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 an encore. The answer from new chief executive Doug Flynn might be summed up as "more of the same, with a heightened emphasis on acquisitions".

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

Rivals, meanwhile, marvel at operating margins that remain stable at 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 the rise of digital television and the Internet - means that advertisers are likely to need more media buying expertise in the future. Aegis is meanwhile building a market research business following the pounds 179m acquisition of US-based Market Facts.

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

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