Tempus Results Show Decent Performance In Tough Conditions, But Jobs Likely To Go

Tempus’ interim results come as global advertising and communications group, WPP, is hovering to seal a takeover of the group. It is assumed that WPP will be having a close look at these results before deciding whether to press ahead with its 555p per share proposal or to let the deal lapse (see WPP Waits On Tempus Results Before Making A Move).

Pre-tax profits at Tempus were down 16% at £8.9 million for the six months to 30 June; pre-tax profits before exceptionals (mainly restructuring costs) were down by 3% to £10.2 million. Revenues grew by 24% to £83.9 million, driven largely by acquisitions, and operating profits rose by 8% to £9.9 million.

Underlying revenue growth was -1.0%, in a market which Tempus says saw a H1 a display advertising decline of 5%; analysts at ABN Amro believe that the H1 2001 decline was around 3%. Nevertheless, the results are broadly in line with the broker’s expectations.

Tempus says that visibility is very poor and that it does not expected to see a return to positive growth in 2002. As a result the company is instigating cost-cutting measures, the majority of which will be realised through job losses.

Ingram points to the continuing trend of consolidation in the media services industry – highlighting the tie between and Optimedia and Zenith (see Optimedia And Zenith Merged By Parent Companies) and the creation of Interpublic’s Magna Media as examples – and says that it is no surprise that eventually Tempus would be approached as an acquisition target.

Comment

Analysts view these results as showing a stronger performance by Tempus than may have been anticipated and do not expect the figures to deter WPP from its takeover of the group. For its part, WPP has been buying stock in Tempus via the market gradually over a number of weeks, indicating that it is serious about continuing with the bid.

At 11:00am today Tempus shares were unchanged at 442½p and WPP’s stock was down 21p at 504p.