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Aegis Group plc Report and Accounts 1999

coverpaul 10/4/00 4:52 pm

2 Group at a glance4 Managing clients’ marketing decisions

internationally 6 The potential of evolving media

10 Understanding consumers’ motivation12 Enhancing our client partnership14 360º communication16 A network of entrepreneurs18 In summary20 Chairman’s statement21 Chief Executive’s statement22 Operational and financial review

26 Board of directors27 Directors and advisors28 Report of the directors31 Remuneration report36 Corporate governance38 Auditors’ report to the members

of Aegis Group plc39 Consolidated profit and loss account40 Consolidated statement of total

recognised gains and losses41 Balance sheets

42 Consolidated cash flow statement43 Notes to the consolidated cash

flow statement44 Notes to the accounts69 Notice of meeting71 Group directory75 Shareholder information

and financial history76 Five year summary

Aegis Group plc Report and Accounts 1999 1

WE ARE ALL BOMBARDED BY A CACOPHONY OFCOMMUNICATION: MEDIA, TELECOMS, COMPUTERS.THE INPUT OF INFORMATION TO EACH INDIVIDUAL HASEXPLODED, CHANGING OUR RELATIONSHIP WITH THEWORLD AROUND US. HOW CAN BUSINESSES CUTTHROUGH TO MARKETING-SAVVY CONSUMERS? HOWCAN THEY BE SURE THEIR MESSAGES REGISTER ANDARE ACTED ON AS INTENDED?

AEGIS DELIVERS MARKETING RETURN ON INVESTMENTFROM INTELLIGENCE.

> GROUP AT A GLANCE

Argentina, Australia, Austria, Belgium, Canada, China, Czech Republic, Denmark, Finland, France,Germany, Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Italy, Malaysia, Netherlands,Norway, Philippines, Poland, Portugal, Russia, Singapore, Slovak Republic, South Korea, Spain,Sweden, Switzerland, Taiwan, Thailand, Turkey, UK, Ukraine, USA.


FINANCIAL HIGHLIGHTS 1999 1998 1997 1996 1995TURNOVER £4,791.8m £4,130.0m £3,652.5m £3,452.5m £3,400.9mGROSS PROFIT £281.7m £221.0m £191.8m £179.5m £165.2mOPERATING PROFIT(BEFORE AMORTISATION OF GOODWILL) £66.6m £50.6m £44.4m £41.9m £36.7mPROFIT BEFORE TAX £67.3m £50.6m £45.6m £39.6m £33.6mBASIC EARNINGS PER SHARE 4.6p 4.0p 3.8p 3.3p 2.8pDILUTED EARNINGS PER SHARE 4.4p 3.7p 3.4p* 3.0p* 2.6p*FULL YEAR DIVIDEND 1.0p 0.85p 0.7p 0.6p –OPERATING CASH FLOW £76.3m £57.0m £54.5m £42.7m £35.0mNET (DEBT)/FUNDS £(15.1)m £36.9m £(2.2)m £(7.6)m £(17.9)m

NEW BUSINESS PERFORMANCE – MEDIA US$1,206m US$770m US$702m US$437m US$408mEMPLOYEES AT 31 DECEMBER 4,175 2,869 2,510 2,011 1,866

*As restated under Financial Reporting Standard 14

CARAT Market Share Market Ranking

Germany 12.4 1France 22.9 1UK 12.3 1Italy 9.5 2Spain 12.9 2Scandinavia 13.1 2Belgium 12.0 2Top 12 in the USA

MEDIAUS$bn

1. OMD 12.22. Western Initiative 10.33. Carat 8.7*4. MediaCom 7.05. The Media Edge 6.66. Mindshare 5.97. Zenith Media 5.78. Starcom 5.59. MediaPlanning 5.2

10. Media Vest 4.1

By 1998 Worldwide Billings*At 1998 average exchange rate.Source: Recma Report April 99

MARKET RESEARCHUS$bn

1. ACNielsen 14.25 2. IMS Health, Inc. 10.84 3. The Kantar Group 6.75 4. Taylor Nelson Sofres 5.49 5. Information Resources 5.11 6. NFO Worldwide 4.24 7. Nielsen Media Research 4.02 8. GfK Group AG 3.53 9. IPSOS Group SA 2.26

10. Westat, Inc. 2.05 11. The Arbitron Company 1.95 12. United Information Group 1.82 13. Maritz Marketing Research 1.69 14. NPD Group 1.39 15. Video Research 1.38 16. Market Facts 1.37

By 1998 Research RevenueSource: Marketing News Honomichl Global Report (August 1999)

MEDIA MARKETRANKING GEOGRAPHIC

GLOBAL RANKING

FULL TIMEEMPLOYEES

4,175

LOCATIONS

CARAT manages the strategy, planning,buying and evaluation of marketingcommunication to give clients businessadvantage through media.

MARKET FACTS uses innovative tech-nology to contact consumers, collectingand analysing data to answer marketers’key questions.

MARKET FACTS and MMA decision systems give insight into brand performance through modellingand interpretation, identifying thosemarketing activities which drive returnon investment.

KEY EVENTS OF THE YEAR

APRIL 99Acquisition of a 51% interest in CaratFax SA

JUNE 99Acquisition of Market Facts, Inc.

JULY 99Acquisition of Carat Santé SA

SEPTEMBER 99Appointment of Douglas Flynn as CEOof Aegis Group plc

OCTOBER 99Acquisition of Christine Malleret Conseil SA

Acquisition of a further 15.6% interestin BBJ Media Services Ltd.

NOVEMBER 99Acquisition of Feather Brooksbank Ltd.

DECEMBER 99Acquisition of Nord Espace Media SA

JANUARY 2000Acquisition of Motoresearch

Acquisition of Ufa Medianet GmbH

Acquisition of a 25% interest in MediaConsultants SARL

Carat Taiwan: 50:50 joint venture withUnited Advertising

Appointment of Lord Sharman asChairman of Aegis Group plc

FEBRUARY 2000Acquisition of 35% interest in IpsosAccess Panels Holding SA

Acquisition of remaining 49% interest inCarat Fax SA

MARCH 2000Acquisition of Asia Market Intelligence

Establishment of Carat Interactive Europe

Establishment of eVerger, 50:50 jointventure with Warburg Pincus

Acquisition of Ambi Dexter AG /SetStep AG

AEGISCLIENTS

adidas, American Express, AT&T, Beiersdorf, Bertelsmann, Bristol-Myers Squibb, Cable &Wireless, Club Med, Danone Group, Diageo plc, EMI Group plc, Ferrero International, Henkel,Kraft Jacobs Suchard, Merrill Lynch, Nissan, Pernod Ricard, Pfizer, Philips, Pizza Hut, Procter& Gamble, Sara Lee, SCA, SmithKline Beecham, The Clorox Company, The Coca Cola Company,The Kellogg Company, The Walt Disney Company

France 23%

Germany 18%

North America 17%

UK 16%

Spain 8%

Scandinavia 7%

Italy 3%

Latin America & Asia Pacific 3%

Others 5%

Europe

TURNOVER

CARAT £4,724m

REACHINTERNATIONAL BUSINESS STRATEGIES ARECONFOUNDED EVERY DAY, NOT BY COMPETITORSBUT BY INEFFECTIVE IMPLEMENTATION IN DIVERSEMARKETS. HOW DO YOU TURN NOTWORKS INTO NETWORKS?


At Aegis it is our intention to furtherdevelop global capability and to increasereturn on investment for our clients’marketing initiatives. The underlyingfactors which drive our growth – theglobalisation of brands, the power ofmedia to influence consumers and the need to maximise marketing return oninvestment (‘ROI’) continue to accelerate.

We have the capacity to respond to these challenges by strengthening ourglobal organisation and by increasing our capability in the expanding media and marketing service sectors.

Global brands are being built on consumer needs and trends. This isparticularly noticeable among youngpeople – their music, their clothes, theirviews. But it is also increasingly true forbusiness, travel, up-market clothing, carsor interior design. The conduits throughwhich this is achieved are the evolvinginternational media such as CNN, BBC,Disney, programmes such as ‘Neighbours’,‘Friends’, ‘Seinfeld’, ‘Frasier’ andpublications like Hello and Vogue. These conduits will be enhanced by the development of the Internet with its unprecedented rate of take-up. It isagainst this background that major localbrands will have to compete and will needmulti-local strategies to survive.To succeed in this new world our clientsneed in-depth intelligence of localconsumers, as well as local media andmarket places. From this, global andinternational trends can be analysed.Often such trends emerge from under-lying global drivers for example, concern

for the environment, ageing populations in developed markets or the growth intelecommunications.Synthesis, perceptivereporting and forecasting give specificdirection for clients’ marketing activitiesand investment. Once they have optimisedtheir portfolio of brands, market bymarket, they can then start to buildcommunication strategies to driveprofitable business growth.

The Aegis approach – to break downbarriers between old definitions of marketresearch, consultancy, media planningand buying – gives us the edge which canensure that media placements are madeagainst specific marketing objectives. This commitment to partnering clients to deliver more effective marketing is ably demonstrated by our acquisition ofMarket Facts. Linking this to our plans toglobalise contact with, and understandingof, consumers, together with furtherinvestment in decision systems whichdrive performance of brands, marketingand communication, is at the heart of ourstrategy.

This strategic core is supported by ournotion of 360º communication, an expertculture and international partnership.Linking all communication, fromsponsorship to Internet, can increasinglycreate or reinforce a brand – in Carat thisis referred to as 360º communication. We have built a range of expert tools and models to allocate budgets acrosscommunication options based onquantitative and qualitative assessmentsof their effects. Our expert culture is builton the international communications

process which we call Carat Sphere. Ourpeople are passionate about their variousdisciplines, but also work well acrossboundaries. Intranets linking client andproject teams are an important part of the investment in infrastructure. It is ouraim to manage our client relationships aslong-term partnerships: this will reducetheir need to invest in skills whichwehave,butare notcore totheir ownbusinesses. We have restructured CaratInternational with this aim specifically inmind to develop a clear business model for working with and delivering addedvalue for our largest clients.

Our mission – to deliver improvedshareholder value – will be achieved by delivering business advantage for agrowing base of clients, by containing ourcosts and by exploiting our shared multi-national experience. We will focus Aegis’power to generate superior knowledgeand to manage increased consumercommunication and

At Aegis we face the challenge of thefuture with a new Chairman and ChiefExecutive and we are building a new teamof non-executive directors. I have everyconfidence that with our executive team,we have the right people to continue the success we have inherited.

OUR PEOPLE HAVE EXPERT IN-MARKETUNDERSTANDING. WORKING TOGETHER THEY AREBUILDING A GLOBAL KNOWLEDGE CENTRE WITHUNRIVALLED ACCESS TO POWERFUL RESEARCH AND INTELLIGENCE.

Lord SharmanChairman

Chairman’s statementpage 20

communication and market sophistication.

Clayton Christensen’s book, ‘TheInnovator’s Dilemma’, has an alarmingmessage for the heads of corporations. It is about the failure of companies to stay at the top of their industries when theyconfront certain types of market andtechnological change. It is about well-managed companies which have theircompetitive antennae up, are listeningastutely to their customers, investingaggressively in new technologies and yetstill losing market dominance. Christensenconsiders the plight of a range of industriesand companies when faced with disruptivetechnologies – from rope shovelmanufacturers to minimill steel producers.In almost every case the incumbentswithered in the face of the new entrants.

The parallels are obvious. No matterwhere we turn, we are confronted with theage of new media, converging industriesand of a world connected. A change asfundamental as the industrial revolution?Can it be true? It certainly looks like itmight be. But the enabler is not just theInternet.Decades of investment intelecoms,computer infrastructure, the developmentof PCs, databases and software of allkinds have come together in a way thatwas science-fiction just a few years ago.

For marketers the most fundamentalchange is knowledge. Ever since the first billboard was posted and the firstnewspaper ad published, producers ofgoods and services have tried to work out

how they can reach their customers mosteffectively and efficiently. The marketingservices industry developed in order toseek an understanding of the response ofconsumers to the media – and throughmarket research, to understand consumers.In particular, it sought to understand theirattitudes towards brands and relatedmessages. Throughout the history of theindustry we have mostly tried to under-stand groups. Suddenly we have availableto us not only an understanding ofgroups, but rapidly rising understanding ofindividuals, their aspirations, attitudes andhabits. And we have the means to handlethat data, to mine it and, at least in theory,to establish an efficient direct relationshipwith the customer.

EVOLVE

TRADITIONAL BUSINESSES AND .COMS ARE SEARCHINGFOR SUSTAINABLE BUSINESS MODELS EMBRACING NEWMEDIA. ARE THEY INVENTING AND RE-INVENTINGBUSINESSES THAT WILL DELIVER?


Douglas FlynnChief Executive Officer

Chief Executive Officer’sstatement page 21

For media, the value of data and ‘owningthe customer’ can be measured simply byconsidering a company’s enterprise valuedivided by the number of customers. Onthis measure, terrestrial broadcasttelevision, radio and newspapers all scorein the range 200 – 400 compared tomobile telephony, cable and satellite payTV and Internet Service Providers, who arein the range 5,000 –10,000. Why? Simplythat no matter what a great franchise anewspaper or a well-defined radio stationmay be, they don’t really know muchabout their customers and certainly don’town them.

Nothing beats being in a market that is growing, and part of the growth inadvertising can be attributed to Internetventures. Their marketing spend is in therange 40–70% of total costs in thefirst twoyears as they drive for a consumer land grabandtake theircompanies to flotation.Some70%of these budgets is spenton traditionalmedia.Onthe Internet,thrivinge-commerce,strong capital markets and funds fromnon-advertising marketing budgets willpush worldwide Internet ad spending toUS$33 billion by 2004 – one third of whichwill be spent outsidethe US.The compoundannual growth rate for Internet advertisingwill be 51%over the next five years, roughlytracking online retail’s growth rate of 56%

over the same period. The rising spend by .coms and the weightof money pursuing the sector is at leastpartly responsible for fuelling strongincreases in television rates with rises of 5–10% in most markets. At the same time as we are seeing strong economicconditions, a number of major consumerbrands are experiencing growth difficulties.Given the strength of the advertisingmarket, these brands require a moreinsightful way to invest in communication.

Do the Internet and other interactivemedia give us the marketing Holy Grail?The answer is, not alone. We have theability to target individuals in a low-costway or at least reach them in a way thatlooks personal and one that allows themto interact in a way that is self-selecting.Interactive media offer a marketing channelthat cuts out many processes which brandowners probably thought got in the way.But brands must still be built and sustained.It is the effective integration of new mediainto clients’ full marketing programmes,which delivers success.

Alongside the great strides that are beingmade in terms of two-way bandwidthallowing ever-richer content and anexplosion of on-demand choice, has comean ever-wider problem of effectiveness

and efficiency for marketers. This is notto mention the simple problem of buildingbrands and shifting stock. In these days ofdetailed information and swiftlymeasurable response, the ‘off the top ofthe head’ views of some marketing guruslook decidedly anachronistic.

At Aegis we believe in fact-based advice.Through our understanding of media andconsumers, the relationships betweenthese two and the attitudes of consumerstowards brands, we aim to maximisemarketing return on investment. Thedecision systems which use these elementsare delivering new tools to executives asthey do battle in this brave new world.There will be a transformation in adbuying from cost-per-thousand toperformance-based, a trend we see fortraditional media aseachgeographicmarket develops.

Right around the world take-up rates of interactive media are amazing.‘Thequickest adoption since the wheel’ orsliced bread, depending on the pundit. Does that mean that the morning paperwill disappear overnight or the radio beconsigned to the dustbin? Hardly.But what it does mean is that many newchannels will sit alongside existing ones.As marketers, we have a rapidly changing

task which is to deliver consumers with apredisposition to listen to a client’s message. If aconsumer is determined enough, then he canavoid a lot of advertising.

The process of media and communicationevolution is quickening but in a way thatshould gladden not frighten both businesspeople and consumers. For consumers theworld at your fingertips is a compelling notion.To retrieve information from the biggest libraryof all, to communicate with friends around the planet and bypass traditional gatekeepersas we shop. For marketers there is now a realopportunity to understand results in real timeas changes in attitude, buying behaviour andsales provide clear indicators of what isgenerating return on marketing spend. Thepace of fragmentation is increasing but at thesame time we have increasing knowledgeabout individual behaviour.

At Aegis our core skills are:

Understanding of the consumers, whatdrives them, their relationship with brandsand the media.A set of proprietary decision systems andtools which takes in-depthmarket andmediadata to understand best the marketingactivities which build return on investment.A communication network enabling the sharing of data, knowledge and

experience, delivering power locally,adding value internationally.

We think those skills position us well for the future.

As with the Gold Rush much of the newmedia wealth will go to the providers of thepicks and shovels. In the case of this boomthat will include database suppliers and theproviders of measurement and datagathering tools.

Aegis’ potential to build decision systemswhich exploit ALL media,consumerand marketinformation across the globe will realisesuccess for our clients and for our business.

DELIVERING PROFITABLE FUTURE CUSTOMERS RELIESON INTEGRATING NEW MEDIA SUCCESSFULLY INTOTHE FULL MARKETING MIX. AEGIS’ ABILITY TO BUILDKNOWLEDGE SYSTEMS AND INFRASTRUCTURES WHICHEXPLOIT ALL MEDIA, WORLDWIDE, CAN REALISESUCCESS FOR OUR CLIENTS.


There are few things in this world moreinteresting than people. That’s why ourbusiness – the business of understandingpeople , their motivations and behaviours,is such a fascinating one. People – old,young, rich, poor, parents, children, co-workers, neighbours, friends, teachers,bankers, homemakers, factory workers,office personnel, farmers, computerprogrammers, clergymen–are allconsumers of goods and services. Theyare the foundation upon which our worldeconomy is built. Understanding theirattitudes, their buying habits and thethings that inspire them to behave as they do is one of the most intriguingchallenges of the modern world.

Why do people do what they do? Theanswer to that single question is the key to marketing success.

From automotive manufacturers tohealthcare organisations, financialservices institutions to computer software

marketers and government agencies –each is striving to unlock the same secret,and it is our job to help theminthat process.

For over half a century Market Factscompanies have been helping marketersunderstand what makes consumers tick:what they know and believe; what theywant; what they expect; what drives theirpreferences; how they view the worldaround them; and ultimately, how theybehave in the marketplace.

Marketers’ needs have changeddramatically. Now, not only is consumerinformation needed quickly, lessexpensively and with greater precisionthan ever before, but the marketplace is increasingly complex.

