Aegis Confident For Second Half; Synovate Sale On Track
August 25 2011 - 2:07AM
Dow Jones News
U.K.-based advertising and marketing firm Aegis Group PLC
(AGS.LN) Thursday said it expects third-quarter organic revenue to
be similar to the 7.3% posted in the first half, signalling
confidence despite the worsening macroeconomic picture.
MAIN FACTS:
- Aegis confirmed it still expects 2011 organic revenue--a key
metric in the advertising industry that strips out acquisitions,
disposals and currency effects--will grow at least as fast as in
2010. The target is for Aegis, excluding the Synovate arm, which it
is in the process of selling. The group also aims for further
improvement in adjusted operating profit this year.
- Third-quarter organic revenue growth is expected to be more in
line with first-half organic revenue growth than second-quarter
growth.
- Aegis said client expenditure levels in the first half of 2011
were ahead of the same period in 2010.
"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
last 18 months," Aegis CEO Jerry Buhlmann said in a statement.
- Total group revenue in the first half rose 14% to GBP756.8
million.
- Organic revenue rose 7.3% in the first half, driven by growth
in emerging markets and North America. In the second quarter,
organic revenue growth totaled 5.9%.
- Net profit for the first half rose to GBP44.3 million from
GBP18.5 million while adjusted operating profit rose 27% to GBP77.4
million.
- Aegis said the sale of its market research arm Synovate is
running on track. The group reiterated its goal to return GBP200
million of the proceeds of the Synovate sale to shareholders by
means of a special dividend, with associated 10 for 11 share
consolidation. The balance of proceeds to be used to develop Aegis,
through targeted acquisitions.
- Aegis last month said it will sell its market research arm
Synovate to French group Ipsos SA (IPS.FR) for an enterprise value
of GBP525 million in a move that will drastically change the future
of the U.K. advertising and marketing group, focusing the company
predominantly on media buying through its Aegis Media business. The
sale is expected to close at the end of September.
- Carat, Europe's biggest media buying agency which is owned by
Aegis, cut its forecast for 2011 global ad spending worldwide to 5%
from a previous 5.7%.
- Larger rival WPP PLC (WPP.LN) Wednesday said heightened
concerns about the macroeconomic environment haven't led to
advertising spending cuts from clients yet, but it will nonetheless
approach 2012 with caution amid the current stock market
turmoil.
-Separately, Aegis said it has signed an agreement to acquire
100% of the share capital of the holding company of Master Ad LLC,
a full-service out-of-home agency based in Moscow, Russia.
-The consideration for 100% of the share capital of the holding
company of Master Ad will include an initial upfront payment of
EUR15 million. There is also an earn-out based on achieving certain
annual profit targets from 2011 to 2014. If Master Ad significantly
outperforms the forecast market growth, total consideration could
reach the maximum amount payable of EUR100 million. All
consideration payments will be satisfied in cash.
- By Ruth Bender, Dow Jones Newswires; +331-4017-1754;
ruth.bender@dowjones.com
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