Ad agency flags in the UK: Strong performance in US lifts Gold Greenlees Trott profit

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The Independent Online
GOLD Greenlees Trott, the advertising agency best known for its Red Rock Cider and Cadbury's Flake campaigns, is continuing to experience tough trading conditions in the UK, writes Neil Thapar.

The company, which issued a profits warning two months ago, reported a near-4 per cent fall in operating profits to pounds 3m for the half- year ended 31 October.

But a strong performance in the US stemmed the decline at the pre- tax level, lifting overall profits 3 per cent to pounds 2.4m on revenues up 18 per cent to pounds 26m.

GGT said UK clients were spending less and making shorter-term commitments of their marketing funds.

It was hit by a 15 per cent fall in media advertising - including Cadbury's Dairy Milk campaign - despite winning a pounds 20m contract from Nationwide Building Society.

Overall, the group slipped into a pounds 100,000 loss in Britain, against an pounds 800,000 profit last time, although the deficit masks 25 per cent revenue growth in sales promotions and presentations business.

GGT continued to make strong inroads in the regional advertising market in the US, where operating profits, excluding currency benefits, climbed 10 per cent to dollars 3.4m, reflecting a firming economy and client gains.

Group interest charges eased 22 per cent to pounds 620,000 due to lower interest rates and a pounds 15m rights issue in February. Earnings per share declined more than a fifth to 6.2p. The interim dividend has been improved from 3.15p to 3.3p.

Michael Greenlees, joint chairman, said: 'Trading conditions in the UK are still bumpy . . . which makes forecasting revenues and, consequently, profits much more difficult. We therefore ask our shareholders to remain patient.'

The shares were unmoved at 210p.