Next 15 : FY25 Final Results Document

15 April 2025

Next 15 Group plc

("Next 15" or the "Group")

Results for the year ended 31 January 2025

Resilient performance in a challenging macro-environment

Next 15 Group plc (AIM:NFG), the tech and data-driven growth consultancy, today announces its final results for the year ended 31 January 2025.

Financial results for the year to 31 January 2025

	Year ended 31	Year ended 31 % change year on year
	January 2025	January 2024
	£m	£m
Adjusted results1
Net revenue	569.7	577.8	(1.4)%
Adjusted operating profit	107.4	121.1	(11.3)%
Adjusted operating profit margin	18.9%	21.0%
Adjusted profit before tax	101.4	117.9	(14.0)%
Adjusted diluted earnings per share	69.3p	81.6p	(15.1)%
Statutory results
Net cash generated from operations	96.1	105.0	(8.5)%
Revenue	729.8	734.7	(0.7)%
Operating profit	56.6	77.1	(26.6)%
Profit before tax	62.5	80.3	(22.2)%
Diluted earnings per share	37.9p	50.3p	(24.7)%
Total dividend per share	15.35p	15.35p

1Adjusted results have been presented to provide additional information that may be useful to shareholders to understand the performance of the Group by facilitating comparability both year on year and with industry peers. Adjusted results are reconciled to statutory results within the appendix.

Financial and Operational Highlights

• Group net revenue decline of 1.4% to £569.7m, reflecting a challenging macro backdrop; offset by strong performances from SMG, M Booth, M Booth Health, MHP and Brandwidth
• Adjusted operating profit of £107.4m, at a margin of 18.9%. Statutory operating profit down 26.6% to £56.6m
• Adjusted profit before tax of £101.4m
• Adjusted diluted earnings per share of 69.3p and statutory diluted earnings per share of 37.9p
• Statutory revenue decline of 0.7% to £729.8m.
• Final dividend unchanged at 10.6p per share and a total dividend of 15.35p for the year
• Net cash generated from operations before tax was £96.1m, with net debt of £38.4m as at 31 January 2025
• Significant new client wins including Deliveroo, PayPal, the Bank of England and WHSmith US
• Completed bolt-on acquisitions of Studio La Plage, Tuva and Cadence for initial consideration of £8.0m
• Creating a new business that brings together our four B2B tech marketing agencies
• £17.0m restructuring cost incurred in the year realising an annualised saving of £45m, of which £16m relates to Mach49. Of the remaining £29m saving, approximately £9m has been realised in the year

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Current trading and outlook

Trading in the new financial year is broadly in line with management expectations, with the trends of last year continuing into the early months of FY26, with several new business wins. Despite the current economic and geopolitical backdrop, performance continues to be resilient across all four business segments, in particular in our consumer businesses.

In line with our previous communication, the loss of the significant Mach49 contract will have a material adverse impact on our FY26 financial performance. We also note that Sterling has recently strengthened against the US dollar. Should this continue, this will lead to further headwinds in the current financial year. The Group's continued focus on simplification of the business coupled with product related investment in AI sets the foundation for long term growth, as well as the strength and quality of our management teams and client relationships gives us confidence in delivering a solid trading performance in the year ahead.

Commenting on the results, Tim Dyson, CEO of Next 15 said:

"We note that markets are reacting strongly to the trade war. As of today, our customers are still determining the impact on their businesses. We anticipate this to be non-linear and strongly dependent on supply chains. We also anticipate that, as during Covid, some customers will increase their spend in a bid to drive sales, while others are more conservative. While we have not seen any notable change to our trading, either positive or negative, we are taking a cautious view given the market volatility and uncertainty over the impacts a trade war may have. However, we continue to invest thoughtfully and focus on strategic improvements to the Group. As a result, we remain confident about the medium-term prospects for our business."

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Webcast for analysts and investors

Next 15 will host an analyst and investor webcast at 9:30 today, Tuesday 15 April 2025.

