Aegis Group's pre-tax profits rise 41% in H1

Aegis Group, the owner of the Carat and Isobar networks, has posted a 41% year-on-year increase in pre-tax profits in the first six months of 2011 and reported a "good performance" across the UK brands.

Jerry Buhlmann: chief executive of Aegis Group plc
Jerry Buhlmann: chief executive of Aegis Group plc

According to Aegis Group's 2011 interim results announcement, statutory profit before tax was £35.6m in the six months to 30 June 2011, up 40.7% when compared to the first half of 2010.

Total group revenue for the first six months of 2011 was £756.8m, up 14.1% at reported rates and up 14.5% in constant currency.

Group revenue from continuing operations was £519.1m, up 17.9% at reported rates and 17.7% at constant currency.

Revenue in the Europe, Middle, East and Africa region was £290.7m in the first half of 2011, an increase of 3.3% at constant currency and supported by strong performances in the UK, Germany, the Netherlands, South Africa and the Nordics.

Aegis Group said the UK and Ireland delivered a "good performance across the brands, securing a number of important client wins, including Asda, Hiscox, Monarch, Mini, the Scottish Government and Tourism Ireland".

The London-based Aegis Group agencies have recently moved into the same building and in Aegis's results today the company said the final accounting charge of the move was £2.9m, which said was mainly attributed to double rent.

Aegis Group said the total accounting charges of £11.7m relating to the re-location in 2010 and the first half of 2011 will be "broadly cash neutral" over the next three years due to the long term efficiency savings relating to the re-location.

Jerry Buhlmann, chief executive of Aegis Group, said: "Aegis has produced another strong performance, highlighting the continuing positive momentum being built in our businesses as we continue to outperform the market.

"Once again, our businesses in faster growing regions and North America have proved their worth with particularly strong performances.

"At the same time, we have continued our focus on targeted acquisitions, extending our capabilities and positioning us in key geographies, all of which leave us well placed for future growth." 

On 27 July Aegis Group announced it had agreed to sell market research firm Synovate to Ipsos SA for £525m. Aegis said shareholders approved the deal at its general meeting on 16 August and the deal is expected to go through on or around 30 September.

Buhlmann said the sale was the "largest structural change in the history of Aegis Group". He said: "Once the sale is completed, Aegis will become a more focused group, with the opportunity to accelerate further the delivery of sustainable, profitable growth, and increased financial flexibility to make targeted acquisitions."

Aegis Group said it planned to return £200m in capital from the sale of Synovate to shareholders by means of a special dividend. The rest of the balance will be used to develop the company through "targeted acquisitions".

In July 2011 Aegis Group acquired 75% of the issued share capital of MediaVest (Manchester) for an initial payment of £27m. The agency will be integrated with Aegis Media’s Carat and iProspect brands.

The total consideration for 100% of the share capital of MediaVest (Manchester) could be £95m, subject to the satisfaction of earn-out criteria based on profits over the period of 2011 to 2016.

Aegis Group said the unaudited profit before tax of MediaVest (Manchester) Ltd. for the year ended 28 February 2011 was £7.4m and the value of the gross assets at that time was £49.6m.

Aegis Group said it reduced the amount owned in earn outs by £10.2m to £53.5m as decreases in liabilities due to payments made in the period were offset by the consideration created by newly acquired subsidiaries.

Buhlmann said: "Medium term visibility continues to be relatively limited and macro-economic uncertainties remain. However, we remain positive about Aegis’s future prospects as a more focused group, particularly given the momentum achieved by our businesses over the past 18 months."

Aegis Group reported much stronger revenue growth than its rivals WPP, Interpublic and Publicis Groupe and three percentage points ahead of Omnicom. Havas is set to report its results next Tuesday (30 August).

WPP reported revenues of £4.7bn, up 6.1% year on year, while revenues at Omnicom were $6.6bn (£4.1bn), up 11.4%.

Interpublic revenues came in at $3.2bn (£2.8bn), up 9%, and Publicis Groupe at €2.7bn (£2.4bn), up 6.3%.