Print Published 5th Dec 2018, 09:36

Design consultancy and media buyer achieve top rankings in this year’s “Private Plums” awards

Two privately owned marketing agencies achieved the highest score for their financial credentials in this year’s Private Plums awards and both have done so before.

Announcing the results of the 2018 edition of its annual survey, Marketing Services Financial Intelligence observed that the vast majority of marketing agencies continue to have difficulty in achieving the levels of productivity that might be expected.  “Clients seem unwilling or unable to pay appropriate fee levels and/or agencies failed to make best use of their staff resources”, the report said.

Winning the full complement of plums this year were design consultancy Jones Knight Ritchie and media agency The7Stars Holdings.  Both agencies have produced a full crop of plums on two previous occasions.

The Private Plums award scheme was launched by Marketing Services Financial Intelligence in 2002 to recognise good financial management among privately owned UK marketing agencies irrespective of size.  Each company is assessed under eight criteria that measure different aspects of trading performance and capital management.

The full analysis and report is available free to subscribers – see below.

For this year’s survey sixty-eight privately owned companies were identified with annual gross income in excess of £2.5 million.

“Generally 2017 seems to have been a tough year as economic austerity continued” commented editor Bob Willott. “For the second year in a row, only one quarter of the agencies surveyed were able to increase their gross income by 15% pa over a two year period.  And the number of agencies achieving an average operating profit of £550,000 or more over two years fell from 70% to 65%.”

But in a more encouraging vein, the report noted an increase in the number of agencies achieving an operating profit margin on gross income of 15% or more, despite the fact that fewer agencies kept their staff costs below 55% of gross income and slightly fewer agencies achieved an operating profit per head of £12,750 or more. “One likely explanation would be that non-staff overheads were squeezed to offset increases in staff numbers and/or payroll costs”, the report said.

More agencies reported a sound working capital position, with net current assets in excess of three months’ operating costs (or £275,000 if greater), and with net borrowings equating to less than 33% of shareholders’ funds.  “We may never know whether this trend towards prudence reflected management initiatives or bankers’ pressures”, Willott commented.

The survey also reported that:

  • Among the upwardly mobile companies in this year’s rankings were Goodstuff Holdings (up from 50th place to 13th after buying out Omnicom Media Group’s shareholding) and Michael Sheridan & Company (up from 49th place to 14th) as they each accumulated six plums.
  • Moving downwards, albeit at a gentler pace, were some of the middle ranking companies like WHC03 that was formed to facilitate a shift in shareholdings at Mike Colling & Company and appeared in 23rd place compared with the 10th place occupied by Mike Colling & Company last year. St Luke’s Holdings and Freud 3.0 also lost a little ground but remained among the more flavoursome plums at 15th and 17th place respectively.
  • Although winners of a high number of plums are likely to become some of the juiciest targets for potential acquirers, none of the top three companies in last year’s survey have been sold and all have scored reasonably well again this year. (They are The7Stars Holdings which yielded a full crop of eight plums again, John Ayling Holdings which yielded a respectable seven plums this time and St Luke’s Advertising which, as already mentioned, lost a little more ground to 15th place with six plums.)
  • In this latest survey 10 companies were reliant on private equity, down from 12 last year. Four of the companies included in last year’s survey have since been sold – namely Hangar Seven, Zone Karma Communications Holdings and WRG Worldwide, reflecting the underlying imperative of private equity investment – and two former public companies – Creston and Chime Communications – have been taken private with the aid of private equity funds.

For the full analysis and findings of “The Private Plums 2018”, only available free to Marketing Services Financial Intelligence subscribers, follow the link below or subscribe here.