cycle. Unlike some others in the marketing services sector it remains
conservative about cash, having ended the year with net cash of £1.8m on its
balance sheet. Despite the slow but gradual improvement in the economic climate,
the Group will continue to be careful in its approach to running the business
and as reported last year, focus heavily on the three Cs of customers, cost base
and cash. The Group has seen an improvement in trading conditions after a tough
first quarter of the 2009 calendar year but it will continue to manage the
business in a way that reflects the general uncertainty that surrounds the
sustainability of economic recovery. In the first two months of the current
financial year, the Group has seen good momentum and the Board remains
optimistic about the prospects for the year.
Will Whitehorn
Chairman
Tim Dyson
Chief Executive Officer
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 JULY 2009
Year ended Year ended
31 July 2009
31 July 2008
(Unaudited)
(Restated)*
Note £`000 £`000 £`000 £`000
Billings 77,287 73,916
Revenue 2 65,394 63,107
Staff costs 43,792 42,455
Depreciation 1,168 1,203
Amortisation and impairment 513 113
Reorganisation costs 1,950 -
Other operating charges 14,121 13,219
Total operating charges (61,544) (56,990)
Operating profit 3,850 6,117
Finance expense (839) (892)
Finance income 147 174
Net finance expense 6 (692) (718)
Share of profit of equity accounted associate - 117
Profit before income tax 2,3 3,158 5,516
Income tax expense 4 (884) (1,655)
Profit for the year 2,274 3,861
Attributable to:
Equity holders of the parent 1,932 3,663
Minority interest 342 198
2,274 3,861
Earnings per share 7
Basic (pence) 3.67 7.08
Diluted (pence) 3.66 6.99
*See note 1
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
FOR THE YEAR ENDED 31 JULY 2009
Year ended Year ended
31 July 2009
31 July 2008
(Unaudited)
£`000 £`000
Foreign currency translation differences for foreign operations 1,540 15
Translation differences on long-term foreign currency inter-company loans 140 28
Income recognised directly in equity 1,680 43
Profit for the year 2,274 3,861
Total recognised income for the year 3,954 3,904
Attributable to:
Equity holders of the Company 3,612 3,706
Minority interest 342 198
Total recognised income for the year 3,954 3,904
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED BALANCE SHEET
AS AT 31 JULY 2009
As at As at
31 July 2009
31 July 2008
(Unaudited)
Note £`000 £`000 £`000 £`000
Assets
Property, plant and equipment 1,949 2,435
Intangible assets 18,441 15,462
Investment in equity accounted associate - 190
Deferred tax asset 1,695 1,468
Other receivables 533 651
Total non-current assets 22,618 20,206
Trade and other receivables 14,595 15,720
Cash and cash equivalents 7,130 9,525
Corporation tax asset 1,115 701
Total current assets 22,840 25,946
Total assets 2 45,458 46,152
Liabilities
Loans and borrowings 4,922 5,315
Deferred tax liabilities 42 32
Other payables 73 385
Provisions 282 -
Deferred consideration - 139
Total non-current liabilities (5,319) (5,871)
Loans and borrowings 156 -
Trade and other payables 13,679 14,914
Corporation tax liability 559 677
Deferred consideration 228 2,630
Derivative financial liabilities 615 685
Share purchase obligation - 1,737
Total current liabilities (15,237) (20,643)
Total liabilities (20,556) (26,514)
TOTAL NET ASSETS 24,902 19,638
Equity
Share capital 1,381 1,354
Share premium reserve 5,157 5,157
Merger reserve 3,075 2,659
Share purchase reserve - (1,380)
Foreign currency translation reserve 1,349 (191)
Investment in own shares (644) (663)
Treasury shares (595) (504)
Retained earnings 14,424 12,960
Total equity attributable to equity holders of the Company 24,147 19,392
Minority interests 755 246
TOTAL EQUITY 24,902 19,638
NEXT FIFTEEN COMMUNICATIONS GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 31 JULY 2009
Year ended Year ended
31 July 2009
31 July 2008
(Unaudited)
£`000 £`000 £`000 £`000
Cash flows from operating activities
Profit for the period 2,274 3,861
Adjustments for:
Depreciation 1,168 1,203
Amortisation 513 113
