Shares in advertising firm Aegis Group (LON:AGS) nudged down half a percent to 110.7p in early trading on news that half year revenues had increased 4.2% to £663.3m in the first half-year, with organic revenue growth of 3.2%. The growth was supported by strong performances in faster-growing regions, which now represent 30% of Aegis's revenue. Underlying operating profit increased 19.6% to £61.1m, with underlying operating margin increasing 120 basis points to 9.2%, mainly due to a return to profitability at the group's market research arm, Synovate, which posted losses in the same period last year. The interim dividend increased 6.8% to 1.025p.
Elsewhere, the group's balance sheet was strengthened through launch of a convertible bond in April to raise £190.6m and the successful re-financing of a £450m revolving credit facility on five year term. Aegis said the return to focused acquisition activity was accelerating the transformation of its Asia Pacific operations, through a shareholding in Charm Communications Inc in China and the proposed acquisition of Mitchell Communication Group, Australia's leading marketing communications group.
Group underlying operating profit for 2010 is expected to be in line with current market consensus, with anticipated modest improvement in group operating margin, and continuing trend of improvement in organic growth in the second half at Aegis Media and Synovate, compared to the first half.
Chief executive, Jerry Buhlmann, said: "I am delighted to be giving my first results review as CEO of Aegis Group. We produced a strong performance during the first half of 2010, confirming our expectations of a return to growth. This was driven by good performances from our businesses in faster-growing regions, Synovate's return to profitability and strong net new business wins totalling $1bn of billings from Aegis Media. For the second half, we are seeing signs of a rebound in both the advertising and market research sectors. While it is too early to predict a sustained longer term recovery, we are optimistic about the short term outlook for both sectors. For the full year, we expect group underlying operating profit to be in line with current market consensus, with modest improvement in group operating margin, and a continuing trend of improvement in organic growth at both our businesses in the second half of 2010, compared to the first half."
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