Aegis profits drop 25% to £68m despite new revenue high

Aegis, the international media-buying and research group, has posted its lowest profits in at least five years after being hit by exceptional costs that offset an 8.4% rise in revenues to a new high of £1.46bn.

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

The results come as Aegis is plotting a bid for the independent Manchester-based media agency MediaVest.

The parent group behind media networks Carat and Vizeum and research division Synovate, reported pre-tax profits of £68m in 2010, down from £91.2m in 2009, and £124.6m in 2008.

The drop came despite revenues being grown by strategic acquisitions in fast-growing regions such as Asia-Pacific, and surpassing their previous annual high of £1.34bn in 2008. The top line growth was offset by 10% increase in operating expenses to £1.14bn.

Underlying profit for the group was up 12.9% to £192.2m. The underlying profits measure excludes £37m in bad debt resulting from the financial problems of a Spanish client, a £13.9m loss on disposal of subsidiaries and an £8.8m cost relating to moving offices in the UK.

Organic revenue growth was 5.8%, which the company attributed to a good performance in particular from North America, compared to -9.7% in the previous year.

In January 2010, the group strengthened its presence in China by forming a joint venture with Charm Communications, one of the country's biggest TV-buying agencies. Then, in July, it bought Australian marketing communications group Mitchell for £207m.

The Mitchell acquisition contributed £12.6m revenue and £2m underlying profit in 2010.

Aegis Media group revenue was up 7.5% to £886.8m and digital revenue was up 32% in 2010, continuing at the same rate as in 2009, where digital revenue was up 31%.

Net new business wins for Aegis Media last year totalled $2bn in billings, including Beiersdorf in the US and Germany, ING in Italy and France and Deutsche Bank globally.

Aegis Media's revenue in its key region of Europe, Middle East and Africa dipped 1% to £579.7m. It performed better elsewhere with the Americas up 19.4% to £189.4m and Asia Pacific up 44.8% to £117.7m.

Aegis claimed a "strong recovery in performance at Synovate", which it said suffered during the downturn due to its being part of the "ad hoc custom market research sector". Revenue rose 9.8% to £572.6m.

Aegis Group's chairman John Napier highlighted "above market growth" for the media division supported by a "strengthened reporting and cash management environment".

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