25 May 2012

Next Fifteen dash to digital

18/10/2011 Ben Jaglom

PR concern Next Fifteen Communications (NFC) has declared a 19 per cent increase in sales for the year to July having gone on an acquisition spree.

The AIM-quoted venture declared sales of £86 million (2010: £72.3 million) while pre-tax profits rose to £7.5 million (2010: £5.3 million) as a result of a number of revaluations from its acquisitions. Over the period Next Fifteen purchased digital agency Beyond, digital specialist Type 3 and took a 85 per cent stake in investor relations concern Blueshirt, as well as two acquisitions in Asia. Net debt stood at £1.6 million (2010: cash of £5.1 million)

In an interview with Growth Company Investor chief executive officer Tim Dyson enthused that 'while the activity with the acquisitions is exciting we also had organic growth of 11 per cent'. He argued that 'Our numbers show that the transition to digital has been taking place as people look to mediums such as Twitter and Facebook for their marketing.'

For the coming year he said the company would be carrying out 'more selective acquisitions' adding that the PR industry is moving away from the 'old industry' staffed by people 'Who are good at selling to journalists' to what he said was the 'future' which will contain people 'who can optimise content, who can do data analytics and who can produce content for YouTube'.

Analysts at paid-for research house Edison are forecasting pre-tax profits of £9.5 million (EPS: 9.5p) on revenues of £93 million for the year to July 2012. In 2013 profits of £10.7 million (EPS: 10.6p) on sales of £99 million are expected. A dividend of 2.25p and 2.5p is penciled in for 2012 and 2013, respectively.

Growth Company Investor recommended shares in Next Fifteen in 2009 at 52p and subsequently in August at 76.5p. Currently trading at 78.5p, the group has profited from its digital strategy at a time in which the industry as a whole is struggling and moving towards further consolidation. At 78.5p, we retain our buy rating.

Tags: Acquisitions, Media on AIM, Move to digital, PR business

Sector: Media

Companies: Next Fifteen Communications

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