David Abbott, chairman, was bullish yesterday about prospects despite announcing flat pre-tax profits of pounds 4.75m for 1993 against last time's pounds 4.72m. 'We have reached the stage where our success in winning new business is producing real profit growth,' he said.
Peter Mead, chief executive, said the cold financial figures were only part of the story. He added: 'Profitability has improved greatly in all our businesses with the exception of McBain Noel-Johnson, the design company, where we invested a lot of money last year to pursue long-term opportunities rather than chase short-term profit.'
McBain's profits fell from pounds 2.1m to pounds 1m, but Mr Mead said the reward for the investment was already coming through. The company has signed a large three-year contract to service all Delta Airline's advertising outside the US via a specially developed electronic network in London. 'The system has been designed for Delta but has applications for other clients,' he said.
Mr Abbott, widely regarded as the creative doyen of the British advertising industry, said that group profits would have been in line with City expectations of about pounds 5.7m had the board not decided to pursue the opportunities at Bain.
The City responded by marking the shares down 22p to 708p, but the price had soared from 540p at the beginning of this year after AMV announced big new business wins, inluding a pounds 50m British Telecom account.
Mr Mead said he believed that there was a recovery throughout the advertising industry and added: 'We don't share the pessimism about the state of the advertising market in this country. There are signs of real growth - we are seeing a significant rise in spends from our 10 bedrock clients.'
James McDanell, the finance director, said: 'We believe the outlook for the future is much better than at any time in the past few years.' There was unlikely to be a return to the heady days of the mid- 1980s, but operating margins of 20 per cent were achievable. 'Our margins are still pretty good at around 12 per cent,' he added.
Mr McDanell is leaving the group to spend a year travelling with his new family. Mr Abbott said that a successor had been found and would join within eight weeks.
He added that it was a sign of confidence in the group's future that the dividend was being raised 12.9 per cent to 10.5p. Earnings per share were static at 18.7p.Reuse content