Flourishing Synovate Leads Aegis Growth

Aegis Group Plc has announced strong results for 2006, including rapid organic and other growth for its MR arm Synovate which grew its share of Aegis' total revenue from 38 to 40%. Synovate revenues were £401.2m and operating profit £30.8m, both up more than 20%. Group CFO Jeremy Hicks is leaving on this high note, to be replaced by Alicja Lesniak.

The preliminary results for 2006 showed that Aegis' advertising business also grew fast. Digital media unit Isobar outpaced the more traditional elements on the advertising side. Overall, Group revenue was up 14.5% to £996.9m, reflecting healthy organic growth (7.7%) and also 13 acquisitions made in 2006 and investments in a further nine companies. The previous year was even busier for acquisitions with a total of 29.

The board is confident for the future, citing a record year for net new business at $2.7bn (2005: $1.6bn), and is proposing a final dividend of 1.175p per ordinary share for the year – up 15.2% vs 2005. CEO Robert Lerwill comments: '2006 was another excellent year for Aegis. We continued to operate at the forefront of major industry shifts: digital convergence in media and entertainment; true globalisation and sophisticated applications in market research.' He continues: 'Our prospects for 2007 are promising. Demand in our markets is growing ahead of world GDP. On top of that, our business mix, our advantage in products and services, and the record new business wins of last year should enable us to outperform our markets once more in 2007.'


Synovate's performance led the Group as a whole, with organic growth roughly twice the MR industry average at 9.5%.

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30% of the research group's revenue came from the fast-growing Asia Pacific, C&E Europe and Middle East regions, again well above the industry norm (c.18%) and also promising well. In addition to organic growth, Synovate also benefited from the first full year effect of its 2005 acquisition spree when 9 companies were bought – another one was added in 2006.

Like TNS (DRNO ) Synovate has pursued a successful strategy of close attention to growing key accounts - in 2006, revenues from its 15 largest clients grew well ahead of overall organic growth.

Among many notable expansions and successes for the year, the growth of the PAX media survey, celebrating its first decade in Asia this year, stands out. The survey spread to the Middle East in 2006 and Latin America and Europe will follow in 2007, the latter using the recent acquisition of Interview NSS whose EMS survey polls four million consumers.


In terms of regions, EMEA showed good growth in C&E Europe (slightly slower than 2005), but softer growth in Western Europe. The UK and Germany performed well, with conditions more 'challenging' in France and Spain. There was rapid expansion for the firm's Russian business and a good year in South Africa.

In the Americas, Synovate gained US market share, and improved profits by outsourcing some of its CATI capacity to Costa Rica and the Philippines, a move it is following up with investment in facilities in Malaysia and Bulgaria. A new ground-up operation in Mexico returned a profit in its first year, and there was strong growth in Argentina and Brazil.

Asia-Pacific business continues to grow fast. China leads the region in growth terms, with the proportion of domestic clients growing from an early position where multinational companies dominated. Synovate Aztec and the group's Retail Analytics practice did well in Australia and NZ and are building business in Thailand.


The Group also announced that Jeremy Hicks is stepping down as CFO, to be replaced from April 1 by Alicja Lesniak, a former top finance executive at US-based Omnicom Group, which is rumoured to be among several companies eyeing up Aegis as a possible acquisition target – rivals Publicis, WPP Group and Havas have been more open about their intentions / interest and Havas' Vincent Bollore will make a third bid to gain seats on Aegis' board during a special shareholder's meeting scheduled for April 4.

Hicks, CFO since 2000, is said to be relocating to the US to be with his family. Lesniak has spent the last eleven years at Omnicom, seven as CFO of its BBDO EMEA. She worked previously for Ogilvy & Mather and JWT, and for WPP for two years in the late 1980s.

Aegis Chairman Colin Sharman comments: 'I'd like to thank Jeremy for all he has done, helping Aegis more than double its revenue during his tenure. We are sorry to see him go, but understand that his future lies on the other side of the Atlantic. We wish him well with the next chapter of his life and career.' He adds: 'I cannot think of a better successor than Alicja. She knows the agency world inside out, has a natural feel for our business and has many years of international experience.'

Synovate is online at www.synovate.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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