Next Fifteen Communications has started its financial year well but the effects of falling world stock markets are having an effect on PR budgets.
The technology PR company should report higher underlying interim profits before currency hedging for the six months to January 2009. NFC made an adjusted profit of £3.08m in the six months to January 2008.
Chief executive Tim Dyson says that some clients have cut back their spending in the past couple of months. He expects a modest decline in revenues but, as more than 70% of revenues are outside of the UK, the weakening of sterling will offset this.
However, currency hedging will knock £1.2m off reported interim profits and the full year effect could be as much as £2.6m depending on how sterling moves between now and July. The contracts mostly end then and NFC will get the full benefit of the weakness of sterling.
NFC has already taken actions to cut its cost base and closed offices in Dublin and Seattle.
Dyson says that the present market conditions are not like 2000-01. At that time the market was in freefall but describes the current market conditions as a “more controlled environment”. Consumer technology businesses have been the hardest hit.
Asia Pacific remains a strong market.
Dyson believes that the technology PR market should stabilise by the end of 2009.
NFC had cash of £3.4m at the end of July 2008 but most of that has gone out in deferred consideration for past acquisitions. Even so, NFC is forecast to have net cash of £2.27m by the end of July 2009.
At 29p a share, NFC is valued at £15.7m.
NFC will report its interim results on 21 April.
Edison forecasts full year profits of £5.2m. That puts the shares on just over four times forecast 2008-09 earnings.
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