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LONDON--(BUSINESS WIRE)-- 29 September 2020 Next Fifteen Communications Group plc Interim results for the six months ended 31 July 2020 Next Fifteen Communications Group plc (Next 15 or the Group), the digital communications group, today announces its interim results for the six months ended 31 July 2020. Financial results for the six months to 31 July 2020 (unaudited) Six months ended 31 July 2020 m Six months ended 31 July 2019 m Growth in results Adjusted results Net revenue 126.2 118.7 6% Operating profit after interest on financial lease liabilities 21.2 17.5 21% Operating profit margin 16.8% 14.7% Profit before tax 20.7 17.2 20% Diluted EPS (p) 17.4p 15.2p 14% Statutory results Revenue 153.1 145.2 Operating (loss)/profit (0.4) 7.6 (Loss)/profit before tax (3.4) 2.8 Net cash inflow from operating activities 31.5 19.3 Diluted EPS (p) (3.6)p 1.8p Adjusted results have been presented to provide additional information that may be useful to shareholders through facilitating comparability with industry peers. Adjusted results are reconciled to statutory results within notes 2 and 3. H1 Highlights Current trading and outlook Commenting on the results, Chairman of Next 15, Richard Eyre said: Robust actions have been taken to secure current performance as well as build for the long-term. Safeguarding our people and maintaining our service quality have been the Boards priority, but we also tasked ourselves to emerge from the crisis better than we entered it. This has resulted in new software products for our customers, increased usage of data driven products and a reduction of the groups property portfolio as the Group shifts to a new working model. The groups strategic direction toward marketing technology is seeing success and our newest target, to build a substantial innovation-consulting division has been kick-started by the acquisition of Mach49. Taking all of the above into account, we are confident of modestly exceeding market expectations for the year. N15 will host an analyst and investor webcast at 13.00 today, Tuesday 29 September 2020. The registration link can be found here: https://numiscorp.zoom.us/meeting/register/tJUkcOugqjIjGNOoi0DBJx85EMhZDYcN6JHy For further information contact: Next Fifteen Communications Group plc Tim Dyson, Chief Executive Officer +1 415 350 2801 Peter Harris, Chief Financial Officer +44 (0) 20 7908 6444 Numis Mark Lander, Hugo Rubinstein, Nick Westlake +44 (0)20 7260 1000 Berenberg Ben Wright, Mark Whitmore, Arnav Kapoor +44 (0)20 3207 7800 Notes: Net revenue Net revenue is calculated as revenue less direct costs as shown on the Consolidated Income Statement. Organic revenue growth Organic revenue growth is defined as the net revenue growth at constant currency excluding the impact of acquisitions and disposals in the last 12 months. Adjusted operating profit margin Adjusted operating profit margin is calculated based on the adjusted operating profit after interest on finance lease liabilities as a percentage of net revenue. This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation. Chairman and Chief Executives Statement Next 15, the digital communications group, is pleased to report its interim results for the six months ended 31 July 2020. During the period the Groups net revenues increased by 6% to 126.2m (2019: 118.7m), despite the challenging macro-economic backdrop, while adjusted profit before tax increased by 20% to 20.7m (2019: 17.2m). The positive revenue performance aided by tight control of our cost base resulted in the Groups adjusted operating margin increasing to 16.8% from 14.7% in the prior period. Diluted adjusted EPS increased by 14% to 17.4p and the strong management of our working capital resulted in our net debt remaining very modest at 5.0m. Against a sector backdrop of double-digit declines in revenues, the Group saw a more modest organic net revenue decline of 6.6% for the six months. We believe this resilient performance to the Covid-19 related disruption of economic activity is attributable to the high share (approximately 55%) of the Groups revenue generated from Tech businesses. Our B2B agencies such as Agent3 and Activate particularly benefitted from clients focus on short-term revenue generation at the expense of long-term brand building and the fall-off in the live events industry. Our B2C agencies suffered from immediate Covid-related client deferrals but we are seeing encouraging signs of a recovery of revenue in this area. During the pandemic, the Group has reviewed its property portfolio in the wake of the significant movement to a more flexible working environment. We have determined that approximately