Chairman’s statement
Continued progress /
I am pleased to report that 2010 was a year of further progress. We continue to deliver an improved underlying operating performance in a demanding market environment with the main achievements including:
- A return to full year revenue growth at our Synovate market research business with improved sales, profits and margins following its recovery in the second half of 2009
- Continued strong above market growth from our Media division with good organic growth, continued new business wins and increases in underlying operating profit and margins
- Overall, our underlying results, pre-exceptionals, delivered an 8.4% increase in revenue, a 12.9% increase in operating profit and a 5.2% increase in earnings per share.
These advances are covered in more detail in the Chief Executive and Business reviews. A significant additional focus in the year has been the integration of our diverse and specialised media and digital services into an improved client-facing suite of services.
The strategy of strengthening our balance sheet, extending our long term debt profile and adding acquisition capability, announced last year, has worked well with the use of a US private placement and a successful convertible bond issue. That put us in a position to renegotiate our previously expiring five year revolving credit facility of £450 million. We now have in place a new five year deal, on acceptable terms. These actions have been reinforced by the continuing benefits of a strengthened reporting and cash management environment.
The strength of the balance sheet has allowed fuller development of a much more strategic programme on acquisitions. At Synovate we announced an agreement to acquire a majority stake in a leading Russian research provider to strengthen our position in that market. We have developed our media market position in China, with the Charm joint venture and investment, and completed the £229.1 million Mitchell acquisition in Australia in November. This transaction has transformed our market position there and increased our digital profile and is expected to be an earnings enhancing acquisition in its first full year. It has also allowed us to further strengthen our Board with the appointment of Harold Mitchell, the founder of Mitchell with his media market knowledge and experience, as an Executive Director.
Your board & management /
On the subject of Board matters we were pleased to appoint Jerry Buhlmann, the experienced Chief Executive of our Media Division, as CEO of Aegis Group plc (“Aegis”) as a whole. He took up the post on 1st May 2010 and brings continuity, energy and expertise. He was selected with the assistance of an externally led evaluation process, and has made a strong and effective start allowing me to step back immediately to a Chairman-only role, whilst maintaining maximum continuity for the business.
Looking back, your Company has successfully achieved a very full reorganisation and near replacement of its Board and senior management over the last two years. At the same time it has dealt effectively with the downturns in the world economy and in many of our major markets from late 2008 through 2009. We have significantly raised our operating performance and strengthened key functions, the benefits of which are reflected in our results for 2010. There is still work to do but we now have in place an effective and settled Board, a strengthened reporting process and a more cohesive and better directed operational and strategic management team under the leadership of a very capable Chief Executive.
The latest proposals on Corporate Governance recommend that Boards consider on a “comply or explain” basis the annual election of all its directors. This is a new initiative and will take some time to settle and for Boards everywhere to consider fully the merits and demerits of this recommendation. It is not without risks. In this year the Board proposes to follow the previous re-election guidelines by putting up for election those appointed in 2010, Messrs Harold Mitchell, Executive Director and Robert Philpott, Executive Director, and the second longest serving director, Lorraine Trainer who is due for re-election on the three year rule.
The Board has also discussed the question of a formal Board evaluation. Given, however, the significant number of changes made, recent appointments and the part year period of the new Chief Executive, the Board decided to defer that process in 2010. I can confirm all members of the Board have made an effective and significant contribution to the Board and the Company for which I thank them.
Summary /
The strong performance in 2010 together with the successful management of change and continuity gives us confidence as we face into 2011. Markets and the world economy have improved but there are still significant regional difficulties and areas of strategic imbalance. We have made strategic acquisitions and investments in Russia, Australia and in China. We remain focused on sustainable growth. We expect to continue to face a demanding and competitive market environment. We continue to focus on improvements and the development of quality integrated services which deliver support and solutions for our clients. We believe that we have the strength and resource to continue our progress.
Dividend /
Given our confidence in the short term outlook for the Company, the Board has recommended a total dividend of 2.75 per share for 2010. This represents a 10% increase on the prior year.
Our people /
Over the last three years, our employees have worked in a demanding market environment. Their success and efforts have been rewarded by our performance in 2010. Our future success depends on their continued efforts. On behalf of the Board I would like to thank them for the progress they have made and their continuous endeavours to further transform and improve our Company and its services.
John Napier
Chairman
