Next Fifteen FY profit surges as expansion continues with Encore and Animl acquisitions

Bite and Lexis PR owner Next Fifteen has reported a 44 per cent rise in operating profit to £12.7m in the 12 months to 31 January, and announced two more acquisitions to grow its content and creative capabilities.

Tim Dyson: CEO hails strong trading in North America and recovery in UK
Tim Dyson: CEO hails strong trading in North America and recovery in UK

Revenue rose 10.6 per cent to £109.2m; growth was 15 per cent on a constant currency basis. Pre-tax profit grew 51 per cent to £12.5m and underlying earnings (ebitda) increased 38 per cent to £14.6m.

Next Fifteen said its US businesses "have continued to perform strongly", with revenue up 13 per cent to £64m. Organic growth was 11.3 per cent and headline operating profit moved from £13.7m to £14.1m.

Growth was led by Next Fifteen's Outcast, M Booth, Text and Blueshirt agencies and its recently acquired content ad agency Story, the company said. US margins stayed above 20 per cent but were impacted slightly by Story, which has historically achieved low-double digit margins.

Revenue recovered sharply in the UK, growing 27.3 per cent to £23.7m following a recent period of decline.

UK headline operating margins rose from 4.1 to 10.6 per cent, with the company citing "improved performances" from Bite and Lexis, plus recent investments and acquisitions including Agent3, Morar and Republic Publishing.

The firm said the integration of its Asia and EMEA businesses "delivered the expected improvements", with headline operating margins up from 1.9 to eight per cent in APAC and from -8.1 to 9.2 per cent in EMEA.

CEO Tim Dyson told PRWeek there was a modest decline in revenue Asia and mainland Europe as the two regions were integrated, leading to some accounts being resigned due to conflicts.

He said: "We’ve had very strong trading in North America and we’ve seen a very strong recovery of our UK business. We were also pleased by the progress we've made in Asia and in mainland Europe, both of them through the combination of the businesses."

This morning Next Fifteen announced that it had bought Encore, a programmatic advertising business, and also acquired a 30 per cent stake in Animl, a content and insight agency. Both are based in London. The firm paid £0.8m initially in total for both, but that figure is to grow substantially.

In January, the AIM-listed group announced plans for a share sale to raise approximately £4.3m. The company said it was targeting three acquisitions and investment opportunities in the first half-year, with a focus on digital firms rather than PR agencies.

Dyson told PRWeek: "We do expect to do further acquisitions this year. There's another one we’re looking at in the UK, and there’s a couple we’re working on in North America at the moment."

Chairman Richard Eyre said: "Next Fifteen continues to make good progress with strong revenue growth in the US and an improving margin performance from its operations in the rest of the world, notably the UK.

"The acquisition of Encore and investment in Animl... are in line with the group’s strategy of investing in businesses that deliver great content, insight and the technology that enables these. The group has got off to an encouraging start to its new financial year, with trading patterns of the last twelve months continuing."

Diluted earnings per share grew in the year from 7.4p to 13.2p as the company reduced its tax charge.

Next Fifteen moved its year-end from 31 July 2014 to 31 January 2015 to better align with client budgets. For the 18 months to 31 January 2015, revenue was £158.5m.

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