Next 15 expects 'modest growth' in H1, eyes acquisitions and B Corp status

Next 15 expects to see "modest growth" in revenue and profit in the first half of its financial year despite the impact of COVID-19, with "real recovery" likely in the "latter part of the fiscal year".

Next 15 chief executive officer Tim Dyson
Next 15 chief executive officer Tim Dyson

The listed marcomms group – which owns PR agencies Archetype, The Outcast Agency, The Brandwidth Group, M Booth, and Publitek – also said it expects to return to the acquisition trail, and is looking at achieving B Corp status.

Next 15 said it has done a "good job in managing the impact" of the coronavirus, in a statement released before its Annual General Meeting today.

The company, whose financial year began on 1 February, said in April that business had not been materially affected by the pandemic to date, although it warned of the future impact.

The firm said today: "Next 15 is pleased to report that, despite the impact of COVID-19 on the marketing industry, it expects to deliver modest growth for the first half of this financial year at both the revenue and profit levels."

Next 15 said its balance sheet "remains strong", with net debt current at around £5m.

Trading remains "consistent" with the update in April, with the new business pipeline "remaining largely positive". It recently won new work with Ernst & Young, the World Health Organization, Photobox and Sainsbury’s Argos, as well as additional assignments from Amazon, Google and Salesforce.

Next 15 added: "The group believes it has done a good job in managing the impact of COVID-19 as it relates to our people, our customers and our business performance. Many of our senior management team along with the board, are taking salary reductions, and some staff are being furloughed. The move to working from home was managed seamlessly and we have progressed a series of initiatives that have focused on emerging from this crisis with healthier operating margins. As can be seen by our current level of net debt, we have also focused heavily on cash conversion.

"However, we still feel it is prudent to assume that any real recovery will not be seen until the latter part of the fiscal year.

"The group has remained relatively insulated from the impact of COVID-19 on the economy. This is in part because of our geographic spread, in part because of the limited exposure we have to highly affected areas such as travel and hospitality and lastly because over half of our revenues come from the technology sector. We think this client, product and geographic mix will be important as we emerge from the economic impact of the pandemic."

Acquisitions

Next 15 said that given its "healthy balance sheet", the group "expects to return to making selective acquisitions which will extend our engagement in business innovation and marketing technology businesses".

The company said it has been "exploring implementing a new ESG (environmental, social, and governance) framework to accelerate our goal to become carbon neutral".

"The group believes that the right framework would support our current, already evolved DE&I (diversity, equity and inclusion) activities. Our talent is by far our most important asset and the urgency of these initiatives has been reinforced by the recent Black Lives Matter protests and the response these events have had from our employees. One such framework being considered is B Corp status for Next 15 and/or its operating businesses."

A small number of PR agencies have achieved B Corp status, including Milk & Honey and Don't Cry Wolf. The marcomms holding group MullenLowe also has the accolade.

Meanwhile, Next 15 said it is reviewing when to resume dividend payments.

Next 15 had earlier reported a 1.4 per cent rise in revenue to £135m in its Brand Marketing division, which includes Archetype, OutCast, M Booth, Blueshirt and Publitek, in the year to 31 January 2020.

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