Finance income (147) (174)
Finance expense 839 892
Share of profit from equity accounted associate - (117)
Loss on sale of property, plant and equipment 5 2
Income tax expense 884 1,655
Share based (credit)/charge (57) 237
Movement on fair value of financial instruments (325) 589
Net cash inflow from operating activities before changes in working capital 5,154 8,261
Change in trade and other receivables 2,999 (1,417)
Change in trade and other payables (2,174) 2,755
Increase in provision 282 -
1,107 1,338
Net cash generated from operations 6,261 9,599
Income taxes paid (1,476) (1,090)
Net cash from operating activities 4,785 8,509
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired (4,448) (829)
Acquisition costs (101) -
Acquisition of property, plant and equipment (415) (1,591)
Proceeds on disposal of property, plant and equipment 40 -
Acquisition of intangible assets (134) (329)
Payments for long-term cash deposits - (233)
Receipts from long-term cash deposits 202 -
Interest received 147 174
Net cash outflow from investing activities (4,709) (2,808)
Net cash from operating and investing activities 76 5,701
Net cash from operating and investing activities 76 5,701
Cash flows from financing activities
Proceeds from sale of own shares 63 64
Acquisition of own shares (91) (504)
Repayment of bank borrowings (1,462) (337)
Capital element of finance lease rental repayment (225) (217)
Interest paid (489) (414)
Minority dividend paid (226) -
Dividend paid to shareholders of the parent (900) (807)
Net cash outflow from financing activities (3,330) (2,215)
Net (decrease)/increase in cash and cash equivalents (3,254) 3,486
Cash and cash equivalents at beginning of the year 9,525 5,834
Exchange gains on cash held 859 205
Cash and cash equivalents at end of the year 7,130 9,525
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 JULY 2009
1)BASIS OF PREPARATION
The financial information for the year ended 31 July 2009 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 annual results are unchanged
from those disclosed in the Group`s Annual Report for the year ended 31 July
2008 and are the same as those that will be used in the Group's Annual Report
for the year ended 31 July 2009. The financial information for the year ended 31
July 2009 is unaudited and does not constitute the Group's statutory financial
statements for the period, as defined under section 434 of the Companies Act
2006. The comparative financial information for the full year ended 31 July 2008
has, however, been derived from the audited statutory financial statements for
that period, except for the restatement noted below. A copy of those statutory
financial statements has been delivered to the Registrar of Companies. The
auditors` report on those accounts was unqualified, did not include references
to any matters to which the auditors drew attention by way of emphasis without
qualifying their report and did not contain a statement under section 237(2)-(3)
of the Companies Act 1985.
The income statement for the year ended 31 July 2008 presented gains or losses
on forward foreign exchange contracts that were settled during the year within
other operating charges. The movement in the fair value of forward foreign
exchange contracts open at the opening and closing balance sheet dates was
presented within finance expense. The income statement for the year ended 31
July 2008 has been restated to ensure that these items are both presented within
other operating charges. This resulted in a decrease in finance expense and a
corresponding increase in other operating charges of £589,000. There is no
impact on profit for the year.
2)SEGMENT INFORMATION
Primary reporting format - business segments
The Group operates in one business segment, being the provision of public
relations services. A second business segment, being research, is not large
enough to require segmental disclosure.
Secondary reporting format - geographical segments
The Group's operations are based in four main geographical areas. The UK is the
home country of the Parent Company.