To access the webinar, please contact [e-mail]

For further information contact:

Next 15 Group plc

Tim Dyson, Chief Executive Officer [phone]

Peter Harris, Chief Financial Officer [phone]

Deutsche Numis (Nomad & Joint Broker)

Mark Lander, Hugo Rubinstein

[phone]

Berenberg (Joint Broker) Ben Wright, Mark Whitmore [phone]

MHP (Investor Relations)

Simon Evans, Eleni Menikou, Veronica Farah [phone] [e-mail]

Notes:

Net revenue

Net revenue is calculated as revenue less direct costs as shown on the Consolidated Income Statement.

Organic net revenue growth

Organic net revenue growth is defined as the net revenue growth at constant currency excluding the impact of acquisitions and disposals in the last 12 months. For acquisitions made in the prior year, only the corresponding months of ownership are included in the calculation of growth. Net revenue is reconciled to statutory revenue within the appendix and a reconciliation of the movement in the year is included in the net revenue bridge on page 6.

Adjusted operating profit margin

Adjusted operating profit margin is calculated based on the adjusted operating profit as a percentage of net revenue. Adjusted operating profit is reconciled to statutory results within the appendix.

This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation.

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About Next 15

Next 15 (AIM:NFG) is an AIM-listed tech and data-driven growth consultancy with operations in Europe, North America and across Asia Pacific. The Group has a strong track record of creating and acquiring high-performance businesses. For acquired businesses it offers an opportunity to take advantage of the Group's global operational infrastructure and centralised resources to accelerate their growth. The Group has long-term customer relationships with many of the world's leading companies including Google, Amazon, Facebook, Microsoft, IBM, American Express and Procter & Gamble.

The business operates across four segments, each of which describes how we help customers grow in different ways: Customer Insight helps them understand their opportunities and challenges; Customer Engagement optimises their reputation and digital assets; Customer Delivery helps them connect with customers to drive sales; and Business Transformation helps maximise long-term value through corporate positioning, business design and the development of new ventures.

At Next 15, success is underpinned by a people-led approach. Our purpose is to make our customers and our people the best versions of themselves, and our culture is empowering and respectful.

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Chairman and Chief Executive's Statement

Review of FY25

In FY25 the Group delivered a resilient performance in an uncertain and unpredictable macro-environment. The loss of Mach49's significant contract was announced in September 2024 and reduced Group revenues by approximately £7m in the year and will reduce revenues by £75.9m in the year to 31 January 2026. The tech sector continued to be challenging, whilst our government revenues in the UK were impacted by political instability when an early general election was called in July 2024. Our brands reacted to the weaker than expected revenue performance by undertaking significant cost reduction exercises, resulting in leaner and more focused businesses. We also completed three bolt-on acquisitions for a combined initial consideration of £8.0m to provide further opportunities for revenue growth in a number of our key businesses.

The statutory operating profit decreased by 26.6% to £56.6m (2024: £77.1m) and diluted earnings per share decreased

to 37.9p (2024: 50.3p).

Acquisitions

The Group has made selective acquisitions during the year with a focus on expanding several of our existing businesses through bolt-on acquisition. During the period, the Group acquired two small businesses for its UK-based communications business, MHP Group, which performed strongly in the year. The acquisitions were made to build out its range of products and services in the tech and content areas. The Group also completed the acquisition of Cadence for Transform, the technology and data consultancy. In the UK, Cadence is renowned for its public service transformation expertise and has become a trusted adviser to central and local government, as well as the rail and road sectors.

Returns to shareholders

The Group maintains a disciplined and consistent approach to capital allocation, with a target leverage of below 1.5x EBITDA. The first priority is to maintain a healthy balance sheet, then investment into the business, and we will continue to invest in a selective manner to support long-term growth of the Group. The Board will continue to prioritise organic investment in the business, alongside selective M&A with a focus on bolt-on acquisitions to enhance key business areas. Beyond this, our priority is to return excess cash to shareholders, firstly through a regular dividend and, when possible, further capital returns.

