The Investment Column: Aegis

AFTER HANDSOMELY outperforming the media sector in recent years,it is hard to know what Aegis, the media buying agency, does for anencore. The answer from new chief executive Doug Flynn might besummed up as "more of the same, with a heightened emphasis onacquisitions".

Yesterday's first-half results show little dissipation in thecompany's growth prospects. Underlying pre-tax profits grew by 19per cent to pounds 29.1m. The company gained pounds 500m of net newbusiness.

Rivals, meanwhile, marvel at operating margins that remain stableat 23 per cent, a sure reflection of the steady performance of Carat,Aegis's main business and Europe's largest media buyer.

The accelerating proliferation of media channels - notably therise of digital television and the Internet - means that advertisersare likely to need more media buying expertise in the future. Aegisis meanwhile building a market research business following the pounds179m acquisition of US-based Market Facts.

Aegis's management talks of a three to five-year plan to grow thenew operation into a broad-based network to complement its buyingoperation. Given the group's rebound since the early 1990s,investors would be advised to stay on board, although more cautioustypes may want to see more evidence of Mr Flynn's vision beforebuying on a prospective p/e ratio of 34.

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