Revenue Profit Adjusted Total Capital
before profit assets expenditure
income before
tax income
tax1
£`000 £`000 £`000 £`000 £`000
Year ended 31 July 2009
(Unaudited)
UK 16,544 1,166 2,493 10,338 180
Europe and Africa 9,774 674 866 3,940 62
US and Canada 31,233 5,348 5,963 15,421 92
Asia Pacific 7,843 421 421 4,738 141
Head Office - (4,451) (4,494) 11,021 114
65,394 3,158 5,249 45,458 589
Year ended 31 July 2008
UK 18,787 2,336 2,520 13,096 785
Europe and Africa 10,074 1,164 1,164 4,085 52
US and Canada 27,522 5,576 5,704 16,186 559
Asia Pacific 6,724 667 667 4,262 366
Head Office - (4,227) (3,473) 8,523 349
63,107 5,516 6,582 46,152 2,111
1Adjusted profit before income tax has been reached by adjusting profit before
income tax for movements in fair value of financial instruments, reorganisation
costs incurred in the year, the unwinding of the discount on deferred
consideration and share purchase obligation, and goodwill impairment charges.
See note 3 Reconciliation of Pro-Forma Financial Measures.
3)RECONCILIATION OF PRO-FORMA FINANCIAL MEASURES
Year ended Year ended
31 July 2009
31 July 2008
(Unaudited)
£`000 £`000
Profit before income tax 3,158 5,516
Movement in fair value of interest rate cap and collar ¹ 255 165
Movement in fair value of foreign exchange contracts2 (325) 589
Reorganisation costs3 1,950 -
Unwinding of discount on deferred consideration and share purchase obligation4 95 312
Impairment charges5 116 -
Adjusted profit before income tax 5,249 6,582
Adjusted profit before income tax has been presented to provide additional
information which may be useful to the reader.
1See note 6
2 Forward exchange contracts held by the Group are recognised at fair value on
the balance sheet at each reporting date and the movement on such contracts is
recognised within operating expenses in the income statement. These financial
instruments comprise of financial products used for hedging currency exposure on
US dollar and euro. The movement in fair value of the foreign exchange contracts
since 31 July 2008 is a credit of £325,000 (2008: charge of £589,000).
3The reorganisation costs of £1,950,000 relate to redundancies across the Group,
the closure of the Text 100 Seattle office and the costs associated with the
merger of Inferno Communications Limited (`Inferno`) into Bite Communications
Limited (`Bite`) on 1 May 2009. £115,000 of the costs can be attributed to the
closure of the Seattle office (£82,000 due to headcount reductions and £33,000
due to other office closure costs), £584,000 of the reorganisation costs relate
to the merger of Inferno with Bite, (£354,000 of these costs can be attributed
to the onerous lease provision and dilapidations provision on the premises
occupied by Inferno until the date of the merger as well as the impairment of
leasehold improvements. £170,000 can be directly attributed to redundancy costs
and the remaining £60,000 relates to other office closure costs). The remaining
£1,251,000 of reorganisation costs have been incurred as a result of headcount
reductions required to reflect revenue expectations in the worsening economy.
4A total interest charge of £95,000 (2008: £312,000) has been recognised during
the period. £61,000 (2008: £128,000) of the charge relates to the unwinding of
the discount on the deferred consideration payable for OutCast Communications
Corporation (a wholly owned subsidiary of Next Fifteen Communications Group
since June 2005), and £34,000 (2008: £184,000) relates to the unwinding of the
discount on the share purchase obligation for Lexis Public Relations Limited (a
wholly owned subsidiary of the Group since October 2008). This interest charge
is notional and relates to the difference between the discounted liability
recognised and the actual liability settled.
5 In accordance with the Group`s accounting policy, the carrying values of
goodwill and intangible assets with indefinite useful lives are reviewed for
impairment annually or more frequently if events or changes in circumstances
indicate that the asset might be impaired. An impairment charge has been
recognised for the goodwill recognised by Bite Communications Limited (`Bite`)
on acquisition of Credo Communications Limited (`Credo`) on 31 December 2005.
The operations were transferred into Bite and the decision has been made to
write down the goodwill by £116,000 due to Credo client revenue reductions.
4)INCOME TAX EXPENSE
The tax charge is based on the effective tax rate of 28% for the year (2008:
30%).
