Aegis under fire for Synovate operation

March 11, 2005

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Aegis under fire for Synovate operation

Aegis posted revenue growth of 15.1 per cent to £747 million for the year to 31 December 2004 and a growth in operating profit of 19.1 per cent to £100.3 million. However, a report from Marketing Services Financial Intelligence continued the criticism of Aegis' former chief executive Doug Flynn's strategy of investing in research businesses. It claimed that Synovate, despite delivering a growth in revenues of 24.4 per cent on 2003, managed to deliver a profit margin of just 5 per cent on the cost of the companies acquired. "This shows a welcome improvement on last year's 2.5 per cent return, but remains well below what should be achievable to justify the cost," the report said. However, Robert Lerwill, the new Aegis chief executive, argued the results "represent an excellent performance across the board, with a significant contribution from initiatives undertaken in media and research". Aegis Media, which includes Carat and Vizeum, increased revenues by 10.4 per cent to £474.6 million. Aegis said it had experienced client defections in France following the launch of the rival media operation KR Media, which was founded by the former Aegis pair Eryck Rebbouh and Bruno Kemoun, but added: "Carat France is once again winning new clients and further progress is expected."

Aegis posted revenue growth of 15.1 per cent to £747 million for the year to 31 December 2004 and a growth in operating profit of 19.1 per cent to £100.3 million.

However, a report from Marketing Services Financial Intelligence continued the criticism of Aegis' former chief executive Doug Flynn's strategy of investing in research businesses.

It claimed that Synovate, despite delivering a growth in revenues of 24.4 per cent on 2003, managed to deliver a profit margin of just 5 per cent on the cost of the companies acquired.

"This shows a welcome improvement on last year's 2.5 per cent return, but remains well below what should be achievable to justify the cost," the report said.

However, Robert Lerwill, the new Aegis chief executive, argued the results "represent an excellent performance across the board, with a significant contribution from initiatives undertaken in media and research".

Aegis Media, which includes Carat and Vizeum, increased revenues by 10.4 per cent to £474.6 million.

Aegis said it had experienced client defections in France following the launch of the rival media operation KR Media, which was founded by the former Aegis pair Eryck Rebbouh and Bruno Kemoun, but added: "Carat France is once again winning new clients and further progress is expected."

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