a third of our real estate in London, New York and San Francisco, approximately 100,000 sq ft, is now surplus to requirements and we are actively marketing the space. Accordingly, we have taken an impairment of 10.9m as at 31 July 2020 against the carrying value of our right-of-use property assets. This will, in time, yield significant on-going improvements to profitability, estimated to be 2.8m annually, and 1.5m for FY21. Primarily as a result of this charge, the Group reported a statutory operating loss of 0.4m compared with 7.6m profit in the prior period, while reported diluted earnings per share were (3.6)p compared with 1.8p in the prior period. The Group has continued to grow its portfolio of businesses. In July, the Group acquired CRE, a web optimisation agency and in August Mach49, the Silicon Valley-based growth incubator for global businesses which becomes a cornerstone of our previously announced plan to create a $100m revenue innovation business. Mach49 which has annual revenues of approximately $13m, currently has offices in Silicon Valley, Boston, London and Singapore serving Global 1000 clients such as Schneider Electric, Pernod Ricard, TDK, Stanley Black and Decker and many others. CRE has annual net revenues of approximately 3.6m and current and previous clients include Facebook, Google and Jamf. The Board is aware of the importance of payment of dividends for shareholders and expects to resume payments with a dividend for the year ended January 2021, paid following the AGM in early summer 2021. Segment adjusted performance Brand Marketing 000 Data and Analytics 000 Creative Technology 000 Head Office 000 Total 000 6 months ended 31 July 2020 Net revenue 69,297 23,897 32,964 - 126,158 Adjusted operating profit after interest on finance lease liabilities 15,863 5,965 4,158 (4,814) 21,172 Adjusted operating profit margin 22.9% 25.0% 12.6% - 16.8% Organic revenue growth (7.9%) 3.6% (9.5%) - (6.6%) 6 months ended 31 July 2019 Net revenue 63,873 20,869 33,981 - 118,723 Adjusted operating profit after interest on finance lease liabilities 13,080 5,734 3,278 (4,592) 17,500 Adjusted operating profit margin 20.5% 27.5% 9.6% - 14.7% Our Brand Marketing segment produced a resilient performance with a strong increase in absolute profitability and adjusted operating profit margin, as we reacted quickly to the onset of the pandemic by aligning our cost base to our reduced organic revenue expectations. Our M Booth and M Booth Health agencies saw an initial impact to their revenues, but trading has recovered over the last couple of months as consumer confidence has returned. Outcast, Archetype and Publiteks revenues proved to be more resilient and their swift action on costs resulted in a strong profit and margin performance. We acquired M Booth Health and Nectar in the prior period, which helped the segments overall net revenue increase by 8.5% to 69.3m, with an organic revenue decline of 7.9%. The increase in the adjusted operating margin to 22.9% resulted in the adjusted operating profit increasing by 21.3% to 15.9m. Our Data and Analytics segment has had a mixed performance with an exceptionally strong performance from our lead generation agency Activate, and whilst Savanta and Planning did experience short-term client revenue deferrals on the back of Covid-19 disruption, both agencies are now benefitting from a recovery in confidence from their clients. Overall, the segments net revenue increased by 14.5% to 23.9m, with organic revenue growth of 3.6% and an adjusted operating margin declined to 25%, producing an increase in the adjusted operating profit to 6.0m. Our Creative Technology segment has seen strong performances from our B2B agencies such as Twogether, Velocity and Agent3. Beyond returned to profitability in the period following the actions taken by management, whilst our B2C agencies suffered from reductions in client revenue in large part due to Covid disruption. Overall, the segments net revenue declined by 3.0% to 33.0m, with an organic decline of 9.5%. The adjusted operating margin increased to 12.6% due to swift action on costs and the adjusted operating profit increased to 4.2m. Reconciliation of Adjusted Financial Measures Six months ended 31 July 2020 (Unaudited) Six months ended 31 July 2019 (Unaudited) 000 000 (Loss)/profit before income tax (3,402) 2,848 Unwinding of discount on deferred and contingent consideration and share purchase obligation payable 2,182 1,669 Change in estimate of future contingent consideration and share purchase obligation payable (366) 2,041 Share-based payment charge 189 - Employment-related acquisition payments 1,699 2,781 Restructuring costs 2,052 2,141 Deal costs 178 