The Board is recommending the payment of a final dividend for the year ended 31 January 2025 of 10.6p per share, which would represent a total dividend of 15.35p for the year, which is unchanged on the 2024 financial year.

In the prior year, the Group announced a share buyback programme to a maximum of £30m, allowing us to return excess cash to shareholders. At the previous reporting period on 31 January 2024, we had, to that date, invested £4.5m buying back shares. We also announced we would acquire up to a further £10m worth of shares by the end of July 2024, of which we only spent £5.3m in the year, buying back 607,199 shares which have been cancelled. Currently, no further share buyback is planned.

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Review of Adjusted Results to 31 January 2025

In order to assist shareholders' understanding of the performance of the business, the following commentary is focused on the adjusted performance for the 12 months to 31 January 2025, compared with the 12 months to 31 January 2024. The Directors consider these adjusted measures better reflect the trading performance of the business as well as aligning with how shareholders value the business. They also give shareholders more information to allow for understandable like-for-like year-on-year comparisons and more closely correlate with the cash and working capital position of the Group.

	Year Ended	Year Ended
ADJUSTED RESULTS1	31 January 2025	31 January 2024
	£'000	£'000
Net revenue	569,696	577,839
Operating profit	107,446	121,081
Operating profit margin	18.9%	21.0%
Net finance expense	(6,001)	(3,136)
Profit before income tax	101,445	117,945
Effective tax rate on adjusted profit	27.4%	26.3%
Diluted adjusted earnings per share	69.3p	81.6p

1Adjusted results have been presented to provide additional information that may be useful to shareholders to understand the performance of the business by facilitating comparability both year on year and with industry peers. Adjusted results are reconciled to statutory results below and within the appendix.

In FY25 the Group delivered a resilient performance in an uncertain and unpredictable macro-environment. Our Customer Delivery segment delivered organic revenue growth largely due to a stellar performance from SMG, our retail media business, whilst our Engage, Data and Insights and Business Transformation segments experienced organic revenue declines, mostly due to softness in the tech sector.

Our total Group net revenues decreased by 1.4% (2024: increased by 2.5%) to £569.7m, with organic net revenue decline

of 4.0% (2024: growth of 0.3%) reflecting the slowdown in the tech sector and more generally a challenging macro-

environment. Our adjusted operating profit decreased by 11.3% to £107.4m (2024: £121.1m) at an adjusted operating

margin of 18.9% (2024: 21.0%). The brands reacted to this weaker than expected revenue performance by undertaking significant cost reduction exercises at a one-off cost of £17.0m. This resulted in a total headcount impact of over 500 roles which equates to over 10% of our global headcount at an annualised saving of approximately £45m, of which £16m relates to employees previously engaged within Mach49. Of the remaining £29m, approximately £9m has been realised in the year.

Net revenue bridge
	Net Revenue (£'m)	Movement (% of prior year net revenue)
Year to 31 January 2024	577.8
Organic decline	(22.9)	- 4.0%	(FY24: + 0.3%)
Acquisitions	22.0	+ 3.8% (FY24: + 3.3%)
Impact of FX	(7.2)	- 1.2%	(FY24: - 1.1%)
Year to 31 January 2025	569.7

1The definition of net revenue and explanation of how organic net revenue growth is calculated is included within the appendix.

Reconciliation between statutory and adjusted profit

For the year to 31 January 2025, the Group delivered net revenue of £569.7m (2024: £577.8m), adjusted operating profit

of £107.4m (2024: £121.1m), adjusted profit before income tax of £101.4m (2024: £117.9m) and adjusted diluted

earnings per share of 69.3p (2024: 81.6p).

Statutory revenue for the year was £729.8m (2024: £734.7m) which resulted in an operating profit of £56.6m compared

with £77.1m in the previous year. Diluted earnings per share decreased to 37.9p (2024: 50.3p), principally reflecting higher net finance charges in the year and lower operating profit as a result of significant restructuring costs.

