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24 August 2004
The Herald
Contract wins push Leith ad agency into profit ;Hotpoint and Holyrood join list of leading clients

THE Leith Agency has surged back into profit after two years of losses triggered by the opening of its fast-expanding London office.

Scotland's largest independent advertising agency expects the upturn to continue, after landing 'white goods' giant Hotpoint as a new client and securing a berth on the Scottish Executive's multi-million-pound public relations account roster.

Leith's turnaround has been achieved despite the agency losing its prestigious Tennent's lager contract in early 2003, together with the four-strong team behind it who left to form the Newhaven agency. Leith held the Tennent's contract for 13 years, but had to resign when its London office picked up the rival Carling lager account from US brewer Coors.

Significant new business wins since then include Jim Beam, The Biography Channel, and 'Maureen', the directory enquiry service launched by Independent Radio News.

In its latest reporting period, for the 15 months to December 31, the Leith agency posted a pre-tax profit of 955,000, compared with a like-for-like loss of (pounds) 36,000 in the previous year. Turnover was flat on an annualised basis, at 9.9m for the 15-month period.

John Rowley, the chief executive, said Leith's business is 'holding up well' in 2004, with its London office especially buoyant. The company now employs 25 staff in London, up from 15 a year ago, and about 60 in Edinburgh.

He said: 'London came on stream in 2000, which was an important investment, but it depressed results for a couple of years. Landing Hotpoint earlier this year was a key win for us, while in Edinburgh we have got on to the Scottish Executive roster for the first time. There are three key sectors in Scotland - drinks, finance and public sector - and the last one was the missing link.'

Last year Leith was ranked by industry bible Campaign as one of the UK's top 10 advertising agencies in terms of new business won. Founder chairman John Denholm quashed rumours of a possible exit, following an approach from J Walter Thompson, part of WPP. However, Rowley admitted a trade sale remains an option.

He added: 'As far as the smaller 'shops' are concerned, it has been an extremely lean time for mergers and acquisitions, but we have an open mind as far as that is concerned. But there is no specific plan at this stage.'

In 2003 Leith saw staff costs edge up to 4.2m, a 3% rise on an annualised basis.

Denholm received 120,360 in the 15-month period, excluding pension contributions, on a par with 2002.

The highest-paid director, assumed to be Rowley, received 137,220. Leith did not pay a dividend.

The Leith Agency operates a final salary scheme for certain employees and paid contribut-ions of 79,000 in 2003, down from 214,000 the previous year.

PAUL ROGERSON



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