306 Property impairment 10,910 - Amortisation of acquired intangibles 7,264 5,443 Adjusted profit before income tax 20,706 17,229 Adjusted financial measures are presented to provide additional information that may be useful to shareholders through facilitating comparability with industry peers and to best represent the underlying performance of the business. Adjusted results are reconciled to statutory results within note 2 and 3. We had a net credit of 0.4m in relation to our estimate of future contingent consideration. As a Group, we are moving towards the inclusion of employment conditions for certain acquisition-related payments. As a result, we are required to build up a provision relating to these payments over time and therefore this has led to an accounting charge of 1.7m (2019: 2.8m). As mentioned earlier, we have conducted a full review of our property requirements in light of the general move to a working from home culture going forward and we have determined that we have a significant amount of surplus property in London, New York and San Francisco. The leases have typically got three to four years left and we have therefore made an impairment of 10.9m against the carrying value of the right-of-use assets and leasehold improvements, which takes account of our assessment of the likely financial recovery against these surplus properties. We incurred 2.1m of restructuring costs in relation to a restructuring of our cost base pursuant to the pandemic. We incurred 0.2m of deal costs in relation to acquisitions, and the amortisation of acquired intangibles was 7.3m in the period. Cashflow The Group delivered an excellent cashflow performance with the net cash inflow from operating activities increasing to 31.5m from 19.3m in the prior period. This resulted in our net debt being only 5.0m as at 31 July 2020. Post Covid-19 We see opportunities for the Group to use our healthy balance sheet to increase the pace of acquisitions while maintaining low gearing; using growth in innovation consulting to drive growth across the Group; and to invest in internally developed software product solutions to our customers challenges. We believe that being a purpose-driven organisation matters, and this is the time to make meaningful improvements to the business. We are investing in DE&I and targeting a reduction in our carbon footprint. We believe an internal focus on ESG initiatives is crucial to excellent client delivery and attracting the best talent. Dividend The Board is aware of the importance of payment of dividends for shareholders and expects to resume payments with a dividend for the year ended January 2021, paid following the AGM in early summer 2021. Current Trading and Outlook Whilst the group remains cautiously optimistic about trading as we enter the second half of our financial year in what is still a highly uncertain general economic environment, the continued good performance across the business and the property related savings give us confidence of modestly exceeding market expectations for the year. We will continue to tightly manage our cost base and conserve cash. The group is highly cash generative and has a strong balance sheet, with net debt as at 24th September of 2.4m. NEXT FIFTEEN COMMUNICATIONS GROUP PLC CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTH PERIOD ENDED 31 July 2020 Six months ended 31 July 2020 (Unaudited) Six months ended 31 July 2019 (Unaudited) 12 months ended 31 January 2020 (Audited) Note 000 000 000 Billings 159,973 156,477 325,353 Revenue 153,100 145,192 300,711 Direct costs (26,942) (26,469) (52,242) Net revenue 2 126,158 118,723 248,469 Staff costs 88,836 83,693 171,180 Depreciation 6,618 6,302 13,196 Amortisation 7,960 5,915 13,211 Other operating charges 23,108 15,181 31,469 Total operating charges (126,522) (111,091) (229,056) Operating (loss)/profit 2 (364) 7,632 19,413 Finance expense 6 (4,985) (5,569) (16,672) Finance income 7 1,888 698 2,611 Share of profit from associate 59 87 204 (Loss)/profit before income tax 3 (3,402) 2,848 5,556 Income tax expense 4 408 (1,273) (2,717) (Loss)/profit for the period (2,994) 1,575 2,839 Attributable to: Owners of the parent (3,330) 1,317 2,262 Non-controlling interests 336 258 577 (2,994) 1,575 2,839 Earnings per share Basic (pence) 8 (3.8) 1.9 2.7 Diluted (pence) 8 (3.6) 1.8 2.5 NEXT FIFTEEN COMMUNICATIONS GROUP PLC CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 July 2020 Six months ended 31 July 2020 (Unaudited) Six months ended 31 July 2019 (Unaudited) 12 months ended 31 January 2020 (Audited) 000 000 000 (Loss)/profit for the period (2,994) 1,575 2,839 Other comprehensive income / (expense): Items that may be reclassified into