The sheer number of choices available to consumers today puts a completelydifferent light on how we interpret theconsumer feedback that we receive. We no longer have just two brands of

aspirin from which to choose – we have20. And within that 20 there are virtuallyendless variations of strength, tablet form,package size and ingredient variety. Theshades of grey that are inherent in theinterpretation of consumer attitudes andbehaviours have grown exponentially… as have the ways in which we at MarketFacts address those issues.

We have developed a wide range of datacollection methods, analytical tools,proprietary research techniques anddecision systems to help us address ourclients’ specific marketing issues.

Our extensive proprietary resources havebeen tailored to provide solutions to thefull spectrum of marketing challenges. We measure the potential customerappealof new product ideas at the conceptualstage, through the refinement of newproducts and services in readiness formarket launch; we track in-market brand delivery, how that leads to total

customer satisfaction in our clients’service and how that generates long-term brand value.

Our research product and serviceofferings have been made accessible to our clients on a truly global scale, to multinational marketers in all keyindustry and geographic sectors.

This year, we launched SEGWAYSM, jointlydeveloped by Market Facts and the ACNielsen Company. SEGWAY identifiesfor marketing planners and brandmanagers in volumetric terms, the trueimpact of consumer attitudes. They canthen effectively target their marketingefforts based on an accurate identificationof where the best potential for increasedprofits lies. It marries the proven attitudeand brand equity measurementcapabilities of Market Facts withpowerful consumer purchasing data-bases from ACNielsen, in the first of anew generation of marketing systems.

We are establishing true partnerships withour clients. They are looking for more thanjust data; they are looking for marketintelligence which provides real value indecision-making and delivers bottom-line results. That is what we are investingin: solutions to their business issues.

Market Facts’ experience is not ‘one sizefits all’; rather we have an exceptionalvariety of research tools that can beapplied, as appropriate, to each individualsituation. We believe that one of the besttestaments to the success of this approachis the recent growth trend that we haveexperienced in being awarded large scaleresearch programmes by some of thelargest multinational marketers. Ourclients trust us to help them unravel theconsumer attitudes and behaviours on atailormade but extensive, long-term scale.

So, regardless of whether we collectconsumer information in person, overthe phone, via the Internet, or through

the mail, all of us at Market Facts arecommitted to making that informationas insightful as it can be for our clients.As we look forward to the next 50 years,the techniques that we use to collectconsumer information will be ever-changing. But one thing will remainconstant: our complete and utterfascination with the process of whatmakes people tick and which marketingprogrammes will ensure our clients getand keep them as customers.

FOR EVERY BRAND, IN EACH MARKET, AT ANYMOMENT, THERE IS A SET OF CUSTOMERS WHO WILLDELIVER THE BEST RETURN. HOW DO MARKETERSTARGET THEM WITH THE RIGHT PRODUCT,COMMUNICATE ITS BENEFITS AND MOTIVATEA CHANGE IN BEHAVIOUR?

BY KNOWING AS MUCH AS POSSIBLE ABOUT WHATTHOSE PEOPLE WANT AND WHY THEY DO WHAT THEYDO. OUR COMPLETE AND UTTER FASCINATION WITHWHAT MAKES PEOPLE TICK ENSURES OUR CLIENTS CANTAKE THE APPROPRIATE MARKETING ACTIONS TO WINAND KEEP THEM AS CUSTOMERS.

Paynedent, f Executive ket Facts FOCUS


efforts based on an accurate identification

The media industry is evolving faster thanany business at any time in history. Inmanaging media we need new paradigms.

Our clients know that the ability to under-stand and exploit the opportunities of the new media market are absolutely key to their future business success. Mediacommunication, and assessing theimportance of its short, medium andlong-term effect, is becoming central to every branded consumer business.

Technological developments create ahuge increase in media capability. Mediahas moved from a collection of singledirection entertainment or informationchannels to providing information,communication, entertainment andtransaction, all interactively distributedthrough satellite or cable, PC or laptop andstatic or mobile platforms. As consumersassimilate and use these media vehicles,whole new sets of consumers with similarmedia usage will evolve. Understanding

the economic value of these segments isvital for our clients. Fast consolidation ofmedia ownership is also changing thelandscape of worldwide media. The bigboys have now moved into the multi-media environment and the ‘old’ mediagiants are investing heavily to enhanceand strengthen their online capability andcoverage. As the key global media ownersgrow rapidly, consolidate and integratetheir properties online and off-line,advertisers need the best advice to achievean advantage over their competitors.

Online does not have a capital, ahomeland or an economic zone. Gone are the historical national boundaries. This will drive business and clients torapidly re-engineer how they structureand operate in many aspects of theirbusiness. Media communications willrapidly become truly international.Advertisers who have successfullydeveloped power brands will becomeincreasingly involved in international

event-dominated media deals to achievevalue and competitive standout. Withinour clients’ organisations, as well as thepressure of plotting a route through thesechanges, there is also significant pressureto deliver return on investment frommarketing budgets in shorter timeframesand with greater certainty.

The Carat service is focused on supportingclients andtheir brandsthrougha structuralcollapse of time and space for consumersand consumer-reliant business. We needto provide the media vision, organisationalsavvy, systems, best practice, planningskills and negotiating strength; effectively,efficiently and internationally.

During 1999, significant progress wasmade on developing key tools, data and information management systemsand building our consumer insight andadvertising effectiveness knowledge. We significantly upgraded ourinternational client service resource

providing a framework for global clientmanagement to deliver an added value,coherent global service.

Innovation becomes harder for clients astheir organisations grow and take a moreglobal perspective. However, innovationis critical to keeping the consumerrelationship vibrant and fresh.Buildingpartnerships with media owners requiresfaster and better global information.

Carat helps clients manage the decision-making process internationally to increasespeed of response and turn data intoinformation – key components inexploiting innovative ideas.

Whether through client extranets,international client service managementtools or a fully flexible data managementstructure, accountability andcommunication are a priority for theCarat business.

The relationship between our clients’brand equity and the response toadvertising is more measurable and morepredictable for those who have the resource, tools and insight. We areinvesting in research and tools to manageadvertisingeffectiveness,bothin traditionalmedia channels and also in onlineplanning and buying. The reward foradvertisers who get it right will be verysignificant. Enhanced values of between5–10% are common as global bestpractice evolves. Worldwide advertisersare achieving value benefits of tens ofmillions of dollars. The opportunity tobuild sustainable competitive advantageis clear: Carat International’s networkand international client partnershipsoffer a critical path to those rewards.

The breadth of our service and our strongcoherent network give Carat the scopeto truly partner international clients whoare winning the race for global mediaeffectiveness.

CARAT HAS THE RESOURCES, TOOLS AND INSIGHTTO SUPPORT CLIENTS’ DECISION-MAKING PROCESSINTERNATIONALLY: TO INCREASE SPEED OF RESPONSEAND TURN DATA INTO INFORMATION – THE KEYCOMPONENTS IN EXPLOITING INNOVATIVE IDEAS.


PARTNERJerry BuhlmannChief Operating OfficerCarat International

THE BIGGER AN ORGANISATION GETS, THE HARDERIT IS TO THINK INNOVATIVELY. YET IT’S THIS SKILLWHICH LEADS TO WINNING IN THE MARKET.WHERE DO YOU GET HELP TO BE FASTER ANDSMARTER, ANYWHERE IN THE WORLD?

Eric DrancourtChief Executive OfficerCarat International

< Eryck RebbouhJoint Chairman andChief ExecutiveCarat France


360º communication exploits the wholerange of media channels open to speakfor a brand. This is fundamental to theway Carat builds effective communicationstrategies for our clients. The often notedmedia explosion,givingbirth toacceleratingnumbers of new media vehicles, is ourbiggest opportunity and challenge.

Thinking 360º has become the motto ofCarat planners as they work within oursystem of communication, Carat Sphere.Beyond the traditional media such as TV, radio, press, poster or cinema, we can enhance a brand’s performance byscanning sponsorship opportunities, newand different programming or spectacularevents. Finding an appropriate climate orenvironment for a brand to meet its targetgroup might lead to TV, direct response orto the Internet.

The task is to build a programme whichengages consumers with the brand andreveals the inherent values in a product or service that cause consumers to say’That’s for me’. As messages reachconsumers in ever new and different ways,they build surprise, refresh and renew therelationship, create excitement and loyalty,even advocacy for the product. Whohasn’t watched for the next amusing adfrom their favourite brand? Who hasn’tbeen repelled bya heavyweight campaignin an inappropriate context?

Having involved the target, the system ofcommunication must guarantee businesssuccess in the marketplace for advertisers.This means profitable, effective responsethrough awareness, loyalty, increased

market share and sales. Linking mediaeffectiveness to businessadvantage for ourclients is at the root of our development.Businesses such as MMA and Market Factshave the experience and the databanks toadd to the ever increasing arsenal of Caratproprietary insights.

We have through our global intranet –Carat Net – the widest range of businesssuccesses linked with their mediaschedules. We know that if sponsorshipleads awareness, then direct response andinteractive media are an excellent andmeasurable way of driving sales. The toolsdivert funds to the right media at the righttime in a brand’s or campaign’s life, basedon the specific requirements as judged bythe client and planner for each brand ineach market. The mathematical challengeof real life optimisation based on real lifeconstraints and opportunities has beenuniquely solved within our workbench of tools.

Working across some 4,000 clients is afantastic basis to leverage the learningfrom a service like Carat Sphere and tofine tune elements such as evaluatingtarget groups or budget allocation.

Building our knowledge base translatesdirectly to clients such as Coca Cola,Volkswagen Group, Disney, Philips or Club Med, who appreciate the essentialcontribution it makes to their businessbattle, creating the fast movingcompetitive edge so needed today.Our ambition, expressed several yearsago, to be a business partner of ourclients, helping them balance their

investments across media to deliver theright combination of messages acrosschannels, is now a reality, lived every day.

Supportingourconfidence inthecontinuingdelivery of business advantage is a uniquemethod and a spirit in Carat teamsworldwide who share a passion forconstantly improving results and forevolving our service.

In this spirit we are investing massively in media marketing tools driven by trulyinternational teams to have the best poolof measurements, linking media exposureand marketing data. Drawing togetherthe strength of Aegis’ teams is a uniqueplatform for further insight and control of the marketing environment, nowrealisable globally.

The Carat Sphere and 360º media approachprovide an intellectual and operationaldiscipline to deliver our media offer,present and future, to propose the bestspecific and complete communicationplan for each and every brand.

The results are judged by the number ofdelighted consumers, delighted clientsand the enthusiasm of Carat teams todeliver even better next time!

DELIGHT

< Bruno KemounJoint Chairman andChief ExecutiveCarat France

CAREFUL PLANNING AND THE RIGHT TOOLS FOR THEJOB. 360º COMMUNICATION – USING THE WHOLE RANGEOF MEDIA CHANNELS – HAS BECOME THE MOTTO OFCARAT PLANNERS. AS MESSAGES REACH CONSUMERSIN EVER NEW AND DIFFERENT WAYS,THEY CAN REFRESHAND RENEW A RELATIONSHIP, CREATE EXCITEMENTAND LOYALTY, EVEN ADVOCACY FOR THE PRODUCT.

WHAT MAKES A SUCCESSFUL BRAND: EITHER ONE THATBURSTS INTO THE BEST SELLERS OR ONE THAT ENDURESFOR DECADES, BECOMING A FRIEND FOR LIFE?

INSPIREOrganisations can perform amazing featswhen given the right resources,motivationsand empowerment to succeed.

That was certainly the challenge for CaratNorth America when I joined Aegis in1998.The leaders of the Carat organisation inEurope had taken their business to No1 in the field of planning communication,constructing a new industry segment.

Now, in North America, our mission is tofundamentally change client expectationsof what media service companies can and should do. We aspire to manage the universe of communications for our clients. Developing fully integratedcommunication plans and solutions forour clients is what we do best. And ourtruly independent status helps us tomaintain a completelyobjective perspectiveon the most appropriate media channelsto exploit, given the marketing challengeat hand. Being good at what we do is notenough. At Carat North America, westrive to be the best in the business.

Teamwork, innovation and accountabilityare core corporate values we share. We’vecreated an internal venture capital fund.All employees are encouraged to comeforward with business building ideas.With minimum red-tape, new businessventures are funded and supported. SusanRowe, Managing Director of our Chicagooffice, stepped forward in early 1999 and developed Carat Direct Response, adivision within our company dedicated toservicing client needs in the directresponse solicitation business.Yearonebillings topped US$50 million. John

Barnes, Managing Director of our LosAngeles office, has recently spear-headedthe development of our Carat Multi-Culturalorganisation to service our clients’ growinginterest in marketing directly to diverse,multicultural consumer groups.

By any measure, 1999 was an explosiveyear of growth. We doubled our billings,expanded our service offerings andfurthered our leadership position inproprietary research and tooldevelopment, benefiting from theexperience, knowledge and resources ofthe Aegis network. We opened newoffices and successfully established Caratas a force to be reckoned with within theNorth American media servicemarketplace, attracting some of the bestand brightest media professionals alongthe way.

Our organisation’s spirit of entrepreneur-ship inspired us to experiment, innovateand exploit untapped opportunities, to provide our clients with the tools,programmes and innovative solutionsneeded to improve their return oninvestment across all media expenditure.

For example, business-to-business clientsare increasing expenditure to developcustomised events to more effectivelytarget their key prospects. We gave thegreen light to Carat Face to Face just 12months ago. Today, Dan Belmont and histeam work with many of the largestmultinational technology companies,including Xerox, Computer Associatesand Hewlett Packard.

For emerging .com clients, Jeff Piper,President ofCarat Press,brings cost effectivedirect response advertising models into theprint medium. Established just six monthsago, Carat Press will be a new multi-million dollar business venture for CaratNorth America in this coming year.

Exploiting Carat Freeman’s leadership inservicing the high tech industry, Carat SanFrancisco opened its doors for businessunder Managing Director Julie Rieger. It isnow working in partnership with many ofthe leading-edge technology companiesin the Silicon Valley.

The common thread running between DanBelmont,JeffPiperand JulieRieger is a drivefor results for their clients and for Carat.

Nurturing a corporate culture that invitesexperimentation, celebrates success andlearns from failures has helped to createan invigorating and inspirationalenvironment for our Carat US employeesto work in.

We’re building a global company oftalented, passionate, media professionals,committed to providing our clients withinnovative media solutions to their diversebusiness challenges. To date we’re proudof our accomplishments and excited bythe challenges ahead.

IT IS OUR SPIRIT OF ENTREPRENEURSHIP THAT INSPIRES US TO EXPERIMENT, INNOVATE AND EXPLOITUNTAPPED OPPORTUNITIES. THIS PROVIDES OURCLIENTS WITH NEW TOOLS, PROCESSES ANDPROGRAMMES TO IMPROVE THEIR RETURN ONINVESTMENT ACROSS ALL MEDIA EXPENDITURE.

MARKETING INVESTMENT IS THE MAJOR BUDGETITEM FOR MANY BUSINESSES. CAN RIGOROUSMANAGEMENT AND ACCOUNTABILITY CREATEPROGRAMMES WHICH BREAK THROUGH?

David VerklinChief Executive OfficerCarat North America


Media> All major countries showed billings

growth ahead of the market,maintaining strong leadershippositions. Net new business gainsreached another record high with netwins of US$1,206 million (+57% vs.1998).

> France, Italy, Spain, UK and Germanyall achieved strong results with qualitynew business gains in all countries.

> Scandinavia remains in strong shape,although Norway and Swedenexperienced market difficulties.

> Central and Eastern Europeannetwork is developing well.

> Continued strong new businessperformance in North America. USA isa key contributor to the Group’s totalnew business. Billings doubled in1999. The two Canadian operationsare now fully integrated.

> Economies are recovering in AsiaPacific and the network is winningstrong new business throughout theregion. Joint venture in Taiwan andSingapore set up under the Caratbrand.

> Argentina is performing in line withexpectations and provides a solidplatform for further expansion intoLatin America.

Market Research> Significant step towards building a

substantial business in marketresearch.

> Market Facts is performing in line withexpectations and gives a goodfoundation for future developmentboth in North America and globally.

> Acquisition of Asia Market Intelligencein March 2000 established a presencein Asia. It is the 2nd largest customisedresearch company in the region.

> Agreement to invest in a joint venturewith Ipsos SA extends our marketingresearch capabilities to Europe.

InternetOur expertise now includes Internet andinteractive media.

> Carat Interactive provides– media buying for the net– media buying for .com clients– Internet consultancy– ‘state of the art’ Internet planning

tools

> Our online research includes– high definition concept and product

testing– web site evaluation– customised market research through

the Internet

> Aegis in a joint venture with WarburgPincus has established eVerger, aninvestment company providing earlystage equity funding in eMarketingservices and enabling technologies.

> IN SUMMARY

OUR FUTURE IS SECURED THROUGH THE WINNINGOF NEW BUSINESS WITH CLIENTS WHO ARE GROWING.OUR CLIENT OFFER IS COMPELLING AND EVER-DEVELOPING.

BILLINGS US $’m NEW CLIENTS

MARKET RESEARCH

MEDIA

Pfizer (USA)Midas (USA)Seagate Technology (USA)Alberto Culver (USA)

Mannesman Mobilfunk, Henkel,PSA (Germany); Dell (France);Sega, NTL, Samsung, (UK);Daewoo (Italy); Tabacalera(Spain); Telering (Austria); L’Oréal(Finland); Aventis (International).

The Roche Group (Australia)Cheil Communications (Hong Kong)Kuoni (India)Cadbury (Malaysia)Bridgestone Tyres (Thailand)

NORTH AMERICA

REVENUE (annualised) US $’m

$160m99

$507m

$679m

$1,350m

97

98

99

$6,944m

$8,036m

$8,660m

97

98

99

$15m

$220m

$240m

97

98

99

MARKET FACTS

EUROPE

REST OF THE WORLD


I AM FORTUNATE TO HAVE SUCCEEDED TO THECHAIRMANSHIP OF AEGIS AT THE END OF A YEAR INWHICH THE GROUP HAS AGAIN DELIVERED IMPRESSIVEPROFITS GROWTH.

1999 WAS A YEAR WHICH SAW A STRONG GLOBALECONOMY AND CONTINUING SOLID GROWTH INMEDIA AND MARKETING SERVICES.

I am fortunate to have succeeded to theChairmanship of Aegis at the end of a yearin which the Group has again deliveredimpressive profits growth. We continue toachieve this through our ability togenerate strong organic growth and asuccessful acquisition track record thathas been prudent and targeted, with well-executed post-acquisition integrationand development.

