Next 15 reports 'excellent' results as full-year profit grows

Next 15 saw pre-tax profit rise 22 per cent to £49.1m in the year to 31 January 2021, in what it described as "excellent" results aided by its focus on the b2b and tech sectors.

Next 15 CEO Tim Dyson
Next 15 CEO Tim Dyson

Net revenue rose seven per cent to £266.9m - aided by acquisitions - for the listed owner of PR agencies Archetype, The Outcast Agency, The Brandwidth Group, M Booth and Publitek. Operating profit margin moved from 16.4 to 18.5 per cent. Figures are adjusted for factors including acquisition costs.

The group said following a review of its property in light of plans to operate more flexible home working, a £10m property impairment charge has been added due to "surplus office space". This resulted in a statutory loss before tax of £1.3m in the full year - versus a profit of £5.6m in the previous year - although Next 15 said it should bring savings of c.£5m annually.

Next 15 said its trading results were helped by its "limited exposure to the more heavily impacted sectors" such as leisure, travel, retail and hospitality. "We are not involved in the live events, traditional media buying or sports marketing sectors, which have suffered materially over the last twelve months," the group added.

"Approximately 60 per cent of our revenue is derived from the tech sector and our b2b marketing agencies, which are focused on driving revenue for their clients, and which excelled despite the uncertain economic environment whilst our b2b agencies recovered well after initial COVID-related client deferrals."

In Brand Marketing, the division that includes its PR agencies, net revenue grew four per cent to £140.5m but declined 5.5 per cent on an organic basis. However, adjusted operating profit increased 15.5 per cent to £34.6m at an improved operating margin of 24.6 per cent.

Next 15 stated: "The b2b agencies performed well, whilst M Booth recovered in the second half after a COVID impacted first half as clients deferred spend. Blueshirt had a very strong year on the back of the US tech IPO market."

Across the group, UK organic revenue fell 6.4 per cent to £106.2m, with recovery in Q4 "as consumer confidence recovered". Overall UK growth increased 9.1 per cent following acquisitions. Adjusted operating profit increased from £20.1m to £22.4m.

Next 15 described the US business has "resilient", with net revenue up 8.5 per cent to £138.4m - they declined 0.8 per cent on an organic basis. Adjusted operating profit from the US increased 29.3 per cent to £34.2m.

Net revenue in EMEA fell two per cent to £8.6m and adjusted operating profit increased to £2m at an improved adjusted operating margin of 23.2 per cent, "due to very tight cost control". In APAC, net revenue fell seven per cent to £13.6m although operating margin increased from 15.6 per cent to 17.1 and operating profit remained at a "very credible" £2.3m.

Next 15 said it has made a "strong start to the new financial year" and is "currently trading ahead of management expectations".

Chairman Penny Ladkin-Brand said: "In a year like no other, these are excellent results. As the first effects of the pandemic took hold at the start of the financial year, Tim [Dyson, CEO] said that he wanted Next 15 to come out of this year as a stronger business. He and the executive team have worked tirelessly in order to achieve that outcome. They have changed the way we operate, rethinking the offering to customers, how the businesses in the group interact and how we interact with our people.

"Most importantly, the past year has shown that our people have the character to handle challenges that are thrown at them. This resilience displayed by our people doesn’t appear on our balance sheet but it has proven to be an invaluable asset. We are grateful and proud of all the people in the Group for their efforts during the year to deliver these results.

"Looking to the year ahead, the Board is optimistic about the prospects for the group, despite the continued impact of COVID-19 on the economy. COVID-19 tested our business model but it also tested the character of the team that leads Next 15 and the people that work for the group across the world. The Board remains confident of the group’s underlying prospects. We believe we have the quality of people, the strategy and the financial strength to continue to outperform our marketplace."

Last month, Next 15 announced it was to repay the £1.4m it received from the UK Government via the furlough scheme.

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