profit or loss Exchange differences on translating foreign operations 473 3,568 (136) Net investment hedge - (372) (411) 473 3,196 (547) Items that will not be reclassified subsequently to profit or loss Revaluation of investments 5 (335) (562) Total other comprehensive income / (expense) for the period 478 2,861 (1,109) Total comprehensive (expense)/income for the period (2,516) 4,436 1,730 Attributable to: Owners of the parent (2,852) 4,178 1,153 Non-controlling interests 336 258 577 (2,516) 4,436 1,730 NEXT FIFTEEN COMMUNICATIONS GROUP PLC ADJUSTED RESULTS: KEY PERFORMANCE INDICATORS Six months ended 31 July 2020 (Unaudited) 000 Six months ended 31 July 2019 (Unaudited) 000 Net revenue 126,158 118,723 Total operating charges (96,916) (93,646) Depreciation and amortisation (7,314) (6,774) Operating profit 21,928 18,303 Interest on finance lease liabilities (756) (803) Operating profit after interest on finance lease liabilities 21,172 17,500 Operating profit margin 16.8% 14.7% Net finance expense excluding interest on finance lease liabilities (525) (358) Share of profits of associate 59 87 Profit before income tax 20,706 17,229 Tax (4,141) (3,446) Retained profit 16,565 13,783 Weighted average number of ordinary shares 88,542,197 84,480,836 Diluted weighted average number of ordinary shares 93,197,615 89,070,220 Adjusted earnings per share 18.3p 16.0p Diluted adjusted earnings per share 17.4p 15.2p Cash inflow from operating activities 31,536 19,340 Cash outflow on acquisition related payments (18,350) (4,673) Net debt 4,993 3,552 Dividend (per share) - 2.5p NEXT FIFTEEN COMMUNICATIONS GROUP PLC CONSOLIDATED BALANCE SHEET AS AT 31 July 2020 31 July 2020 (Unaudited) 31 July 2019 (Unaudited) 31 January 2020 (Audited) Note 000 000 000 Assets Property, plant and equipment 10,048 16,002 14,224 Right-of-use assets 27,623 42,341 41,655 Intangible assets 157,332 132,274 155,408 Investment in equity-accounted associate 123 131 232 Investments in financial assets 1,080 1,308 1,075 Deferred tax asset 15,233 11,391 10,967 Other receivables 590 863 809 Total non-current assets 212,029 204,310 224,370 Trade and other receivables 68,634 76,642 70,260 Cash and cash equivalents 9 30,191 21,268 28,661 Corporation tax asset 1,943 1,195 734 Total current assets 100,768 99,105 99,655 Total assets 312,797 303,415 324,025 Liabilities Loans and borrowings 9 30,184 19,820 33,007 Deferred tax liabilities 4,932 3,877 3,538 Lease liabilities 35,147 46,223 43,023 Other payables 1,193 18 16 Provisions 3,949 3,867 4,942 Contingent consideration 10 20,615 18,622 26,815 Share purchase obligation 10 1,670 133 2,098 Total non-current liabilities 97,690 92,560 113,439 Loans and borrowings 9 5,000 5,000 5,000 Trade and other payables 66,988 66,454 59,620 Lease liabilities 11,038 8,938 11,210 Provisions 2,700 327 1,522 Corporation tax liability 2,510 2,197 1,173 Deferred consideration 10 1,424 2,994 2,715 Contingent consideration 10 8,666 12,757 15,366 Share purchase obligation 10 1,263 1,328 1,269 Total current liabilities 99,589 99,995 97,875 Total liabilities 197,279 192,555 211,314 TOTAL NET ASSETS 115,518 110,860 112,711 Equity Share capital 2,265 2,130 2,163 Share premium reserve 90,838 68,956 76,019 Foreign currency translation reserve 8,034 11,265 7,561 Other reserves (2,065) (2,026) (2,065) Retained earnings 16,890 31,229 29,618 Total equity attributable to owners of the parent 115,962 111,554 113,296 Non-controlling interests (444) (694) (585) TOTAL EQUITY 115,518 110,860 112,711 NEXT FIFTEEN COMMUNICATIONS GROUP PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTH PERIOD ENDED 31 July 2020 Share capital Share premium reserve Foreign currency translation reserve Other reserves1 Retained earnings Equity attributable to owners of the Company Non- controlling interests Total equity 000 000 000 000 000 000 000 000 At 31 January 2019 (audited) 2,089 62,993 7,697 (1,654) 41,404 112,529 (1,076) 111,453 Change in accounting policy (IFRS 16) 2 - - - - (1,794) (1,794) - (1,794) Deferred tax on accounting policy change (IFRS 16) - - - - 400 400 - 400 At 1 February 2019 as restated 2,089 62,993 7,697 (1,654) 40,010 111,135 (1,076) 110,059 Profit for the period - - - - 1,317 1,317 258 1,575 Other comprehensive income / (expense) for the period - - 3,568 (372) (335) 2,861 - 2,861 Total comprehensive income / (expense) for the period - - 3,568 (372) 982 4,178 258 4,436 Shares issued on satisfaction of vested share options 36 4,829 - - (4,865) - - - Shares issued on acquisitions 5 1,134 - - - 1,139 - 1,139 Movement in relation to share-based payments - - - - 437 437 - 437 Dividends to owners of the parent - - - - (4,595) (4,595) - (4,595) Movement on reserves for