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As founder Russell Tate retires, STW looks ahead to ‘challenging’ year end

As Russell Tate called time on his stint on the board of STW Group at an annual general meeting yesterday, the marketing communications group signaled its intention to keep profits high, grow digital revenue and expand by acquisition.

STW’s chief executive Mike Connaghan (pictured) told Mumbrella that the company’s predictions made in February that net profit margins for 2011 would be 5-10% higher than in 2010 were on track, but admitted that this would be “challenging” to sustain.

In the AGM report, the Queensland floods, the earthquake in Christchurch, events in Japan and subdued consumer sentiment in Australia and New Zealand were identified as obstacles to STW hitting its targets.

STW would be looking to grow by acquisition in the digital, research, CRM and field marketing spaces, Connaghan said.

The “high growth corridor of Asia” would increasingly be the focus for acquisition activity, although “continued dominance” at home was identified as crucial to expansion.

On digital, STW, which employs 592 digital staff, aims for the medium to make up 24% of company revenues by the end of this year – up from 21% in 2010.

The AGM identified the group’s star performers of 2010 – Ikon Communications for innovation, The Brand Agency for performance,  AlphaSalmon as most improved and Lawrence for business of the year. Connaghan said it was too early to say which brands were in contention this year.

The AGM unveiled the group’s 2010 financial results, which were as follows:

  • Proportional revenue was up 13% to $304m
  • Proportional EBITDA up by 10.5% to $69.4m
  • Free cashflow was $75.2 million, growth of 12.7%
  • Underlying net profit after tax grew by 17% to $38.7m
  • The total dividend for the year was higher by 86 % to 6.5 cents/share

On the retirement of Russell Tate, the company’s founder, Connaghan praised the “professional” manner with which Tate had managed his exit from the company.

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