On 1 September 1999, Douglas Flynn,who joined the Board as a non-executivedirector in May 1998, was appointedChief Executive Officer in succession toCrispin Davis. He has extensive experiencein the media world, both internationallyand in the UK, having held a number ofsenior positions in the News Corporationgroup, most recently as Managing Directorof News International plc. We would liketo extend our appreciation to Crispin forhis contribution to the growth of theGroup over the past five years.

On 1 January 2000, I took over as non-executive Chairman from Frank Law, whoretired at the end of 1999.The Board wouldlike to thank Frank for his outstandingcontribution to the Group. In addition, Kai Hiemstra, Sir Kit McMahon, Sir PeterThompson and Philippe Villin retired in1999 and the Board would like to thankthem all for their contribution. Sir DavidHannay joined the Board as a non-executive director on 1 January 2000.We also announced further seniormanagement changes last year. OurEuropean operations have been dividedinto three zones: Northern Europe,Southern Europe and a German/Central

European region. Ray Kelly will takeresponsibility for Northern Europeincluding the UK, Scandinavia and theBenelux region. Eryck Rebbouh and BrunoKemoun will oversee our operations inSouthern Europe, including France, Spain,Italy, Portugal and Greece. AlexanderRuzicka has been appointed ChiefExecutive for HMS & Carat in Germanyand for our Central and Eastern Europeoperations with Kai Hiemstra continuingas non-executive Chairman. David Verklin,Chief Executive of Carat North America,joined the Board on 2 September 1999and Pat Doble, Group Marketing Director,joined the Board on 21 May 1999. Thesechanges have further strengthened theeffectiveness of the Board and ouroperations.

Each year new companies and people joinus and 1999 saw the arrival of MarketFacts and its depth of management talent.Around the world we have anoutstanding team of dedicatedprofessionals throughout our businesses. Ithank them all for their effort andcommitment.

DividendsAn interim dividend of 0.4 pence perordinary share was declared and paid in1999. This was a 14% increase over the1998 interim dividend. The Board isrecommending a final dividend of 0.6pence per ordinary share, making 1.0pence per ordinary share for the full year.This represents an 18% increase on the0.85 pence per share paid in respect of 1998.

2000 outlook2000 has started well and initial newbusiness wins have again been strong.The full year should represent anotheryear of continued satisfactory progress.We remain confident that the Group cantake advantage of the long-termopportunities for growth, both in terms of developing its products and servicesand on a geographical basis.

I would like to take this opportunity tothank all our staff for their hard work anddedication in achieving these results.


1999 was a year which saw a strongglobal economy and continuing solidgrowth in media and marketing services.It was also a year of major change in themedia world including some re-rating ofthe sector. Broad consumer access tointeractive media will continue to providea substantial boost to well-positionedmarketing services companies. Rightnow, the outlook for 2000 is robust forall. For Aegis our foundation for the yearis well set, with many opportunitiesavailable to us.

Net annualised new business in 1999 ofUS$1,206 million was a record for us.There is good evidence to suggest thestrong performance will continue in2000.

The development of our Carat brandcontinued at every level through CaratSphere, proprietary tools, systematictraining of our people in countriesaround the world and our operationalability across our 360º communicationmodel.We continue to develop a commoninternational culture and values.

Acquisitions form an important part of Aegis’ development. Our ability tocarefully select and integrate newcompanies is a fundamental and coreskill within our Company. It has allowedus to grow geographically, widen ourproduct range, deepen our client sectorexpertise and relationships and enternew associated fields.

In 1999 and the first part of 2000 wehave made a number of acquisitions.

From a strategic standpoint the mostfundamental has been our entry intomarket research through the acquisitionofUS-based Market Facts and,subsequent to the year end, theacquisition of Asia Market Intelligence.These substantial investments have beensupported by an acquisition in the US ofa motor industry research business andan agreement to invest in a joint venturewith Ipsos SA which gives us Europeanaccess panel capability.We plan to builda leading position in market research.

The Group has some excitingtechnologies and businesses that offerclients considerable advantage throughtheir ability to distil key marketing andcommunication decisions from basedata. These Decision Systems within bothour Market Facts and Carat businesseswill drive our competitive advantage atan accelerating rate.

The Internet and interactive media providemajor opportunities for our Company.Rapidly rising expenditure by .comenterprises is contributing to our revenueand new business wins.Our internalexpertise now includes Internet mediaplanning and buying. The rapid growthand pan-regional and global nature of the business has encouraged us to createpan-regional structures with centres ofexcellence in the major markets. Thetechnologyalso allowsusacloseroperatingrelationship with traditional clients as wemove to establish extranet links. Forresearch, the Internet is allowing us toturn around projects in a few weeks thatpreviously tookmonths,withtheattendant

advantages in cost and working capital.

We have also announced a plan toestablish eVerger, an Internet investmentcompany, in a 50:50 joint venture withE.M. Warburg, Pincus & Co InternationalLimited. Aegis and Warburg Pincus havemade an initial joint commitment ofUS$100 million. eVerger will make earlystage investments in eMarketing servicesand enabling technologies. We choseWarburg Pincus as our partner for theventure capital skills that they bring. Also,they have previously had a long andsuccessful relationship with Aegis asinvestors. The sector we are targeting isone in which we have a great deal ofknowledge, which will contribute to the growth of our investments.

Shareholder value is a conceptunderstood widely throughout ourbusinesses. It is not just about meetingbudgets, it is about building and creatingsustainable enduring competitiveadvantage through efficiently deliveredclient benefit. The dedication of our staffin all our businesses is acknowledgedand appreciated. I thank them for it.


7 March 2000

> CHAIRMAN’S STATEMENT > CHIEF EXECUTIVE’S STATEMENT



Douglas FlynnChief ExecutiveOfficer

THE 1999 RESULTS CONTINUE TO DEMONSTRATE THEGROUP’S STRONG GROWTH. NEW BUSINESS, TURNOVERGROWTH AND IMPROVED GROSS MARGINS CONTRIBUTEDTOTHE STRONG FINANCIALPERFORMANCE. DESPITESIGNIFICANT INVESTMENT, OPERATING MARGINS ARESTABLE, GENERATING CONTINUED STRONG CASH FLOW, A KEY FOCUS FOR THE BUSINESS.

Trading overview – mediacommunicationsDuring 1999, the Group’s media billings(defined as the annualised value of mediapurchased on behalf of clients, beforeagency discounts) increased by 21% toUS$10.3 billion.

1999 was also another excellent year fornew business for the Group’s mediaoperations which reached a record £745million (US$1,206 million), up 57%compared to a 1998, boosted by theUS$280 million win of the Pfizer account.

North America contributed US$529million of net annualised new businessbillings with Midas, Seagate Technologiesand Henkel adding to the impact of thePfizer win. This was a particularly strongperformance despite the loss ofAmeritech at the end of 1999. We havenow completed the integration of ourcore US media buying activities into CaratUSA. In addition, we are developing ourInternet-related activities and haveopened a new office in San Francisco.

Europe contributed US$624 million of netgains. It has been especially pleasing towin the Peugeot Citroen account inGermany, worth over US$120 million.Other new accounts include Ambipure

and Aventis in France, Henkel andMannesmann Mobilfunk in Germany,Telering in Austria, SPT Telecom in theCzech Republic, Infostrade and Daewooin Italy, Sega in Spain and NTL Corporateand Dolphin Telecom in the UK. Our largeroperations in France, Germany, UK andSpain continue to perform strongly andour Central and Eastern Europeannetwork is developing well. Althoughturnover in Italy is down in sterling terms,the volume of media billings handled hasin fact risen by 17%. In the Scandinavianmarkets, although Norway andSweden are experiencing more difficulttrading conditions predominantly dueto a downturn in client spend, ourbusinesses remain fundamentally instrong shape, with previouslyimplemented efficiency measures helpingto mitigate the impact.

We continue to develop our Asia Pacificnetwork. This year, we have openedoffices in Taiwan (by way of a 50:50joint venture with United Advertising) and Singapore. We are confident ofannouncing further developments inthe region in the near future thatwill complete our regional network.Meanwhile, we are expanding ourexisting businesses on a prudent basis.

On 9 April 1999, we announced that theGroup had acquired a 51% interest in FaxSA in Argentina. This acquisition enablesus to gain entry into the important Centraland South American markets. OurArgentinian operation performed well in1999 and we have consequentlypurchased the remaining 49% interestthis year.

Trading overview – market research In 1999, the Group decided to expand itsrange of client services into marketresearch in order to form a broaderplatform for growth. This was achievedthrough the Group’s acquisition of MarketFacts, Inc. in June 1999 for £183.8 million(US$297.2 million). This acquisition haspresented us with a good foundation forfuture development both within NorthAmerica and globally and traded in linewith expectations for 1999, with revenuesfor the full year 1999 of US$160 million.

TurnoverTurnover of £4,791.8 million showed a16% improvement on 1998. Turnoverincludes 7 months of Market Facts at£67.7 million. Excluding this, Carat’sturnover grew by 14% with exceptionalgrowth in North America of 56% whichnow represents some 17% of theGroup’s media turnover behind onlyFrance (23%) and Germany (18%).Carat’s European turnover grew by 6%with France, Germany, UK and Spain allperforming particularly well and wecontinue to have good turnover growthin the Central and Eastern Europe region.Carat’s turnover in Latin America and theAsia Pacific region is also developing wellwith Asia Pacific up by 37% on 1998.

Excluding 1999 acquisitions, Carat’sturnover growth was 12%. Averageannual growth on a constant currencybasis between 1995 and 1999 was 14%.

1999 was a record year for new business;this should positively impact the Group’sturnover development in 2000.

Gross profitGross profit of £281.7 million rose by 27%reflecting not only a strong increase inturnover but also a further improvementin margins.Gross margins rose from 5.4%

to 5.9% partly due to the acquisition ofMarket Facts in June; excluding thisimpact, margins were still up on 1998.

Gross profit remains the principal focusof the Group’s strategic growth plans.The Group is committed to fundamentallong-term development in this area. In1999, the Group continued to meet itsobjective of sustaining andstrengthening margins by identifyingnew products and service offerings tocomplement our core media planningand buying activity.

Operating expensesOperating expenses (excludingamortisation of goodwill) of £215.3million represent a 26% increase over1998 reflecting the impact of recentacquisitions and geographical expansion.Excluding these, like-for-like costsincreased by 14%, mainly due to ourexpansion in the USA. Underlying costson our European operations rose by 7%.The Group’s operating margin (excludingamortisation of goodwill) was 24%.

The total staffcomplement at 31December1999 was 4,175 as compared to 2,869 at31 December 1998. Full-time employeesat Market Facts accounted for 997 of this total, with media communications

representing 3,178. Consistent withpreceding years approximately two-thirdsof the Group’s operating expenses arerelated to personnel.

Expenditure on research during 1999was £19.2 million, reflecting the Group’ssubstantial efforts to develop knowledgeand skills. The Group maintains itscommitment to achieve operatingefficiencies wherever possible.

Management remains focused onenhancing operating efficiency andproductivity and, although we comparefavourably to similar companies, we willstrive to make furtherprogress in this area.

Profit on disposal of associatedundertakingsOn 18 January 1999, the Group, bymutual agreement, disposed of its46.82% interest in the Consodata Groupbased in France for £6.2 million to theexisting management and to Alpha, aninvestment company, to allowConsodata’s management to pursue its own expansion plans in Europe. Anexceptional profit of £4.6 million wasrealised at 31 December 1999 (afterdeduction of £1.3 million of goodwillpreviously written off to reserves).

> OPERATIONAL AND FINANCIAL REVIEW


FINANCIAL HIGHLIGHTS Year ended Year ended31 December 31 December

1999 1998 Increase

Trading results Turnover £4,791.8m £4,130.0m 16%Gross profit £281.7m £221.0m 27%% Gross profit to turnover 5.9% 5.4%Operating profit before amortisation of goodwill £66.6m £50.6m 32%% Underlying operating profit to gross profit 24% 23%Profit before tax, amortisation of goodwill and exceptional items £64.6m £51.1m 26%Profit before tax £67.3m £50.6m 33%Effective underlying tax rate 28.9% 28.4%Profit for the financial year £47.0m £35.5m 32%

Shareholder returns Earnings per share – basic 4.6p 4.0p 16%Earnings per share – diluted 4.4p 3.7p 22%Ordinary dividend per share – interim 0.4p 0.35p 14%Ordinary dividend per share – final 0.6p 0.5p 20%Total 1.0p 0.85p 18%

Cash flow Operating cash flow £76.3m £57.0m 34%Net (debt) / funds at year end £(15.1)m £36.9m

Colin DayGroup Finance Director

Pre-tax profitsOverall, profit before tax (excludingamortisation of goodwill and exceptionalgains) increased by26%from £51.1millionto £64.6 million (27% on a constantcurrency basis). After amortisation ofgoodwill of £1.9 million in 1999 and theexceptional gain of £4.6 million, profitbefore tax rose 33% from £50.6 million to£67.3 million.Tax has been recorded at28.9% based on profit before amortisationof goodwill and exceptional items.

Between 1995 and 1999, the Group hasachieved an average compound annualunderlying growth in profit before tax of18% on a historical basis and 25% on aconstant currency basis.

Foreign exchangeThe 1999 results were affected by adverseforeign exchange movements due to thestrength of sterling. The majority of theGroup’s profits are earned outside of theUK. The adverse impact of foreignexchange on profits in 1999 was £0.2million (1998: £1.4 million).

Cash flow, borrowings and interest Working capital management continues tobe a key element of the treasurymanagement programme. Operating cashflow for 1999 was strong at £76.3 million

equivalent to 118% of operating profit, thefourth successive year that operating cashflow has exceeded operating profit.

Free cash flow (after interest, tax, capitalexpenditure and deferred payments onprior period acquisitions) was £36.0 million,which represents 56% of operating profit.

Net debt at 31 December 1999 was £15.1million compared to net cash of £36.9million at 31 December 1998, reflectingthe net cash outflow of £97.1 million oncurrent and prior period acquisitions. On15 October 1999, the Group obtained anew £250 million, 5-year credit facility tosupport its investment programme goingforward.

Net interest payable, excluding theamortisation of refinancing costs, was£1.6 million compared to net interestreceivable of £0.8 million in 1998. Thisreflects £2.6 million of interest on debt toacquire Market Facts, without which theGroup would have had positive netinterest income. Included within theinterest charge is £0.4 million (1998: £0.7million) relating to dividends payable onthe £10.5 million preference shares issuedin part consideration for the acquisition ofthe Carat ICG in 1997, which wereredeemed by the vendors in July 1999.

TaxationThe Group’s tax charge in the profit andloss account is at an underlying effectiverate of 28.9% (1998: 28.4%). TheGroup’s effective tax rate continues to bereduced by the offset of tax losses broughtforward. As tax losses are utilised, it isenvisaged that the effective tax rate willgradually increase.

Profit for the financial year andshareholders’ fundsProfit for the financial year attributable to shareholders (before payment of thedividend on the ordinary shares) increasedto £47.0 million from £35.5 million in1998.

Basic earnings per share of 4.6 pencegrew 16% versus 1998, with theacquisition of Market Facts adding 0.1pence. Diluted earnings per share, aftergoodwill amortisation and exceptionalitems, of 4.4 pence rose 22% on 1998.On an underlying basis, this rise was 13%.

An interim dividend of 0.4 pence perordinary share was declared and paid in1999. This was a 14% increase over the1998 interim dividend. The Board isrecommending a final dividend of 0.6pence per ordinary share, making 1.0pence per ordinary share for the full year.This represents an18% increase on the 0.85pence per share paid in respect of 1998.

AcquisitionsDuring 1999, the Group completed theacquisition of Market Facts, Inc. and, inaddition, acquired a 51% interest inCarat Fax SA and a 100% interest inFeather Brooksbank. The Group alsopurchased further minority interests inBBJ Media Services Limited in the UK.Further details in respect of the Group’s1999 acquisitions are set out in note 20to the Accounts.

The total initial investment in theseacquisitions was £201.6 million withmaximum deferred considerationpayable in cash of £12.1 million, subjectto challenging growth objectives. Theacquisition of Market Facts was fundedpartly by raising £119 million, after costs,by way of a 10% vendor placing of 96million new shares in the Company withthe remainder of the acquisition cost and expenses being funded by some £70 million of new debt.

As a result of the transactionsundertaken during 1999, total deferredliabilities related to acquisitions haveincreased to £42.4 million from £23.8million in 1998, after having paid £12.5million in deferred consideration on theGroup’s pre-1999 acquisitions. Theincrease is mainly attributable todeferred liabilities within Market Factsand on Feather Brooksbank.Approximately £16.7 million may be paidas deferred consideration in 2000.

Since the year end, the Group hasannounced eight further acquisitionswhich are detailed in note 24 of theAccounts. Five of these acquisitions relateto our media operations with an initialcash cost of £11.1 million and maximumdeferred payments in cash of £2.2 million.The most significant of these is ouracquisition of the remaining 49% in Carat Fax SA in Argentina for £8.4 million.

The remaining three acquisitions relate toour market research operations for initialcash consideration of £22.8 million anddeferred cash consideration of up to£37.8 million, as follows:

On 6 March 2000, we purchased a100% interest in AMI, based in Hong

Kong. AMI has operations in thePeoples Republic of China, HongKong, Indonesia, Malaysia, thePhilippines, Singapore, South Korea,Taiwan and Thailand and is the secondlargest custom research network in the region behind ACNielsen. Initialconsideration is £15 million withadditional deferred considerationpayable in cash over three years of £35 million, subject to challengingperformance criteria. On 12 January 2000, the Groupacquired Motoresearch, a businessservicing the automotive industry,based in Detroit, USA. Initialconsideration is £5.0 million withadditional deferred considerationpayable in cash over three years of £2.8 million, subject to challengingperformance criteria. On 4 February 2000, the Groupreached agreement with Ipsos SA totake a 35% stake in its Europeanaccess panels, Ipsos Access PanelsHolding SA, for £2.8 million.

The Group will continue to pursueacquisition targets that fit in with itsstated strategy to expand its geographicalnetwork or support its product andservice development. The Group iscurrently assessing a number of furtheropportunities, with particular focus onexpanding our research operations inEurope and Latin America. We willcontinue to ensure that all futureacquisitions are made on a financiallyprudent basis.