non-controlling interests - - - - (740) (740) 740 - Non-controlling interest purchased in the period - - - - - - - - Non-controlling interest dividend - - - - - - (616) (616) At 31 July 2019 (unaudited) 2,130 68,956 11,265 (2,026) 31,229 111,554 (694) 110,860 Profit for the period - - - - 945 945 319 1,264 Other comprehensive expense for the period - - (3,704) (39) (227) (3,970) - (3,970) Total comprehensive income / (expense) for the period - - (3,704) (39) 718 (3,025) 319 (2,706) Shares issued on satisfaction of vested share options 2 559 - - (561) - - - Shares issued on acquisitions 31 6,504 - - - 6,535 - 6,535 Movement in relation to share-based payments - - - - 330 330 - 330 Dividends to owners of the parent - - - - (2,164) (2,164) - (2,164) Movement on reserves for non-controlling interests - - - - 66 66 (66) - Non-controlling interest dividend - - - - - - (144) (144) At 31 January 2020 (audited) 2,163 76,019 7,561 (2,065) 29,618 113,296 (585) 112,711 Profit for the period - - - - (3,330) (3,330) 336 (2,994) Other comprehensive income for the period - - 473 - 5 478 - 478 Total comprehensive income / (expense) for the period - - 473 - (3,325) (2,852) 336 (2,516) Shares issued on satisfaction of vested share options 64 9,253 - - (9,317) - - - Shares issued on acquisitions 38 5,566 - - - 5,604 - 5,604 Obligation to purchase non-controlling interest - - - - - - - - Movement in relation to share-based payments - - - - 273 273 - 273 Dividends to owners of the parent - - - - - - - - Movement on reserves for non-controlling interests - - - - (359) (359) 359 - Non-controlling interest purchased in the period - - - - - - - - Non-controlling interest dividend - - - - - - (554) (554) At 31 July 2020 (unaudited) 2,265 90,838 8,034 (2,065) 16,890 115,962 (444) 115,518 1 Other reserves include ESOP reserve, hedging reserve, share purchase reserve and merger reserve. NEXT FIFTEEN COMMUNICATIONS GROUP PLC CONSOLIDATED STATEMENT OF CASH FLOW FOR THE SIX MONTH PERIOD ENDED 31 July 2020 Six months ended 31 July 2020 (Unaudited) Six months ended 31 July 2019 (Unaudited) Twelve months ended 31 January 2020 (Audited) 000 000 000 Cash flows from operating activities (Loss)/profit for the period (2,994) 1,575 2,839 Adjustments for: Depreciation 6,618 6,302 13,196 Amortisation 7,960 5,915 13,211 Finance expense 4,985 5,569 16,672 Finance income (1,888) (698) (2,611) Share of profit from equity accounted associate (59) (87) (204) Impairment of RoU assets 7,664 - - Loss on sale/impairment of property, plant and equipment 5,753 659 1,360 (Gain)/Loss on exit of finance lease (2,327) - 14 Income tax expense (408) 1,273 2,717 Share-based payment charge 502 161 600 Net cash inflow from operating activities before changes in working capital 25,806 20,669 47,794 Change in trade and other receivables 1,607 (5,680) 1,971 Change in trade and other payables 6,962 6,279 (1,950) Change in other liabilities 175 1,080 1,686 8,744 1,679 1,707 Net cash generated from operations before tax and interest outflows 34,550 22,348 49,501 Income taxes paid (3,014) (3,008) (5,993) Net cash inflow from operating activities 31,536 19,340 43,508 Cash flows from investing activities Acquisition of subsidiaries and trade and assets, net of cash acquired (4,237) (1,333) (18,501) Payment of contingent and deferred consideration (14,113) (3,290) (5,622) Purchase of investment - (50) (50) Acquisition of property, plant and equipment (1,028) (1,841) (3,460) Proceeds on disposal of property, plant and equipment 2 13 23 Proceeds on disposal of subsidiary - 466 466 Acquisition of intangible assets (1,059) (878) (1,831) Net movement in long-term cash deposits 120 (39) (24) Income from finance lease receivables 434 - 547 Interest received 33 56 112 Net cash outflow from investing activities (19,848) (6,896) (28,340) NEXT FIFTEEN COMMUNICATIONS GROUP PLC CONSOLIDATED STATEMENT OF CASH FLOW (Continued) FOR THE SIX MONTH PERIOD ENDED 31 July 2020 Six months ended 31 July 2020 (Unaudited) Six months ended 31 July 2019 (Unaudited) Twelve months ended 31 January 2020 (Audited) 000 000 000 Cash flows from financing activities Repayment of lease liabilities (6,235) (5,337) (11,367) Net movement in bank borrowings (3,000) (1,311) 13,039 Interest on borrowings paid (578) (414) (979) Dividend and profit share paid to non-controlling interest partners (554) (616) (760) Dividends paid to shareholders of the parent - (4,595) (6,759) Net cash outflow from financing activities (10,367) (12,273) (6,826) Net increase in cash and cash equivalents 1,321 171 8,342 Cash and cash equivalents at beginning of the period 28,661 20,501 20,501 Exchange gains on cash held 209 596 (182) Cash and cash equivalents at end of the period 30,191 21,268 28,661 NOTES TO THE INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 July 20120 1)BASIS OF PREPARATION The unaudited consolidated interim financial statements represent a condensed set of financial information and have been prepared using the recognition and measurement principles of International Accounting Standards, and in accordance with IAS 34, Interim Financial Reporting. 