The UK’s top 30 design consultancies now have an aggregated pre-tax profit of £19.7m, a 25 per cent increase on last year, according to a report by accountant Willott Kingston Smith.
Fitch, the Imagination Group and Wolff Olins continue to dominate the sector in size-terms says the report, The Financial Performance of Marketing Services Companies 2000. Imagination generated gross income of £29m, up 22 per cent, and Wolff Olins of £15m, up 10 per cent.
PSD Associates reports the highest increase in gross income, almost doubling from £2.4m to £4.7m. The most significant decrease in gross income is reported by Citigate Lloyd Northover, with gross income falling by 31 per cent from £2.9m to £2m.
The report also finds design groups struggling with employee costs, with average employment costs per head rising by 7 per cent. The highest average earners are employed by Interbrand Newell and Sorrell.
Directors’ pay represents 18 per cent of total employment costs of the top 30 groups. The highest paid directors can be found at Enterprise IG, The Partners and Radley Yeldar. The ratio of employment costs to gross income for designers is 66 per cent, reinforcing the point that good staff remain hard to find. Premises costs in central London continue to rise and may be beginning to reduce profitability for companies there.
The consultancies surveyed increased the number of employees by over 17 per cent. Employment costs have increased in line with gross income, while non-staff operating costs increased by slightly more. The net result is an increase in operating profit of 20 per cent. The most productive groups in terms of gross income per head include Wolff Olins and Imagination.