STW reports $50m loss after huge write down of business ahead of WPP merger

Mike ConnaghanSTW Group, parent company of agencies including Ogilvy and Ikon, has reported a net loss of $52.6m for 2015 after making massive write-downs to the value of some of its businesses after what it described as a difficult year.


While the company reported an underlying net profit after tax of $39.6m it has wiped $92m off the value of some of its assets, as it prepares to seal a merger with the world’s largest marketing services holding group, WPP.


CEO Mike Connaghan also used the full year results to confirm that once the merger with WPP is complete, the STW name will be retired and the group will operate under a new brand in alignment with WPP.


STW saw revenues remain flat, up just 1.6% to $416m, which saw the underlying net profit slip 13% on the previous year, as the company undertook a review to shed and merge many of its businesses.


That included divesting interests in The Conscience Organisation and Adelaide agency Jamshop. It also merged media agency Ikon and creative shop Moon to create a full-service agency.


The company reported business close down and other one off costs of $2.1m and strategic review costs of $3m.


Earnings before interest, tax, depreciation and amortisation were $76.8m, down 7.8% with a reported margin of 18.5%, down slightly on the 2014 financial year which was 20.3%.


CEO Mike Connaghan said while the result capped a difficult year, it had set the company up for a stronger 2016.


“There is no doubt that 2015 was a challenging year for the company with flat revenues and a decline in underlying earnings,” said Connaghan.


“We have, however, delivered on our guidance provided in August 2015.


“After a disappointing finish to 2014, the company undertook a strategic and structural review during the course of 2015 and made tough decisions to restructure the business.


“The changes are designed to allow STW to meet the challenges faced in the current trading environment and to position STW for future growth.”


Connaghan said that much of the negative impact on STW’s books had taken place in the first half of 2015 and that organic growth through existing clients, having them work with more STW businesses and cost cutting measures had seen underlying improvement in the second half of the year.


“If you look at half-on-half performance the second half does undine the momentum we have coming it 2016.”


Second half EBITDA was 21% in the six months to December and the group also achieved positive organic revenue growth.


Connaghan was also bullish about the impact the WPP merger will have on the fortunes of the group, and he said with current combined revenues of $850m he expected it to quickly grow to $1b.


“STW will become the primary operating vehicle for WPP in Australia and New Zealand,” said Connaghan.


He also addressed speculation about reporting lines and management continuity, with WPP’s current ANZ operations reporting to STW’s management, and STW management now firmly in place.


He said WPP was looking forward to having “agnostic country leadership” that would would be focused on managing its assets in the region.


Cost synergies of $15m per year will also be realised over the first three years of the merged entity.


He highlighted some of the brands STW was keen to work with including Y&R, research specialist Kantar and digital brand VML.


In particular, he said he saw Grey as a business that could grow under the management guidance of the STW team.


“There are hidden jewels within these groups and immediate opportunity for our clients to drive efficiency and reduce complexity,” he said.


The merger with WPP is expected to be approved at an extraordinary general meeting of shareholders to be held in March and based on the impact the merger will have, STW did not give further guidance.


Simon Canning


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STW reports $50m loss after huge write down of business ahead of WPP merger

Instagram Account Switching: This Week in Social Media


Welcome to our weekly edition of what’s hot in social media news. To help you stay up to date with social media, here are some of the news items that caught our attention. What’s New This Week Instagram Rolls Out Account Switching: “Starting this week, you can easily switch between multiple accounts without having to […]


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– Your Guide to the Social Media Jungle


Instagram Account Switching: This Week in Social Media

Qantas hunts for new influencer talent in partnership with The Remarkables Group

Influencer agency The Remarkables Group is on the hunt for future talents across the fashion, beauty, well-being and travel industries via a new competition supported by Priceline Pharmacies, Bonds and Qantas.


The Rising Social Star is a talent search for the ‘next generation of influencers’, with 20 finalists set to compete in a series of ‘The Apprentice-style’ content challenges held throughout April and early May with the winner presented at the grand final party in Sydney on May 27.


Four winners will each pocket $4,000, become an ambassador for their category’s brand partner (Priceline, Bonds and Qantas) and receive a contract with The Remarkables Group.




Robyn Simper, group digital marketing and e-commerce manager at Priceline Pharmacies, said in a statement: “Working with influencers across the health and beauty category is a key part of our digital and PR strategies at Priceline Pharmacy.


“We see the role of influencers as providing our customers with highly engaged, inspirational, relevant content as well as increasing awareness and advocacy of the brand through their own channels. We are extremely excited to be part of Rising Social Star and look forward to working with the next generation of social media stars.”


The winners will also take home a scholarship with education partner Secret Bloggers’ Business and appear at Vivid Ideas 2016. Collective Hub is the media partner for the search.


Lorraine Murphy of The Remarkables


Lorraine Murphy, founder of The Remarkables Group, said in a statement: “We’re thrilled to see Rising Social Star live after six months of planning and to have the calibre of partners that we do.


“It’s essential for us as an influencer agency to be constantly scouting out potential talent and I’m looking forward to seeing the secret gems that we uncover during the search.”


The four winners will be chosen by a panel of industry judges: including Collective Hub’s Lisa Messenger, Junkee Media’s Tim Duggan, Christina Butcher from Hair Romance and Kate McKibbin from Drop Dead Gorgeous Daily.


Lisa Messenger, founder and editor-in-chief of Collective Hub, said in a statement: “Collective Hub has led the way in partnering with social influencers, including featuring a number of them on the magazine’s cover, so it made perfect sense to support this search.


“With 30 issues of the magazine and 50-93 stories per issue, we’re continuously searching out the next wave of talent. Rising Social Star is yet another layer of that. As a judge, I’ll be looking for an authentic voice, the aesthetic of the channel, the business acumen of the influencer and what they’re doing to contribute something positive to the world.”


The search is channel-agnostic and entrants must be 18 years old, based in Australia and have been running their platform for between 12 to 36 months as of January 29, 2016.


Entries are open until March 11 at Winners will be announced at the Rising Social Star party in Sydney on May 27.


CommsCon will be discussing all things ‘Influencer’ in a dedicated stream at Doltone House Hyde Park, Sydney, Wednesday March 23. For information on the program and how to buy tickets, click on the banner below.




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Qantas hunts for new influencer talent in partnership with The Remarkables Group