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 2020. The comparative financial information for the year ended 31 January 2020 has been derived from the audited statutory financial statements for that period. 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 498(2)-(3) of the Companies Act 2006. 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, 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. Other information provided to them is measured in a manner consistent with that in the financial statements. 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. UK Europe and Africa US Asia Pacific Head Office Total 000 000 000 000 000 000 Six months ended 31 July 2020 (Unaudited) Net revenue 46,773 4,228 68,657 6,500 - 126,158 Adjusted operating profit / (loss) 9,063 882 15,385 1,181 (4,583) 21,928 Adjusted operating profit / (loss) after interest on finance lease liabilities 8,955 868 15,011 1,152 (4,814) 21,172 Adjusted operating profit margin1 19.1% 20.5% 21.9% 17.7% - 16.8% Organic revenue growth (11.9%) (3.3%) (2.6%) (6.2%) - (6.6%) Six months ended 31 July 2019 (Unaudited) Net revenue 47,974 4,332 59,361 7,056 - 118,723 Adjusted operating profit / (loss) 9,466 763 11,541 866 (4,333) 18,303 Adjusted operating profit / (loss) after interest on finance lease liabilities 9,324 747 11,188 833 (4,592) 17,500 Adjusted operating profit margin1 19.4% 17.2% 18.8% 11.8% - 14.7% Organic revenue growth 4.6% (0.6%) (6.0%) 2.1% - (1.3%) Twelve months ended 31 January 2020 (Audited) Net revenue 97,377 8,820 127,563 14,709 - 248,469 Adjusted operating profit / (loss) 20,366 1,619 27,155 2,367 (9,051) 42,456 Adjusted operating profit / (loss) after interest on finance lease liabilities 20,094 1,587 26,421 2,299 (9,541) 40,860 Adjusted operating profit margin1 20.6% 18.0% 20.7% 15.6% - 16.4% Organic revenue growth 0.3% 0.4% (4.6%) 4.8% - (2.0%) 1 Adjusted operating profit margin is calculated based on the operating profit after interest on finance lease liabilities as a percentage of net revenue. NOTES TO THE INTERIM RESULTS (Continued) FOR THE SIX MONTHS ENDED 31 July 2020 2) SEGMENT INFORMATION (continued) Brand marketing Data and analytics Creative technology Head Office Total 000 000 000 000 000 Six months ended 31 July 2020 (Unaudited) Net revenue 69,297 23,897 32,964 - 126,158 Adjusted operating profit / (loss) 16,252 5,975 4,284 (4,583) 21,928 Adjusted operating profit / (loss) after interest on finance lease liabilities1 15,863 5,965 4,158 (4,814) 21,172 Adjusted operating profit margin1 22.9% 25.0% 12.6% - 16.8% Organic net revenue growth (7.9%) 3.6% (9.5%) - (6.6%) Six months ended 31 July 2019 (Unaudited) Net revenue 63,873 20,869 33,981 - 118,723 Adjusted operating profit / (loss) 13,478 5,744 3,414 (4,333) 18,303 Adjusted operating profit / (loss) after interest on finance lease liabilities1 13,080 5,734 3,278 (4,592) 17,500 Adjusted operating profit margin1 20.5% 27.5% 9.6% - 14.7% Organic net revenue growth (4.9%) 21.4% (1.1%) - (1.3%) Year ended 31 January 2020 (Audited) Net revenue 135,036 45,054 68,379 - 248,469 Adjusted operating profit / (loss) 30,750 12,722 8,035 (9,051) 42,456 Adjusted operating profit / (loss) after interest on finance lease liabilities1 29,930 12,697 7,774 (9,541) 40,860 Adjusted operating profit margin1 22.2% 28.2% 11.4% - 16.4% Organic net revenue growth (5.7%) 19.3% (2.1%) - (2.0%) 1 Adjusted operating profit margin is calculated based on the operating profit after interest on finance lease liabilities as a percentage of net revenue. A reconciliation of segment adjusted operating profit to operating profit is provided as follows: Six months ended 31 July 2020 (Unaudited) Six months ended 31 July 2019 (Unaudited) Twelve months ended 31 January 2020 (Audited) 000 000 000 Segment adjusted operating profit after interest on finance lease liabilities 21,172 17,500 40,860 Interest on finance lease liabilities 756 803 1,596 Segment adjusted operating profit 21,928 18,303 42,456 Amortisation of acquired intangibles (note 3) (7,264) (5,443) (12,099) Share-based payment charge (note 3) (189) - (374) Employment-related acquisition payments (note 3) (1,699) (2,781) (5,029) Restructuring costs (note 3) (2,052) (2,141) (4,596) Property impairment (note 3) (10,910) - - Deal costs (note 