Treasury managementThe Group’s treasury function is chargedwith the objective of minimising financialrisks whilst providing adequate liquidityfor the Group’s activities. There is acentral treasury function that interactsclosely with those in the individualoperations. The conceptual frameworkfor treasury within the Group is toidentify risks and to provide guidelineson deposits, foreign exchange and otherareas to minimise exposures. The Group does not engage in speculativetransactions. The Board receives regularreports from the treasury departmentand they also review and approve all

counterparty limits. Principal currencyexposures arise from resultsdenominated in foreign currencies.

Internal financial controlConsistent with previous years, theGroup has maintained its policy ofexamining the internal financial controlsoperating within the individualbusinesses. This work is undertaken onan ongoing basis and involves examiningall businesses and all aspects of theiroperations, with further workundertaken to reflect areas of particularrisk or concern.

Year 2000Our programme to ensure that ourbusinesses were unaffected by the‘millennium bug’ was successful with nosignificant issues arising. The total cost ofthis project over the past three years was£0.7 million.

EuroThe Group remains confident that it willbe able to handle transactions in bothlocal currency and in the Euro in theevent that further countries, in which theGroup operates, were to adopt the Euro.

Going concernThe directors confirm that they have areasonable expectation that the Grouphas adequate resources to continue inoperational existence for the foreseeablefuture. For this reason they continue toadopt the going concern basis inpreparing the accounts.

ConclusionThe Group’s results continue to improve.Margin growth and cost efficienciesshould be sustained with the objective of enhancing profits. These areas remaina key priority as, together with strongpositive cash flow, they are the Group’sprincipal financial drivers. The strongfinancial performance in 1999 ensuresthat the Group is well placed to takeadvantage of future opportunities asthey arise.


> FINANCIAL REVIEW CONTINUED


1994 1995 1996 1997 1998 1999

Five year developmentProfits, Cash flow &Cash/Debt 1994–1999

PBTOperating cashflowNet Debt/Cash

-30

-20

-10

0

10

20

30

40

50

60

70

80

£'m

Lord Sharman of Redlynch CBENon-Executive Chairman

Lord Sharman was appointed to the Board on 2September 1999 and became Chairman on 1January 2000. He joined KPMG in 1966 wherehe was elected UK Senior Partner in 1994 andalso joined both the International and ExecutiveCommittees of KPMG. Between 1997 and 1999he was Chairman of KPMG Worldwide. InOctober 1999 he became a member of theHouse of Lords. He is also a non-executive direc-tor of AEA Technology plc and Youngs Breweryplc and Chairman of Le Gavroche Limited. Age57. (Audit, Remuneration and NominationCommittee member).


Douglas Flynn was appointed to the Board as anon-executive on 15 May 1998 and becameChief Executive Officer on 1 September 1999.Previously he was Managing Director of NewsInternational plc. He has held a number ofsenior positions in the Australian newspaperindustry and also been a management consul-tant to a number of media companies. Age 50.

John AmermanNon-Executive

John Amerman was appointed to the Board on12 December 1997. He is the former Chairmanand Chief Executive of Mattel in the USA. Priorto joining Mattel he was President of a divisionof Warner Lambert. Age 68. (Audit,Remuneration and Nomination Committeemember).

Sir David HannayNon-Executive

Sir David Hannay was appointed to the Boardon 1 January 2000. Until his retirement in 1995,he was a member of the Diplomatic Service,serving in a number of countries before finallyholding the posts of Britain’s Ambassador to theEuropean Union (1985 - 1990) and Britain’sAmbassador to the United Nations (1990 -1995). Sir David is also a non-executive directorof Chime Communications plc. Age 64. (Audit,Remuneration and Nomination Committeemember).


Colin Day was appointed to the Board on 13February 1995. Prior to joining he was FinanceDirector of ABB Instrumentation Group. He pre-viously held senior financial positions in De LaRue and British Gas. Colin is also a non-execu-tive director of Bell Group plc. Age 45.

Pat DobleGroup Marketing Director

Pat Doble was appointed to the Board on 21May 1999. She has been Group MarketingDirector since 1995. Pat has previously heldsenior marketing positions at Guinness, Lex andMars. She is also a non-executive director ofNationwide Building Society. Age 56.

Ray KellyChairman and Chief Executive, Carat Group UKChief Executive, Carat Northern Europe

Ray Kelly was appointed to the Board on 16September 1992. After thirteen years working infull service advertising agencies he joined TMD(now Carat UK Ltd) in 1979, becomingManaging Director in 1989. In 1990 he wasappointed Chief Executive of Carat UK Ltd. Raywas appointed Chief Executive of CaratNorthern Europe in September 1999. Age 49.

Bruno Kemoun and Eryck RebbouhJoint Chairmen and Chief Executives, Carat FranceJoint Chief Executives, Carat Southern Europe

Bruno Kemoun and Eryck Rebbouh wereappointed to the Board on 16 September 1992.They founded 2010 Medias in 1985 in associa-tion with Carat France and they sold it in 1991to become shareholders in Aegis. They wereappointed Joint Chairmen of Carat France in1995 and Joint Chief Executives of CaratSouthern Europe in September 1999. Bruno isaged 42 and Eryck aged 43.

David VerklinChief Executive Officer, Carat North America

David Verklin was appointed to the Board on 2September 1999. He has been Chief ExecutiveOfficer of Carat North America since April 1998.Prior to joining the Group he was ManagingDirector of Hal Riney & Partners, having startedhis career in 1977 at Young & Rubicam. Age 44.

> BOARD OF DIRECTORS

Directors of Aegis Group plcLord Sharman non-executive Chairman

Douglas Flynn Chief Executive Officer

John Amerman non-executive

Sir David Hannay non-executive

Colin Day Group Finance Director

Pat Doble Group Marketing Director

Ray KellyBruno KemounEryck RebbouhDavid Verklin

Members of Carat Global ExecutiveDouglas FlynnColin DayPat DobleRay KellyBruno KemounEryck RebbouhDavid VerklinExecutive Directors of Aegis Group plc

Eric Drancourt,Chief Executive, Carat International

Alexander Ruzicka,Chief Executive, Germany and Central Europe

Eléonore Sauerwein,Group Legal Counsel

William Skerrett,Group Human Resources Director

Company SecretaryJohn Ross

Registered Office11A West Halkin StreetLondon SW1X 8JLTel: 020 7470 5000Fax: 020 7470 5099

Registered Number1403668 England and Wales

AuditorsPricewaterhouseCoopers 1 Embankment PlaceLondon WC2N 6NN

BankersNational Westminster Bank plcJuno Court24 Prescot StreetLondon E1 8BB

RegistrarsComputershare Services PLCP O Box 435, Owen House8 Bankhead Crossway NorthEdinburgh EH11 4BR

SolicitorsSlaughter & May35 Basinghall StreetLondon EC2V 5DB

StockbrokersHoare Govett Corporate Finance Limited250 BishopsgateLondon EC2M 4AA

> DIRECTORS AND ADVISERS


< Pat Doble < Ray Kelly < Bruno Kemoun

< Eryck Rebbouh < David Verklin

< Lord Sharman < Douglas Flynn < John Amerman

< Sir David Hannay < Colin Day


1999 was £0.6 million (1998: £0.4million).

Substantial shareholdingsAt 27 March 2000 the Company had beennotified of the following interests of 3% ormore in its ordinary shares:

No. of shares %

Deutsche Bank AG& subsidiaries 118,414,091 10.97

Scottish Widows 62,612,702 5.80

FMR Corp (FidelityInvestments) 41,981,017 3.89

Norwich Union Group 42,239,270 3.91

Putnam InvestmentManagement, Inc. 77,124,958 7.21

Morley FundManagement 33,125,557 3.07

Share capitalDetails of the movements in authorisedand issued share capital during the yearare given in note 18 to the financialstatements.

At the Annual General Meeting resolutionswill be proposed to authorise the directorsto allot securities in the Company.Resolution 11 set out in the Notice ofAnnual General Meeting on pages 69 and70 provides the directors with authority toallot securities in the Company up to anaggregate nominal value of £17,165,944.

If passed, the resolution will enable the directors to allot a maximum of343,318,880 ordinary shares whichrepresent 31.8% of the current issuedordinary share capital as at 27 March2000. Save for shares to be issued tosatisfy existing legal obligations, thedirectors have no present intention ofexercising the authority which would beconferred by resolution 11.

Resolution 12 is a special resolution

disapplying pre-emption rights and grantingauthority to the directors, without the needfor further specific shareholder approval,to make allotments of equity securities forcash pursuant to (a) issues by way of rightsand (b) other issues up to an aggregatenominal value of £2,697,122.

The authority conferred by resolution 12 is limited as regards issues of shares otherthan by way of rights issues to 53,942,443ordinary shares amounting to 5% of theissued ordinary share capital of the Companyas at 31 December 1999. In relation to theexercise of this authority the Company willhave regard to the guidelines published bythe investment committees of both theAssociation of British Insurers and theNational Association of Pension Funds. The authorities sought by these resolutionsare to replace the existing powers of thedirectors which expire at the conclusion ofthe Annual General Meeting and both ofthese authorities will lapse at the conclusionof the next Annual General Meeting.

The existing authority for the Company to purchase its own shares expires at theconclusion of the Annual GeneralMeeting. No purchases have been made to the date of this report and there are nooutstanding contracts to purchase sharesas of this date. It is proposed to seek arenewal of this authority at the forth-coming Annual General Meeting. Ifpassed, resolution 13 will enable theCompany to purchase up to 53,965,158ordinary shares (5% of the present issuedordinary share capital).

The maximum price at which any sharemay be purchased is the price equal to 5%above the average of the middle marketquotations of such share as derived fromthe Daily Official List of the London StockExchange for the five business daysimmediately preceding the date of suchpurchase, exclusive of expenses, and theminimum price at which any share may bepurchased is the par value of such share.The number of options for ordinary shareswhich are outstanding at 27 March 2000,

the latest practical date prior topublication of the Annual Report andAccounts, was 76,904,626 (7.13% of thepresent issued ordinary share capital). Nowarrants to acquire ordinary shares wereoutstanding as at that date. If theproposed authority for the Company topurchase its own shares is used in full, thetotal number of such options will represent7.5% of the issued ordinary share capital.If granted, the directors will exercise theauthority only if in their judgement it is inthe best interests of shareholders generallyand where exercise should result in animprovement in earnings per share for theremaining shareholders.

Annual General MeetingAt the forthcoming Annual GeneralMeeting, as well as the items of specialbusiness detailed above and the resolutionseeking approval of the remunerationpolicy (explained on page 32 in theRemuneration Report), resolution 14 seekstwo changes to the Company’s Articles ofAssociation.

The current Articles of Association requireshare certificates to be issued under thecommon seal of the Company. This is nolonger a requirement of the Listing Rulesof the London Stock Exchange. To allowfor more efficient and effective use oftechnology, such as laser printed signatures,it is proposed that Article 10 be replaced to permit the directors to allow for theexecution of share certificates, not onlyunder seal, but in such other manner thatthey may authorise, including using laserprinted signatures.

To prevent any uncertainty as to whether a Board or Committee meeting conductedby conference telephone or othercommunication equipment is properlyconstituted, new Article 122(A) will givespecific authority for Board andCommittee meetings to be so held.The full terms of the proposed changes tothe Company’s Articles of Association areset out in the Notice of the Annual GeneralMeeting on pages 69 and 70.

The directors have pleasure in submittingtheir report together with the auditedfinancial statements for the year ended31 December 1999.

Results and dividendsThe profit and loss account is set out onpage 39 and shows a retained profit for the financial year of £36.2 million (1998: £27.7 million) all of which is transferred to reserves.

An interim dividend of 0.4p per share was paid on 6 October 1999 to ordinaryshareholders. The directors recommend a final dividend for the year of 0.6p pershare which, if approved at the AnnualGeneral Meeting, will be payable on 30 June 2000 to ordinary shareholdersregistered at 9 June 2000. The totaldividend for the year will then amount to 1.0p per share (1998: 0.85p).

Principal activityThe principal activity of the Company is that of a holding company based inLondon. Its subsidiaries and relatedcompanies provide a broad range ofservices in the areas of mediacommunications and market research.

Review of business and futuredevelopmentsA review of the business and likely futuredevelopments of the Group is given in the Chairman’s and Chief Executive’sstatements on pages 20 to 21.

Research and developmentThe Group is involved in media researchand development in order to offer clientsthe most advanced media communicationsservices. During the year the Group spent£19.2 million (1998: £19.5 million) onresearch and development.

DonationsThe Company made charitable donationsof £9,620 (1998: £10,200) during the yearin the United Kingdom. There were nopolitical donations during the year in the United Kingdom (1998: £nil).

Employment policiesIt is the policy of the Group that thereshould be no unfair discrimination inconsidering applications for employment,including those from disabled persons.Should any employee become disabledevery practical effort is made to providecontinued employment.

The directors are committed to maintainingand developing communication andconsultation procedures with employees,who in turn are encouraged to becomeaware of and involve themselves in theperformance of their own company and of the Group as a whole. Consultation and involvement policies vary from countryto country according to local customs,legal considerations and the size of thebusiness. In addition, the Group has anintranet site which is constantly updatedwith news and information concerning the Group and its businesses.

EnvironmentThe Group is committed to conducting its business in a manner which showsresponsibility towards the environmentand to ensuring high standards of healthand safety for its employees, visitors andthe general public. It complies with allstatutory and mandatory requirements.

Supplier payment policyWhilst the Company does not impose aformal code of payment practice on itssubsidiaries, the Group nevertheless doeshave the following policy concerning thepayment of its suppliers:

to agree the terms of payment withsuppliers in advance;to ensure that suppliers are made aware of the terms of payment; andto abide by the terms of payment.

At 31 December 1999, the Group had 66 days purchases outstanding (1998: 63 days). The creditor day analysis is not applicable to the holding company.

Directors The names of the directors at the date of

this report and biographical details aregiven on page 26.

Sir Kit McMahon retired on 21 May 1999,Crispin Davis resigned on 1 September1999 and Philippe Villin resigned on 25October 1999. Frank Law, Sir PeterThompson and Kai Hiemstra all retired on 31 December 1999.

Re-election of directorsIn accordance with the Articles ofAssociation, Ray Kelly and John Amermanretire by rotation and, being eligible, offerthemselves for re-electionat the forthcomingAnnual General Meeting. Lord Sharman, PatDoble, David Verklin and Sir David Hannay,all of whom having been appointed sincethe previous Annual General Meeting, offer themselves for re-election.

Pat Doble has a service contract with theCompany which is terminable upon 18months’ notice.

Ray Kelly and David Verklin have servicecontracts with subsidiary companies,terminable upon 12 months’ and 18months’ notice respectively.

Non-executive directors do not haveservice contracts.

Transactions with directorsIn December 1999 the Group acquired100% of the share capital of SociétéInternationale de Conseil pour laCommunication (‘SICC’) for a cashconsideration of £1.5 million. Two of the directors of Aegis Group plc – Bruno Kemoun and Eryck Rebbouh – were shareholders of SICC, each havingowned 22.84% of the share capital ofSICC. An independent financial adviserreviewed the transaction and purchaseprice and confirmed it to be fair andreasonable in so far as shareholders of Aegis Group plc are concerned.Total fees payable to SICC by the Companyduring the year were £1.9 million (1998:£1.8 million) and the balance outstandingwith the Company as at 31 December

> REPORT OF THE DIRECTORS


> REMUNERATION REPORT

The directors have an establishedRemuneration Committee, the members ofwhich are disclosed on page 36 within thesection on Corporate Governance.

Remuneration policyIn determining the remuneration packagesof the executive directors, theRemuneration Committee has regard totwo fundamental principles:

The importance of recruiting and retainingmanagement of the highest calibre; andLinking reward to the Group’sperformance.

The Committee has applied these principlesto develop remuneration packages which:

Provide a competitive base salarydesigned to attract and retain executivedirectors of the highest calibre and toreflect their role and experience;Provide incentive arrangements which aresubject to challenging performancetargets, reflect the Company’s objectivesand recognise the importance ofmotivating management to focus onannual, as well as longer-term,performance; andDirectly align the interests of theexecutive directors with those ofshareholders.

The Committee determines remunerationpackages with regard to the prevailing payand benefits conditions across its markets.

Remuneration package of executivedirectors The main components are:

Base salary and benefitsBase salary and benefits are determined onan annual basis by the Committee after areview taking into account the individual’sperformance, market trends and theperformance of the Group and localcompany as a whole. For guidance, theCommittee has regard to available researchand published remuneration informationon companies of a similar size and withinthe same industry and markets. Benefits

typically include a car, life assurance anddisability and health insurance.

Annual bonusExecutive directors are paid bonuses under the Group Bonus Scheme uponachievement of individual objectives andfinancial targets linked to Group and localcompany performance. This may result inthe payment of cash bonuses of up to50% of base salary.

Share optionsGrants of options are made by theCommittee under the Executive ShareOption Schemes which were introduced in1995 and the Aegis Group ManagementIncentive Scheme which was adopted inMay 1998. Options are granted on anannual phased basis. Exercise of options issubject to the achievement of specificdemanding performance conditions. Theconditions in respect of the 1995 ExecutiveShare Option Schemes are:

That Earnings Per Share growth exceedsa composite retail price index plus 5%per annum. The composite index isdetermined by weighting indicescalculated for selective countries toapproximate the source of the Group’sturnover. The country indices arecalculated from official retail inflationdata, adjusted for exchange ratefluctuations against sterling; andThat total shareholder return in capitalgrowth plus dividends must beequivalent to that of companies in thetop third of the ‘FTSE 100’.

The conditions in respect of the AegisGroup Management Incentive Scheme are:

That the Company’s total shareholderreturn (share price growth plus re-investeddividends) over the performance periodmust reach 15% per annum compound;andThat the total shareholder return must atleast match that of the FTSE Actuaries500 Index over the same period.

PensionsUK executive directors participate indefined contribution Group pensionschemes. Pensionable salary is limited tobasic salary excluding all bonuses and otherbenefits. Where UK Plan benefits exceedInland Revenue limits, contributions aremade to an Unapproved RetirementBenefits Scheme to increase pensionbenefits to the level which would haveapplied. Non-UK executive directors havearrangements in line with marketconditions and statutory obligationsoperating in their own countries.

Notice periodsThose executive directors based in the UKand USA have notice periods ranging from12 to 24 months. There are no currentplans to reduce these periods which areconsidered a necessary part of theremuneration package to attract the rightcalibre of executive director and which arefelt to be in line with current marketpractice. The executive directors based inFrance have contracts with six months’notice. However, in the event that CaratFrance terminates the agreement otherthan by reason of misconduct, a paymentequivalent to 18 months’ remunerationmust be made.

