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Next Fifteen hikes dividend as half year profits rise by a quarter

The digital communications firm reported an adjusted pre-tax profit of £15.1mln, up 26% on the same period a year ago, while net revenues rose 14% to £106.8mln

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The group’s interim dividend for the period rose 20% to 1.8p per share

Next Fifteen Communications Group Plc (LON:NFC) has hiked its interim dividend in its half-year results as its pre-tax profit for the period rose by a quarter.

The digital communications firm reported an adjusted pre-tax profit of £15.1mln, up 26% on the same period a year ago, while net revenues rose 14% to £106.8mln. Operating margins also increased to 14.4% from 13.2% previously.

READ: Next Fifteen snaps up digital marketing business TAG for up to £3.6mln

In its divisions, the firm reported that its UK business had seen a 56% increase in revenues to £39.9mln while operating profits grew to £9.5mln from £5.2mln and operating margins expanded to 23.7% from 20.2%.

However, in the US the group’s revenues declined 2% to £55.8mln while operating profit fell to £9.4mln from £10.3mln, mainly due to the strength of sterling against the dollar in the period.

In its EMEA and APAC divisions, revenues rose to £4.2mln from £3.7mln and declined to £6.8mln from £7.1mln respectively. The firm added that it was expecting an improvement in its operating profit margins, which declined to 16.9% from 18.1%, in the “seasonally stronger” second half. The group’s interim dividend for the period rose 20% to 1.8p per share.

In its outlook, Next 15 said prospects fort eh second half of the year “remain good” and that it was confident of meeting its full-year expectations.

The firm also said it had announced plans to merge its Text 100 and Bite businesses in the UK and US, having previously merged them in its European and Asia-Pacific arms, after the reporting period which was expected to lead to “material restructuring costs” in the second half.

Richard Eyre, chairman of Next 15, said the firm’s growth in the first half was evidence of “an effective strategy”, with the pace of change in the marketing sector “showing no signs of slowing”.

In a note to clients, analysts at City broker Peel Hunt upped their target price for the firm to 630p from 570p saying the merger between Text 100 and Bite businesses would "increase the pace of transformation within the brand" as the slower growing Text was combined with the more digitised and faster-growing Bite division.

--Adds broker change and comment--

Quick facts: Next Fifteen Communications Group PLC

Price: 514 GBX

LSE:NFC
Market: LSE
Market Cap: £444.83 m
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