3) (178) (306) (945) Operating (loss)/profit (364) 7,632 19,413 NOTES TO THE INTERIM RESULTS (Continued) FOR THE SIX MONTHS ENDED 31 July 2020 3)RECONCILIATION OF ADJUSTED FINANCIAL MEASURES Six months ended 31 July 2020 (Unaudited) Six months ended 31 July 2019 (Unaudited) Twelve months ended 31 January 2020 (Audited) 000 000 000 (Loss)/profit before income tax (3,402) 2,848 5,556 Unwinding of discount on deferred and contingent consideration and share purchase obligation payable1 2,182 1,669 3,552 Change in estimate of future contingent consideration and share purchase obligation payable1 (366) 2,041 8,086 Share-based payment charge2 189 - 374 Employment-related acquisition payments3 1,699 2,781 5,029 Restructuring costs4 2,052 2,141 4,596 Deal costs5 178 306 945 Property impairment 6 10,910 - - Amortisation of acquired intangibles7 7,264 5,443 12,099 Adjusted profit before income tax 20,706 17,229 40,237 Adjusted profit before income tax has been presented to provide additional information which may be useful to the reader, and it is a measure of performance used in the calculation of the adjusted earnings per share. This measure is considered to best represent the underlying performance of the business and so it is used for the vesting of employee performance shares. The adjusting items are consistent with those in the prior period. 1 The Group adjusts for the remeasurement of the acquisition-related liabilities within the adjusted performance measures in order to aid comparability of the Groups results year on year as the charge/credit from remeasurement can vary significantly depending on the underlying brands performance. It is non-cash and its directional impact to the income statement is opposite to the brands 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 Groups 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 Savanta Group Limited. (2019: M Booth & Associates LLC) 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 share-based payment 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 over the required period of employment. Although these costs are not exceptional or non-recurring, the Group determined they should be excluded from the underlying performance as the costs solely relate to acquiring the sellers business. 4 In the current period the Group has incurred restructuring costs which primarily relates to Covid-19 redundancy costs taken in the period in response to the pandemic. These costs relate to these specific transformational events; they do not relate to underlying trading and therefore have been added back to aid comparability of performance year on year. 5 This charge relates to third party professional fees incurred during acquisitions. 6 In the current period the Group has recognised charges relating to the reorganisation of the property space across the Group. The majority of the charge is impairment of right-of-use assets and leasehold improvements. As a result of Covid-19, the Group has identified excess property space within the portfolio and therefore taken an impairment charge relating to those offices. The Group has adjusted for this cost, as the additional one-off impairment charge does not relate to the underlying trading of the business and therefore added back to aid comparability. 7 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. 4) TAXATION The tax charge for the six months ended 31 July 2020 is based on the Groups estimated effective tax rate for the year ending 31 January 2021 (20%). NOTES TO THE INTERIM RESULTS (Continued) FOR THE SIX MONTHS ENDED 31 July 2020 5) DIVIDENDS Given the macroeconomic backdrop due to Covid-19, the Group has decided to suspend the interim dividend, although it expects to resume payments with a dividend for the year ended January 2021, paid following the AGM in early summer 2021. For the six months ended 31 July 2019, an interim dividend of 2.5p per ordinary share was paid. 6) FINANCE EXPENSE Six months ended 31 July 2020 (Unaudited) Six months ended 31 July 2019 (Unaudited) Twelve months ended 31 January 2020 (Audited) 000 000 000 Financial liabilities at amortised cost Bank interest payable 575 411 977 Interest on finance lease liabilities 756 803 1,596 Financial liabilities at fair value through profit and loss Unwinding of discount on future deferred and contingent consideration and share purchase obligation payable1 2,182 1,669 3,552 Change in estimate of future contingent consideration and share purchase obligation payable1 1,470 2,683 10,545 Other Other interest payable 2 3 2 Finance expense 4,985 5,569 16,672 1 These items are adjusted for in calculating the adjusted net finance expense. 