Next Fifteen (NFC) has shifted from PR to data- and technology-driven marketing, partly on the back of M&A activity, although the 6.4 per cent growth in organic net revenue points to in-house operational progress. However, changes to the business model come at a cost, so even though adjusted pre-tax profit increased by 22.7 per cent to £36m for FY2019, it belies a mixed performance across business segments as the group invests in its future.
Brand marketing, constituting 60 per cent of net revenue, saw only 0.1 per cent organic growth, although there were margin improvements at the operating level. The group incurred £2.2m in exceptional costs due to the merger of the Text 100 and Bite businesses (relaunched in February under the Archetype brand). Pressure on the top line was particularly noticeable in the US market, supposedly a key expansion area, in which some clients outsourced work to the UK on cost grounds.
By contrast, Data and analytics, comprising only 10 per cent of net revenue, exhibited the largest increase in organic revenue growth at 30.6 per cent. Acquiring US-based demand generation firm Activate and UK-based predictive analytics company Planning-inc demonstrates Next Fifteen’s focus on embedding data, analytics and technology capabilities across the group. This strategy has proved effective in the UK. Outpacing other geographical areas, organic revenue growth was 15.5 per cent and adjusted operating profit surged by 57.7 per cent to £20.5m.
Peel Hunt forecasts adjusted pre-tax profits of £43.8m and EPS of 37.8p in the year to January 2020, rising to £49.1m and 42.7p in 2021.
| NEXT FIFTEEN COMMUNICATIONS (NFC) | ||||
| ORD PRICE: | 562p | MARKET VALUE: | £470m | |
| TOUCH: | 552-562 | 12-MONTH HIGH: | 610p | LOW: 436p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 32 | |
| NET ASSET VALUE: | 133p | NET CASH: | 4.7% | |
| Year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 158 | 0.4 | -0.2 | 3.50 |
| 2016 | 130 | 5.6 | 6.0 | 4.20 |
| 2017 | 171 | 2.9 | 1.6 | 5.25 |
| 2018 | 197 | 13.3 | 11.6 | 6.30 |
| 2019 | 224 | 18.8 | 17.5 | 7.56 |
| % change | +14 | +41 | +51 | +20 |
| Ex-div: | 13 Jun | |||
| Payment: | 26 Jul | |||
| *Includes intangible assets of £126m, or 150p a share | ||||
