REG-Next 15 Group plc Final Results
15/04/2025 07:02
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Final Results
15 April 2025
Next 15 Group plc
(“Next 15” or the “Group”)
Results for the year ended 31 January 2025
Resilient performance in a challenging macro-environment
Next 15 Group plc (AIM:NFG), the tech and data-driven growth consultancy,
today announces its final results for the year ended 31 January 2025.
Financial results for the year to 31 January 2025
Year ended 31 January 2025 Year ended 31 January 2024 % change year on year
£m £m
Adjusted results(1)
Net revenue 569.7 577.8 (1.4)%
Adjusted operating profit 107.4 121.1 (11.3)%
Adjusted operating profit margin 18.9% 21.0%
Adjusted profit before tax 101.4 117.9 (14.0)%
Adjusted diluted earnings per share 69.3p 81.6p (15.1)%
Statutory results
Net cash generated from operations 96.1 105.0 (8.5)%
Revenue 729.8 734.7 (0.7)%
Operating profit 56.6 77.1 (26.6)%
Profit before tax 62.5 80.3 (22.2)%
Diluted earnings per share 37.9p 50.3p (24.7)%
Total dividend per share 15.35p 15.35p
(1)Adjusted results have been presented to provide additional information that
may be useful to shareholders to understand the performance of the Group by
facilitating comparability both year on year and with industry peers. Adjusted
results are reconciled to statutory results within the appendix.
Financial and Operational Highlights
* Group net revenue decline of 1.4% to £569.7m, reflecting a challenging macro
backdrop; offset by strong performances from SMG, M Booth, M Booth Health, MHP
and Brandwidth
* Adjusted operating profit of £107.4m, at a margin of 18.9%. Statutory
operating profit down 26.6% to £56.6m
* Adjusted profit before tax of £101.4m
* Adjusted diluted earnings per share of 69.3p and statutory diluted earnings
per share of 37.9p
* Statutory revenue decline of 0.7% to £729.8m.
* Final dividend unchanged at 10.6p per share and a total dividend of 15.35p for
the year
* Net cash generated from operations before tax was £96.1m, with net debt of
£38.4m as at 31 January 2025
* Significant new client wins including Deliveroo, PayPal, the Bank of England
and WHSmith US
* Completed bolt-on acquisitions of Studio La Plage, Tuva and Cadence for
initial consideration of £8.0m
* Creating a new business that brings together our four B2B tech marketing
agencies
* £17.0m restructuring cost incurred in the year realising an annualised saving
of £45m, of which £16m relates to Mach49. Of the remaining £29m saving,
approximately £9m has been realised in the year
Current trading and outlook
Trading in the new financial year is broadly in line with management
expectations, with the trends of last year continuing into the early months of
FY26, with several new business wins. Despite the current economic and
geopolitical backdrop, performance continues to be resilient across all four
business segments, in particular in our consumer businesses.
In line with our previous communication, the loss of the significant Mach49
contract will have a material adverse impact on our FY26 financial
performance. We also note that Sterling has recently strengthened against the
US dollar. Should this continue, this will lead to further headwinds in the
current financial year. The Group's continued focus on simplification of the
business coupled with product related investment in AI sets the foundation for
long term growth, as well as the strength and quality of our management teams
and client relationships gives us confidence in delivering a solid trading
performance in the year ahead.
Commenting on the results, Tim Dyson, CEO of Next 15 said:
“We note that markets are reacting strongly to the trade war. As of today,
our customers are still determining the impact on their businesses. We
anticipate this to be non-linear and strongly dependent on supply chains. We
also anticipate that, as during Covid, some customers will increase their
spend in a bid to drive sales, while others are more conservative. While we
have not seen any notable change to our trading, either positive or negative,
we are taking a cautious view given the market volatility and uncertainty over
the impacts a trade war may have. However, we continue to invest thoughtfully
and focus on strategic improvements to the Group. As a result, we remain
confident about the medium-term prospects for our business.”
Webcast for analysts and investors
Next 15 will host an analyst and investor webcast at 9:30 today, Tuesday 15
April 2025.
To access the webinar, please contact next15@mhpgroup.com
(mailto:next15@mhpgroup.com)
For further information contact:
Next 15 Group plc
Tim Dyson, Chief Executive Officer
+1 415 350 2801
Peter Harris, Chief Financial Officer
+44 (0) 20 7908 6444
Deutsche Numis (Nomad & Joint Broker)
Mark Lander, Hugo Rubinstein
+44 (0)20 7260 1000
Berenberg (Joint Broker)
Ben Wright, Mark Whitmore
+44 (0)20 3207 7800
MHP (Investor Relations)
Simon Evans, Eleni Menikou, Veronica Farah
+44 (0)77 1011 7517
Next15@mhpgroup.com (mailto:Next15@mhpgroup.com)
Notes:
Net revenue
Net revenue is calculated as revenue less direct costs as shown on the
Consolidated Income Statement.
Organic net revenue growth
Organic net revenue growth is defined as the net revenue growth at constant
currency excluding the impact of acquisitions and disposals in the last 12
months. For acquisitions made in the prior year, only the corresponding months
of ownership are included in the calculation of growth. Net revenue is
reconciled to statutory revenue within the appendix and a reconciliation of
the movement in the year is included in the net revenue bridge on page 6.
Adjusted operating profit margin
Adjusted operating profit margin is calculated based on the adjusted operating
profit as a percentage of net revenue. Adjusted operating profit is reconciled
to statutory results within the appendix.
This announcement contains inside information as defined in Article 7 of the
Market Abuse Regulation.
About Next 15
Next 15 (AIM:NFG) is an AIM-listed tech and data-driven growth consultancy
with operations in Europe, North America and across Asia Pacific. The Group
has a strong track record of creating and acquiring high-performance
businesses. For acquired businesses it offers an opportunity to take advantage
of the Group’s global operational infrastructure and centralised resources
to accelerate their growth. The Group has long-term customer relationships
with many of the world’s leading companies including Google, Amazon,
Facebook, Microsoft, IBM, American Express and Procter & Gamble.
The business operates across four segments, each of which describes how we
help customers grow in different ways: Customer Insight helps them understand
their opportunities and challenges; Customer Engagement optimises their
reputation and digital assets; Customer Delivery helps them connect with
customers to drive sales; and Business Transformation helps maximise long-term
value through corporate positioning, business design and the development of
new ventures.
At Next 15, success is underpinned by a people-led approach. Our purpose is to
make our customers and our people the best versions of themselves, and our
culture is empowering and respectful.
Chairman and Chief Executive’s Statement
Review of FY25
In FY25 the Group delivered a resilient performance in an uncertain and
unpredictable macro-environment. The loss of Mach49’s significant contract
was announced in September 2024 and reduced Group revenues by approximately
£7m in the year and will reduce revenues by £75.9m in the year to 31 January
2026. The tech sector continued to be challenging, whilst our government
revenues in the UK were impacted by political instability when an early
general election was called in July 2024. Our brands reacted to the weaker
than expected revenue performance by undertaking significant cost reduction
exercises, resulting in leaner and more focused businesses. We also completed
three bolt-on acquisitions for a combined initial consideration of £8.0m to
provide further opportunities for revenue growth in a number of our key
businesses.
