Daily Research News Online no. 7259 - TNS Results Show Strategy 'Working'

TNS Results Show Strategy 'Working'

September 3 2007

TNS has today released unaudited interim results for the six months ended 30 June 2007. The firm says underlying revenue growth of 5.9% and operating profit up 8.9% to £45.4m show the successful implementation of a strategy commenced last year.

Revenue grew 3.5% in absolute terms vs the same period in 2006, to £497.4m, while margin rose 40 basis points to 9.1%. Adjusted earnings per share rose 22.4% to 6.0p.

Acquisitions and disposals added 1.7% to growth but currency movements reduced it by 4.1%, so that overall reported revenue was up 3.5% to £497.4 million (2006 £480.5 million). The group made an announcement ahead of results, on 9th July, which highlighted many of the positive trends in today's release (www.mrweb.com/drno/news7018.htm ).

Chief Executive David Lowden says the group 'remains confident in its outlook for the year and expects to continue to achieve year-on-year improvement in underlying revenue growth', as well as improved adjusted operating margin. Lowden says a 14.3% increase in interim dividend 'reflects the board's confidence' that the group has put in place the strategy, structure, people and skills needed.
fruit, the group says it is benefitting from devoting additional resource to its major multinational clients. Revenue from its Global Partnership Accounts (GPAs) in the custom business grew by 13.0% in the six months, and GPAs now represent 15.3% of custom revenue, with a declared target of 20% within 3 5 years.

Cost reduction is a major plank of the new strategy, with former Dell exec Renaud Collery, appointed as the new Head of Global Operations this year, overseeing improved call centre utilisation and increased off-shoring. The group's off-shoring facility in Hyderabad now employs 600. Data collection via Internet access panels is also growing steadily - business via this method rose grew its share by more than a fifth in the half-year, to 25.2% of custom revenue. The firm aims to increase this to 40% within 3-5 years.

TNS says it 'expects to continue to achieve year-on-year improvement in underlying revenue growth', adding: 'As in previous years, the proportion of orders secured at the end of July represented over 80% of our internal forecasts for the year, supporting our outlook.'

World Regions

The group now reports three regions: Europe, North America and the ALM developing world super-region, encompassing Asia Pacific, Latin America, the Middle East & Africa.

The ALM region now represents 15.8% of group revenues, which the firm aims to increase to 20% in the next 3-5 years. Underlying growth in this region was 9.0%, with good performance in most countries.

Underlying revenue growth for Europe as a whole was 5.6%, with the H1 2007 figure £319.4m. A rise of 8.2% in the UK came from strong performances in both the custom and syndicated businesses, boosted by the deferral of some delayed completions from Q4 2006 into Q1 2007; in France, underlying growth was 3.2%, while Spain, Russia and Eastern Europe drove the Rest of Europe's growth of 5.4%.

Underlying growth in North America was 4.5% (revenue H1 £99.2m), with better results from the US custom business, up over 3% thanks mostly to Technology, Healthcare and Automotive sectors. The group stresses that it is 'in the process of rebuilding' its US custom business, 'with 2007 being viewed as a year of stabilisation' but says the turnaround 'has advanced ahead of plan'.

Vertical Sectors

Underlying growth in the Consumer sector, the group's largest, was 4.0% (H1 2007 revenue £161.2m); in the Media sector it was 6.6% (to £108.7m), with strong growth in television and radio audience measurement - both TNS Media Intelligence and TNS iTRAM made good progress.

In Business Services underlying growth was 5.0% (to £63.9m), with a good performance in financial services, particularly in Europe and Asia. Technology is a high growth area for the MR industry generally and TNS saw underlying growth here of 8.3% (£51.9m).

In Healthcare the figure was 8.4% (£45.4m), continuing recent good performances and reflecting the launch of new services measuring consumer commitment and brand effectiveness. Underlying growth within Other activities was 6.7% (to £66.3m), with strong performances in political and social research and in automotive.

The group's three syndicated services have again performed well in 2007, benefiting from continued investment - the groups cites Worldpanel as the clearest example of this.

Acquisitions of five companies contributed to the figures. Majority shares of Research Surveys (Pty) Ltd in South Africa and Expert Monitor in Poland were acquired, along with 100% of three US firms, Sorensen Associates, Cymfony, Inc. and Retail Forward, Inc. These acquisitions contributed revenues of £8.9m and operating profit of £0.2m to the group for the six months ended 30 June 2007.

Full results can be viewed via the group's web site at www.tnsglobal.com.