Next Fifteen: FY15’s Strong Rebound Sets Good Growth Platform
Edison | Apr 28, 2015 06:08AM ET
FY15’s strong rebound sets good growth platform
Next Fifteen's (LONDON:NFC) results for the 12 months (FY15) and 18 months to January 2015, following a change in the year-end, show good progress. Revenue in FY15 rose 10.6% to £109.2m, with organic growth of 6.1%. In addition to continued strong performance in the US, the group has achieved a solid recovery in operating margins in the UK, Europe and Asia, following management implementing initiatives to improve the group’s profitability. Normalised FY15 PBT came in at £12.5m, nicely ahead of our estimate by £0.5m. Together with strategy focused on creating a new type of globally integrated marketing business, the group appears to have established a good future growth platform. Reflecting this and management stating that FY16 has got off to an encouraging start, we raise our FY16 normalised EPS estimate by 2.0p to 14.6p and initiate the same for FY17 at 16.1p.
Good progress in FY15
FY15 revenue rose 10.6% to £109.2m (FY14: £98.7m), with organic growth of 6.1%. Group adjusted operating margin rose to a group record 11.7% in FY15 from the depressed 8.9% in FY14, resulting in adjusted operating profit rising 45% to £12.73m from FY14’s £8.76m, which was affected by challenging trading, predominately in Europe and Asia, as well as to a lesser extent in the UK. While normalised PBT rose 51.6%, diluted EPS after a 23.9% tax charge for FY15 of 13.2p (2.2p ahead of our estimate) was up 78%, a larger percentage gain primarily due to the exceptionally high tax charge of 34.7% in FY14.
Acquisitions further the group’s digital transition
During FY15, the group acquired Story Worldwide, a global content advertising business, and Morar, an international market research consultancy. After the year-end for an aggregate consideration of £4.6m and 0.5m shares, the group added a 30% stake in Animl, a specialist digital marketing consultancy, 75% of Encore, a programmatic advertising technology business, and acquired the remaining minority interests in Republic Publishing (49%) and Beyond (32.8%).
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