The statutory operating profit decreased by 26.6% to £56.6m (2024: £77.1m)
and diluted earnings per share decreased to 37.9p (2024: 50.3p).
Acquisitions
The Group has made selective acquisitions during the year with a focus on
expanding several of our existing businesses through bolt-on acquisition.
During the period, the Group acquired two small businesses for its UK-based
communications business, MHP Group, which performed strongly in the year. The
acquisitions were made to build out its range of products and services in the
tech and content areas. The Group also completed the acquisition of Cadence
for Transform, the technology and data consultancy. In the UK, Cadence is
renowned for its public service transformation expertise and has become a
trusted adviser to central and local government, as well as the rail and road
sectors.
Returns to shareholders
The Group maintains a disciplined and consistent approach to capital
allocation, with a target leverage of below 1.5x EBITDA. The first priority is
to maintain a healthy balance sheet, then investment into the business, and we
will continue to invest in a selective manner to support long-term growth of
the Group. The Board will continue to prioritise organic investment in the
business, alongside selective M&A with a focus on bolt-on acquisitions to
enhance key business areas. Beyond this, our priority is to return excess cash
to shareholders, firstly through a regular dividend and, when possible,
further capital returns.
The Board is recommending the payment of a final dividend for the year ended
31 January 2025 of 10.6p per share, which would represent a total dividend of
15.35p for the year, which is unchanged on the 2024 financial year.
In the prior year, the Group announced a share buyback programme to a maximum
of £30m, allowing us to return excess cash to shareholders. At the previous
reporting period on 31 January 2024, we had, to that date, invested £4.5m
buying back shares. We also announced we would acquire up to a further £10m
worth of shares by the end of July 2024, of which we only spent £5.3m in the
year, buying back 607,199 shares which have been cancelled. Currently, no
further share buyback is planned.
Review of Adjusted Results to 31 January 2025
In order to assist shareholders’ understanding of the performance of the
business, the following commentary is focused on the adjusted performance for
the 12 months to 31 January 2025, compared with the 12 months to 31 January
2024. The Directors consider these adjusted measures better reflect the
trading performance of the business as well as aligning with how shareholders
value the business. They also give shareholders more information to allow for
understandable like-for-like year-on-year comparisons and more closely
correlate with the cash and working capital position of the Group.
ADJUSTED RESULTS(1) Year Ended Year Ended
31 January 2025 31 January 2024
£’000 £’000
Net revenue 569,696 577,839
Operating profit 107,446 121,081
Operating profit margin 18.9% 21.0%
Net finance expense (6,001) (3,136)
Profit before income tax 101,445 117,945
Effective tax rate on adjusted profit 27.4% 26.3%
Diluted adjusted earnings per share 69.3p 81.6p
(1)Adjusted results have been presented to provide additional information that
may be useful to shareholders to understand the performance of the business by
facilitating comparability both year on year and with industry peers. Adjusted
results are reconciled to statutory results below and within the appendix.
In FY25 the Group delivered a resilient performance in an uncertain and
unpredictable macro-environment. Our Customer Delivery segment delivered
organic revenue growth largely due to a stellar performance from SMG, our
retail media business, whilst our Engage, Data and Insights and Business
Transformation segments experienced organic revenue declines, mostly due to
softness in the tech sector.
Our total Group net revenues decreased by 1.4% (2024: increased by 2.5%) to
£569.7m, with organic net revenue decline of 4.0% (2024: growth of 0.3%)
reflecting the slowdown in the tech sector and more generally a challenging
macro-environment. Our adjusted operating profit decreased by 11.3% to
£107.4m (2024: £121.1m) at an adjusted operating margin of 18.9% (2024:
21.0%). The brands reacted to this weaker than expected revenue performance by
undertaking significant cost reduction exercises at a one-off cost of £17.0m.
This resulted in a total headcount impact of over 500 roles which equates to
over 10% of our global headcount at an annualised saving of approximately
£45m, of which £16m relates to employees previously engaged within Mach49.
Of the remaining £29m, approximately £9m has been realised in the year.
Net revenue bridge
Net Revenue (£’m) Movement (% of prior year net revenue)
Year to 31 January 2024 577.8
Organic decline (22.9) - 4.0% (FY24: + 0.3%)
Acquisitions 22.0 + 3.8% (FY24: + 3.3%)
Impact of FX (7.2) - 1.2% (FY24: - 1.1%)
Year to 31 January 2025 569.7
(1)The definition of net revenue and explanation of how organic net revenue
growth is calculated is included within the appendix.
Reconciliation between statutory and adjusted profit
For the year to 31 January 2025, the Group delivered net revenue of £569.7m
(2024: £577.8m), adjusted operating profit of £107.4m (2024: £121.1m),
adjusted profit before income tax of £101.4m (2024: £117.9m) and adjusted
diluted earnings per share of 69.3p (2024: 81.6p).
Statutory revenue for the year was £729.8m (2024: £734.7m) which resulted in
an operating profit of £56.6m compared with £77.1m in the previous year.
Diluted earnings per share decreased to 37.9p (2024: 50.3p), principally
reflecting higher net finance charges in the year and lower operating profit
as a result of significant restructuring costs.
Adjusted operating profit decreased by 11.3% to £107.4m (2024: £121.1m) and
statutory profit before tax reduced by 22.2% to £62.5m (2024: £80.3m). When
comparing to the adjusted operating profit, the lower statutory profit before
tax was mostly due to acquisition related accounting, including the
amortisation of acquired intangibles, offset by a reduction in the expected
Mach49 earn-out payment.
At each balance sheet date, we are required to estimate the value of future
earnout payments for all of our acquired businesses. The Mach49 estimate is
the largest and most judgemental of these calculations. As at 31 January 2024,
we estimated the total value payable under the earn-out to be $250m on an
undiscounted basis, but noted at the time this was an area of significant
judgement. When reflecting the historic trading performance, we have reduced
the estimate of the total earn-out to $219m, a reduction of $31m year on year,
with $91m of the earnout remaining to be paid as at 31 January 2025.
Accordingly, in the year this resulted in a £22.6m credit to the profit and
loss, reflecting the reduction in the remaining earn-out liability on a
discounted basis. This change in estimate has been included as a credit to the
profit and loss account within net the movement in fair value of other
financial liabilities.
We also incurred £17.0m of operational restructuring costs as we reacted to
the reduction in demand for our services at a number of our agencies.
Year ended Year ended
31 January 2025 31 January 2024
£’000 £’000
Profit before income tax 62,452 80,348
Acquisition accounting related costs(1) 16,231 24,568
One-off charges employee incentive schemes 175 6,605
Costs associated with operational restructuring 16,966 5,152
Intangibles write off 1,409 -
RCF fees write off - 601
Deal costs 600 671
Goodwill impairment 3,000 -
Property impairment 612 -
Adjusted profit before income tax(2) 101,445 117,945
(1) Acquisition accounting related costs includes unwinding of discount and
change in estimate on deferred and contingent consideration and share purchase
obligation payable, employment linked acquisition payments and amortisation of
acquired intangibles.
(2) A full reconciliation and further detail is set out in the appendix.
