Next 15 sees return to 'modest' organic growth

Next 15 expects revenue to be up about nine per cent in the three months to 31 January versus the same period last year, with a return to 'modest' organic revenue growth in the quarter.

Next 15 CEO Tim Dyson
Next 15 CEO Tim Dyson

The group said it expects results for its financial year, which ends on 31 January, to be ahead of current market expectations, with operating profit margin showing "strong growth" on last year.

In a trading statement this morning, the listed owner of PR agencies Archetype, The Outcast Agency, The Brandwidth Group, M Booth and Publitek said it expects organic revenue decline in the second half of its financial year to be about 1.5 per cent.

This compares to a decline of 6.6 per cent in H1, and three per cent in Q3.

Next 15 said revenue in the US and UK "strengthened as our financial year has progressed" and pointed to a "resilient performance" in H2.

"The performance has again been led by our b2b technology-focused agencies, such as Activate, Twogether and Agent3, but we have also seen a strong recovery in performance from our b2c agencies, such as M Booth and Savanta," the company stated.

"While COVID-19 continues to impact the global economy, we remain cautiously optimistic about trading as we enter our new financial year. The strength of our customer base, coupled with the increasingly digital and data-driven nature of our product offering, continue to position us well to capitalise on opportunities as the economy continues to adapt to and ultimately emerge from the pandemic. Unsurprisingly, therefore, new business activity has remained strong and we have won a number of significant new clients including Hitachi, TDK, Door Dash, and Goodyear."

The group said it is "highly cash-generative and has a strong balance sheet", with net cash at 25 January of about £10m, after the early repayment of VAT deferred from earlier in the year. Next 15 anticipates resuming dividend payment following its AGM in June, the group said.

Issuing a Buy recommendation for Next 15, analyst Steve Liechti at Numis said the company "looks a relative winner given its modest rating, exposure to vaccine-led recovery, growth skew to tech clients/digital/data, plus a very strong [balance sheet]".

Last November, Next 15 agency Archetype announced it had acquired independent London-based firm Marlin PR, with plans to merge the two entities in 2021.

At its half-year results announcement in September, Next 15 said it was 'actively marketing' about one-third of its real estate in London, New York and San Francisco after deeming it 'surplus to requirements' amid the shift to more home working.

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