Report of the Directors

The principal activity of the Group during the year continued to be the provision of public and press relations services to clients predominantly in the technology sector. Over the last few years the Group’s strategy has broadened to include non-technology and consumer clients also.

The Group consists of five independent subsidiary PR brands that operate as autonomous businesses, thus enabling them to service competing clients. These are Text 100, Bite, OutCast, Lexis and M Booth. The Group also has two research businesses, Redshift Research and Context Analytics, and 463 Communications, a policy communications business.

A detailed review of the business, current trading and future developments is given in the Chairman’s statement, the Chief Executive Officer’s review and the Financial review, the latter of which includes an overview of the key performance indicators of the business. Details of the Group’s principal risks and uncertainties are given in the Directors’ statement on corporate governance.

The Group’s financial statements for the year ended 31 July 2009 show that profit before tax for the financial year was £3,158,000 (2008: £5,516,000). The Group made a profit attributable to shareholders of the Company for the year of £1,932,000 (2008: £3,663,000). The interim dividend paid during the year was 0.45p per share (2008: 0.45p). A final dividend of 1.25p per share (2008: 1.25p) has been proposed, making the total for the year 1.7p (2008: 1.7p).

The Company continues to be listed on the Alternative Investment Market (AIM) of the London Stock Exchange.

On 27 October 2008, the Company acquired the remaining 12.85% of Panther Communications Group Limited (‘Panther’), the parent company of the UK public relations company Lexis Public Relations Limited, for consideration of £1.77m. This was satisfied through a combination of cash and shares in the Company. Panther is therefore now 100% owned by the Company.

Details of changes in the issued Ordinary Share capital of the Company during the year are set out in note 21 of the Financial statements.

On 15 October 2008 the Company purchased 214,258 of its own shares, representing 0.4% of the Company’s issued share capital, at an average price of 42.5p per share. This purchase of own shares was made under the authority granted at the Company’s 2008 Annual General Meeting on 29 January 2008. The shares will be held in treasury.

Information on both the Group’s financial-risk-management objectives and the Group’s policies on exposure to relevant risks in respect of financial instruments is set out in note 20.

The names and biographical details of the Directors who held office at the date of this report can be viewed in Board of Directors.

In accordance with the Company’s Articles of Association, one-third of the Directors must retire by rotation each year. Will Whitehorn and Ian Taylor will retire from the Board at the next Annual General Meeting of the Company and offer themselves for re-election. As Ian has been a non-executive Director for ten years, he will, in accordance with good corporate governance, retire and offer himself for re-election every year. Both Ian and Will are engaged pursuant to letters of appointment and continue to be effective non-executive Directors and demonstrate commitment to the role.

Additional information relating to Directors’ remuneration, service agreements and interests in the Company’s shares is given in the Remuneration report.

Other than service contracts, no Director has a material interest in any contract to which the Company, or any of its subsidiaries, is a party.

During the year the Group made charitable donations of £19,000 (2008: £54,000).

It is the Group’s policy not to make donations for political purposes.

It is the policy of the Group to agree suitable terms and conditions for its business transactions with all suppliers. These terms and conditions range from standard written terms to individually drafted contracts. Once such terms are agreed, it is the Group’s policy to adhere fully to them, provided the supplier has also complied with the terms and conditions. The number of days taken by the Company to pay suppliers, on the basis of trade creditors at 31 July 2009 and average daily purchases for the year, was 28 days (2008: 28 days).

The Group operates a policy of regularly informing all employees of the Group’s financial performance, through a combination of meetings and electronic communications. In addition, the Group’s employee share option schemes, long-term incentive schemes and bonus schemes encourage employees at all levels to contribute to the achievement of the Group’s short-term and long-term goals.

The Group gives full and fair consideration to all applications for employment made by people with disabilities, having regard to their particular aptitudes and abilities. The Group’s policies for training, career development and promotion do not disadvantage such people. The Group seeks to recruit, develop and employ throughout the organisation suitably qualified, capable and experienced people, irrespective of sex, age, race, religion or belief, marital or civil partnership status or sexual orientation.

All the current Directors have taken all the steps they ought to have taken to make themselves aware of any information needed by the Group’s auditors for the purpose of their audit and to establish that the auditors are aware of that information. The Directors are not aware of any relevant audit information of which the auditors are unaware.

A resolution to reappoint the Company’s auditors will be proposed at the forthcoming Annual General Meeting.

The Annual General Meeting of the Company will be held at the Company’s offices at The Triangle, 5-17 Hammersmith Grove, London W6 0LG on Tuesday 26 January 2010 at 3.00 p.m. The notice convening the meeting is included in the mailing with this Annual Report for those shareholders who requested a hard copy, and is also available on the Company’s website www.nextfifteen.com

On 3 August 2009, the Company acquired New York-based, M Booth & Associates Inc. The initial consideration paid on completion was US $4m. Deferred consideration of up to a maximum of US $13.25m may be payable over the next four years subject to the achievement of certain revenue and profit performance targets. The total maximum consideration is therefore US $17.25m. Any deferred consideration that may be payable may be satisfied by cash or up to 25% in the Company’s shares, at the option of the Company.

On 27 October 2009, the Company acquired the marketing communications trading subsidiaries of Upstream Marketing and Communications Inc. (‘Upstream Asia’). These businesses will be integrated into Bite Communications Group. The initial consideration was US $0.9m paid in cash and the assumption of US $0.2m of Upstream Asia’s liabilities, making a total of US $1.1m. The Company owns 55% of Upstream Asia, and a Hong Kong-based company, Asset Pioneer Limited, owns the residual 45%. The Company has entered into an option deed under which it has a right to acquire Asset Pioneer’s shares over a five-year period based on the profitability of the acquired businesses.

On 31 October 2009, the Company acquired a further 30% stake in 463 Communications LLC. This took the Company’s total stake to 70%. The Company paid consideration of US $2.14m in cash and shares in the Company.