Archetype owner Next 15's pre-tax profit surges 69 per cent in H1

Listed marcomms group Next 15 has reported a 69 per cent rise in pre-tax profit to £35m in the six months to 31 July, naming PR agencies Archetype and MBooth among its strong performers.

Archetype owner Next 15's pre-tax profit surges 69 per cent in H1

Overall revenue rose 32 per cent to £165.9m at Next 15 in H1, while its adjusted operating margin was 21.1 per cent, up from 16.8 per cent in the same period last year. The group, which also owns PR consultancies Outcast, The Brandwidth Group and Publitek, turned around an operating loss of £0.4m to generate an operating profit of £14.9m.

The group had already reported 23 per cent growth in organic revenue in the first half, and +29 per cent in the second quarter.

Next 15 also announced a return to dividend payments after suspending them during the pandemic. It said refinancing has provided up to £100m of debt capacity to fund further acquisitions and capital investment; it acquired Shopper Media Group and a controlling interest in Blueshirt Capital Advisers in the period.

The group's chair, Penny Ladkin-Brand, said: “Our first-half results have seen very strong organic revenue and profit growth across all segments and we continue to benefit from the same momentum in our second half. The increasing mix of digital services is providing strong operating leverage, although we are also taking the opportunity to accelerate investment in talent and product development to continue to drive longer-term growth.”

At Next 15's Customer Engagement arm, organic net revenue grew 14.6 per cent, turning around a decline of 11.4 per cent last year. Revenue grew 10 per cent to £91.2m, with operating profit up 25 per cent to £20.4m.

Next 15 said the division – its biggest – reported "positive performances across the board", with MBooth the "standout performer, benefitting from a recovery in revenues from its more consumer-oriented client base and its broad range of service offerings".

"Archetype and Beyond’s profitability have both risen significantly in the period due to resilient revenue performances and efficiency savings," Next 15 added.

Of its other divisions, there was particularly strong organic net revenue growth at Customer Delivery (48.8 per cent) and Business Transformation (47.4 per cent), with Customer Insight growing 22.3 per cent.

The group said its "strong trading" has continued into Q3 and it is "currently seeing no sign of a slowdown in client demand, despite being against a tough comparable period in our second half".

"Our new positioning as a growth consultancy is clearly resonating with our clients and we are confident of a positive financial performance for the rest of the year."

Next 15 reported a net cash figure of £6.6m, versus a net debt of £5m this time last year. It said its "strong balance sheet provides scope for further investments, both in the businesses and in M&A, to accelerate our long-term growth".

"Given the robust performance of the businesses, we are using the period to accelerate investment in productising a number of areas of the group and hire additional digital talent. While these investments will have a minor impact on margins this year, they are expected to help drive sustained long-term organic growth."

Next 15 is to pay an interim dividend of 3.6p on 26 November 2021, which it said is a 20 per cent increase on what it would have paid last year.

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