Investment Column: Cordiant

UNLIKE NYCOMED Amersham, Cordiant Communications Group, the advertising business that demerged from Saatchi & Saatchi in December 1997, is enjoying the benefits of demerger. Chief executive Mike Bungey claims the company has developed a "shareholder culture"; its employees have noticeably more drive. The half-year figures prove the claims. But now CCG has settled down, Mr Bungey is embarking on radical strategic initiatives. The shares have doubled since October amid speculation that the improved CCG could be a bid target. Is Mr Bungey about to blow it all?

CCG does its job well. New business wins outweighed account losses by $200m in the first half. Asia has returned to profit following restructuring. Margins rose from 5.7 to 6.7 per cent, putting CCG on track for a 10 per cent margin this year (the business is skewed to the second half).

Meanwhile, it sees opportunities to strip out costs by centralising its airline tickets and corporate credit cards - the expense accounts are staying. There's also scope to bring down the tax charge.

The question is whether CCG can replicate its success in the new businesses it is eyeing up. It wants to spend perhaps "hundreds of millions" on acquisitions; last year it spent just pounds 20m.

It is to establish a distinct consultancy specialising in Internet marketing and separate bespoke houses catering to healthcare, technology and financial services.

West LB Panmure expects pre-tax profits of pounds 34m and 9p per share this year, putting the shares, at 176p, on a forward p/e of 20. After yesterday's numbers, that looks like a reasonable rating at which to buy into CCG's strategy.