Engine's pre-tax profits go from red to black

Peter Scott: chief executive of Engine
Peter Scott: chief executive of Engine

Engine has posted pre-tax profits of £700,000 for the 2012 financial year, a notable improvement on the previous year's performance when the group lost £3.2 million.

Revenue for the 2012 financial year was £91.2 million, up 10 per cent on £82.9 million in 2011. This figure includes revenue from newly acquired businesses, however. On a like-for-like basis, turnover was up only five per cent in 2012.

Similarly, Engine’s key growth metric – earnings before interest, taxes, depreciation and amortisation (EBITDA) – was up marginally from £11.3 million to £11.4 million in 2012, but down seven per cent on a like-for-like basis.

Overall, Engine’s North American businesses outperformed the UK in 2012.

US shops Deep Focus and Noise won new business from Pernod Ricard, Nestlé and Tresemme, resulting in their combined revenue rising 24 per cent to £13.4 million. EBITDA at the US agencies doubled to £1.8 million.

At the UK agencies, EBITDA was down to £10.7 million, a 14 per cent drop on the previous year.

The reason that the UK and US figures are higher than the overall EBITDA is because these are the regional performances given before the Central Costs are taken into account.

Engine blamed the drop on cancelled or deferred projects, which hit businesses such as Calling Brands, Transform and Fuel hard.

The digital agency Jam was one of the star performers in the UK, with turnover and EBITDA up 46 per cent and 45 per cent, respectively. No underlying figures were provided for the agency, which picked up accounts from Samsung and Tesco Mobile among others during 2012.

In August 2013, it emerged that Alex Miller, the founder and chief executive of Jam, and Jamie Kenny, the chief strategy officer, are to leave the agency later this year to pursue other interests.

Engine Group’s results were buoyed by a drop in one-off costs, which fell from £4.6 million in 2011 to £2.1 million in 2012. The drop was a result of Engine making fewer redundancies than expected, in addition to smaller expansion costs and bank refinancing fees.

The group also paid down its debt pile. On 31 December 2012, net debt (excluding a £32.5m HIG convertible loan note) was £33 million compared to £35.5 million at the end of 2011.

Peter Scott, the group chief executive of Engine, said: "In 2012 we focused the business on strengthening management, improving processes and enhancing the way we bring our range of services together for the benefit of clients.

"2012 was also a year of consolidation where we consciously invested ahead of revenue in areas such as digital, client service, and new business development, in order to provide a firm foundation for future growth."

Engine said its medium-term objective is to expand in the US and Asia through acquisitions and start-ups.

Scott said: "We continue to invest heavily in our businesses to provide broader and stronger platforms in what is an ever-changing media and technology environment."

In August last year, Scott tipped "strong growth" in 2012, after a "disappointing 2011".

Subscribe today for just $116 a year

Get the very latest news and insight from Campaign with unrestricted access to campaignlive.com , plus get exclusive discounts to Campaign events

Become a subscriber


Don’t miss your daily fix of breaking news, latest work, advice and commentary.

register free