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Adjusted operating profit decreased by 11.3% to £107.4m (2024: £121.1m) and statutory profit before tax reduced by

22.2% to £62.5m (2024: £80.3m). When comparing to the adjusted operating profit, the lower statutory profit before tax was mostly due to acquisition related accounting, including the amortisation of acquired intangibles, offset by a reduction in the expected Mach49 earn-out payment.

At each balance sheet date, we are required to estimate the value of future earnout payments for all of our acquired businesses. The Mach49 estimate is the largest and most judgemental of these calculations. As at 31 January 2024, we estimated the total value payable under the earn-out to be $250m on an undiscounted basis, but noted at the time this was an area of significant judgement. When reflecting the historic trading performance, we have reduced the estimate of the total earn-out to $219m, a reduction of $31m year on year, with $91m of the earnout remaining to be paid as at 31 January 2025. Accordingly, in the year this resulted in a £22.6m credit to the profit and loss, reflecting the reduction in the remaining earn-out liability on a discounted basis. This change in estimate has been included as a credit to the profit and loss account within net the movement in fair value of other financial liabilities.

We also incurred £17.0m of operational restructuring costs as we reacted to the reduction in demand for our services at a number of our agencies.

		Year ended		Year ended
		31 January 2025		31 January 2024
		£'000		£'000
Profit before income tax	62,452	80,348
Acquisition accounting related costs1	16,231	24,568
One-off charges employee incentive schemes	175	6,605
Costs associated with operational restructuring	16,966	5,152
Intangibles write off	1,409	-
RCF fees write off	-	601
Deal costs	600	671
Goodwill impairment	3,000	-
Property impairment	612		-
Adjusted profit before income tax2		101,445		117,945

1. Acquisition accounting related costs includes unwinding of discount and change in estimate on deferred and contingent consideration and share purchase obligation payable, employment linked acquisition payments and amortisation of acquired intangibles.
2. A full reconciliation and further detail is set out in the appendix.

Segment adjusted performance

				Business
	Customer	Customer	Customer	Transfor	Head
	Engage	Delivery	Insight	mation	Office	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Year ended 31 January 2025
Net revenue	262,001	109,599	55,404	142,692	-	569,696
Adjusted operating profit/(loss)	53,854	23,857	7,009	40,045	(17,319)	107,446
Adjusted operating profit margin1	20.6%	21.8%	12.7%	28.1%	-	18.9%
Organic net revenue (decline)/growth	(2.4)%	2.7%	(9.5)%	(9.3)%	-	(4.0)%
Year ended 31 January 2024
Net revenue	263,120	107,653	57,476	149,590	-	577,839
Adjusted operating profit/(loss)	53,178	29,117	10,358	48,253	(19,825)	121,081
Adjusted operating profit margin1	20.2%	27.0%	18.0%	32.3%	-	21.0%
Organic net revenue (decline)/growth	(6.3)%	5.1%	4.3%	8.7%	-	0.3%

1 Adjusted operating profit margin is calculated based on the adjusted operating profit as a percentage of net revenue.

The Customer Engage segment includes M Booth, M Booth Health, Outcast, Archetype, Nectar, Brandwidth, MHP and House 337. M Booth, M Booth Health, MHP and Brandwidth delivered organic growth in the tough macro-environment whilst our more tech and project-based agencies showed revenue declines for the year. The segment's net revenue declined 0.4% to £262.0m, with an organic revenue decline of 2.4%, and delivered an adjusted operating profit of £53.9m at an improved adjusted operating margin of 20.6%.

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The Customer Delivery segment includes our Activate, The Agent3 Group, Twogether and SMG agencies. This segment is focused on solving short-term revenue challenges for its clients usually through digital products, which makes it easier to determine their return on investment. SMG had a stellar year winning significant new customers such as ASDA and Deliveroo in the UK and WHSmith Travel in the US. SMG also extended its contractual relationship with its largest customer Morrisons for a further four years.

Our B2B tech-focused agencies had a tough year as their clients continued to delay spend due to the weak macro- environment. The segment delivered net revenue growth of 1.8% to £109.6m with organic revenue growth of 2.7%. The adjusted operating profit decreased to £23.9m at a still very healthy adjusted operating profit margin of 21.8%, principally due to the investment by SMG in US expansion.