Segment adjusted performance
Customer Engage Customer Delivery Customer Insight Business Head Office Total
£’000
£’000
£’000
Transformation
£’000
£’000
£’000
Year ended 31 January 2025
Net revenue 262,001 109,599 55,404 142,692 - 569,696
Adjusted operating profit/(loss) 53,854 23,857 7,009 40,045 (17,319) 107,446
Adjusted operating profit margin(1) 20.6% 21.8% 12.7% 28.1% - 18.9%
Organic net revenue (decline)/growth (2.4)% 2.7% (9.5)% (9.3)% - (4.0)%
Year ended 31 January 2024
Net revenue 263,120 107,653 57,476 149,590 - 577,839
Adjusted operating profit/(loss) 53,178 29,117 10,358 48,253 (19,825) 121,081
Adjusted operating profit margin(1) 20.2% 27.0% 18.0% 32.3% - 21.0%
Organic net revenue (decline)/growth (6.3)% 5.1% 4.3% 8.7% - 0.3%
(1) Adjusted operating profit margin is calculated based on the adjusted
operating profit as a percentage of net revenue.
The Customer Engage segment includes M Booth, M Booth Health, Outcast,
Archetype, Nectar, Brandwidth, MHP and House 337. M Booth, M Booth Health, MHP
and Brandwidth delivered organic growth in the tough macro-environment whilst
our more tech and project-based agencies showed revenue declines for the year.
The segment’s net revenue declined 0.4% to £262.0m, with an organic revenue
decline of 2.4%, and delivered an adjusted operating profit of £53.9m at an
improved adjusted operating margin of 20.6%.
The Customer Delivery segment includes our Activate, The Agent3 Group,
Twogether and SMG agencies. This segment is focused on solving short-term
revenue challenges for its clients usually through digital products, which
makes it easier to determine their return on investment. SMG had a stellar
year winning significant new customers such as ASDA and Deliveroo in the UK
and WHSmith Travel in the US. SMG also extended its contractual relationship
with its largest customer Morrisons for a further four years.
Our B2B tech-focused agencies had a tough year as their clients continued to
delay spend due to the weak macro-environment. The segment delivered net
revenue growth of 1.8% to £109.6m with organic revenue growth of 2.7%. The
adjusted operating profit decreased to £23.9m at a still very healthy
adjusted operating profit margin of 21.8%, principally due to the investment
by SMG in US expansion.
The Customer Insights segment includes Savanta and Plinc. Savanta had a weaker
year than expected and we made a leadership change and a significant
restructuring as a result. Plinc grew its retail client base and continued to
develop a suite of new products for its target market. Total net revenue for
the segment decreased by 3.6% to £55.4m with organic decline of 9.5%, whilst
the adjusted operating profit decreased by 32.3% to £7.0m at a reduced
adjusted operating margin of 12.7%.
This Business Transformation segment includes Mach49, The Blueshirt Group,
Palladium and Transform. In September 2024 we announced the loss of the
significant contract by Mach49, which reduced expected revenue by £7m in the
year and will lead to a reduction in revenue of £75.9m in the year to January
2026. Transform had a weaker year due to the political instability and the
early election in the UK. It secured a major contract win with the Department
of Education, which should result in a much-improved performance in the year
to January 2026. The Blueshirt Group and Palladium suffered revenue and profit
declines due to weakness in the Tech IPO and PE advisory markets. Overall, the
segment delivered a net revenue decline of 4.6% to £142.7m with an organic
revenue decline of 9.3%. The adjusted operating profit declined by 17.0% to
£40.0m at an adjusted operating profit margin of 28.1%.
Regional adjusted performance
UK EMEA US Asia Pacific Head Office Total
£’000 £’000 £’000 £’000 £’000 £’000
Year ended 31 January 2025
Net revenue 258,897 12,330 282,492 15,977 - 569,696
Adjusted operating profit/(loss) 44,526 2,641 75,686 1,912 (17,319) 107,446
Adjusted operating profit margin¹ 17.2% 21.4% 26.8% 12.0% - 18.9%
Organic net revenue (decline)/growth (4.1)% 2.0% (3.9)% (6.6)% - (4.0)%
Year ended 31 January 2024
Net revenue 254,281 12,399 294,054 17,105 - 577,839
Adjusted operating profit/(loss) 45,731 2,345 91,139 1,691 (19,825) 121,081
Adjusted operating profit margin¹ 18.0% 18.9% 31.0% 9.9% - 21.0%
Organic net revenue (decline)/growth (0.4)% 6.1% 0.9% (3.6)% - 0.3%
(1) Adjusted operating profit margin is calculated based on the adjusted
operating profit as a percentage of net revenue.
In the year to 31 January 2025, total US net revenues declined by 3.9% to
£282.5m from £294.1m, which included organic decline of 3.9%. We saw
continued weakness from our B2B tech businesses, whilst our B2C agency M Booth
and its sister agency M Booth Health improved their performances as the year
progressed and confidence returned to their key customers.
Mach49 lost its biggest contract during the year, whilst The Blueshirt Group
had a fall in revenues due to a dearth of Tech IPOs. All businesses reacted to
the tougher trading conditions by managing cost bases tightly. The adjusted
operating profit from our US businesses decreased by 17.0% to £75.7m compared
with £91.1m in the previous 12 months to 31 January 2024, at a still very
healthy operating margin of 26.8% compared with 31.0% in the prior year.
The UK businesses delivered a mixed performance over the last 12 months, with
net revenue increasing by 1.8% to £258.9m from £254.3m in the prior period.
This growth was supported by two bolt-on acquisitions for MHP. Our UK
businesses delivered an organic revenue decline of 4.1%. The adjusted
operating profit decreased to £44.5m from £45.7m in the prior year with the
adjusted operating margin decreasing to 17.2% from 18.0% in the prior year.
The EMEA business continued to perform relatively well with net revenue
reduced marginally to £12.3m (2024: £12.4m) and an adjusted operating profit
of £2.6m, at an adjusted operating margin of 21.4%.
In the APAC region net revenue declined by 6.6% to £16.0m (2024: £17.1m).
The operating profit increased to £1.9m at an operating margin of 12.0%.
Balance Sheet and Net Debt
The Group’s balance sheet remains strong, with a modest net debt position as
at 31 January 2025 of £38.4m (2024: £1.4m) and net assets of £181.2m (2024:
£156.2m).
Contingent consideration also saw a significant decrease to £72.7m as at 31
January 2025. Primarily due to £62.0m settlements during the year and a
£29.7m change in estimate, primarily driven by the revised assumptions for
the latest trading performance and forecast expectations for the Mach49
business. The estimates around the contingent consideration are considered by
management to be an area of significant judgement, which could result in a
material adjustment to the value of these liabilities in the future years.
The net cash inflow from operating activities before changes in working
capital for the year to 31 January 2025 decreased to £103.1m from £115.7m in
the prior period reflecting the reduction in profit. We had a net outflow from
working capital of £7.0m due to the reduction in deferred income and bonus
accruals across the Group. This resulted in our net cash generated from
operations before tax being £96.1m (2024: £105.0m).
Over the year we incurred £68.9m in acquisition-related payments and £7.2m
in capital expenditure.