5)DIVIDEND
A final dividend of 1.25p per share (2008: 1.25p) has been proposed. The interim
dividend was 0.45p per share (2008: 0.45p), making a total for the year of 1.70p
per share (2008: 1.70p). The final dividend, if approved at the AGM on 26
January 2010, will be paid on 5 February 2010 to all shareholders on the
Register of Members on 8 January 2010. The ex-dividend date for the shares is 6
January 2010. The Employee Share Ownership Trust has waived its rights to
dividends of £18,000 (2008: £27,000).
6)FINANCE EXPENSE
As at 31 July 2009 the Group held a reset cap and collar interest rate contract
to hedge interest rate risk on long-term debt. The net finance expense of
£692,000 (2008: £718,000), includes a charge of £255,000 (2008: £165,000) on
financial instruments reflecting the movement in the fair value of the interest
cap and collar contract since 31 July 2008.
Also included within finance expense is a charge of £95,000 for the year (2008:
£312,000) relating to the unwinding of the discount on the deferred
consideration of OutCast Communications Corporation to be settled in full in
October 2009 and share purchase obligation of Lexis Public Relations Limited
which was settled in October 2008.
7)EARNINGS PER SHARE
Year ended Year ended
31 July 2009 31 July 2008
(Unaudited)
£`000 £`000
Earnings attributable to ordinary shareholders 1,932 3,663
Reorganisation costs after taxation 1,339 -
Unwinding of discount on deferred consideration and share purchase obligation after tax 71 264
Movement in fair value of interest cap and collar after tax 184 118
Movement in fair value of foreign exchange contracts after tax (234) 414
Impairment charges 116 -
Adjusted earnings attributable to ordinary shareholders 3,408 4,459
Number Number
Weighted average number of ordinary shares 52,585,175 51,737,491
Dilutive shares 133,987 652,320
Diluted weighted average number of ordinary shares 52,719,162 52,389,811
Basic earnings per share 3.67p 7.08p
Diluted earnings per share 3.66p 6.99p
Adjusted earnings per share 6.48p 8.62p
Diluted adjusted earnings per share 6.46p 8.51p
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 share options and
performance shares. The only difference between the adjusting items in this note
and the figures in note 3 is the tax effect of those adjusting items.
8)ANALYSIS OF NET CASH
As at 31 July 2009 the Group had net cash of £1,785,000 (2008: £3,410,000)
comprising cash and cash equivalents, bank loans, finance facility debt and
finance lease liabilities.
Year ended Year ended
31 July 2009 31 July 2008
(Unaudited)
£`000 £`000
Current assets
Cash and cash equivalents 7,130 9,525
Non current liabilities
Bank loan 4,828 5,315
Finance facility 94 252
Finance lease 73 133
(4,995) (5,700)
Current liabilities
Finance facility 156 146
Finance lease 194 269
(350) (415)
Net cash 1,785 3,410
9)ACQUISITIONS
1. On 1 August 2008 the Group recognised control of 463 Communications LLC (`463
LLC`). 463 LLC is a venture based in Palo Alto and Washington DC, working to
position technology companies, organisations and coalitions in global policy
debates.
On 31 January 2006 the Company invested in a 40% stake of 463 LLC for a
consideration of $20,000 and has, until 1 August 2008, treated this as an
associate undertaking in the Group accounts under the equity method of
accounting. The carrying value of the investment at 31 July 2008 was £190,000.
On 1 August 2008 the Group had the right to purchase an additional 11% of 463
LLC (taking the holding to 51%) and acquire control of the business. Since this
date 463 LLC has been accounted for as a subsidiary. The following table sets
out the book values of the identifiable assets and liabilities acquired and
their fair value to the Group.
Book value Fair value Fair value
at acquisition adjustments1 to the Group
£`000 £`000 £`000
Non-current assets
Intangible assets 61 409 470
Property, plant and equipment 5 - 5
Current assets
Cash and cash equivalents2 195 - 195
Other current assets 348 - 348
Current liabilities (206) - (206)
Net assets acquired 403 409 812
Goodwill -
Total consideration -
1The fair value adjustment relating to intangible assets is due to the
recognition of $380,000 (£192,000) in respect of the 463 LLC trade-name and
$430,000 (£217,000) in respect of client relationships, which have been
independently valued. The trade name will be amortised over its useful economic
life of 20 years, and the client relationships will be amortised over three
years.
