Preliminary Results for the year to 31 July 2004

14/10/2004

"Strong results and continuing future growth"

Highlights

· Revenue rose by 7.2% to £37.7m (2003: £35.2m), despite translation effect of prolonged dollar weakness affecting our largest market

· Profit before tax up 18.4% to £1.93m (2003: £1.63m)

· Adjusted profit before tax, before re-organisation costs and goodwill amortisation up 4.2% to £2.57m (2003: £2.47m)

· Basic EPS improved 14.6% to 2.67p (2003: 2.33p) with adjusted EPS up 4.5% to 3.98p (2003: 3.81p)

· Final dividend of 0.8p (2003: 0.7p) - Total dividend for the year up 10% to 1.1p (2003: 1.0p)

· Substantial growth in US following successful integration and development of Applied and strong flow of new business to the Group

· Group presence in China strengthened by two new offices, in Shanghai and Hong Kong - leading to impressive new business wins across region

 

Commenting, Tim Dyson, Chief Executive Officer, said:

"The Group has made a strong start to the new financial year, with over £2m of increased annualised fee income in the first quarter, following recent new client wins in US and Europe. These successes, coupled with the general economic outlook for the Group's major markets, make us optimistic about our prospects for the current year."

Chairman and Chief Executive Officer's Statement

Next Fifteen Communications Group plc, which owns some of the world's leading public relations consultancies, is pleased to announce strong full-year results for the year to 31 July 2004 and expects further growth in the current financial year. Revenue for the last year rose by 7.2% to £37.7m, despite the weakness of the US Dollar; had currencies remained constant at 2003 levels, revenue would have risen by 11.5%, an additional £1.4m. Pre-tax profit also increased during the year by 18.4% to £1.93m (2003: £1.63m). Adjusted profit before tax, before reorganisation costs and goodwill amortisation improved 4.2% to £2.57m (2003: £2.47m). Basic earnings per share were 2.67p, up 14.6% from 2.33p last year. The adjusted earnings per share were 3.98p, up 4.5% from the previous year's 3.81p.

As a result, the Board is proposing a final dividend of 0.8p, which will bring the total for the year to 1.1p (2003: 1p), a rise of 10%. The Group has made an impressive start to the current financial year, adding new clients in the first quarter that will increase annualised fee income by £2m.

The Group's balance sheet remains very strong, with cash of £2.9m. Although this figure is £0.9m less than that at the previous year-end, it comes after funding £1.35m for the acquisition and working capital needs of the Applied Communications PR and research businesses ("Applied"), acquired in September last year. The Group has generated £0.6m cash since the half-year, and the ability of the Group to generate cash from its trading activities remains positive.

Reorganisation costs for the year were £0.4m and amortisation of goodwill was £0.2m. The reorganisation costs relate to the last of the surplus office space, redundancies following the acquisition of Applied, and other costs arising from the reorganisation of AUGUST.ONE following its merger with Joe Public Relations and the transfer of its APAC operations to Text 100.

Much of the Group's growth has come from the expansion of our North American and Asian businesses. In the US, we have seen substantial growth following the successful acquisition and subsequent integration and development of Applied, though this has been lessened by the impact of the weakening dollar. In this market, which now accounts for 43% of the Group's revenues, our Text 100 and Bite businesses generated revenue of £16.1m compared with £12.7m last year, an increase of 27%. (In dollar terms this growth would have been an even more impressive 39 %). £3.7m of US revenue in the year was recorded in the acquired Applied businesses, including £0.8m of new business wins during the year. The growth in the US has come from a combination of a strong flow of new business from companies such as Earthlink, McData, NEC and Sun Microsystems, and also through the expansion of relationships with existing clients such as FujiFilm, Juniper Networks, Peregrine, VeriSign and Xerox.

In Asia we continued to expand our business into China with two new offices, first in Shanghai and then also in Hong Kong. This gives the Group a total of ten offices across the region. Through these businesses we have added some impressive new clients, notably Tektronix in China, Taiwan and Korea. IBM also extended its business with us in Mainland China and Hong Kong this year, while Infineon has become a client in Singapore. Cell phone giant Nokia has awarded us substantial project work in Singapore and Japan; and VeriSign, which is a client in the US and EMEA, has also become a client in Australia.

The Board is currently exploring the possibility of moving the Group's listing to the AIM market, operated by the London Stock Exchange. Given the liquidity of this market for smaller-cap companies and the reduced regulatory burdens and costs relating to acquisitions for companies quoted on this market, such a move could offer significant benefits to the Group and its shareholders. The Board plans to finalise its review of this matter within the next quarter. The Group strategy is still focused on driving organic growth from its existing PR brands, but it will seek to supplement this with targeted acquisitions that offer growth potential and complement the existing PR businesses in the Group.

Looking forward, the Group has made a strong start to the new financial year,
adding over £2m of annualised fee income in the first quarter. This has come
from new client wins that include Autodesk, Cadence Design Systems and
Siebel Systems in the US and Mothercare, Olympus, Yahoo! UK and Software AG in
Europe. These successes, coupled with the general economic outlook for the
Group's major markets, make us optimistic about our prospects for the current
year.

Will Whitehorn Chairman

Tim Dyson Chief Executive Officer

14 October 2004

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