Next Fifteen Communication 's (NFC) acquisition-intensive growth strategy comes with a price. A marked increase in staff costs, plus higher amortisation charges, ate into pre-tax profits for the reported period. Yet sales growth was strong in the core US market as well as in the UK and, after stripping out one-off costs, adjusted pre-tax profits were up by half to £24.2m.
The marketing group spent almost £22m on four domestic acquisitions during the 12 months to January. These included Twogether, a digital agency focused on technology clients, as well as market research agency HPI. The latter was merged with research and advisory business Morar to create MIG Global. These higher-margin, high-growth businesses helped lift UK operating margins to 18.9 per cent, from 13.6 per cent in the previous year.
The US led the way in terms of organic sales growth, which was up 13 per cent. Overall sales climbed more than a quarter to £107m, after taking into account the effect of a strong dollar. Agencies including Text 100, M Booth and Connections Media, which specialise in the increasingly popular area of digital marketing, performed particularly strongly. Some major clients were also added to the roster, including KPMG and LinkedIn.
Analysts at Investec expect adjusted pre-tax profits of £28.8m in the 12 months to January 2018, giving EPS of 26p (up from £24.2m and 23.4p in 2016).
NEXT FIFTEEN COMMUNICATIONS (NFC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 385p | MARKET VALUE: | £283m | |
| TOUCH: | 383-393p | 12-MONTH HIGH: | 425p | LOW: 234p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 241 | |
| NET ASSET VALUE: | 92p* | NET DEBT: | 17% | |
| Year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 92 | 6.0 | 6.9 | 2.30 |
| 2013 | 96 | 2.1 | 0.6 | 2.55 |
| Year to 31 Jan | ||||
| 2015** | 158 | 0.4 | -0.2 | 3.5 |
| 2016 | 130 | 5.6 | 6.0 | 4.2 |
| 2017 | 171 | 2.9 | 1.6 | 5.25 |
| % change | +32 | -48 | -73 | +25 |
Ex-div: 29 Jun Payment: 4 Aug *Includes intangible assets of £80m, or 109p a share **18-month period | ||||
