Next 15 still expecting modest growth despite Covid crisis

Next Fifteen Communications Group updated the market on its trading on Thursday, reporting that despite the impact of Covid-19 on the marketing industry, it expected to deliver modest growth for the first half of the financial year at both the revenue and profit levels.

The AIM-traded firm, which was holding its annual general meeting later in the day, said its balance sheet also remained “strong”, with net debt currently standing at around £5m.

Overall trading remained consistent with its update in April, as the new business pipeline remained “largely positive”, with a number of new assignments being won recently including work from Ernst & Young, the World Health Organization, Photobox and Sainsbury’s Argos, as well as additional assignments from Amazon, Google and Salesforce.

“The group believes it has done a good job in managing the impact of Covid-19 as it relates to our people, our customers and our business performance,” the board said in its statement.

“Many of our senior management team, along with the board, are taking salary reductions, and some staff are being furloughed.

“The move to working from home was managed seamlessly and we have progressed a series of initiatives that have focused on emerging from this crisis with healthier operating margins.”

Next Fifteen said that, as evidenced by its current level of net debt, it had also focussed “heavily” on cash conversion.

However, the board said it still felt it prudent to assume that any real recovery would not be seen until the latter part of the fiscal year.

The group said it had remained “relatively insulated” from the impact of Covid-19 on the economy, in part because of its geographic spread, partly due to the limited exposure it had to “highly affected areas” such as travel and hospitality, and lastly because more than half of its revenues came from the technology sector.

“We think this client, product and geographic mix will be important as we emerge from the economic impact of the pandemic.”

Given its healthy balance sheet, Next Fifteen said it expected to return to making selective acquisitions which would extend its engagement in business innovation and marketing technology businesses.

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

Lastly, the group said it had been exploring implementing a new environmental, social and governance (ESG) framework to accelerate its goal to become carbon neutral.

“The group believes that the right framework would support our current, already evolved diversity, equity and inclusion activities,” the board said.

“Our talent is by far our most important asset and the urgency of these initiatives has been reinforced by the recent Black Lives Matter protests and the response these events have had from our employees.”

One such framework being considered was B Corp status for the group, or its operating businesses.

“We will update shareholders on this topic when we announce interim results.”

At 0849 BST, shares in Next Fifteen Communications Group were up 7.57% at 398p.