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Next Fifteen Communications Group PLC

Next Fifteen tipped for more progress and acquisitions in 2019

Snapshot

Speaking in April, Next’s chief executive Tim Dyson said the company had “lots of scope” for acquisitions in the coming year

marketing

Quick facts: Next Fifteen Communications Group PLC

Price: £6.04

Market: LSE
Market Cap: £514.73 m
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  • 23 digital marketing and communications brands under one roof

  • First listed in 2000 as Text 100 Group, before changing its name to OneMonday and then to Next Fifteen in 2002

  • M&S, Samsung and Nike and other big names are among its customers

  • Market value of £515mln

 

What it does

Next Fifteen Communications Group Plc (LON:NFC) is a digital marketing and communications group, and its brands – there are currently 23 of them – span everything from digital content to PR to market research.

The latest addition to the stable was Planning-Inc, which was bought at the turn of the year for an initial £6.3mln sum, which could rise to £15mln if the business hits its performance targets.

Planning-Inc is a predictive analytics and data marketing business and it has been hired by the likes of Marks & Spencer Group PLC (LON:MKS) to boost customer engagement.

To take M&S as an example, Planning-Inc used its tech to analyse thousands of data points to figure out what each customer who had signed up to its newsletter was likely to want to see.

It then took that information and used it to tailor its customers’ email experience based on what is most likely to be right for them.

 

How is it faring?

Good, by all accounts. In its full year results for 2018 the company reported an adjusted pre-tax profit of £36mln for the year ended 31 January 2019, 23% higher than the year before, while net revenues were up 16% at £272.4mln.

Adjusted profit margins had also risen to 16.5% from 15.3% last year, while net debt was cut by over 50% to £5.2mln from £11.6mln.

As a result of the improved performance, Next Fifteen upped its final dividend to 5.4p per share from 4.5p, taking the total dividend 20% higher to 7.56p.

Looking to its current year, Next Fifteen said in an update in June that trading at the start of the year had been in line with its expectations, with the results from “significant” changes at its Archetype marketing agency expected to be felt in the second half.

The company added that its recent acquisitions were making a “strong contribution” to growth and it continued to have a good pipeline of purchases in both the US and the UK.

As a result, the group was confident in its prospects for the full year.

 

What the boss says

Speaking to Proactive in April, Next’s chief executive Tim Dyson said the company had “lots of scope” for acquisitions in the coming year.

Dyson said the number of targets would be similar to the four recent 'reasonably sized' acquisitions, which included predictive analytics firm Planning-Inc in January.

He added that the company also had its eye on emerging digital trends and planned to move into Innovation Consulting having ended 2018 with a strong balance sheet.

 

What the broker says

Peel Hunt currently has Next Fifteen pegged with a ‘buy’ rating and a target price of 640p, a 5.8% premium to its close price on 25 June 2019.

For its 2020 financial year, Peel Hunt is forecasting that Next Fifteen will deliver an adjusted pre-tax profit of £43.5mln on sales of £251.1mln.

With shares trading around 628p as of 26 June 2019, Next Fifteen has a market cap of £515.4mln.

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