Non-executive directors’ feesFees for non-executive directors aredetermined by the Board and are disclosedbelow. Non-executive directors do notreceive benefits or pension contributionsand do not participate in any Groupincentive scheme.

AuditorsA resolution to re-appointPricewaterhouseCoopers as auditors andto authorise the directors to fix theirremuneration will be proposed at theforthcoming Annual General Meeting.

Directors’ responsibilitiesThe following statement, which should beread in conjunction with the auditors’statement of auditors’ responsibilities setout on page 38, is made with a view todistinguishing for shareholders therespective responsibilities of the directorsand of the auditors in relation to thefinancial statements.

Company law requires the directors toprepare financial statements for eachfinancial year which give a true and fairview of the state of affairs of the Companyand the Group as at the end of thatfinancial year and of the profit or loss of theGroup for that financial year. The directorsconsider that in preparing the financialstatements on pages 39 to 68, theCompany and the Group have usedappropriate accounting policies,consistently applied and supported byreasonable and prudent judgements andestimates and that all accounting standardswhich they consider to be applicable havebeen followed, subject to any explanationsdisclosed in the notes to the financialstatements.

The directors have responsibility forensuring that the Company and the Groupkeep accounting records which disclosewith reasonable accuracy the financialposition of the Company and the Groupand to enable them to ensure that thefinancial statements comply with theCompanies Act 1985. They have generalresponsibility for taking such steps as arereasonably open to them to safeguard theassets of the Group and to prevent anddetect fraud and other irregularities.

> REPORT OF THE DIRECTORS CONTINUED


Directors’ interestsThe directors of the Company in office at the end of the year, and their interests in the share capital and debentures of the Company asat 27 March 2000, all of which are beneficial to the directors and their immediate families, which have been notified to the Companypursuant to Sections 324 or 328 of the Companies Act 1985 (the ‘Act’) or are required to be entered into the Register required to bekept under Section 325 of the Act, and of persons connected (within the meaning of Section 346 of the Act) with the directors, wereas follows:

Ordinary 5p shares 27 March 31 December 31 December

2000 1999 1998 or date ofappointment if later

John Amerman 10,429 10,429 21,353Colin Day 75,932 75,932 75,932Pat Doble 3,205 3,205 –Douglas Flynn – – –Sir David Hannay (appointed 1.1.00) 10,000 – –Ray Kelly 287,188 287,188 287,188Bruno Kemoun 3,249,756 3,249,756 2,286,432Eryck Rebbouh 3,249,756 3,249,756 2,286,432Lord Sharman 10,000 10,000 –David Verklin – – –

The middle market price of the ordinary 5p shares as derived from the Stock Exchange Daily Official List on 31 December 1999 was225p and the range during the year was 87.75p to 225p. The share price on 23 March 2000, the latest practicable date prior topublication of the Annual Report and Accounts, was 208p.

Approval of remuneration policyAt the Annual General Meeting under Resolution 10, the directors are seeking shareholders’ approval of the policy set out above. TheCombined Code provides that the annual remuneration report need not be a standard agenda item for annual general meetings. Thedirectors do not expect the approval of its remuneration policy to be a standard item of business at the Annual General Meeting eachyear.

The tables which follow provide details of all directors’ remuneration, shareholdings and share options.

Directors’ remunerationBasic Annual Total Total Pensions Pensionssalary Fees Benefits bonus Other 1999 1998 1999 1998£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

John Amerman – 25 – – – 25 25 – –Crispin Davis (resigned 1.9.99) 381 – 14 – – 395 772 187 254Colin Day 252 – 13 145 – 410 341 56 48Pat Doble (appointed 21.5.99) 135 – 9 57 – 201 – 20 –Douglas Flynn (a) 201 12 1 99 250 563 16 40 –Sir David Hannay (appointed 1.1.00) – – – – – – – – –Kai Hiemstra (retired 31.12.99) 159 – 19 541 – 719 711 – –Ray Kelly 270 – 21 104 – 395 337 32 72Bruno Kemoun (b) 267 – 3 40 93 403 382 – –Frank Law (retired 31.12.99) (c) 100 – 13 – – 113 118 – –Sir Kit McMahon (retired 21.5.99) – 10 – – – 10 25 – –Eryck Rebbouh (b) 267 – 3 40 93 403 382 – –Lord Sharman (appointed 2.9.99) 33 – – – – 33 – – –Sir Peter Thompson (retired 31.12.99) – 25 – – – 25 25 – –David Verklin (appointed 2.9.99) 112 – 2 55 – 169 – 2 –Philippe Villin (resigned 25.10.99) – 20 – – 61 81 120 – –

Totals 2,177 92 98 1,081 497 3,945 3,254 337 374

Notes:(a) Douglas Flynn’s figures show ‘Fees’ payable to News International plc for the time during which he was a non-executive director. He

received no benefit from those fees. In addition, he received a fee of £250,000 on joining the Group as Chief Executive Officer.

(b) Bruno Kemoun and Eryck Rebbouh were two of the shareholders of SICC which provided international management services to theGroup during the year. Fees are paid to SICC at a fixed amount together with a performance-related element. The salaries receivedby Bruno Kemoun and Eryck Rebbouh from SICC are shown in ‘Basic salary’. Their proportion of the profit of SICC earned prior tothe disposal of SICC is shown as ‘Other’ emoluments.

(c) In the event that Frank Law pre-deceases his wife, the Remuneration Committee has granted Mrs Law an index-linked pension of£100,000 per annum for life. No amount has been provided in the Accounts for this contingent liability.

At 31 December 1999 there were 5 directors (1998: 3) who had benefits accruing under money purchase schemes. Figures shown forpensions are the contributions paid by the Company to both approved and unapproved retirement benefits schemes.

Other than as disclosed in the above paragraphs, none of the directors were materially or beneficially interested in any contract ofsignificance with the Company or any of its subsidiary undertakings during or at the end of the financial year ended 31 December1999.

> REMUNERATION REPORT CONTINUED


Notes:

* Options granted under the Aegis Group Management Incentive Scheme. The 11,700,000 options in respect of Crispin Davis lapsed on his leavingthe Company.

(a) Options exercised and sold realising a gross gain of £12,342,572.(b) Options exercised and sold realising a gross gain of £877,587.(c) Options exercised and sold realising a gross gain of £944,594.(d) Options exercised and sold realising a gross gain of £414,615.(e) Options exercised and held. Mid-market price of shares on date of exercise 189p.(f) Options exercised and sold realising a gross gain of £414,615.(g) Options exercised and held. Mid-market price of shares on date of exercise 189p.(h) Options exercised and held. Mid-market price of shares on date of exercise 170p.

Bruno Kemoun’s wife exercised and sold the following options on 13 December 1999:(i) 69,112 options granted 5.5.93 at 29.3p, sold for gross gain of £124,194; and(ii) 7,500 options granted 25.5.94 at 28.5p, sold for gross gain of £13,537.

Other than as noted above, no directors or members of their immediate families have exercised or sold options during the period ended27 March 2000. In addition, other than noted above, no options have expired or lapsed during the year in respect of the directors.

Options are subject to performance conditions as described in the paragraph headed ‘Share options’ on page 31.

By order of the Board

John Ross FCISCompany Secretary11A West Halkin StreetLondonSW1X 8JL

27 March 2000

Ordinary shares of 5p each for which directors have beneficial options to subscribe are as follows:

Options heldat start of year Granted Exercised Options Date from

or date of during during held at Exercise which ExpiryDirector appointment year year end of year price exercisable date

Douglas Flynn * – 5,000,000 – 5,000,000 138.25p 9.9.02 8.9.05– 21,428 – 21,428 140p 22.10.02 21.10.09– 621,429 – 621,429 140p 22.10.02 21.10.09

Crispin Davis (a) 9,411,764 – 9,411,764 – 25.5p – –(resigned 1.9.99) * 11,700,000 – – – – – –

Colin Day (b) 1,132,075 – 832,000 300,075 26.5p 21.6.98 20.6.05365,385 – – 365,385 52p 2.7.99 1.7.06321,569 – – 321,569 63.75p 8.7.00 7.7.07

* 2,500,000 – – 2,500,000 87p 15.5.01 14.5.04113,924 – – 113,924 98.75p 2.6.01 1.6.08

– 100,000 – 100,000 121.5p 17.3.02 16.3.09* – 2,000,000 – 2,000,000 138.25p 9.9.02 8.9.05

Pat Doble 1,132,075 – – 1,132,075 26.5p 21.6.98 20.6.05323,077 – – 323,077 52p 2.7.99 1.7.06274,510 – – 274,510 63.75p 8.7.00 7.7.07

* 1,000,000 – – 1,000,000 87p 15.5.01 14.5.0493,164 – – 93,164 98.75p 2.6.01 1.6.08

– 90,534 – 90,534 121.5p 17.3.02 16.3.09* – 250,000 – 250,000 138.25p 9.9.02 8.9.05

Ray Kelly (c) 716,981 – 716,981 – 26.5p – –394,231 – – 394,231 52p 2.7.99 1.7.06349,804 – – 349,804 63.75p 8.7.00 7.7.07

* 2,000,000 – – 2,000,000 87p 15.5.01 14.5.04127,594 – – 127,594 98.75p 2.6.01 1.6.08

– 110,905 – 110,905 121.5p 17.3.02 16.3.09* – 1,500,000 – 1,500,000 138.25p 9.9.02 8.9.05

Bruno Kemoun (d) 256,410 – 256,410 – 27.3p – –(e) 963,324 – 963,324 – 26.5p – –

510,997 – – 510,997 52p 2.7.99 1.7.06364,050 – – 364,050 63.75p 8.7.00 7.7.07

* 2,000,000 – – 2,000,000 87p 15.5.01 14.5.04128,697 – – 128,697 98.75p 2.6.01 1.6.08

– 112,071 – 112,071 121.5p 17.3.02 16.3.09* – 1,500,000 – 1,500,000 138.25p 9.9.02 8.9.05

Eryck Rebbouh (f) 256,410 – 256,410 – 27.3p – –(g) 963,324 – 963,324 – 26.5p – –

510,997 – – 510,997 52p 2.7.99 1.7.06364,050 – – 364,050 63.75p 8.7.00 7.7.07

* 2,000,000 – – 2,000,000 87p 15.5.01 14.5.04128,697 – – 128,697 98.75p 2.6.01 1.6.08

– 112,071 – 112,071 121.5p 17.3.02 16.3.09* – 1,500,000 – 1,500,000 138.25p 9.9.02 8.9.05

Table continued from previous page:

Options heldat start of year Granted Exercised Options Date from

or date of during during held at Exercise which ExpiryDirector appointment year year end of year price exercisable date

David Verklin 641,398 – – 641,398 80.5p 9.4.01 8.4.08* 2,000,000 – – 2,000,000 87p 15.5.01 14.5.04

– 271,088 – 271,088 121.5p 17.3.02 16.3.09* – 1,500,000 – 1,500,000 138.25p 9.9.02 8.9.05

Kai Hiemstra (h) 567,973 – 567,973 – 52p – –(retired 31.12.99)

Totals 43,612,480 14,689,526 13,968,186 32,633,820

> REMUNERATION REPORT CONTINUED


business strategy and the reservedpowers and sanctioning limits laiddown by the Board.

d. The Board and the Global ExecutiveCommittee receive, on a monthly basis,financial results from each business andthe Group reports bi-annually toshareholders based on a standardisedreporting process.

e. The Audit Committee, comprisedexclusively of non-executive directors,reviews the effectiveness of the internalfinancial control environment of theGroup and receives reports from GroupFinance and the external auditors on aregular basis.

f. The internal control system is reviewedby Group Finance which operates on aglobal basis and reports to managementand the Audit Committee. GroupFinance and the external auditors alsoco-ordinate their work to the extentnecessary for the external auditors toexpress their audit opinion on theGroup’s report and accounts.

The directors confirm that the AuditCommittee has carried out a review of theeffectiveness of the Group’s system ofinternal financial controls as it operatedduring the year.

Internal control As permitted by the London StockExchange, the Group has complied withCode Provision D.2.1 on internal control inaccordance with the guidance given fordirectors on internal control and financialreporting that was issued in December1994.

In accordance with the guidance given bythe Turnbull Committee published inSeptember 1999, the Board intends tohave established procedures by the end ofMay 2000 to implement the guidance sothat compliance will be reported in nextyear’s annual accounts.

Going concernBased on normal business planning andcontrol procedures, the directors have areasonable expectation that the Companyand the Group have adequate resources tocontinue in operational existence for theforeseeable future. For this reason, theycontinue to adopt the going concern basisin preparing the accounts.

Relations with shareholdersGood relations with shareholders are ofprime importance to the Company. TheChief Executive Officer and FinanceDirector meet frequently withrepresentatives of institutional shareholdersto discuss their views and to ensure thatthe strategies and objectives of theCompany are well understood.

The Board recognises the importance ofstrong corporate governance and fullyendorses the Principles of Good Governanceand Code of Best Practice encompassed inthe Combined Code (the ‘Code’) issued bythe London Stock Exchange in June 1998.

The Board considers that the Companycomplied with all the recommendations ofthe Code during the year, other than in notappointing two non-executive directors fora specified term (Code provision A.6.1), thenotice periods for certain executivedirectors (Code provision B.1.7) and thatnon-executive directors comprise less thanone-third of the members of the currentBoard (Code provision A.3.1).

Lord Sharman, who was appointed to theBoard in September 1999 and is currentlynon-executive Chairman, and JohnAmerman, who was appointed in 1997,have no specific term of appointment. SirDavid Hannay was appointed to the Boardin January 2000 for an initial period ofthree years. It is intended that futureappointments of non-executive directorswill continue this recently introduced policyof three year term appointments.

The Board currently has ten directors,comprising seven executive directors andthree non-executive directors. It is intendedto make further non-executiveappointments shortly to give a betterbalance to the Board. All of the currentnon-executive directors are independent ofthe management of the Group and freefrom any business or other relationshipwhich could materially interfere with theexercise of their independent judgement.John Amerman has been nominated as thesenior independent director to whomshareholders may convey any concerns inthe event that they do not wish to involveeither the Chairman or the Chief Executive.

All directors are given appropriate briefingon appointment and individual trainingneeds are met as required. The Boardmeets regularly throughout the year andretains full and effective control over theCompany and monitors the executive

management. The Board is supplied in atimely manner with information in a formand of a quality appropriate to enable it todischarge its duties. Board meetings followa formal agenda and the Board has aschedule of matters specifically reservedto it for decision. All directors have accessto the advice and services of the CompanySecretary and, if required, externalprofessional advice at the Company’sexpense.

The Board has appointed the followingCommittees:

Audit CommitteeThe Audit Committee comprises JohnAmerman (Chairman), Lord Sharman andSir David Hannay and meets at least twiceeach year. It has particular responsibility forensuring that the Company’s financialstatements present a true and fairreflection of the Company’s results andfinancial position and that appropriatefinancial controls are in operation. Thesemeetings are attended by the GroupFinance Director and the external auditors.The Board considers that, through theAudit Committee, it has an objective andprofessional relationship with the externalauditors.

Remuneration and NominationCommitteesThe Remuneration and NominationCommittees both comprise Lord Sharman(Chairman), John Amerman and Sir DavidHannay. The Remuneration Committeemeets as and when necessary to review thesalaries of executive directors and seniormanagement, together with incentiveschemes for the Group as a whole. It isempowered to grant share options underthe existing Share Option Schemes. TheNomination Committee meets as and whennecessary and has responsibility fornominating to the Board candidates forappointment as directors.

Internal financial controlsThe Board is responsible for establishingand maintaining the Group’s system ofinternal financial controls. The internal

financial control systems are designed toaddress the risks and needs of operations.Any system can provide only reasonableand not absolute assurance againstmaterial misstatement or loss.

The key procedures which the directorshave established are as follows:

a. The Board of Directors has overallresponsibility for the Group’s system ofinternal financial controls. The full Boardmeets regularly and has adopted aschedule of matters which are requiredto be brought to it for discussion, thusensuring that it maintains full andeffective supervision over appropriatefinancial controls. The Group’s strategicdirection is reviewed annually by theBoard, the Chief Executive and theexecutive directors consider the strategyfor the individual businesses.

b. The Board has put in place anorganisational structure with clearlydefined lines of responsibility anddelegation of authority. Annual plansand performance targets for eachbusiness are set by the executivedirectors and reviewed by the Board inthe light of the Group’s overallobjectives. The division of responsibilityat Board level is achieved by theappointment of a non-executiveChairman and a Chief Executive.Management of the Group’s day-to-dayactivities is delegated to the ChiefExecutive and members of the GlobalExecutive Committee.

c. Each operation’s chief executive isresponsible for:i) the conduct and performance of

their business; ii) ensuring an effective system of

internal financial controls is in place;iii) meeting defined reporting

timetables and ensuring compliancewith the Group’s accounting policies,controls and definitions – ensuringthe integrity and accuracy of theGroup’s accounting records; and

iv) signing-off their accounts on amonthly basis subject to thelimitations set by the annual

> CORPORATE GOVERNANCE


> CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 DECEMBER 1999

1999 1998Notes £’m £’m

Turnover:

– continuing operations 4,642.4 4,035.8

– acquisitions 149.4 94.2

2 4,791.8 4,130.0

Cost of sales (4,510.1) (3,909.0)

Gross profit 281.7 221.0

Operating expenses before amortisation of goodwill (215.3) (170.4)

Amortisation of goodwill (1.9) (0.5)

Operating expenses (217.2) (170.9)

Income from interests in associated undertakings 0.2 –

Operating profit:

– continuing operations 54.7 48.7

– acquisitions 10.0 1.4

64.7 50.1

Profit on disposal of associated undertakings 3 4.6 –

Interest and similar charges:

– interest receivable 5.1 5.2

– interest payable 4 (6.7) (4.4)

– amortisation of refinancing costs 4 (0.4) (0.3)

Net interest (payable)/receivable (2.0) 0.5

Profit on ordinary activities before taxation 2, 5, 6 67.3 50.6

Tax on profit on ordinary activities 7 (18.7) (14.5)

Profit on ordinary activities after taxation 48.6 36.1

Equity minority interests (1.6) (0.6)

Profit attributable to members of the parent company 47.0 35.5

Dividends:

– preference – 0.2

– ordinary 8 (10.8) (8.0)

Retained profit for the financial year 36.2 27.7

Earnings per share: 9

Basic 4.6p 4.0p

– Profit on disposal of associated undertakings (0.5)p –

– Amortisation of goodwill 0.2p –

Underlying basic earnings per share 4.3p 4.0p

Diluted 4.4p 3.7p

The underlying basic earnings excludes amortisation of goodwill of £1.9 million for the year ended 31 December 1999 (1998: £0.5

million) and the exceptional profit of £4.6 million realised on the disposal of an associated undertaking (note 3).

