Communications group Next Fifteen’s (NFC) strategy for growth relies on its ability to leverage the strength of its US-based businesses, building on their existing relationships with high-growth companies (read: Silicon Valley start-ups). So far, progress has been a mixed bag. The US businesses saw organic revenue growth of 7 per cent in the period, hampered slightly by the strength of sterling against the dollar, but operating margins slipped to 16.9 per cent, from 18.1 per cent in the prior period, due to investment commitments linked to bringing some of the group’s UK brands across the Atlantic.
With this in mind, the group is merging two of its agencies, Bite and Text 100 in the US and UK. Text 100 faced challenges in the US after losing long-standing clients IBM and Lenovo, while Bite was one of the standout players in the region. The two businesses’ Europe and Asia Pacific operations were merged two years ago, and tellingly it will be Bite chief executive Helena Maus who will take over the combined agency.
Organic growth remained strong at 8.7 per cent, driven primarily by growth in the UK division, which increased revenue by 56 per cent following a restructuring. The group continued to win clients, bringing in Capital One, Diageo and AIG in the period.
Broker Peel Hunt is forecasting adjusted pre-tax profit of £35.7m, giving EPS of 32.8p for 2018 (from £29.3m and 27.8p in 2017).
| NEXT FIFTEEN (NFC) | ||||
| ORD PRICE: | 558p | MARKET VALUE: | £441m | |
| TOUCH: | 548-558p | 12-MONTH HIGH: | 610p | LOW: 355p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 34 | |
| NET ASSET VALUE: | 110p* | NET DEBT: | 30% | |
| Half-year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 93.5 | 5.2 | 5.30 | 1.80 |
| 2018 | 107 | 10.3 | 10.0 | 2.16 |
| % change | +14 | +97 | +89 | +20 |
| Ex-div: | 25 Oct | |||
| Payment: | 23 Nov | |||
| *Includes intangible assets of £102m, or 129p a share | ||||
