Next Fifteen Communication's focus on digital marketing is clearly paying off, a fact not lost on investors with the shares riding a five-year high. It is good news if you followed our long-standing buy tip (46p, 11 Jun 2009) with the shares more than doubling in the past three years. Moreover, there is little to suggest the positive momentum in the business is likely to end anytime soon.
In the latest trading period, digital revenues rose by an impressive 39 per cent, which was way ahead of broker Peel Hunt's forecasts. A new business - Animo, specialising in mobile marketing - has been launched and subsidiary Bite Group acquired an 80 per cent stake in two German-based communication businesses for £1.28m in cash. And after the half-year end, the remaining 20 per cent of digital marketing agency Bourne was also acquired. On a like-for-like basis, group revenues still increased by a respectable 4 per cent if you strip out acquisitions. A good part of this growth came from investor relations and financial communications business Blueshirt, helped by new client wins.
However, the UK consumer business has been slower to adapt to digital services, prompting a change in management and a restructuring that will cost £0.4m.
Peel Hunt is forecasting full-year adjusted EPS of 10p (8.7p in 2011), rising to 11.1p the year after.
| NEXT FIFTEEN COMMUNICATIONS (NFC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 96.5p | MARKET VALUE: | £ 55m | |
| TOUCH: | 95-97p | 12-MONTH HIGH: | 97p | LOW: 72p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 55p* | NET DEBT: | 13% | |
| Half-year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 40.8 | 2.49 | 2.79 | 0.52 |
| 2012 | 45.3 | 2.67 | 2.82 | 0.57 |
| % change | +11 | +7 | +1 | +10 |
Ex-div: 2 May Payment: 1 Jun *Includes intangible assets of £40m, or 70p a share | ||||