We have audited the financial statementson pages 39 to 68 which have beenprepared under the historical costconvention and the accounting policies setout on pages 44 and 45.

Respective responsibilities of directorsand auditorsThe directors are responsible for preparingthe Annual Report. As described on page30 this includes responsibility for preparingthe financial statements in accordance withapplicable United Kingdom accountingstandards. Our responsibilities, asindependent auditors, are established inthe United Kingdom by statute, theAuditing Practices Board, the Listing Rulesof the London Stock Exchange and ourprofession’s ethical guidance.

We report to you our opinion as towhether the financial statements give atrue and fair view and are properlyprepared in accordance with the UnitedKingdom Companies Act. We also reportto you if, in our opinion, the directors’report is not consistent with the financialstatements, if the Company has not keptproper accounting records, if we have notreceived all the information andexplanations we require for our audit, or ifinformation specified by law or the ListingRules regarding directors’ remunerationand transactions is not disclosed.

We read the other information containedin the Annual Report and consider theimplications for our report if we becomeaware of any apparent misstatements ormaterial inconsistencies with the financialstatements.

We review whether the statement onpages 36 and 37 reflects the Company’scompliance with the seven provisions ofthe Combined Code specified for ourreview by the London Stock Exchange, andwe report if it does not. We are notrequired to form an opinion on theeffectiveness of the Group’s corporategovernance procedures or its risk andcontrol procedures.

Basis of audit opinionWe conducted our audit in accordancewith Auditing Standards issued by theAuditing Practices Board. An audit includesexamination, on a test basis, of evidencerelevant to the amounts and disclosures inthe financial statements. It also includes anassessment of the significant estimates andjudgements made by the directors in thepreparation of the financial statements,and of whether the accounting policies areappropriate to the Company’scircumstances, consistently applied andadequately disclosed.

We planned and performed our audit so asto obtain all the information andexplanations which we considerednecessary in order to provide us withsufficient evidence to give reasonableassurance that the financial statements arefree from material misstatement, whethercaused by fraud or other irregularity orerror. In forming our opinion we alsoevaluated the overall adequacy of thepresentation of information in the financialstatements.

OpinionIn our opinion the financial statements givea true and fair view of the state of affairsof the Company and the Group at 31December 1999 and of the profit and cashflows of the Group for the year then endedand have been properly prepared inaccordance with the Companies Act 1985.

Chartered Accountants and Registered Auditors London

27 March 2000

> AUDITORS’ REPORT TO THE MEMBERS OF AEGIS GROUP PLC


> BALANCE SHEETSAT 31 DECEMBER 1999

Group Company1999 1998 1999 1998

Notes £’m £’m £’m £’m

Fixed assets

Intangible assets: goodwill 1, 10 242.2 17.0 – –

Tangible assets 11 30.4 16.0 0.3 0.4

Investments 12 3.1 1.8 554.1 426.9

275.7 34.8 554.4 427.3

Current assets

Debtors 13 831.9 669.9 19.9 29.8

Stock: work in progress 9.0 – – –

Investments 14 – 0.1 – –

Cash at bank and in hand 91.5 114.0 1.0 36.3

932.4 784.0 20.9 66.1

Creditors: amounts falling due within one year 15 (997.1) (859.3) (160.9) (218.5)

Net current liabilities (64.7) (75.3) (140.0) (152.4)

Total assets less current liabilities 211.0 (40.5) 414.4 274.9

Creditors: amounts falling due after more than one year 16 (110.0) (21.1) – (2.1)

Net assets/(liabilities) 101.0 (61.6) 414.4 272.8

Capital and reserves

Issued, allotted, called up and fully paid share capital 18 53.9 47.8 53.9 47.8

Share premium account 19 181.3 59.0 181.3 59.0

Capital redemption reserve 19 0.2 0.2 0.2 0.2

Special reserve 19 – 4.5 – 4.5

Merger reserve 19 – – 13.0 13.0

Profit and loss account 19 (138.3) (174.6) 166.0 148.3

Equity shareholders’ funds 97.1 (63.1) 414.4 272.8

Equity minority interests 3.9 1.5 – –

Total capital employed 101.0 (61.6) 414.4 272.8

Douglas Flynn (Director)

Colin Day (Director)

27 March 2000

1999 1998£’m £’m

Profit for the financial year 47.0 35.5

Currency translation differences on foreign currency net investments (5.7) (0.7)

Total recognised gains and losses relating to the year 41.3 34.8

Group Company1999 1998 1999 1998£’m £’m £’m £’m

Profit for the financial year 47.0 35.5 24.0 19.7

Preference dividends – 0.2 – 0.2

Ordinary dividends (10.8) (8.0) (10.8) (8.0)

Retained profit for the financial year 36.2 27.7 13.2 11.9

Issue of shares by the Company (net of expenses) 128.4 17.4 128.4 17.4

Goodwill realised in the year 1.3 – – –

Currency translation differences on foreign currency net investments (5.7) (0.7) – –

Net increase in equity shareholders’ funds 160.2 44.4 141.6 29.3

Equity shareholders’ funds at 1 January (63.1) (107.5) 272.8 243.5

Equity shareholders’ funds at 31 December 97.1 (63.1) 414.4 272.8

There is no material difference between the reported results for 1999 and 1998 and the results for those years restated on an

unmodified historical cost basis.

> CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFOR THE YEAR ENDED 31 DECEMBER 1999

> RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS’ FUNDSFOR THE YEAR ENDED 31 DECEMBER 1999

> NOTES OF HISTORICAL COST PROFITS AND LOSSESFOR THE YEAR ENDED 31 DECEMBER 1999


> NOTES TO THE CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 1999

1999 1998Reconciliation of operating profit to operating cash flow £’m £’m

Operating profit 64.7 50.1

Amortisation of goodwill 1.9 0.5

Depreciation charges 8.1 6.2

Loss on disposal of tangible fixed assets 0.1 0.1

Loss on disposal of other fixed asset investments 0.2 –

Profit on disposal of associated undertakings – (0.2)

Increase in debtors (117.3) (93.9)

Decrease in stock: work in progress 7.3 –

Increase in creditors 111.3 94.2

Net cash flow from operating activities 76.3 57.0

Subsidiary undertakings acquired in the year contributed £10.3 million to the Group’s net cash flow from operating activities

(1998: £2.4 million).

1999 1998Reconciliation of net cash flow to movement in net debt £’m £’m

Increase in cash in the year 19.0 35.0

Cash (inflow)/outflow from (increase)/decrease in debt and lease financing (61.0) 1.5

Cash outflow from issue costs of debt 1.2 –

Change in net debt/cash resulting from cash flows (40.8) 36.5

Amortisation of new refinancing costs (0.2) –

Debt and finance lease obligations in subsidiaries acquired in the year (4.0) –

Effect of foreign exchange rate changes (7.0) 2.6

Movement in net debt/cash in the year (52.0) 39.1

Net funds/(debt) at 1 January 36.9 (2.2)

Net (debt)/funds at 31 December (15.1) 36.9

Acquisitions Other1 January (excl. cash non-cash Exchange 31 December

1999 Cash flow and overdrafts) changes movement 1999£’m £’m £’m £’m £’m £’m

Analysis of net funds/(debt)

Cash in hand and at bank 114.0 (15.1) – – (7.4) 91.5

Overdrafts (59.3) 34.1 – – 0.6 (24.6)

54.7 19.0 – – (6.8) 66.9

Debt due within one year (10.5) 14.1 (3.4) – (0.3) (0.1)

Debt due after more than one year (6.9) (75.4) – – 0.1 (82.2)

Net funds/(debt) before finance lease obligations

and issue costs of new debt 37.3 (42.3) (3.4) – (7.0) (15.4)

Finance lease obligations (0.4) 0.3 (0.6) – – (0.7)

Issue costs of new debt – 1.2 – (0.2) – 1.0

Total 36.9 (40.8) (4.0) (0.2) (7.0) (15.1)

There were bank loans and overdrafts of £3.4 million within subsidiaries acquired in the year.

1999 1998£’m £’m

Net cash flow from operating activities 76.3 57.0

Returns on investments and servicing of finance

Interest received 5.1 5.2

Interest paid (6.7) (4.3)

Interest element of finance lease rental payments (0.1) (0.1)

Issue costs for new unsecured loan (1.2) –

Dividends paid to minority interests (0.7) (1.2)

Net cash flow for returns on investments and servicing of finance (3.6) (0.4)

Taxation (12.6) (13.7)

Capital expenditure and financial investment

Purchase of tangible fixed assets (13.1) (8.2)

Sale of tangible fixed assets 0.7 0.3

Purchase of investments – (0.4)

Sale of investments 0.8 0.9

Net cash flow for capital expenditure and financial investment (11.6) (7.4)

Acquisitions and disposals

Purchase of subsidiary undertakings and minority interests (note 20) (205.2) (9.2)

Cash acquired on purchase of subsidiary undertakings (note 20) 1.6 4.6

Investment in associated undertakings – (0.4)

Sale of associated undertakings (a) 6.2 0.4

Deferred consideration on prior period acquisitions (12.5) (6.2)

Net cash flow for acquisitions and disposals (209.9) (10.8)

Equity dividends paid (9.1) (6.6)

Cash flow before use of liquid resources and financing (170.5) 18.1

Management of liquid resources (b)

Sale of short term money market investments 0.1 1.0

Net cash flow for management of liquid resources 0.1 1.0

Financing

Issue of share capital (net of expenses) 128.4 17.4

New unsecured loan 79.7 –

Repayment of secured loan (18.4) (1.2)

Capital element of finance lease rental payments (0.3) (0.3)

Net cash flow from financing 189.4 15.9

Increase in cash in the year 19.0 35.0

(a) Sale of associated undertakings in the year ended 31 December 1999 represents proceeds realised on the disposal of the Group’s

shareholding in Consodata SA (note 3).

(b) Readily disposable short–term investments and deposits that are not repayable on demand without penalty are reported as liquid

resources in the cash flow statement.

Notes to this consolidated cash flow statement are provided overleaf.

> CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 1999


Fixed assets and depreciationTangible fixed assets are stated at historic cost less accumulated depreciation.

Depreciation is provided to write off the cost of all fixed assets, except freehold land, to their residual value over their expected usefullives. It is calculated on the historic cost of the assets at the following rates:

Freehold buildings 1% – 5% per annumLeasehold buildings Over the period of the leaseLeasehold improvements 10% – 20% per annum or over the period of the lease, if shorterOffice furniture, fixtures, equipment & vehicles 10% – 50% per annum

Leased assetsWhere assets are financed by leasing agreements that give rights approximating to ownership (‘finance leases’), the assets are treatedas if they had been purchased outright. The amount capitalised is the present value of the minimum lease payments payable during thelease term. The corresponding leasing commitments are shown as amounts payable to the lessor. Depreciation on the relevant assets ischarged to the profit and loss account.

Lease payments are split between capital and interest using the actuarial method. The interest is charged to the profit and loss account.The capital element reduces the amounts payable to the lessor.

All other leases are treated as ‘operating leases’. These annual rentals are charged to the profit and loss account over the lease term.

Subsidiary undertakingsInvestments in subsidiaries are held at cost less any provisions for permanent diminution in value.

Associated undertakingsCompanies in which the Group has a participating interest and over whose operating and financial policies it exercises a significantinfluence are treated as associated undertakings. Investments in associated undertakings are included in the consolidated balance sheetat cost less any goodwill arising before 1 January 1998, less provisions for permanent diminution in value plus attributablepost–acquisition retained profits.

Other fixed asset investmentsOther fixed asset investments are stated at cost less amounts written off in respect of any permanent diminution in value.

Stock: work in progressWork in progress is stated at the lower of cost or net realisable value.

Deferred taxationProvision is made for timing differences between the treatment of certain items for taxation and accounting purposes to the extent thatit is probable that a liability or asset will crystallise in the foreseeable future.

Pension costsRetirement benefits for employees of certain companies in the Group are provided by defined contribution schemes which are fundedby contributions from Group companies and employees. The amount charged to the profit and loss account is the contributionspayable in the year. With minor exceptions, these funds are placed with separate trustee-administered schemes or insurance companies.

Financial instrumentsThe costs of issue of capital instruments such as the issue costs of new debt are charged to the profit and loss account on an annualbasis over the life of the instrument.

1. Principal accounting policiesThe financial statements have been prepared under the historical cost convention and in accordance with applicable accountingstandards and, with the exception of the Group’s treatment of goodwill arising on the acquisition of Market Facts, Inc., as detailedbelow, adopting the following principal accounting policies:

Basis of consolidationThe consolidated financial statements incorporate the financial statements of Aegis Group plc and its subsidiary undertakings from thedate of acquisition up to 31 December 1999. All inter–company balances and transactions are eliminated. The financial statements alsoinclude the Group’s attributable share of associated undertakings’ results up to 31 December 1999.

GoodwillPrior to 1 January 1998, it was the Group’s policy to write off purchased goodwill immediately to reserves and charge it to the profitand loss account only on the subsequent disposal of the business to which it related. For acquisitions prior to 1 January 1998, theGroup has elected to continue with this accounting policy.

In accordance with Financial Reporting Standard 10, goodwill arising on each acquisition on or after 1 January 1998 is capitalised as anasset in the balance sheet. The directors review the estimated useful economic life of goodwill arising on each acquisition and, wherethis is considered finite, the goodwill is amortised over this period on a straight line basis. Following the first full year of ownership ofan acquired business, the goodwill capitalised is reviewed for impairment. The carrying value of goodwill may also be reviewed at anytime if there is a new event or change in circumstance which may impact upon its recoverable amount.

In the case of goodwill arising on the acquisition of Market Facts, Inc., the directors are of the opinion that the goodwill has anindefinite useful economic life due to the strength of the brand, its market position, its long–term profitability outlook and the Group’scommitment and proven ability to enhance brand value. The financial statements depart from the specific requirements of companies’legislation to amortise goodwill over a finite period in order to give a true and fair view. If the goodwill on this acquisition had beenamortised over 20 years, a further charge of £5.9 million would have been incurred in the year ended 31 December 1999 results (£10.0 million on an annualised basis).

Foreign currenciesProfit and loss accounts and cash flows in foreign currencies are translated into sterling at average exchange rates. Assets and liabilitiesdenominated in foreign currencies are translated using the rate of exchange ruling at the balance sheet date. Unrealised exchangeadjustments, arising on the translation of the net assets of subsidiaries, associated undertakings or on borrowings hedging againstthese net assets, are taken directly to reserves in the consolidated financial statements. All other gains and losses on translation aredealt with in the profit and loss account.

TurnoverTurnover represents the value of media handled by the Group on behalf of clients (excluding VAT). Turnover is recognised when chargesare made to clients, principally when advertisements appear in the media. Fees are recognised over the period of the relevantassignments or agreements.

For the market research business, profit is recognised either on completion of a project or on the satisfactory completion of a specificphase of a project. Provision is made for losses on a project when identified.

Research and developmentResearch and development expenditure, including purchased software licences and development costs, is charged to the profit and lossaccount in the year in which it is incurred.

> NOTES TO THE ACCOUNTSFOR THE YEAR ENDED 31 DECEMBER 1999


3. Profit on disposal of associated undertakings

On 18 January 1999, the Group disposed of its 46.82% holding in the Consodata Group based in France for £6.2 million to the

existing management and to Alpha, an investment company. The Group realised a profit on disposal of £4.6 million in 1999 (after

deduction of £1.3 million of goodwill previously written off to reserves). Due to the availability of brought forward losses, there was

no tax payable on this gain.

4. Interest payable and similar charges

1999 1998£’m £’m

Interest payable:

On bank loans and overdrafts 4.7 2.4

On other loans 0.8 0.7

Interest payable under finance lease and hire purchase contracts 0.1 0.1

Other charges 1.1 1.2

6.7 4.4

Amortisation of refinancing costs 0.4 0.3

7.1 4.7

On 15 October 1999, the Group entered into new banking facilities under which the Group obtained a five-year, unsecured,

multi–currency revolving credit facility of £250 million.

The cost of these banking facilities of £1.0 million was capitalised in 1999 and is being written off over five years, representing the

minimum period of these arrangements.

5. Staff costs

1999 1998£’m £’m

Staff costs consist of:

Wages and salaries 108.6 90.9

Social security costs 18.6 16.1

Other pension costs 2.9 1.9

130.1 108.9

Number of employeesMedia com- Market Media com- Marketmunications research Total munications research Total

1999 1999 1999 1998 1998 1998

Average number of full–time employees 3,107 1,004 4,111 2,838 – 2,838

Employees as at 31 December 1999 3,178 997 4,175 2,869 – 2,869

Average number of full-time UK employees 537 – 537 491 – 491

Directors’ remuneration is disclosed in the Report of the Remuneration Committee on page 31. The total amount of directors’

remuneration in 1999 was £3.9 million (1998: £3.3 million).

2. Net assets/(liabilities) and operating performance

Profit/(loss) onordinary activities

Net assets/(liabilities) before taxation Turnover1999 1998 1999 1998 1999 1998£’m £’m £’m £’m £’m £’m

Geographical analysis

Europe (3.2) (26.3) 51.5 48.3 3,788.9 3,568.8

North America 99.7 (33.6) 13.6 3.6 855.4 504.6

Latin America and Asia Pacific 4.5 (1.7) 1.3 (1.3) 147.5 56.6

101.0 (61.6) 66.4 50.6 4,791.8 4,130.0

Income from interests in associated undertakings 0.2 –

Profit on disposal of associated undertakings 4.6 –


Amortisation of goodwill (1.9) (0.5)

Profit on ordinary activities before taxation 67.3 50.6

Of the net assets at 31 December 1999, £124.3 million relates to the market research sector, all located in North America. The Group’s

share of the net assets of associated undertakings of £0.4 million (1998: £0.6 million) is located in Europe.

