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Next Fifteen expands client base despite pandemic

Snapshot

  • +20 digital marketing and communications brands under 1 roof
  • M&S, Samsung and Nike among its customers
  • Pandemic expected to hit but client wins continue
marketing

Quick facts: Next Fifteen Communications Group PLC

Price: 377.5 GBX

LSE:NFC
Market: LSE
Market Cap: £342.16 m
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What it does

Next Fifteen Communications Group Plc (LON:NFC) is a digital marketing and communications group, and its brands span everything from digital content to PR to market research.

The group's aim is to build a group of specialised companies that can cover a wide range of sectors and geographies, allowing it maximum access to customers and international talent.

How it's doing

Next Fifteen expects “modest growth” in both revenues and profitability in the first half of its financial year, it said in June.

In a presentation to the company’s annual meeting, chief executive Tim Dyson said: “Overall trading remains consistent with the update provided in April, the new business pipeline remaining largely positive with a number of new assignments being won.”

The marketing and communications specialist said it has won work from Ernst & Young, the World Health Organization, Photobox and Sainsbury’s Argos as well as additional assignments from Amazon, Google and Salesforce.

Dyson said the group had done a “good job” managing the impact of coronavirus, with a focus on boosting operating margins and cash conversion.

And he added Next 15 had been “relatively insulated” from the sectors worst affected by the lockdown, though he also cautioned: “We still feel it is prudent to assume that any real recovery will not be seen until the latter part of the fiscal year.”

With net debt of just £5mln and a strong balance sheet, Dyson confirmed the group plans to return to making selective acquisitions.

“We also recognise the importance of paying a regular and sustainable dividend to our shareholders and are reviewing when to resume payments,” investors were told.

What the boss says: Tim Dyson, chief executive 

“We still feel it is prudent to assume that any real recovery will not be seen until the latter part of the fiscal year.”

“We also recognise the importance of paying a regular and sustainable dividend to our shareholders and are reviewing when to resume payments,

Inflexion points

  • No material impact from the crisis until April
  • Modest growth forecast in half-year
  • Client wins continue
  • Strong balance sheet makes acquisitions likely say brokers

Broker estimates

Next Fifteen's target share price was raised to 520p by Berenberg on the back of the June update.

The German broker said it was a robust statement from the digital marketing specialist, which forecast modest sales and underlying earnings growth in the current half-year to July.

In the context of the impact of COVID-19 on the media landscape and the ongoing restructuring within the brand marketing division, which has been the most affected, this is a solid result, Berenberg said.  

“It leads us to increase our FY 2021-22 EBIT estimates by c11/3% respectively,” added the broker.

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