7) FINANCE INCOME Six months ended 31 July 2020 (Unaudited) Six months ended 31 July 2019 (Unaudited) Twelve months ended 31 January 202 (Audited) 000 000 000 Financial assets at amortised cost Bank interest receivable 19 20 99 Finance lease interest receivable 20 24 40 Financial assets at fair value through profit and loss Change in estimate of future contingent consideration and share purchase obligation payable1 1,836 642 2,459 Other interest receivable 13 12 13 Finance income 1,888 698 2,611 1 These items are adjusted for in calculating the adjusted net finance expense. NOTES TO THE INTERIM RESULTS (Continued) FOR THE SIX MONTHS ENDED 31 July 2020 8)EARNINGS PER SHARE Six months ended 31 July 2020 (Unaudited) Six months ended 31 July 2019 (Unaudited) Twelve months ended 31 January 2020 (Audited) 000 000 000 Earnings attributable to ordinary shareholders (3,330) 1,575 2,262 Unwinding of discount on future deferred and contingent consideration and share purchase obligation payable 1,848 1,468 3,138 Change in estimate of future contingent consideration and share purchase obligation payable (612) 1,554 6,395 Share-based payment charge 189 2,781 572 Restructuring costs 1,884 1,757 3,746 Property impairment 8,670 - - Employment-related acquisition payments 1,682 - 5,010 Amortisation of acquired intangibles 5,720 4,342 9,607 Deal costs 178 306 882 Adjusted earnings attributable to ordinary shareholders 16,229 13,525 31,612 Number Number Number Weighted average number of ordinary shares 88,542,197 84,480,836 85,284,663 Dilutive LTIP shares 609,071 777,184 755,018 Dilutive Growth Deal shares 1,711,629 2,415,165 2,983,371 Other potentially issuable shares 2,334,718 1,397,035 1,913,430 Diluted weighted average number of ordinary shares 93,197,615 89,070,220 90,936,482 Basic earnings per share (3.8)p 1.9p 2.7p Diluted earnings per share (3.6)p 1.8p 2.5p Adjusted earnings per share 18.3p 16.0p 37.1p Diluted adjusted earnings per share 17.4p 15.2p 34.8p Adjusted and diluted adjusted earnings per share have been presented to provide additional information which may be useful to shareholders through facilitating comparability with industry peers. The adjusted earnings per share is the performance measure used for the vesting of employee 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. NOTES TO THE INTERIM RESULTS (Continued) FOR THE SIX MONTHS ENDED 31 July 2020 9)NET DEBT The HSBC Bank revolving credit facility of 40m expires in 2022 and therefore the outstanding balance has been classified in non-current borrowings. The 20m loan drawn from HSBC is repayable in annual instalments and is classified in non-current borrowings with the exception of the instalment due in less than one year. 31 July 2020 (Unaudited) 31 July 2019 (Unaudited) 31 January 2020 (Audited) 000 000 000 Total loans and borrowings 35,184 24,820 38,007 Less: cash and cash equivalents (30,191) (21,268) (28,661) Net debt 4,993 3,552 9,346 Share purchase obligation 2,933 1,461 3,367 Contingent consideration 29,281 31,379 42,181 Deferred consideration 1,424 2,994 2,715 38,631 39,386 57,609 10) OTHER FINANCIAL LIABILITIES Deferred consideration Contingent consideration Share purchase obligation 000 000 000 At 31 January 2019 (Audited) 4,646 24,712 1,736 Arising during the period 350 4,194 - Change in estimate - 2,038 3 Exchange differences - 1,069 103 Utilised (2,205) (2,028) (453) Unwinding of discount 203 1,394 72 At 31 July 2019 (Unaudited) 2,994 31,379 1,461 Arising during the period - 10,251 - Change in estimate - 4,129 1,916 Exchange differences - (1,795) (96) Utilised (462) (3,397) - Unwinding of discount 183 1,614 86 At 31 January 2020 (Audited) 2,715 42,181 3,367 Arising during the period - 417 - Reclassification 2,405 (2,405) - Change in estimate - 258 (624) Exchange differences - 3 7 Utilised (3,811) (13,057) - Unwinding of discount 115 1,884 183 At 31 July 2020 (Unaudited) 1,424 29,281 2,933 Current 1,424 8,666 1,263 Non-current - 20,615 1,670 NOTES TO THE INTERIM RESULTS (Continued) FOR THE SIX MONTHS ENDED 31 July 2020 11)EVENTS AFTER THE BALANCE SHEET DATE On 1 September 2020 Next 15 purchased the entire issued share capital of Mach49, the Silicon Valley-based growth incubator for global businesses. This signals an important strategic move, as Mach49 will become the cornerstone of the previously announced plan to create a $100m revenue innovation business to work alongside our market leading data, technology and brand marketing businesses to help global leaders create and execute disruptive growth strategies, shake up existing markets and open new ones. We expect there to be goodwill arising as a result of this acquisition due to the anticipated profitability and operating synergies.

Answer: Half-year Report