BULL POINTS:
■ Niche focus on technology
■ Blue-chip clients
■ Cost saving from re-structuring
BEAR POINTS:
■ Weak second-half trading
■ Bosses want to keep the company independent
Next Fifteen Communications' niche focus on technology has kept the marketing and PR group firmly in profits, despite the downturn. It has a solid base of technology clients and now caters to more than half of the world's top 25 technology companies, including Apple, Microsoft and IBM. Technology remains a growth area, especially as companies feel compelled to advertise on social media such as Facebook.
Next Fifteen's non-technology clients also include blue-chip names such as Coca-Cola and Unilever. Management says that relationships are strong. The proof is that 82 per cent of revenue is generated from retainer relationships with clients.
These strengths have not gone unnoticed, though. In early May, Next Fifteen was approached by both Huntsworth and Chime Communications for a possible takeover. Next Fifteen's share price surged to 57p as a result, but both offers were rejected and Next Fifteen's bosses say they want to keep the company independent. That said, chief executive Tim Dyson acknowledges that, if the price looked right, an offer would have to be put to shareholders.
| ORD PRICE: | 46p | MARKET VALUE: | £ 24.9m | |
| TOUCH: | 44-48p | 12M HIGH / LOW: | 58p | 20p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 6 | |
| NET ASSET VALUE: | 47p | NET DEBT: | 1% | |
| Year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 59.8 | 2.9 | 2.6 | 1.4 |
| 2007 | 59.3 | 5.1 | 6.3 | 1.5 |
| 2008 | 63.1 | 5.5 | 7.1 | 1.7 |
| 2009* | 63.3 | 2.5 | 2.9 | 1.8 |
| 2010* | 64.6 | 6.1 | 7.9 | 1.9 |
| % change | +2 | +144 | +172 | +6 |
NMS: 2,000 MARKET MAKERS: 4 BETA: 0.44 * Forecasts from Canaccord Adams | ||||
More share tips and updates...
The group's half-year results to 31 January 2009 were impressive, but tougher trading in February was a sign of a weaker second half to come. Underlying results are likely to be about the same as 2007-08, but the basic figures will have to carry some restructuring charges and losses on foreign currency hedging (see table). Even so, Mr Dyson has signalled that there remains room to raise dividends.
The outlook for 2009-10 remains promising. Mr Dyson says that trading "picked up" in March and is confident that growth will return. Further, trading in Asia Pacific - which accounts for 44 per cent of group sales - remains unaffected. A cost saving scheme, which has already shaved £0.5m off operating costs, should also bear fruit.