Cash flow KPIs Year to Year to
31 January 31 January
2025 2024
£m £m
Net cash inflow from operating activities before changes in working capital 103.1 115.7
Working capital movement (7.0) (10.7)
Net cash generated from operations 96.1 105.0
Income tax paid (20.7) (25.4)
Investing activities (12.3) (17.9)
Dividend paid to shareholders (15.5) (14.8)
Net debt (38.4) (1.4)
Treasury and funding
At 31 January 2025, the Group had a £150m revolving credit facility
(“RCF”) with a consortium of HSBC, Bank of Ireland, NatWest Bank, Citibank
and CIC, and as part of the arrangement, the Group had a £50m accordion
option. Post the year-end, the Group strengthened its banking facilities by
agreeing to access an additional £25m of this accordion. The facility is
available until December 2027 with an option to extend for a further year.
The RCF facility is available for permitted acquisitions and working capital
requirements. It is due to be repaid from the trading cash flows of the Group.
The facility is available in a combination of sterling, US dollar and Euro.
The margin payable on each facility is dependent upon the level of gearing in
the business. The Group also has a US facility of $7m (2024: $7m) which is
available for property rental guarantees and US-based working capital needs.
Current trading and outlook
Trading in the new financial year is broadly in line with management
expectations, with the trends of last year continuing into the early months of
FY26, with several new business wins. Despite the current economic and
geopolitical backdrop, performance continues to be resilient across all four
business segments, in particular in our consumer businesses.
In line with our previous communication, the loss of the significant Mach49
contract will have a material adverse impact on our FY26 financial
performance. We also note that Sterling has recently strengthened against the
US dollar. Should this continue, this will lead to further headwinds in the
current financial year. The Group's continued focus on simplification of the
business coupled with product related investment in AI sets the foundation for
long term growth, as well as the strength and quality of our management teams
and client relationships gives us confidence in delivering a solid trading
performance in the year ahead.
NEXT 15 GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEARS ENDED 31 JANUARY 2025 AND 31 JANUARY 2024
Year ended Year ended
31 January 2025 31 January 2024
Restated(1)
Note £’000 £’000
Revenue 729,810 734,673
Direct costs (160,114) (156,834)
Net revenue 2 569,696 577,839
Staff costs 411,854 407,445
Depreciation 12,153 12,263
Amortisation 21,948 24,360
Other operating charges 67,113 56,652
Total operating charges (513,068) (500,720)
Operating profit 56,628 77,119
Movement in fair value of other financial liabilities 9 12,704 7,469
Finance expense 5 (7,569) (5,372)
Finance income 6 689 1,132
Profit before income tax 62,452 80,348
Income tax expense 3 (21,482) (26,403)
Profit for the year 40,970 53,945
Attributable to:
Owners of the parent 39,465 52,907
Non-controlling interests 1,505 1,038
40,970 53,945
Earnings per share
Basic (pence) 7 39.3 53.3
Diluted (pence) 7 37.9 50.3
(1) Comparatives have been restated, as explained in the FY24 restatements
section in note 1.
NEXT 15 GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED 31 JANUARY 2025 AND 31 JANUARY 2024
Year ended Year ended
31 January 2025 31 January 2024
£’000 £’000
Profit for the year 40,970 53,945
Other comprehensive income/(expense):
Items that may be reclassified into profit or loss:
Exchange differences on translating foreign operations 858 (576)
Items that will not be reclassified subsequently to profit or loss
Revaluation of investments 134 (6)
Total other comprehensive income/(expense) for the year 992 (582)
Total comprehensive income for the year 41,962 53,363
Attributable to:
Owners of the parent 40,457 52,325
Non-controlling interests 1,505 1,038
41,962 53,363
NEXT 15 GROUP PLC
ADJUSTED RESULTS: KEY PERFORMANCE INDICATORS
Year ended Year ended
31 January 2025 31 January 2024
£’000 £’000
Net revenue 569,696 577,839
Operating charges (446,707) (441,062)
EBITDA 122,989 136,777
Depreciation and Amortisation (14,664) (14,592)
Operating profit 108,325 122,185
Interest on finance lease liabilities (879) (1,104)
Adjusted operating profit 107,446 121,081
Operating profit margin 18.9% 21.0%
Net finance expense (6,001) (3,136)
Adjusted profit before income tax 101,445 117,945
Tax (27,795) (31,073)
Adjusted profit after tax 73,650 86,872
Non-controlling interest (1,505) (1,038)
Retained profit 72,145 85,834
Weighted average number of ordinary shares 100,379,867 99,247,832
Diluted weighted average number of ordinary shares 104,151,507 105,218,101
Adjusted earnings per share 71.9p 86.5p
Diluted adjusted earnings per share 69.3p 81.6p
Net cash generated from operations before tax 96,135 105,041
Cash outflow on acquisition-related payments (68,987) (70,865)
Net debt (38,365) (1,356)
Dividend (per share) 15.35p 15.35p
Adjusted results have been presented to provide additional information that
may be useful to shareholders to understand the performance of the business by
facilitating comparability both year on year and with industry peers. Adjusted
results are reconciled to statutory results within the appendix.
Per the detail in the appendix (A2), one-off charges for employee incentive
schemes, employment linked acquisition payments, restructuring costs, deal
costs, RCF fees written off, intangible write off, goodwill impairment and
property impairment are adjusted for in calculating the adjusted operating
charges and amortisation of acquired intangibles is adjusted for in
calculating the adjusted depreciation and amortisation. Interest on lease
liabilities and unwinding of discount and change in estimate of future
contingent consideration and share purchase obligation payables are adjusted
for in calculating net finance expense. These measures are not considered to
be adjusted performance measures for the Company.
NEXT 15 GROUP PLC
CONSOLIDATED BALANCE SHEET AS AT 31 JANUARY 2025 AND 2024
31 January 2025 31 January 2024
Note £’000 £’000
Assets Restated(1)
Property, plant and equipment 7,599 10,099
Right-of-use assets 16,150 24,686
Intangible assets 270,504 279,342
Investments in financial assets 861 581
Deferred tax asset 52,749 62,087
Other receivables 544 1,040
Total non-current assets 348,407 377,835
Trade and other receivables 163,008 170,003
Cash and cash equivalents 8 89,433 89,073
Corporation tax asset 4,114 911
Total current assets 256,555 259,987
Total assets 604,962 637,822
Liabilities
Loans and borrowings 8 65,939 44,227
Deferred tax liabilities 15,431 15,939
Lease liabilities 13,962 23,313
Other payables 113 110
Provisions 6,501 19,591
Contingent consideration 9 42,669 84,693
Additional contingent incentive 9 288 1,847
Deferred consideration 9 474 -
Share purchase obligation 9 - 7,277
Total non-current liabilities 145,377 196,997
Overdraft 8 61,859 46,202
Trade and other payables 139,282 151,510
Lease liabilities 9,197 10,115
Provisions 25,933 3,066
Corporation tax liability 4,189 6,843
Contingent consideration 9 30,047 62,059
Additional contingent incentive 9 2,015 2,483
Deferred consideration 9 3,942 -
Share purchase obligation 9 1,929 2,326
Total current liabilities 278,393 284,604
Total liabilities 423,770 481,601
TOTAL NET ASSETS 181,192 156,221
Equity
Share capital 2,523 2,486
Share premium reserve 192,654 175,144
Share purchase reserve (2,643) (2,658)
Foreign currency translation reserve 4,162 3,304
Other reserves 608 608
Retained loss (15,633) (22,904)
Total equity attributable to owners of the parent 181,671 155,980
Non-controlling interests (479) 241
TOTAL EQUITY 181,192 156,221
(1) Comparatives have been restated, as explained in the FY24 restatements
section in note 1.
