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Next Fifteen Communications Group Plc: THE INVESTMENT CASE

Next Fifteen's momentum continues into the new financial year

"Our Beyond, MBooth and Publitek agencies have been stand-out performers, whilst we have achieved solid performances pretty much across the portfolio"
Marketing and public relations
UK revenues grew by 36.8% year-on-year, boosted by recent acquisitions

Digital communications company Next Fifteen Communications Group PLC (LON:NFC) enjoyed another year of record revenues and earnings last year.

Revenues rose by 15% to £196.8mln in the year to 31 January 2018 from £171.0mln the year before, with organic revenue growth of 5.2%.

WATCH: Another year of record revenues and earnings for Next Fifteen Communications

“Organic growth that had been modest amid the political and economic uncertainty of the first half of the year, grew to more familiar levels in the second, with many of the group’s businesses turning in strong performances,” said Richard Eyre, the chairman of Next 15.

Adjusted profit before tax rose 21% to £29.3mln from £24.2mln the previous year.

Diluted earnings per share of 27.8p were up 19% on the previous year's 23.4p and a shade ahead of market expectations of 27.35p.

The full-year dividend of 6.3p was bang in line with expectations and up 20% on the preceding year's pay-out of 5.25p.

The group has made a good start to the new financial year with the strong performance seen in the second half of the previous financial year continuing into the first half of the new one; organic revenue growth year-on-year was in the high single digits in percentage terms, the group revealed.

“Next 15 continues to develop its services against our template of Creativity, Data and Technology, ensuring the group’s capability to develop with the extraordinary pace of technology in our sector,” Eyre said.

“These results were influenced by three major factors: strong organic growth in the second half of the year and additional well-executed acquisitions, offset by some negative impact from the relative strength of sterling,” Eyre commented.

“High single-digit organic revenue growth has continued into the new financial year, augmented by strong performances from newly acquired agencies, giving us confidence for another good year ahead,” the Next 15 chairman declared.

Organic growth still strong

Broker Peel Hunt said the results were in line with expectations.

“Looking at the performance of the different geographical regions - for the UK, revenues grew by 36.8% yoy [year-on-year] to £58.3mln; growth was mainly attributed to the acquisitions undertaken in the period; however, organic growth was still strong at 7.6% (double digits for H2) for region,” Peel Hunt noted.

“Operating margins for the UK expanded from 18.9% to 22.3%. Organic growth in the US came in at 5.1%, margins declined slightly to 20% (from 20.9%) due to investment in taking UK companies to the US.

“Revenues grew organically by 3.4% in EMEA with the focus on markets with the potential to scale; margins in this region edged up slightly to 9.6% from 9%.

“Asia Pac continues to struggle with organic growth at -0.7%, margins dropped to 13.6% from 15.2%,” Peel Hunt noted.

German bank Berenberg, meanwhile, reiterated its 'buy' recommendation and raised its target price to 560p from 500p.

Shares in Next Fifteen were a penny higher at 451p in lunchtime trading.

--- adds broker comment and share price ---

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Next Fifteen Communications Group Plc Timeline

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