The Customer Insights segment includes Savanta and Plinc. Savanta had a weaker year than expected and we made a leadership change and a significant restructuring as a result. Plinc grew its retail client base and continued to develop a suite of new products for its target market. Total net revenue for the segment decreased by 3.6% to £55.4m with organic decline of 9.5%, whilst the adjusted operating profit decreased by 32.3% to £7.0m at a reduced adjusted operating margin of 12.7%.

This Business Transformation segment includes Mach49, The Blueshirt Group, Palladium and Transform. In September 2024 we announced the loss of the significant contract by Mach49, which reduced expected revenue by £7m in the year and will lead to a reduction in revenue of £75.9m in the year to January 2026. Transform had a weaker year due to the political instability and the early election in the UK. It secured a major contract win with the Department of Education, which should result in a much-improved performance in the year to January 2026. The Blueshirt Group and Palladium suffered revenue and profit declines due to weakness in the Tech IPO and PE advisory markets. Overall, the segment delivered a net revenue decline of 4.6% to £142.7m with an organic revenue decline of 9.3%. The adjusted operating profit declined by 17.0% to £40.0m at an adjusted operating profit margin of 28.1%.

Regional adjusted performance

	UK	EMEA	US	Asia	Head	Total
				Pacific	Office
	£'000	£'000	£'000	£'000	£'000	£'000
Year ended 31 January 2025
Net revenue	258,897	12,330	282,492	15,977	-	569,696
Adjusted operating profit/(loss)	44,526	2,641	75,686	1,912	(17,319)	107,446
Adjusted operating profit margin¹	17.2%	21.4%	26.8%	12.0%	-	18.9%
Organic net revenue (decline)/growth	(4.1)%	2.0%	(3.9)%	(6.6)%	-	(4.0)%
Year ended 31 January 2024
Net revenue	254,281	12,399	294,054	17,105	-	577,839
Adjusted operating profit/(loss)	45,731	2,345	91,139	1,691	(19,825)	121,081
Adjusted operating profit margin¹	18.0%	18.9%	31.0%	9.9%	-	21.0%
Organic net revenue (decline)/growth	(0.4)%	6.1%	0.9%	(3.6)%	-	0.3%

1 Adjusted operating profit margin is calculated based on the adjusted operating profit as a percentage of net revenue.

In the year to 31 January 2025, total US net revenues declined by 3.9% to £282.5m from £294.1m, which included organic decline of 3.9%. We saw continued weakness from our B2B tech businesses, whilst our B2C agency M Booth and its sister agency M Booth Health improved their performances as the year progressed and confidence returned to their key customers.

Mach49 lost its biggest contract during the year, whilst The Blueshirt Group had a fall in revenues due to a dearth of Tech IPOs. All businesses reacted to the tougher trading conditions by managing cost bases tightly. The adjusted operating profit from our US businesses decreased by 17.0% to £75.7m compared with £91.1m in the previous 12 months to 31 January 2024, at a still very healthy operating margin of 26.8% compared with 31.0% in the prior year.

The UK businesses delivered a mixed performance over the last 12 months, with net revenue increasing by 1.8% to £258.9m from £254.3m in the prior period. This growth was supported by two bolt-on acquisitions for MHP. Our UK businesses delivered an organic revenue decline of 4.1%. The adjusted operating profit decreased to £44.5m from £45.7m in the prior year with the adjusted operating margin decreasing to 17.2% from 18.0% in the prior year.

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The EMEA business continued to perform relatively well with net revenue reduced marginally to £12.3m (2024: £12.4m) and an adjusted operating profit of £2.6m, at an adjusted operating margin of 21.4%.

In the APAC region net revenue declined by 6.6% to £16.0m (2024: £17.1m). The operating profit increased to £1.9m at an operating margin of 12.0%.

Balance Sheet and Net Debt

The Group's balance sheet remains strong, with a modest net debt position as at 31 January 2025 of £38.4m (2024: £1.4m) and net assets of £181.2m (2024: £156.2m).