NEXT 15 GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31 JANUARY 2025 AND 31 JANUARY 2024
Share premium reserve Share purchase reserve Foreign currency translation reserve Other reserves(1) Retained loss Equity attributable to owners of the Company Non-controlling interests Total equity
Share capital
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 31 January 2023 2,462 166,174 (2,673) 3,880 608 (56,503) 113,948 452 114,400
Profit for the year - - - - - 52,907 52,907 1,038 53,945
Other comprehensive expense for the year - - - (576) - (6) (582) - (582)
Total comprehensive (expense)/income for the year - - - (576) - 52,901 52,325 1,038 53,363
Shares issued on satisfaction of vested performance shares 22 4,024 - - - (6,643) (2,597) - (2,597)
Shares issued on acquisitions 17 4,946 - - - - 4,963 - 4,963
Acquisition of own shares (15) - 15 - - (4,475) (4,475) - (4,475)
Movement in relation to share-based payments - - - - - 11,476 11,476 - 11,476
Tax on share-based payments - - - - - (984) (984) - (984)
Dividends to owners of the Parent - - - - - (14,762) (14,762) - (14,762)
Movement due to ESOP share purchases - - - - (7) - (7) - (7)
Movement due to ESOP share option exercises - - - - 7 - 7 - 7
Movement on reserves for non-controlling interests - - - - - (216) (216) 216 -
Non-controlling interest purchased in the period - - - - - (3,698) (3,698) (204) (3,902)
Non-controlling interest reversed in the period - - - - - - - 29 29
Non-controlling dividend - - - - - - - (1,290) (1,290)
At 31 January 2024 2,486 175,144 (2,658) 3,304 608 (22,904) 155,980 241 156,221
Profit for the year - - - - - 39,465 39,465 1,505 40,970
Other comprehensive income for the year - - - 858 - 134 992 - 992
Total comprehensive income for the year - - - 858 - 39,599 40,457 1,505 41,962
Shares issued on satisfaction of vested performance shares 26 7,215 - - - (9,878) (2,637) - (2,637)
Shares issued on acquisitions 26 10,295 - - - - 10,321 - 10,321
Acquisition of own shares (15) - 15 - - (5,344) (5,344) - (5,344)
Movement in relation to share-based payments - - - - - 759 759 - 759
Tax on share-based payments - - - - - (3,712) (3,712) - (3,712)
Dividends to owners of the Parent - - - - - (15,457) (15,457) - (15,457)
Movement due to ESOP share purchases - - - - (5) - (5) - (5)
Movement due to ESOP share option exercises - - - - 5 - 5 - 5
Movement on reserves for non-controlling interests - - - - - (93) (93) 93 -
Non-controlling interest reversed in the period - - - - - 1,397 1,397 (1,397) -
Non-controlling dividend - - - - - - - (921) (921)
At 31 January 2025 2,523 192,654 (2,643) 4,162 608 (15,633) 181,671 (479) 181,192
(1 )Other reserves include ESOP reserve, the treasury reserve, the merger
reserve and the hedging reserve.
NEXT 15 GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE YEARS ENDED 31 JANUARY 2025 AND 31 JANUARY 2024
Year ended Year ended
31 January 2025 31 January 2024
£’000 £’000
Cash flows from operating activities
Profit for the year 40,970 53,945
Adjustments for:
Depreciation 12,153 12,263
Amortisation 21,948 24,360
Movement in fair value of other financial liabilities (12,704) (7,469)
Finance expense 7,569 5,372
Finance income (689) (1,132)
Impairment of intangibles 4,409 -
Loss on sale of property, plant and equipment 409 125
Loss/(gain) on exit of finance lease 628 (1,313)
Income tax expense 21,482 26,403
Employment linked acquisition provision charge 9,498 10,006
Settlement of employment linked acquisition payments (1,655) (15,713)
Share-based payment charges 759 11,476
Settlement of share-based payment in cash (1,683) (2,597)
Net cash inflow from operating activities before changes in working capital 103,094 115,726
Change in trade and other receivables 10,060 837
Change in trade and other payables (16,555) (12,343)
Change in other liabilities (464) 821
(6,959) (10,685)
Net cash generated from operations before tax outflows 96,135 105,041
Income taxes paid (20,668) (25,408)
Net cash inflow from operating activities 75,467 79,633
Cash flows from investing activities
Acquisition of subsidiaries and trade and assets, net of cash acquired (6,884) (13,006)
Acquisition of investments in financial assets (479) -
Acquisition of property, plant and equipment (2,197) (3,711)
Proceeds on disposal of investments in financial assets 335 -
Proceeds on disposal of property, plant and equipment 29 8
Acquisition of intangible assets (5,021) (3,436)
Movement in long-term cash deposits 304 (179)
Income from finance lease receivables 1,019 1,388
Interest received 602 1,051
Net cash outflow from investing activities (12,292) (17,885)
NEXT 15 GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOW (Continued)
FOR THE YEARS ENDED 31 JANUARY 2025 AND 31 JANUARY 2024
Year ended Year ended
31 January 2025 31 January 2024
£’000 £’000
Cash flows from financing activities
Payment of contingent consideration (59,969) (42,146)
Purchase of non-controlling interest in subsidiary - (5,059)
Proceeds on sale of non-controlling interest in subsidiary - 29
Acquisition of own shares (5,344) (4,475)
Capital element of finance lease rental repayment (11,260) (14,175)
Increase in bank borrowings and overdrafts 184,025 195,564
Repayment of bank borrowings and overdrafts (162,834) (171,891)
Banking arrangement fees - (1,905)
Interest paid (6,690) (4,268)
Dividend and profit share paid to non-controlling interest partners (921) (1,290)
Dividends paid to shareholders of the parent (15,457) (14,762)
Net cash outflow from financing activities (78,450) (64,378)
Net decrease in cash and cash equivalents (15,275) (2,630)
Cash and cash equivalents at beginning of the year 42,871 47,320
Exchange loss on cash held (22) (1,819)
Cash and cash equivalents at end of the year 27,574 42,871
NOTES TO THE YEAR END RESULTS
FOR THE YEARS ENDED 31 JANUARY 2025 AND 31 JANUARY 2024
1) BASIS OF PREPARATION
The financial information in these results has been prepared using the
recognition and measurement principles of International Accounting Standards,
International Financial Reporting Standards and Interpretations adopted for
use in the United Kingdom (collectively Adopted IFRSs). The principal
accounting policies used in preparing the results are those the Group has
applied in its financial statements for the year ended 31 January 2025.
The financial information set out above does not constitute the Group’s
statutory accounts for the years ended 31 January 2025 or 2024, but is derived
from those accounts. Statutory accounts for 2024 have been delivered to the
Registrar of Companies and those for 2025 will be delivered following the
company's annual general meeting. The auditors have reported on those
accounts: their reports were unqualified, did not draw attention to any
matters by way of emphasis and did not contain statements under s498(2) or (3)
of the Companies Act 2006.
