Technology PR firm Next Fifteen Communications reported higher than expected earnings in 2007-08.
Technology is a sector that continues to do well and Next Fifteen says that many of the technology companies have large cash piles - particularly the likes of Cisco. Their investment approach is not as aggressive as in 2001. Start-ups will not have as strong balance sheets, though.
Management also describes Cleantech as a “big bright spot in the technology industry”. It points to tax benefits available in California as one of the reasons behind this.
Next Fifteen adds that it is careful about not increasing its cost base ahead of winning work.
Revenues increased 6% to £63.1m while profits rose from £5.6m to £6.58m in the year to July 2008. Earnings rose even faster - by 22% to 8.5p a share - because of a lower tax rate. The total dividend rose 13% to 1.7p a share.
Strong cash generation meant that Next Fifteen went from a small net debt position to net cash of £3.4m.
Management is looking for earnings enhancing acquisitions in technology and consumer PR. The minority stake in Lexus PR will be acquired this year.
At 38.5p a share, Next Fifteen is valued at £20.4m. The shares are trading on less than five times historical profits, falling to just over four times prospective earnings for 2008-09. The forecast yield is almost 5%.
© 2021 Aim Micro. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.