2The inflow of cash and cash equivalents on acquisition is the cash acquired of
$387,000 (£195,000). Control of 463 LLC was acquired for nil consideration.
From the date of acquisition to 31 July 2009, the acquisition contributed
$3,799,000 (£2,401,000) to revenue and $959,000 (£606,000) profit before
interest, tax and amortisation of intangibles.
It is the Group`s long-term intention to own 100% of 463 LLC as contractually
agreed with the sellers.
2. On 1 September 2008 Bite Communications Limited (a wholly owned subsidiary of
the Company) acquired the business and certain assets of AimPR Public Relations
AB, a company based in Stockholm, Sweden. This business was integrated into
Bite`s existing Swedish operation.
The following table sets out the book values of the identifiable assets acquired
and their fair value to the Group.
Book value Fair value Fair value
at acquisition adjustments1 to the Group
£`000 £`000 £`000
Non-current assets
Intangible assets - 183 183
Property, plant and equipment 2 - 2
Assets acquired 2 183 185
Goodwill -
Consideration2
Cash consideration 132
Total deferred cash consideration 53
Capitalised acquisition costs1 4
1The fair value adjustment relating to intangible assets is due to the
recognition of SEK 2,174,000 (£183,000) in respect of client relationships. The
client relationships will be amortised over five years. Total intangibles of
SEK2,222,000 (£187,000) have been capitalised including SEK48,000 (£4,000) of
legal and professional fees.
2The Group acquired the business and certain assets for a consideration of
SEK990,000 (£84,000), with further consideration of SEK574,000 (£48,000) payable
based on revenue of retained clients in the first six months, and an estimated
SEK632,000 (£53,000) payable based on revenue of retained clients over the 12
months following completion.
3. On 27 October 2008, the Group acquired the remaining 12.85% stake in Panther
Communications Group Limited (`Panther`), the parent company of Lexis Public
Relations Limited (`Lexis`). The stake was acquired for a total consideration of
£1,771,000, of which £1,328,000 was satisfied in cash and £443,000 in shares
(1,098,591 shares), taking the Group`s total stake to 100%. Based on the
acquisition balance sheet, additional goodwill of £1,507,000 has been
capitalised.
On 27 October 2008, the Group paid £1,145,000 relating to the deferred
consideration for the purchase on 4 April 2008 of a 10.55% stake in Panther, the
parent company of Lexis.
4. On 3 November 2008, the Group paid US$3,023,000 (£1,843,000) relating to the
deferred consideration for the purchase of OutCast Communications Corporation
(`OutCast`). OutCast is a wholly owned subsidiary acquired in June 2005.
10)SUBSEQUENT EVENTS
On 3 August 2009, the Company acquired the business and assets of New York based
M Booth & Associates Inc (`M Booth`), a leading PR consultancy in North America.
The initial consideration paid on completion was $4,000,000 (£2,413,000).
Deferred consideration of up to a maximum of $13,250,000 (£7,992,000) may be
payable over the course of the next four years subject to the achievement of
certain revenue and profit performance targets. The total maximum consideration
is therefore $17,250,000 (£10,405,000). Any deferred consideration that may be
payable may be satisfied by cash or up to 25% in the Company`s shares, at the
option of the Company.
For the year ended 31 December 2008, M Booth had consolidated revenues of
$10,400,000 (£6,273,000) and profit before tax of $1,000,000 (£603,173). The
consolidated gross assets at 31 December 2008 were $4,300,000 (£2,594,000). The
business will be acquired with $1,500,000 (£905,000) of net working capital. The
above numbers have been extracted from the management accounts of M Booth and
are therefore unaudited.
Acquisition costs of $154,000 (£97,000) were paid during the year relating to
the purchase of M Booth, and recognised within the consolidated income
statement.
Next Fifteen Communications Plc
Copyright Business Wire 2009
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