FY24 Restatements
Within the period, it was determined that the Group's cash and overdrafts
within notional cash pooling arrangements, did not meet the requirements for
offsetting in accordance with IAS 32 'Financial Instruments: Presentation' and
shouldn’t be presented net in the consolidated balance sheet. For
presentational purposes, amounts have therefore been restated. The impact of
this change is to increase both cash and cash equivalents and bank overdraft
by £61.9m (2024: £46.2m) in the Group's consolidated balance sheet. This has
had no impact on net assets as seen on the face of the consolidated balance
sheet.
Within the consolidated income statement, the fair value movement of other
financial liabilities has been presented separately to provide greater
clarity, and accordingly the corresponding 2024 comparative amounts have been
re-presented for consistency and comparability between periods. The 2024
comparative amount includes £26.0m that was previously included within
finance expense, and £33.5m that was previously included within finance
income. There is no impact on net profit, net assets or subtotals presented
previously.
Going concern statement
The Directors have, at the time of approving this financial information, a
reasonable expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future. Accordingly,
they continue to adopt the going concern basis in preparing this financial
information. The Directors have made this assessment in light of reviewing the
Group’s budget and cash requirements for a period in excess of one year from
the date of signing of the annual report and considered outline plans for the
Group thereafter.
2) SEGMENT INFORMATION
Measurement of operating segment profit
The Board of Directors assesses the performance of the operating segments
based on a measure of adjusted operating profit before intercompany recharges
and net revenue, which reflects the internal reporting measure used by the
Board of Directors. This measurement basis excludes the effects of certain
acquisition-related costs and goodwill impairment charges. Head office costs
relate to Group costs before allocation of intercompany charges to the
operating segments. Intersegment transactions have not been separately
disclosed as they are not material. The Board of Directors does not review the
assets and liabilities of the Group on a segmental basis and therefore this is
not separately disclosed.
NOTES TO THE YEAR END RESULTS (Continued)
FOR THE YEARS ENDED 31 JANUARY 2025 AND 31 JANUARY 2024
2) SEGMENT INFORMATION (continued)
Customer Engage Customer Delivery Customer Insight Business Transformation £’000 Head Office Total
£’000
£’000
£’000
£’000
£’000
Year ended 31 January 2025
Net revenue 262,001 109,599 55,404 142,692 - 569,696
Adjusted operating profit/(loss) 53,854 23,857 7,009 40,045 (17,319) 107,446
Adjusted operating profit margin(1) 20.6% 21.8% 12.7% 28.1% - 18.9%
Organic net revenue (decline)/growth (2.4)% 2.7% (9.5)% (9.3)% - (4.0)%
Year ended 31 January 2024
Net revenue 263,120 107,653 57,476 149,590 - 577,839
Adjusted operating profit/(loss) 53,178 29,117 10,358 48,253 (19,825) 121,081
Adjusted operating profit margin(1) 20.2% 27.0% 18.0% 32.3% - 21.0%
Organic net revenue (decline)/growth (6.3%) 5.1% 4.3% 8.7% - 0.3%
(1) Adjusted operating profit margin is calculated based on the adjusted
operating profit as a percentage of net revenue.
UK EMEA US Asia Pacific Head Office Total
£’000 £’000 £’000 £’000 £’000 £’000
Year ended 31 January 2025
Net revenue 258,897 12,330 282,492 15,977 - 569,696
Adjusted operating profit/(loss) 44,526 2,641 75,686 1,912 (17,319) 107,446
Adjusted operating profit margin¹ 17.2% 21.4% 26.8% 12.0% - 18.9%
Organic net revenue (decline)/growth (4.1)% 2.0% (3.9)% (6.6)% - (4.0)%
Year ended 31 January 2024
Net revenue 254,281 12,399 294,054 17,105 - 577,839
Adjusted operating profit/(loss) 45,731 2,345 91,139 1,691 (19,825) 121,081
Adjusted operating profit margin¹ 18.0% 18.9% 31.0% 9.9% - 21.0%
Organic net revenue (decline)/growth (0.4%) 6.1% 0.9% (3.6%) - 0.3%
(1) Adjusted operating profit margin is calculated based on the adjusted
operating profit as a percentage of net revenue.
3) TAXATION
The tax charge on adjusted profit for the year ended 31 January 2025 is
£27,795,000 (2024: £31,073,000), equating to an adjusted effective tax rate
of 27.4%, compared to 26.3% in the prior year. The Group’s adjusted
effective tax rate was higher than the rate achieved in the prior year largely
due to the increase in the UK statutory rate to 25% from the blended rate of
24.03% in the prior year following the increase from 19% to 25% on 1 April
2023.
The statutory tax expense for the year ended 31 January 2025 is £21,482,000
(2024: £26,403,000).
4) DIVIDENDS
A final dividend of 10.6p per ordinary share will be paid on 8 August 2025 to
shareholders listed on the register of members on 4 July 2025. Shares will go
ex-dividend on 3 July 2025. This makes the total dividend for the year 15.35p
per share (2024: 15.35p).
NOTES TO THE YEAR END RESULTS (Continued)
FOR THE YEARS ENDED 31 JANUARY 2025 AND 31 JANUARY 2024
5) FINANCE EXPENSE
Year ended Year ended
31 January 2025 31 January 2024
£’000 £’000
Financial liabilities at amortised cost
Bank interest payable 6,495 4,242
Interest on lease liabilities(1) 879 1,104
Other
Other interest payable 195 26
Finance expense 7,569 5,372
(1)These items are adjusted for in calculating the adjusted net finance
expense.
6) FINANCE INCOME
Year ended Year ended
31 January 2025 31 January 2024
£’000 £’000
Financial assets at amortised cost
Bank interest receivable 585 1,039
Finance lease interest receivable 87 81
Other
Other interest receivable 17 12
Finance income 689 1,132
7) EARNINGS PER SHARE
Year ended Year ended
31 January 2025 31 January 2024
£’000 £’000
Profit attributable to ordinary shareholders 39,465 52,907
Number Number
Weighted average number of ordinary shares 100,379,867 99,247,832
Dilutive LTIP and options shares 1,036,086 1,848,787
Dilutive growth deal shares 2,198,485 3,345,900
Other potentially issuable shares 537,069 775,582
Diluted weighted average number of ordinary shares 104,151,507 105,218,101
Basic earnings per share 39.3p 53.3p
Diluted earnings per share 37.9p 50.3p
NOTES TO THE YEAR END RESULTS (Continued)
FOR THE YEARS ENDED 31 JANUARY 2025 AND 31 JANUARY 2024
8) NET DEBT
At 31 January 2025, the Group had a £150m revolving credit facility
(“RCF”) with a consortium of HSBC, Bank of Ireland, NatWest Bank, Citibank
and CIC, and as part of the arrangement, the Group had a £50m accordion
option. Post the year-end, the Group strengthened its banking facilities by
agreeing to access an additional £25m of this accordion. The facility is
available until December 2027 with an option to extend for a further year.
The RCF facility is available for permitted acquisitions and working capital
requirements. It is due to be repaid from the trading cash flows of the Group.
The facility is available in a combination of sterling, US dollar and Euro.
The margin payable on each facility is dependent upon the level of gearing in
the business. The Group also has a US facility of $7m (2024: $7m) which is
available for property rental guarantees and US-based working capital needs.