Contingent consideration also saw a significant decrease to £72.7m as at 31 January 2025. Primarily due to £62.0m settlements during the year and a £29.7m change in estimate, primarily driven by the revised assumptions for the latest trading performance and forecast expectations for the Mach49 business. The estimates around the contingent consideration are considered by management to be an area of significant judgement, which could result in a material adjustment to the value of these liabilities in the future years.

The net cash inflow from operating activities before changes in working capital for the year to 31 January 2025 decreased to £103.1m from £115.7m in the prior period reflecting the reduction in profit. We had a net outflow from working capital of £7.0m due to the reduction in deferred income and bonus accruals across the Group. This resulted in our net cash generated from operations before tax being £96.1m (2024: £105.0m).

Over the year we incurred £68.9m in acquisition-related payments and £7.2m in capital expenditure.

	Year to	Year to
	31 January	31 January
	2025	2024
Cash flow KPIs	£m	£m
Net cash inflow from operating activities before changes in working capital	103.1	115.7
Working capital movement	(7.0)	(10.7)
Net cash generated from operations	96.1	105.0
Income tax paid	(20.7)	(25.4)
Investing activities	(12.3)	(17.9)
Dividend paid to shareholders	(15.5)	(14.8)
Net debt	(38.4)	(1.4)

Treasury and funding

At 31 January 2025, the Group had a £150m revolving credit facility ("RCF") with a consortium of HSBC, Bank of Ireland, NatWest Bank, Citibank and CIC, and as part of the arrangement, the Group had a £50m accordion option. Post the year- end, the Group strengthened its banking facilities by agreeing to access an additional £25m of this accordion. The facility is available until December 2027 with an option to extend for a further year.

The RCF facility is available for permitted acquisitions and working capital requirements. It is due to be repaid from the trading cash flows of the Group. The facility is available in a combination of sterling, US dollar and Euro. The margin payable on each facility is dependent upon the level of gearing in the business. The Group also has a US facility of $7m (2024: $7m) which is available for property rental guarantees and US-based working capital needs.

Current trading and outlook

Trading in the new financial year is broadly in line with management expectations, with the trends of last year continuing into the early months of FY26, with several new business wins. Despite the current economic and geopolitical backdrop, performance continues to be resilient across all four business segments, in particular in our consumer businesses.

In line with our previous communication, the loss of the significant Mach49 contract will have a material adverse impact on our FY26 financial performance. We also note that Sterling has recently strengthened against the US dollar. Should this continue, this will lead to further headwinds in the current financial year. The Group's continued focus on simplification of the business coupled with product related investment in AI sets the foundation for long term growth, as well as the strength and quality of our management teams and client relationships gives us confidence in delivering a solid trading performance in the year ahead.

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NEXT 15 GROUP PLC

CONSOLIDATED INCOME STATEMENT

FOR THE YEARS ENDED 31 JANUARY 2025 AND 31 JANUARY 2024

		Year ended	Year ended
		31 January 2025	31 January 2024
			Restated1
	Note	£'000	£'000
Revenue		729,810	734,673
Direct costs		(160,114)	(156,834)
Net revenue	2	569,696	577,839
Staff costs		411,854	407,445
Depreciation		12,153	12,263
Amortisation		21,948	24,360
Other operating charges		67,113	56,652
Total operating charges		(513,068)	(500,720)
Operating profit		56,628	77,119
Movement in fair value of other financial liabilities	9	12,704	7,469
Finance expense	5	(7,569)	(5,372)
Finance income	6	689	1,132
Profit before income tax		62,452	80,348
Income tax expense	3	(21,482)	(26,403)
Profit for the year		40,970	53,945
Attributable to:
Owners of the parent		39,465	52,907
Non-controlling interests		1,505	1,038
		40,970	53,945
Earnings per share
Basic (pence)	7	39.3	53.3
Diluted (pence)	7	37.9	50.3

1 Comparatives have been restated, as explained in the FY24 restatements section in note 1.

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