The Group operates in two business sectors: media communications and market research. A further analysis of turnover by

geographical area is set out below:

1999 1998 1999 1998Local’m Local’m £’m £’m

France 10,652.5 9,774.1 1,069.8 1,001.2

Germany 2,578.9 2,432.1 868.6 835.1

UK 770.3 667.9 770.3 667.9

Spain 89,563.2 77,978.4 354.6 315.2

Scandinavia 4,463.7 4,868.9 332.9 368.3

Italy 440,009.3 483,093.0 149.7 167.8

Rest of Europe N/A N/A 243.0 213.3

Total for Europe 3,788.9 3,568.8

North America (excluding market research) 1,274.4 838.9 787.7 504.6

Latin America and Asia Pacific N/A N/A 147.5 56.6

Turnover for media communications N/A N/A 4,724.1 4,130.0

Turnover for market research (all North America) 109.6 – 67.7 –

4,791.8 4,130.0

There is no material difference between turnover determined by origin and that determined by destination.

A further analysis of profits has not been given since, in the opinion of the directors, this would be seriously prejudicial to the interests

of the Group.

> NOTES TO THE ACCOUNTS CONTINUED


8. Dividends

1999 1998

Ordinary shares of 5p each

– interim dividend rate per share 0.4p 0.35p

– final dividend proposed rate per share 0.6p 0.5p

1.0p 0.85p

£’m £’m

– interim dividend paid 4.3 3.2

– final dividend proposed 6.5 4.8

10.8 8.0

The final dividend, if approved, will be paid on 30 June 2000 to all ordinary shareholders on the register on 9 June 2000.

9. Earnings per ordinary share

As reported Underlying As reported Underlying1999 1999 1998 1998

Earnings per ordinary share is calculated as follows:

Basic

Profit for the period £47.0m £44.3m £35.7m £36.2m

Weighted average number of ordinary shares in issue 1,019.2m 1,019.2m 898.4m 898.4m

Basic earnings per share 4.6p 4.3p 4.0p 4.0p

Diluted

Profit for the period £47.0m £44.3m £35.5m £36.0m

Weighted average number of ordinary shares in issue and the

weighted average number of dilutive securities 1,057.2m 1,057.2m 971.3m 971.3m

Diluted earnings per share 4.4p 4.2p 3.7p 3.7p

The calculation of basic earnings per share is based on profit net of tax, minority interests and preference dividends.

The calculation of diluted earnings per share is based on profit for basic earnings per share adjusted for preference dividends.

At 31 December 1999, there were 1,078.8 million ordinary shares in issue (1998: 955.1 million) and 77.3 million options outstanding

(1998: 94.2 million). The total proceeds that would be received on exercise of the outstanding options at 31 December 1999 is £74.5

million. The table below sets out the effect of the dilutive securities on the diluted earnings per share calculation:

No. of ordinary shares No. of ordinary shares1999 1998

Options 38.0m 34.7m

Convertible preference shares – 15.6m

Warrants – 22.6m

Total weighted average number of dilutive securities 38.0m 72.9m

Underlying profits are calculated by adding back amortisation of goodwill of £1.9 million in 1999 (1998: £0.5 million) and the profit on

disposal of associated undertakings of £4.6 million (note 3) in 1999 in order to eliminate the effect of these distorting items.

6. Profit on ordinary activities before taxation

1999 1998£’m £’m

This is stated after charging/(crediting):

Auditors’ remuneration and expenses – audit services – UK* 0.2 0.2

Auditors’ remuneration and expenses – audit services – overseas 0.3 0.3

0.5 0.5

Auditors’ remuneration and expenses – non–audit services – UK – –

Auditors’ remuneration and expenses – non–audit services – overseas 0.2 0.1

0.2 0.1

Depreciation of fixed assets – owned 7.8 6.0

Depreciation of fixed assets held under finance leases 0.3 0.2

Operating lease rentals 10.9 8.3

Research and development costs 19.2 19.5

Loss on disposal of tangible fixed assets 0.1 0.1

Profit on disposal of associated undertakings (4.6) (0.2)

Loss on disposal of other fixed asset investments 0.2 –

*Auditors’ remuneration and expenses payable by the Company were £0.1 million (1998: £0.1 million).

All operating expenses are administrative expenses.

7. Tax on profit on ordinary activities

1999 1998£’m £’m

Overseas taxation 18.7 14.4

Associated undertakings – 0.1

18.7 14.5

The effective underlying rate of tax on the Group’s underlying profits is 28.9% based on profits before amortisation of goodwill (1998:

28.4%). As disclosed in note 3 above, there was no tax arising in 1999 on the profit on disposal of the Group’s 46.82% shareholding

in Consodata Group SA.



11. Tangible fixed assets continued

Office furniture,fixtures,

Leasehold equipment &improvements vehicles Total

£’m £’m £’m

Company:

Cost at 1 January 1999 0.1 0.8 0.9

Additions – 0.2 0.2

Disposals – (0.1) (0.1)

At 31 December 1999 0.1 0.9 1.0

Depreciation at 1 January 1999 – 0.5 0.5

Provided for in the year 0.1 0.2 0.3

Disposals – (0.1) (0.1)

At 31 December 1999 0.1 0.6 0.7

Net book value

At 31 December 1999 – 0.3 0.3

At 31 December 1998 0.1 0.3 0.4

The cost of the Group’s tangible fixed assets includes £1.3 million (1998: £0.9 million) and the net book value includes £0.7 million

(1998: £0.3 million) in respect of assets held under finance leases. Depreciation on these assets in the year was £0.3 million

(1998: £0.2 million).

The net book value of the Company’s tangible fixed assets includes no amount (1998: £nil) in respect of assets held under finance

leases.

The Group has no capital commitments contracted for but not provided (1998: £nil). The Company has no capital commitments

contracted for but not provided (1998: £nil).

10. Intangible fixed assets

GoodwillGroup: £’m

Cost at 1 January 1999 17.5

Additions (note 20) 227.1

At 31 December 1999 244.6

Amortisation at 1 January 1999 0.5

Provided for in the year 1.9


Net book value



11. Tangible fixed assets

Office furniture,fixtures,

Freehold land & Leasehold equipment &buildings improvements vehicles Total

£’m £’m £’m £’m

Group:

Cost at 1 January 1999 3.8 8.2 26.8 38.8

Additions 0.2 4.1 8.8 13.1

In subsidiaries acquired 9.5 1.0 13.6 24.1

Disposals – (0.2) (4.4) (4.6)

Exchange adjustments (0.4) (0.2) (2.3) (2.9)

At 31 December 1999 13.1 12.9 42.5 68.5

Depreciation at 1 January 1999 1.0 5.3 16.5 22.8

Provided for in the year 0.5 0.8 6.8 8.1

In subsidiaries acquired 4.3 0.8 7.9 13.0

Disposals – (0.2) (3.6) (3.8)

Exchange adjustments (0.1) (0.1) (1.8) (2.0)

At 31 December 1999 5.7 6.6 25.8 38.1

Net book value

At 31 December 1999 7.4 6.3 16.7 30.4

At 31 December 1998 2.8 2.9 10.3 16.0



13. Debtors


Trade debtors 773.0 616.8 0.3 –

Amounts due from Group undertakings – – 15.4 25.1

Amounts due from associated undertakings 5.9 7.1 – –

Other debtors 32.1 35.3 3.9 4.4

Prepayments and accrued income 20.9 10.7 0.3 0.3

831.9 669.9 19.9 29.8

14. Current asset investments


Other investments – 0.1 – –

Current asset investments comprise unlisted investments.

15. Creditors: amounts falling due within one year


Bank loans and overdrafts 24.7 69.8 55.4 109.0

Less issue costs of debt to be amortised (0.3) (0.2) – (0.2)

24.4 69.6 55.4 108.8

Trade creditors 816.5 679.4 0.6 –

Finance leases and hire purchase contracts 0.3 0.2 – –

Amounts due to Group undertakings – – 94.9 99.4

Taxation and social security 18.8 16.8 0.2 0.1

Corporation tax 12.8 9.5 – –

Payments received on account 16.9 – – –

Dividends payable 6.5 4.8 6.5 4.8

Other creditors 63.8 45.4 1.0 2.7

Accruals and deferred income 37.1 33.6 2.3 2.7

997.1 859.3 160.9 218.5

12. Fixed asset investments

Share ofassociated Other

undertakings’ fixed asset Totalnet assets investments Own shares investments

£’m £’m £’m £’m

Group:

Net book value at 1 January 1999 0.6 0.7 0.5 1.8

In subsidiaries acquired – 2.6 – 2.6

Disposals (0.2) (0.5) (0.5) (1.2)

Exchange adjustments – (0.1) – (0.1)

Net book value at 31 December 1999 0.4 2.7 – 3.1

Company:

Net book value at 1 January 1999 – 426.8 0.1 426.9

Additions – 127.3 – 127.3

Disposals – – (0.1) (0.1)

Net book value at 31 December 1999 – 554.1 – 554.1

Associated undertakings

A list of the Group’s associated undertakings is disclosed in note 25.

Other fixed asset investments

The Group’s fixed asset investments mainly comprise an investment of approximately 4% in Harris Interactive, Inc.

The Group and Company have UK listed fixed asset investments with a market value at 31 December 1999 of £2,188 (1998: £14,180).

The Company’s fixed asset investments principally relate to shares in subsidiary undertakings. A list of the Group’s principal subsidiary

undertakings is disclosed in note 25. The historical cost of the Company’s fixed asset investments is £563.6 million (1998:

£436.3 million), before provisions for diminution in value.

Own shares

The nominal value of own shares held at 31 December 1999 was £nil (1998: £nil). Options over some of these shares have been

granted to certain senior employees exercisable at any time ranging up to 4 May 2003 and 24 May 2004 at a price of 28.5p or 29.3p.

Under the terms of the trust, all dividends on the shares owned by the trust, the purchase of which was funded by an interest free loan

to the trust by Aegis Group plc, are waived. All expenses incurred by the trust are settled directly by Aegis Group plc and are charged in

the Accounts as incurred.



18. Share capital continued

Ordinary shares

The ordinary shares of 5p each have full voting rights.

During the year the following issues of ordinary shares were made:

No. of ordinary shares Nominal value of Reason for issue issued ordinary shares issued Consideration

Placing as part of acquisition of Market Facts 96,000,000 £4,800,000 £118,944,000

Exercise of share options 27,708,654 £1,385,433 £9,464,890

Total 123,708,654 £6,185,433 £128,408,890

The Company received £128.4 million as consideration on the exercise of share options and the new share placing. There are no

preference shares or warrants outstanding at 31 December 1999.

Under the Group’s share option schemes, there were outstanding options over 77,311,916 ordinary shares of 5p at 31 December 1999

for which the participants have the right to exercise their options at prices ranging from 26.5p to 190p. These options are exercisable

between 21 June 1998 and 5 December 2009.

19. Reserves

Share Capital Profit andpremium redemption Special lossaccount reserve reserve account

£’m £’m £’m £’m

Group:

At 1 January 1999 59.0 0.2 4.5 (174.6)

Retained profit for the financial year – – – 36.2

Issue of shares by the Company (net of expenses) 122.3 – – –

Goodwill realised on disposal – – – 1.3

Transfers – – (4.5) 4.5

Currency translation differences on foreign currency net investments – – – (5.7)

At 31 December 1999 181.3 0.2 – (138.3)

Goodwill arising on acquisitions up to 31 December 1997 of £563.9 million, which has been written off immediately to reserves, is

included within the profit and loss reserve account.

16. Creditors: amounts falling due after more than one year


Bank loans 82.2 6.9 – –

Less issue costs of debt to be amortised (0.7) – – –

81.5 6.9 – –

Finance leases and hire purchase contracts 0.4 0.2 – –

Other creditors 28.1 14.0 – 2.1

110.0 21.1 – 2.1

On 15 October 1999, the Group entered into new banking facilities under which the Group obtained a multi–currency revolving credit

facility of £250 million. Interest is payable on the revolving credit facility at the relevant LIBOR plus a maximum of 0.8%. The media

guarantee in the UK continues to be underwritten by an Insurance Bond of £60 million.

Of the above, £81.9 million (1998: £6.9 million) is repayable between two and five years. No amount (1998: £nil) is repayable after

more than five years. There is no amount in other creditors (1998: £nil) repayable in instalments more than five years from the date of

the balance sheet.

17. Provisions for liabilities and charges

Group and Company:

No provision for deferred taxation is recorded due to the availability of tax losses carried forward which offset the full potential effect of

timing differences between the treatment of certain items for taxation and accounting purposes. There was no material unprovided

liability for deferred taxation at 31 December 1999 or 31 December 1998.

18. Share capital

1999 1998£’m £’m

Authorised:

1,500,000,000 (1998: 1,200,000,000) ordinary shares of 5p each 75.0 60.0

Issued, allotted, called up and fully paid:

1,078,848,875 (1998: 955,140,221) ordinary shares of 5p each 53.9 47.8



20. Acquisitions continued

Accounting policy and other adjustments have been made to the book value of net assets acquired as set out below:

(a) Software licences of £0.7 million within Market Facts, Inc. have been written off in accordance with the Group’s accounting policy.

(b) The depreciation rate for computer hardware within Market Facts, Inc. has been reduced from five to three years, resulting in a

write-off of £0.9 million.

(c) The carrying value of a building owned by Market Facts, Inc. has been reduced by £1.0 million in line with an independent

valuation.

(d) Deferred tax assets of £1.0 million within Market Facts, Inc. have been written off in accordance with UK accounting standards.

(e) The accounting policy for revenue recognition for Market Facts, Inc. has been amended to recognise revenue only on completion

of a project or on the satisfactory completion of a specific phase of a project. The net effect is to reduce the net assets acquired by

£9.0 million.

(f) Provisions for doubtful debts have been made for Market Facts, Inc. of £0.3 million.

(g) Estimated deferred consideration of £16.5 million payable to 100% owned subsidiaries previously acquired by Market Facts, Inc.

has been provided in accordance with UK accounting standards.

The summarised profit and loss account and statement of total gains and losses of Market Facts, Inc. for the period 1 January 1999 to

1 June 1999, being the period from the beginning of its financial year to the effective date of acquisition, are disclosed below. Also

disclosed below is the summarised profit and loss account for the financial year ended 31 December 1998.

Period1 January 1999 Year ended

to 1 June 31 December1999 1998

£’m £’m

Turnover 37.5 82.5

Operating profit 2.2 8.8


Profit before tax 2.1 8.9

Tax (0.9) (3.5)

Profit after tax 1.2 5.4

Dividends – –

Profit for the financial period 1.2 5.4

There is no material difference between the profit for the financial period and the total recognised gains relating to the period.

19. Reserves continued

Share Capital Profit andpremium redemption Special Merger lossaccount reserve reserve reserve account

£’m £’m £’m £’m £’m

Company:

At 1 January 1999 59.0 0.2 4.5 13.0 148.3

Retained profit for the financial year – – – – 13.2

Issue of shares by the Company (net of expenses) 122.3 – – – –

Transfers – – (4.5) – 4.5

At 31 December 1999 181.3 0.2 – 13.0 166.0

Following the issue of shares during the year, a further £4.5 million has been transferred from the special reserve to the profit and loss

reserve account in accordance with a court-approved share premium account reduction scheme implemented in 1994.

The Company has not presented its own profit and loss account as permitted by Section 230 (1) of the Companies Act 1985. The profit

after tax dealt with in the accounts of the Company for the 12 months to 31 December 1999 was £24.0 million (12 months to

31 December 1998: £19.7 million). Accumulated reserves for the Company include £118.8 million (1998: £111.3 million) which is

not available for distribution under the terms of the court-approved share premium reduction scheme.

20. Acquisitions

Market Facts, Inc.

On 2 June 1999, the Group’s tender offer to acquire a 100% interest in Market Facts, Inc. (based near Chicago, USA) became

unconditional. The offer was for cash consideration of £183.8 million (US$297.2 million), of which £0.5 million has yet to be paid.

AccountingBook value policy Other Fair value of

acquired alignment adjustments net assetsNet assets/(liabilities) acquired: £’m £’m £’m £’m

Intangible fixed assets 0.7 (0.7) (a) – –

Tangible fixed assets 12.7 (0.9) (b) (1.0) (c) 10.8

Other fixed assets 2.5 – – 2.5

Debtors 25.1 (6.1) (d)/(e) (0.3) (f) 18.7

Stock: work in progress – 16.3) (e) – 16.3

Debt (3.4) – – (3.4)

Creditors (20.6) (36.7) (e)/(g) – (57.3)

17.0 (28.1) (1.3) (12.4)

Goodwill capitalised in the year 199.9

187.5

Satisfied by: £’m

Cash consideration 183.3

Direct costs of acquisition 3.7

Deferred consideration (note 21) 0.5

187.5




Other acquisitions

In addition to the acquisition of Market Facts, Inc., the Group made acquisitions as detailed below.

Net assets/(liabilities) acquired:Book value Other Fair value of

acquired adjustments net assets£’m £’m £’m

Tangible fixed assets 0.3 – 0.3

Other fixed assets 0.1 – 0.1

Debtors 28.8 (1.2) 27.6

Cash at bank and in hand 1.6 – 1.6

Creditors (25.1) – (25.1)

Minority interest acquired (1.8) – (1.8)

Minority interest extinguished 0.3 – 0.3

4.2 (1.2) 3.0

Goodwill capitalised in the year 27.2

30.2

Satisfied by: £’m

Cash consideration 18.3

Direct costs of acquisition 0.3

Deferred consideration (note 21) 11.6

30.2

Provisions for doubtful debts have been made for Carat Fax SA of £1.2 million.



Carat Fax SA

On 9 April 1999, the Group acquired a 51% interest in Fax SA (now renamed Carat Fax SA), based in Buenos Aires, Argentina. The

Group paid cash consideration of £7.9 million (US$12.75 million). The Group has an option to purchase a further 9% by 9 April 2000

for approximately £1.4 million (US$2.3 million). There is also a put and call option over the existing 49% minority share exercisable after

9 April 2002 for cash consideration based on the profits of the preceding periods.

Feather Brooksbank

On 11 November 1999, the Group acquired a 100% interest in WIRR Limited (trading as Feather Brooksbank), based in Edinburgh,

Scotland. The Group paid consideration of £7.5 million, £4.5 million in cash and £3 million by way of a loan note payable on 10

January 2001. Further contingent consideration payable in cash of up to £6 million may also be paid between 2000 and 2002 subject

to specified growth criteria.

BBJ Media Services Limited

On 7 October 1999, the Group acquired a further 15.6% interest in BBJ Media Services, based in London, UK, for cash consideration of

£2.8 million. The interest was acquired from Mr Jerry Buhlmann, who was Managing Director of BBJ Media Services prior to the sale of

his interest in the company.

In addition to the transactions outlined above, the Group made further acquisitions for initial cash consideration of £3.1 million and

deferred cash consideration of up to £2.6 million, including:

Christine Malleret Conseil SA

On 22 October 1999, the Group acquired a 100% interest in Christine Malleret Conseil SA based in Paris, France.

