Latest Next 15 figures report drop of a quarter in pre-tax profit but growth in revenue
Digital communications group Next 15 reported a three per cent increase in revenue while pre-tax profit fell by a quarter in its six-monthly interim results for the period ending 31 January.
Figures: The group reported a rise in revenues of three per cent
Revenues were up to £46.6m compared to £45.3m in 2012, while adjusted profit was up from £4.2m in 2012 to £4.5m, a rise of six per cent. However, pre-tax profit was down from £2.7m in 2012 to £2m.
The group reported investment in a "new sight and data business" due to launch this year as well as £2.5m of acquisition-related payments during the period, resulting in a net debt of £5.2m, up by £0.8m on 2012.
Chairman of Next 15, Richard Eyre, said: "The transition from traditional PR to digital communications continues at Next 15. This has been achieved without affecting performance for the half-year, which is in line with management expectations.
"Overall the group is seeing good progress from its portfolio of agencies; however, while revenues remain strong, the costs of restructuring and some isolated trading challenges are likely to impact the reported profits for the second half.
The report noted the merger of its digital PR agency Bite Communications and digital marketing agency Bourne last year and the post-balance sheet date acquisition of Washington DC-based digital agency Connections Media last month, which specialises in politics and public affairs.
Importance was placed on the ability of the group to re-skill its workforce to offer digital services and the report said "the rate of change among clients is gathering pace with a trend away from large traditional PR mandates towards digital services".
Eyre added: "Such is the pace of adoption for digital marketing services among its clients, the board is accelerating the transition to digital capabilities over the next two years through restructuring, investment an acquisition.
"It anticipates costs of approximately £2m over this period to enhance the group's capacity to compete effectively for marketing and communications budgets in fundamentally changed media conditions."
Next 15 counts PR brands Text 100, The OutCast Agency, Lexis and M Booth in its group, as well as research business Redshift Research and digital agency Beyond.
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