Next Fifteen fights back

However, issues there should not detract from the progress Next Fifteen has made towards changing the business model to embrace advances in digital communications. Indeed, four of its agencies - Text 100, M Booth, Outcast and Blueshirt - generated record revenue that boosted group revenue to an all-time high. Growth was most pronounced in the US operations where revenues rose by 17 per cent in the second half to account for 55 per cent of group turnover. Moreover, after adjusting for one-off items, pre-tax profits declined from £9.6m to £7.7m, a far better outcome than analysts at Canaccord had expected.

Importantly, chief executive Tim Dyson believes that the accounting problems at Bite have now been addressed, and notes that trading in the new financial year has started strongly, boosted by new work from clients like J Sainsbury and HBO. The £1.6m of the profit decline in Bite's German and UK operations last year should be recoverable, which explains why Canaccord is forecasting a recovery in underlying pre-tax profits to £9.7m, giving EPS of 10.6p (up from £7.7m and 6.6p in fiscal 2013).