Next 15 pre-tax profit surges 50 per cent in year of 'exceptional progress'

Next Fifteen Communications saw pre-tax profit rise 50 per cent to £24.2m ($30.1m) in the year to 31 January, boosted by growth in the US and higher margins elsewhere, and aided by acquisitions and favourable exchange rates.

Chairman Richard Eyre: organic growth, acquisitions and exchange rates helped performance
Chairman Richard Eyre: organic growth, acquisitions and exchange rates helped performance

Full-year revenue at UK-listed Next 15 - which owns PR shops Bite, Lexis, Text100 and The Blueshirt Group - rose 32 per cent to £171m ($212.6m) after the group made four acquisitions in the period, including tech PR agency Pinnacle and content marketing business Publitek.

Growth was 10 per cent on an organic basis. Underlying earnings (EBITDA) rose 51 per cent to £29m ($36.1m). (Figures exclude factors such as acquisition costs and other charges). 

Significant clients wins in the period included LinkedIn, GM and KPMG.

The company described 2016 as "a period of exceptional progress across the group", adding that it had made a "good start" to the new financial year with "encouraging signs across our brands".

Next 15 chairman Richard Eyre said: "The results for the financial year to January 2017 were helped by forex [foreign currency exchange movements], but reflect strong organic growth, judicious and effective acquisitions and continued organisational efficiencies in an entrepreneurial culture. Current trading reassures the board that the outlook for Next 15 continues to be positive."

Net debt rose from £6.6m ($8.2m) to £11.4m ($14.2m) in the period, although Next 15 said its balance sheet remained "healthy", citing its debt-to-earnings ratio. Acquistion costs totalled £21.6m ($26.9m).

Regional breakdown

Revenue in the US rose 28.1 per cent to £107m ($133.1m), with organic growth of 12.6 per cent. Profit margin exceeded 20 per cent, although it was hit by the performance of its newly acquired ad agency Story Worldwide.

"M Booth and Beyond US have had impressive performances whilst OutCast, Connections Media and Bite US have continued to deliver solid results," Next 15 said.

The company said a "series of operational improvements" led to higher operating margin outside the US.

"We have improved the efficiency of a number of our UK businesses whilst acquiring high-growth, high-margin agencies in Publitek, Pinnacle and Twogether."

UK revenue grew 52.7 per cent to £42.6m ($53m), with adjusted operating profit more than doubling to £8m ($10m) and adjusted operating margin increasing from 13.6 to 18.9 per cent.

Next 15 said there was an "improved trading performance" in EMEA as it continued to focus on "markets of potential scale". Revenue rose 11.5 per cent to £7.2m ($9m) and operating profit increased to £0.6m ($0.8m) at an improved operating margin of nine per cent.

APAC produced an "encouraging performance", with Next 15 saying it continued to benefit from the operational restructuring undertaken in 2015.

Revenue in the region increased 18.4 per cent to £14.2m ($17.7m), with operating margin up from 11.5 to 15.2 per cent and operating profit rising by 56.7 per cent to £2.2m ($2.7m).

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