Next Fifteen Communications | Investors | Results and presentations

"We have made a satisfactory start to the new financial year and we are beginning to see signs of growth in our core markets. I therefore look forward to this year with some optimism."

CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S STATEMENT

Next Fifteen Communications Group plc, owner of some of the world's leading public relations consultancies, is pleased to announce improved underlying full-year results for the year to 31 July 2003.

The year has witnessed a further recovery in the Group's fortunes. The adjusted pre-tax profit rose 30% to £2.44m (2002: £1.88m) before reorganisation costs of £794k (2002: £947k) (see Note 5) and this was achieved on net revenue of £35.2m, down fractionally from the previous year's £35.8m. The like-for-like profit before tax comparison shows an improvement of £0.7m, from £0.94m to £1.64m. The actual profit before tax of £1.64m is down from the £4.07m reported last year but the latter number was distorted by the £3.13m exceptional profit from the sale of the OneMonday name. The reorganisation costs incurred this year relate to surplus office space, to redundancies and other costs arising from the closure of non-core offices and to the merger of our AUGUST.ONE and Joe Public Relations businesses. The adjusted earnings per share were 3.73p, up 71% from the previous year's 2.18p (see Note 8). Basic earnings per share were 2.37p, down from 5.94p last year, but that figure included the exceptional £2.19m after-tax profit from the name sale. As a result, the Board is proposing a final dividend of 0.7p, which will bring the total for the year to 1p (2002: 0.9p), a rise of 11%.

The Group's balance sheet remains very strong, with net funds of £3.5m; this figure, although £0.5m less than at the previous year-end, follows the purchase of £0.5m worth of the Company's shares for the Employee Share Ownership Trust and payment of £0.9m tax on the name sale. The net cash flows generated from the Group's trading activities remain positive.

Recovery in the Group's fortunes has been achieved in market conditions that have remained difficult, particularly in mainland Europe and Asia Pacific. Significantly, the recovery has coincided with the investment phase of a number of new organic activities that will generate longer-term growth for the Group. These include a new operation in mainland China and the formation of Inferno, a new subsidiary brand in the UK, which will target technology clients in the business-to-business sector. It is worth noting that the Group added some impressive clients during the year, including Fuji Film's account in North America, and a global brief for ARM, the leading microprocessor designer. In addition, the Group's largest client, IBM, agreed to renew its global contract for a further two years.

Perhaps the most exciting development for the Group occurred after the year-end with the acquisition of the client base and staff of Applied Communications, a highly respected technology public relations agency with offices in San Francisco, Washington DC and Amsterdam. After more than 20 years of organic growth for the Group, this acquisition is not so much a change of direction as a demonstration that Next Fifteen is perfectly capable of supplementing its core organic growth with acquisitions when the strategic fit and the timing prove irresistible. We paid a fair price in the prevailing market environment, achieving a level of value that would not have been available to us in the overheated acquisition markets of a few years ago -

So our patience has been rewarded. The majority of Applied's business will complement Bite's North American interests, and the enlarged operation will be overseen by Bite's CEO, Clive Armitage. The remainder of the acquired activities have been integrated into Text 100's global network.

The Group has made a satisfactory start to the new financial year. Despite the wide disparity of predictions for the year ahead coming from London's quoted marketing and communications companies, we feel that both the technology specialisation and broader public relations markets will return to modest growth over the coming year - most notably in the USA, which is now our largest market. We believe that the signs of market improvement are there to be seen and that it will take a sudden macroeconomic reverse to stall this progress.

Tom Lewis Tim Dyson Chairman CEO

20 October 2003

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