31 January 2025 31 January 2024
£’000 £’000
Total loans, borrowings and overdraft 127,798 90,429
Less: cash and cash equivalents (89,433) (89,073)
Net debt 38,365 1,356
Share purchase obligation 1,929 9,603
Deferred consideration 4,416 -
Contingent consideration 72,716 146,752
Additional contingent incentive 2,303 4,330
Net debt and acquisition related liabilities 119,729 162,041
9) OTHER FINANCIAL LIABILITIES
Deferred Contingent consideration Additional contingent incentive Share purchase obligation
consideration
£’000 £’000 £’000 £’000
At 31 January 2023 - 189,406 6,309 8,984
Arising during the year - 12,077 - -
Exchange differences - (6,160) (238) (78)
Utilised - (39,075) (3,071) -
Unwinding of discount - 23,049 572 1,250
Change in estimate - (32,545) 758 (553)
At 31 January 2024 - 146,752 4,330 9,603
Exchange differences - 1,296 115 46
Utilised - (62,014) (2,454) (3,606)
Reclassification 4,279 1,453 - (5,732)
Unwinding of discount 137 14,920 350 1,044
Change in estimate - (29,691) (38) 574
At 31 January 2025 4,416 72,716 2,303 1,929
Current 3,942 30,047 2,015 1,929
Non-current 474 42,669 288 -
NOTES TO THE YEAR END RESULTS (Continued)
FOR THE YEARS ENDED 31 JANUARY 2025 AND 31 JANUARY 2024
9) OTHER FINANCIAL LIABILITIES (continued)
The estimates around contingent consideration and share purchase obligations
are considered by management to be an area of significant judgement, with any
changes in assumptions and forecasts creating volatility in the income
statement. Management estimates the fair value of these liabilities taking
into account expectations of future payments. During the year, earnout
liabilities decreased by a net £79.3m, primarily driven by settlements during
the year and a change in estimate of £22.6m relating to the Mach49 business.
This change in estimate was driven by the revised assumptions for the latest
trading performance for the Mach49 business. At the previous year end, the
Group estimated the total earn-out to be US$250m which has now been reduced
down to US$219m at 31 January 2025 on an undiscounted basis.
Changes in the estimates of contingent consideration payable are recognised in
the movement in fair value of other financial liabilities. If the judgements
around future revenue growth, profit margins and discount rates change, this
could result in a material adjustment to the value of these liabilities within
the next financial year. Estimations are also included for other uncertainties
deriving from the purchase agreements, which are subject to final negotiations
which ultimately determine the future payments. An increase in the liability
would result in an increase in net finance income/expense, while a decrease
would result in a further gain. Management has determined that a reasonable
possible range of discounted outcomes within the next financial year is £56m
to £84m.
Litigation
In 2022, a former minority shareholder and employee of the Group’s largest
US business filed a legal claim against the founding shareholders of the
subsidiary and the Group amongst others, relating to their historic
entitlement to a share in the business. On 9 September 2024, all parties filed
with the court a “Notice of Settlement of Entire Case,” which indicates
that the parties expect all remaining claims to be dismissed in their
entirety.
The Group does not expect any outflow from any company in the Group in
relation to the claim. The Group has incurred legal fees in relation to this
claim and has recognised a corresponding asset representing the amount
recoverable under the indemnity given at the time of the acquisition.
APPENDIX – ALTERNATIVE PERFORMANCE MEASURES
FOR THE YEARS ENDED 31 JANUARY 2025 AND 31 JANUARY 2024
Introduction
In the reporting of financial information, the Directors have adopted various
alternative performance measures (‘APMs’). The Group includes these
non-GAAP measures as they consider these measures to be both useful and
necessary to the readers of the financial statements to help understand the
performance of the Group. The Group’s measures may not be calculated in the
same way as similarly titled measures reported by other companies and
therefore should be considered in addition to IFRS measures.
Purpose
The Director’s believe that these APMs are highly relevant as they reflect
how the Board measures the performance of the business and align with how
shareholders value the business. They also allow understandable like-for-like,
year-on-year comparisons and more closely correlate with the cash inflows from
operations and working capital position of the Group.
They are used by the Group for internal performance analyses and the
presentation of these measures facilitates better comparability with other
industry peers as they adjust for non-recurring or uncontrollable factors
which materially affect IFRS measures.
A1: RECONCILIATION OF STATUTORY OPERATING PROFIT TO ADJUSTED OPERATING PROFIT
A reconciliation of segment adjusted operating profit to segment adjusted
operating profit and statutory operating profit is provided as follows:
Year ended Year ended
31 January 2025 31 January 2024
£’000 £’000
Statutory operating profit 56,628 77,119
Interest on finance lease liabilities (879) (1,104)
Statutory operating profit after interest on finance lease liabilities 55,749 76,015
Amortisation of acquired intangibles (A2) 19,437 22,031
One-off charges for employee incentive schemes (A2) 175 6,605
Employment linked acquisition payments (A2) 9,498 10,006
Property impairment (A2) 612 -
Goodwill impairment (A2) 3,000 -
Costs associated with restructuring (A2) 16,966 5,152
RCF fees write off (A2) - 601
Intangibles write off (A2) 1,409 -
Deal costs (A2) 600 671
Adjusted operating profit 107,446 121,081
Adjusted operating profit margin 18.9% 21.0%
Adjusted operating profit margin is calculated based on the adjusted operating
profit as a percentage of net revenue.
APPENDIX – ALTERNATIVE PERFORMANCE MEASURES (Continued)
FOR THE YEARS ENDED 31 JANUARY 2025 AND 31 JANUARY 2024
A2: RECONCILIATION OF STATUTORY PROFIT BEFORE TAX TO ADJUSTED PROFIT BEFORE
TAX
Year ended Year ended
31 January 2025 31 January 2024
£’000 £’000
Statutory profit before income tax 62,452 80,348
Unwinding of discount on deferred and contingent consideration and share 16,451 24,871
purchase obligation payable(1)
Change in estimate of future contingent consideration and share purchase (29,155) (32,340)
obligation payable(1)
One-off charges for employee incentive schemes(2) 175 6,605
Employment linked acquisition payments(3) 9,498 10,006
Costs associated with restructuring(4) 16,966 5,152
Deal costs(5) 600 671
Property impairment( 6) 612 -
RCF fees write off(7) - 601
Intangibles write off(8) 1,409 -
Goodwill impairment(9) 3,000 -
Amortisation of acquired intangibles(10) 19,437 22,031
Adjusted profit before income tax 101,445 117,945
(1)The Group adjusts for the remeasurement of the acquisition-related
liabilities within the adjusted performance measures in order to aid
comparability of the Group’s results year on year as the charge/credit from
remeasurement can vary significantly depending on the underlying brand’s
performance. It is non-cash and its directional impact to the income statement
is opposite to the brand’s performance driving the valuations. The unwinding
of discount on these liabilities is also excluded from underlying performance
on the basis that it is non-cash and the balance is driven by the Group’s
assessment of the time value of money and this exclusion ensures
comparability.
(2 )This charge relates to transactions whereby a restricted grant of brand
equity was given to key management in MHP Group Limited (2024: House 337
Limited, MHP Group Limited, Transform UK Consulting Limited, M Booth &
Associates LLC, Brandwidth Marketing Limited and Plinc Limited ) at nil cost
which holds value in the form of access to future profit distributions as well
as any future sale value under the performance-related mechanism set out in
the share sale agreement. This value is recognised as a one-off charge in the
income statement in the year of grant as the agreements do not include service
requirements, thus the cost accounting is not aligned with the timing of the
anticipated benefit of the incentive, namely the growth of the relevant
brands.
(3)This charge relates to payments linked to the continuing employment of the
sellers which is being recognised as an expense over the period of employment
as required by accounting standards. Although these costs are not exceptional
or non-recurring, the Group determined they should be excluded from the
underlying performance as the costs relate to acquiring the business. The
sellers of the business are typically paid market salaries and bonuses in
addition to these acquisition-related payments and therefore the Group
determines these costs solely relate to acquiring the business. Adjusting for
these within the Group’s adjusted performance measures gives a better
reflection of the Group’s profitability and enhances comparability
year-on-year.
(4)In the current year the Group has incurred restructuring costs, of which
£16.1m related to staff redundancies as we proactively reduced our cost base
to take account of the weakness in demand from tech clients and anticipated
efficiencies. Only costs that relate to roles permanently being eliminated
from the business with no intention to replace are adjusted for. The remaining
£0.9m costs relate to the reorganization and integration of a number of
businesses across the Group. In both years, the costs do not relate to
underlying trading of the relevant brands and have been added back to aid
comparability of performance year on year.
(5)These costs are directly attributable to business combinations and
acquisitions made during the year, as well as aborted acquisitions and other
mergers. The charges are excluded from performance as they would not have been
incurred had the business not explored these business combinations and a
higher or lower spend has no relation on the organic business. They do not
relate to the trading of the Group and are added back each year to aid
comparability of the Group’s profitability year on year.
APPENDIX – ALTERNATIVE PERFORMANCE MEASURES (Continued)
FOR THE YEARS ENDED 31 JANUARY 2025 AND 31 JANUARY 2024
A2: RECONCILIATION OF STATUTORY PROFIT BEFORE TAX TO ADJUSTED PROFIT BEFORE
TAX(Continued)
(6)In the current year the Group recognised charges relating to the
reorganization of the property space across the Group. The majority of the
charge is impairment of right-of-use assets which were linked to office spaces
associated with the significant contract that was lost during the year. The
Group adjusted for this cost, as the additional one-off impairment charge did
not relate to the underlying trading of the business and therefore added back
to aid comparability.
(7)In the prior year the Group refinanced its banking facilities and agreed to
a new £150m revolving credit facility (“RCF”) with a consortium of five
banks. The refinance occurred before the old facility agreement ended and
therefore there was £0.6m of capitalised fees remaining on the balance sheet
in relation to the previous facility agreement that had yet to be amortised.
As a result of the new agreement, the old RCF fees were written off as a
one-off charge to the income statement. The Group adjusted for this
significant cost as the charge is non-recurring and therefore added back to
aid comparability of the Group’s profitability year on year.
(8)In the current year the Group took an impairment charge of £1.4m for
writing off internally generated intangible assets which were identified as no
longer being offered to clients as a result of a strategic restructure at one
of the Group’s Customer Insights businesses. Therefore, the associated
products were deemed to no longer generate any future economic benefit and as
a result, the corresponding £1.4m remaining on the balance sheet was written
off. The Group adjusted for this cost, as the charge was one-off not relating
to the underlying trading of the business and therefore added back to aid
comparability Group’s profitability year on year.
(9)In the current year the Group took an impairment charge of £3.0m against
the carrying value of goodwill relating to House 337. Following a full review,
it was identified that the value in use on the associated cash generating unit
was less that the carrying value of goodwill, resulting in negative headroom.
Therefore, an impairment charge has been recognised. The Group adjusted for
this cost, as the charge was one-off not relating to the underlying trading of
the business and therefore added back to aid comparability Group’s
profitability year on year.
(10)In line with its peer group, the Group adds back amortisation of acquired
intangibles. Judgement is applied in the allocation of the purchase price
between intangibles and goodwill, and in determining the useful economic lives
of the acquired intangibles. The judgements made by the Group are inevitably
different to those made by our peers and as such amortisation of acquired
intangibles been added back to aid comparability.
Adjusted profit before income tax has been presented to provide additional
information which may be useful to the reader. Adjusted earnings to ordinary
shareholders is a measure of performance used in the calculation of the
adjusted earnings per share. This measure is considered an important indicator
of the performance of the business and so it is used for the vesting of
employee performance shares.
A3: RECONCILIATION OF ADJUSTED TAX EXPENSE
Year ended Year ended
31 January 2025 31 January 2024
£’000 £’000
Income tax expense reported in the Consolidated Income Statement 21,482 26,403
Add back tax on adjusting items:
Costs associated with the current period restructure and office moves 4,412 1,248
Unwinding of discount on and change in estimates of contingent and deferred (2,379) (2,220)
consideration
Share-based payment charge - 273
Employment-related acquisition payments (15) -
Intangible write off 352 -
Amortisation of acquired intangibles 3,943 5,369
Adjusted tax expense 27,795 31,073
Adjusted profit before income tax 101,445 117,945
Adjusted effective tax rate 27.4% 26.3%
APPENDIX – ALTERNATIVE PERFORMANCE MEASURES (Continued)
FOR THE YEARS ENDED 31 JANUARY 2025 AND 31 JANUARY 2024
A4: RECONCILIATION OF ADJUSTED EARNINGS PER SHARE
Year ended Year ended
31 January 2025 31 January 2024
£’000 £’000
Profit attributable to ordinary shareholders 39,465 52,907
Unwinding of discount on future deferred and contingent consideration and 16,451 24,871
share purchase obligation payable
Change in estimate of future contingent consideration and share purchase (29,155) (32,340)
obligation payable
One-off charges for employee incentive schemes 175 6,605
Costs associated with restructuring 16,966 5,152
Property impairment 612 -
RCF fees write off - 601
Amortisation of acquired intangibles 19,437 22,031
Intangible write off 1,409 -
Goodwill impairment 3,000 -
Employment linked acquisition payments 9,498 10,006
Deal costs 600 671
Tax effect of adjusting items above (6,313) (4,670)
Adjusted earnings attributable to ordinary shareholders 72,145 85,834
Number Number
Weighted average number of ordinary shares 100,379,867 99,247,832
Dilutive LTIP shares 1,036,086 1,848,787
Dilutive growth deal shares 2,198,485 3,345,900
Other potentially issuable shares 537,069 775,582
Diluted weighted average number of ordinary shares 104,151,507 105,218,101
Adjusted earnings per share 71.9p 86.5p
Diluted adjusted earnings per share 69.3p 81.6p
Adjusted and diluted adjusted earnings per share have been presented to
provide additional information which may be useful to shareholders to
understand the performance of the business by facilitating comparability both
year on year and with industry peers. The adjusted earnings per share is the
performance measure used for the vesting of employee performance shares.
A5: RECONCILIATION OF NET REVENUE
Year ended Year ended
31 January 2025 31 January 2024
£’000 £’000
Revenue 729,810 734,673
Direct costs (160,114) (156,834)
Net revenue 569,696 577,839
Organic net revenue growth is defined as the net revenue growth at constant
currency excluding the impact of acquisitions and disposals in the last 12
months. For acquisitions made in the prior year, only the corresponding months
of ownership are included in the calculation of growth.
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