Nord Espace Media SA

On 27 December 1999, the Group acquired a 100% interest in Nord Espace Media SA, based in Lille, France.

Carat Santé SA

On 1 July 1999, the Group acquired a 100% interest in the businesses of Media Deal and Media Medical to form a new company

called Carat Santé, based in Paris, France.

Société Internationale de Conseil pour la Communication

On 22 December 1999, as detailed on page 28 of the directors’ report, the Group acquired a 100% interest in Société Internationale

de Conseil pour la Communication based in Paris, France.

All acquisitions have been acquisition accounted for.


22. Related parties

In addition to the disclosures set out in the directors’ report and note 20 of these accounts, the Group had the following related party

transactions in 1999:

Related party transactions with associated undertakings

The Group had the following transactions and balances with its associated undertakings:

Carat Espana SA purchased media space on behalf of Mediasal 2000 SA, an associated undertaking, totalling £20,339,823 in 1999.

The balance due at the year end was £5,901,284 (1998: £5,027,139).

Carat Hellas SA provided planning and media buying services to JV Bonds, an associated undertaking, for a fee of £56,510 in 1999.

The balance due at year end was £nil (1998: £59,352).

23. Financial instruments

Treasury management and financial instruments

The Group’s Treasury department is responsible for managing the Group’s financing and treasury risks. The Board of Directors sets

formal parameters and guidelines on the use of financial instruments to manage risk and review these regularly. The Group does not

trade in financial instruments nor engage in speculative arrangements and it is the Group’s policy not to use any complex financial

instruments, unless, in exceptional circumstances, it is necessary to cover defined risks.

Management of financial risk

The Group considers its major financial risks to be credit risk, liquidity, interest rate risk and currency risk. The Group’s policies with

regard to these risks and how financial instruments are used to manage these risks are set out below.

Credit risk

The Group’s exposure with banks and other institutions is limited by the use of dealing limits set by reference to ratings provided by the

major credit rating agencies.

Liquidity

It is the Group’s policy that funding required by an overseas operation should be provided locally where appropriate and that these

should be adequate to cover the needs of the business. A further analysis of local and Group facilities is set out below:

At 31 December 1999, the Group had net debt (before finance lease obligations and issue costs of new debt) of £15.4 million (1998:

net cash of £37.3 million). The Group had cash balances of £91.5 million at 31 December 1999 (1998: £114.0 million) which were held

mainly in the Group’s trading companies and gross borrowings of £106.9 million (1998: £76.7 million).

Interest rate risk

The Group’s policy is not to enter into any long–term arrangement that fixes or caps the interest rate on any portion of debt.

All borrowings are floating rate. The Group’s cash and borrowings currently offset each other and any arrangement to fix the interest rate

would result in the Group having a potential exposure, except in the USA where borrowings are made at fixed interest rates for periods

of less than one year.

Currency risk

The Group’s foreign currency management policy requires subsidiaries to use short–term forward exchange contracts to hedge all

transactions with material currency exposures. The Group’s accounting policy is to translate the profits of overseas investments at the

average exchange rate for the year and to translate the net assets at year end rates. It is the Group’s policy not to hedge exposures

arising from profit translation.

The Group’s policy is to borrow locally wherever possible to act as a hedge against the translation risk arising from its net investments

overseas. Gains and losses arising on net investments overseas are recognised in the statement of total recognised gains and losses.

Short-term debtors and creditors

Short–term debtors and creditors have been excluded from all disclosures, other than the currency risk disclosures.


21. Contingent liabilities and other commitments

Deferred consideration

Deferred consideration, which has been fully provided for in creditors, may be made to the vendors of certain subsidiary undertakings in

the years to 2004. Such payments are either fixed under the terms of the acquisition or are contingent on future financial performance.

The directors estimate that, at the rates of exchange ruling at the balance sheet date, the maximum liability at 31 December 1999 for

payments that may be due is as follows:

1999 1998£’m £’m

Within one year 16.7 12.1

Between one and two years 8.3 7.4

Between two and five years 17.4 4.3

42.4 23.8

All of the contingent deferred payments noted above are payable in cash. The minimum liability is £17.9 million. There is no deferred

consideration in the Company.

Put options held by outstanding minority interests

Put options are held by minority interests in respect of Carat companies in Argentina, Germany, Greece, Thailand and the United

Kingdom, exercisable between 1998 and 2002. The value of the put options is based upon the profitability of the individual companies.

The directors estimate the value of these contingent liabilities to be approximately £13.0 million, payable in a combination of cash and

ordinary shares.

Guarantees

Guarantees of £28.2 million (1998: £17.0 million) have been given by the Company on behalf of its subsidiaries together with other

guarantees and contingencies arising in the normal course of business.

Lease commitments

At 31 December 1999, there were the following annual commitments in respect of non–cancellable operating leases for the following

years:

Group CompanyLand and Land andbuildings Other buildings

£’m £’m £’m

Operating leases that expire:

Within one year 0.5 0.2 0.1

Between one and two years 0.8 0.3 –

Between two and five years 4.0 0.9 –

After more than five years 5.4 – 0.9

31 December 1999 10.7 1.4 1.0

31 December 1998 9.4 2.4 1.7


23. Financial instruments continued

Fair values of the Group’s financial assets and liabilities

The fair value of the Group’s floating rate financial liabilities, calculated by discounting the book value of current obligations as at

31 December 1999, was £104.1 million (1998: £72.3 million). The floating rate financial liabilities have been discounted using the

Group’s weighted average cost of debt. There are no material differences between the book and fair values of the Group’s financial

assets and other financial liabilities.

Maturity of financial liabilities

The maturity profile of the Group’s financial liabilities is set out in notes 15, 16 and 21.

Borrowing facilities

The Group had the following undrawn, committed borrowing facilities available at 31 December in respect of which all conditions

precedent had been met at that date:

1999 1998£’m £’m

Expiring within one year 150.0 49.0

Expiring between one and two years – 16.0

Expiring between two and five years 18.1 –

168.1 65.0

Of the amounts disclosed above at 31 December 1999, £150.0 million may be extended by the Group for up to a further four years.

All covenants at 31 December 1999 were met.

Market risk

At 31 December 1999, on the basis of existing net debt balances, it is estimated that a general rise of 1% in interest would adversely

impact 1999 profit before tax by £0.2 million.

It is also estimated that a strengthening of Sterling by 1% would reduce 1999 profit before tax by approximately £0.5 million.

Currency exposures

No Group companies have material monetary assets and liabilities in currencies other than that of the local functional currency.

Hedges of future transactions

At 31 December 1999 and 1998, there were no material foreign exchange contracts to hedge against future transaction flows.

Financial instruments held for trading purposes

The Group does not trade in financial instruments.


23. Financial instruments continued

Analysis of interest rate risk profile of financial liabilities of the Group

The currency and interest rate risk profile of the financial liabilities of the Group at 31 December, all of which were at floating interest

rates, was:

Floating rate Floating ratefinancial financialliabilities liabilities

1999 1998£’m £’m

Sterling 18.7 48.4

Deutschmark – 6.5

French Franc – 2.6

Spanish Peseta 3.4 5.3

Other EU currencies – 0.2

US Dollar 81.9 12.7

Other currencies 2.9 1.0

106.9 76.7

Interest is payable on the above financial liabilities based on the relevant national LIBOR plus a maximum of 1.125%. The weighted

average interest rate for the year ended 31 December 1999 was 6.1% (1998: 6.2%).

There were no fixed rate financial liabilities at 31 December 1999 (1998: £nil). In addition to the liabilities above, the Group had

creditors due after more than one year of £28.0 million (1998: £14.0 million) on which no interest is paid (principally representing

deferred consideration on acquisitions) and finance lease obligations of £0.5 million (1998: £0.4 million) which are mostly held in

US Dollars.

Analysis of interest rate risk profile of financial assets of the Group

The currency and interest rate risk profile of the financial assets of the Group at 31 December, all of which were at floating interest

rates, was:

Cash at bank Current asset Cash at bank Current assetand in hand investments Total and in hand investments Total

1999 1999 1999 1998 1998 1998£’m £’m £’m £’m £’m £’m

Sterling 2.1 – 2.1 24.7 – 24.7

Deutschmark 11.8 – 11.8 24.3 – 24.3

French Franc 28.9 – 28.9 8.0 – 8.0

Spanish Peseta 3.7 – 3.7 6.2 – 6.2

Other EU currencies 27.4 – 27.4 28.7 – 28.7

US Dollar 7.2 – 7.2 13.4 – 13.4

Other currencies 10.4 – 10.4 8.7 0.1 8.8

91.5 – 91.5 114.0 0.1 114.1

Current asset investments comprise short–term money market investments. Floating rate cash earns interest based on the relevant

national LIBID equivalent. In addition to the financial assets above, the Group had other fixed asset investments of £2.7 million,

£2.6 million in US Dollars and £0.1 million in French Francs (1998: £0.7 million in Sterling, £0.4 million in Deutschemarks and

£0.3 million in French Francs), which do not yield an interest–related income and which do not have a fixed maturity date.


25. Principal subsidiary and associated undertakings

Effective interestCountry of in issued ordinaryincorporation share capital at

Principal subsidiary undertakings: Office and operation 31 December 1999

Media communications:

Carat Fax Buenos Aires Argentina 51%

Carat Australia Sydney Australia 100%

HMS Carat Austria Vienna Austria 100%

Carat Crystal Brussels Belgium 100%

Carat Canada Montreal Canada 100%

Groupe Carat Strategem Montreal Canada 100% (49% voting)

K2 Media Montreal Canada 100% (49% voting)

Carat Cairns Toronto Canada 100% (49% voting)

Carat Prague Czech Republic 100%

HMS Prague Czech Republic 100%

Carat Danmark Copenhagen Denmark 100%

Carat Media Research Copenhagen Denmark 100%

Carat Group UK London England and Wales 100%

Carat London England and Wales 100%

Carat Direct London England and Wales 100%

Carat Manchester Manchester England and Wales 100%

Carat Direct Manchester Manchester England and Wales 100%

BBJ Media Services London England and Wales 90.6%

Carat Business London England and Wales 100%

Carat Insight London England and Wales 100%

Posterscope London England and Wales 100%

Posterscope in the North Manchester England and Wales 100%

Carat Interactive London England and Wales 100%

Carat International London England and Wales 100%

Carat Media Services London England and Wales 100%

Carat Finland Helsinki Finland 100%

Oy Inter Media Helsinki Finland 100%

Mediekompetens Helsinki Finland 100%

Carat France Paris France 100%

Carat Expansion Paris France 100%

Carat 2010 Paris France 100%

Carat Expert Paris France 100%

Carat MCI Paris France 100%

Carat Prospective Paris France 95.1%

Carat SPFD Paris France 100%

Carat Sponsorship Paris France 100%

Saverne Developpement Paris France 100%

Granit Paris France 100%

Carat Direct Paris France 100%


24. Post balance sheet events

Media Consultants SARL

On 7 January 2000, the Group acquired a 25% interest in Media Consultants SARL, based in Paris, France. The Group paid initial cash

consideration of £0.1 million with further payment of approximately £0.3 million due on or before 31 March 2000.

Motoresearch, Inc.

On 12 January 2000, the Group acquired a 100% interest in Motoresearch, Inc., a market research company based in Detroit, USA. The

initial consideration of £5.0 million was payable in cash on closing; there is also deferred cash consideration of £2.8 million, subject to

performance criteria, payable over the next three years.

Ufa Medianet GmbH

On 20 January 2000, the Group acquired a 100% interest in Ufa Medianet GmbH (now renamed Carat Munich), a media agency

owned by the Bertelsmann Group and based in Munich. The initial consideration is £0.5 million payable in cash with further deferred

cash consideration payable in 2001, based on performance criteria for the first operating year, of a maximum of £0.3 million.

Carat Taiwan

On 27 January 2000, the Group commenced a 50:50 joint venture with United Advertising based in Taipei, Taiwan, for initial

consideration of £1.0 million and contingent deferred consideration payable in cash between 2000 and 2002 of a maximum of

£0.5 million, subject to performance criteria.

Ipsos Access Panels Holdings SA

On 4 February 2000, the Group reached agreement to enter into a joint venture with Ipsos SA to take a 35% interest in their European

access panel business, Ipsos Access Panels Holdings SA, for cash consideration of £2.8 million, subject to certain conditions precedent.

Carat Fax SA

On 25 February 2000, the Group reached agreement to acquire the remaining 49% interest in Carat Fax SA, based in Buenos Aires,

Argentina, for cash consideration of £8.4 million (US$13.5 million).

Carat Interactive AG

On 1 March 2000, the Group acquired 100% interests in SetStep AG and Ambi Dexter AG, both based in Zurich, Switzerland, now

merged, and renamed Carat Interactive AG. The initial cash consideration of £1.1 million is payable in cash on closing with deferred

cash consideration of a maximum of £1.1 million payable in March 2001, subject to performance criteria.

Asia Market Intelligence (Holdings) Limited

On 6 March 2000, the Group acquired a 100% interest in Asia Market Intelligence (Holdings) Limited, a market research group based in

Hong Kong and with operations in Indonesia, Malaysia, the People’s Republic of China, Philippines, Singapore, South Korea, Taiwan and

Thailand. The initial consideration is £15 million (US$24 million) payable in cash on closing and contingent deferred consideration

payable in cash between 2001 and 2003 of a maximum of £35 million (US$56 million) consideration, subject to performance criteria.


>> NOTES TO THE ACCOUNTS CONTINUED

25. Principal subsidiary and associated undertakings continued



Cyclades Carat Paris France 100%

Image Publicité Conseil Paris France 100%

Saverne Conseil Paris France 100%

Grap & Gides Lille France 100%

Carat Santé Paris France 100%

Christine Malleret Conseil Paris France 100%

Nord Espace Media Lille France 100%

Carat Media Service Wiesbaden Germany 100%

HMS Media Service Wiesbaden Germany 100%

HMS and Carat Central Services Wiesbaden Germany 100%

HCCS Plus Wiesbaden Germany 51%

Carat Direct Wiesbaden Germany 100%

Carat Expert Wiesbaden Germany 100%

Carat Interactive Wiesbaden Germany 100%

Carat Hamburg Media Service Hamburg Germany 100%

HMS Hamburg Media Service Hamburg Germany 100%

HMS Frankfurt Eschborn Germany 100%

MW Office Munich Germany 75%

PAP Hamburg Germany 51%

Carat Hellas Athens Greece 75.5%

Carat Creative Athens Greece 75.5%

HMS Carat Budapest Hungary 100%

Carat Media Services Asia Pacific Hong Kong Hong Kong 100%

Carat Italia Milan, Turin, Florence, Rome Italy 100%

Carat Expert Milan Italy 100%

Horizon Milan, Rome Italy 100%

Carat Visions Milan Italy 100%

Carat Media Services India Mumbai, Delhi India 75%

Carat Nederland Amsterdam Netherlands 100%

Carat Malaysia Kuala Lumpur Malaysia 90%

Carat Inter–Media Oslo Norway 100%

Carat Media and Research Oslo Norway 100%

Carat Mediakanalen Oslo Norway 100%

HMS Carat Polska Warsaw Poland 100%

Carat Portugal Lisbon Portugal 100%

Carat Russ–Media Moscow Russia 73%

Feather Brooksbank Edinburgh, Glasgow Scotland 100%

HMS Carat Slovakia Bratislava Slovak Republic 100%

Carat Espana Madrid, Barcelona Spain 100%

Carat Scandinavia Stockholm Sweden 100%




Carat Sverige Stockholm, Gothenburg, Malmo Sweden 100%

Carat Media Research Stockholm Sweden 100%

Mediekompetens Gothenburg, Stockholm Sweden 100%

Micom Carat Zurich, Lausanne Switzerland 100%

Carat Media Services (Thailand) Bangkok Thailand 49% (51% voting)

Carat Turkey Istanbul Turkey 100%

Carat Ukraine Kiev Ukraine 100%

Carat North America New York USA 100%

Carat USA New York, Los Angeles, San

Francisco, Atlanta, Chicago,

Memphis, Dallas USA 100%

MMA Carat Wilton, San Francisco, Chicago USA 100%

Carat Freeman Boston, San Francisco USA 100%

Market research:

Market Facts of Canada Toronto, Montreal, Vancouver Canada 100%

Market Facts Atlanta, Aurora, Boston, Chicago,

Cincinnati, Dallas, Evanston,

Los Angeles, Morgantown,

New Jersey, New York, Oak Park,

Orange County, Seattle,

Washington USA 100%

BAIGlobal Tarrytown, New York,

New York State USA 100%

Tandem Associates Suffern, New York,

Mahwah, New Jersey USA 100%

Strategy Research Corporation Miami USA 100%

Product Intelligence Long Island USA 100%

Marketing Strategy & Planning New York USA 100%

All shareholdings are of ordinary shares. The subsidiary undertakings listed, all of which are consolidated in the accounts of the Group,

are those which, in the opinion of the directors, principally affected the results or financial position of the Group during or at the end of

the financial year.



With the exception of 100% shareholdings in Carat Group UK Limited, Carat International Limited and Carat Media Services Limited, all

of the principal subsidiary and associated undertakings disclosed above are indirectly held. The effective interest in the issued share

capital is equivalent to the percentage of voting rights held by the Group, unless otherwise stated. A full list of all subsidiary

undertakings, and the information shown above with respect to them, is filed with the Company’s annual return.


Principal associated undertakings: Office and operation 31 December 1999

Aerlig Talt Oslo Norway 34%

Carat Consulting Oslo Norway 34%

Mediasal 2000 Bilbao Spain 23.9%

Carat Philippines Manila Philippines 30%

CPM Media Prague Czech Republic 35%

CPM Media Bratislava Slovak Republic 50%

JV Bonds Athens Greece 40%


Notice is hereby given that the Annual General Meeting of the Company will be held at 11a.m. on 24 May 2000 at 11AWest Halkin Street, London SW1X 8JL for the purpose of transacting the ordinary business of the Annual General Meetingset out in resolutions 1 to 9, and special business, when resolutions 10 and 11 will be proposed as ordinary resolutions andresolutions 12, 13 and 14 will be proposed as special resolutions.

Ordinary business1. To receive the financial statements for the year ended 31 December 1999 and the reports of the Directors and Auditors.2. To declare a final dividend of 0.6p per ordinary share.3. To re-elect as a director Ray Kelly who retires by rotation and, being eligible, offers himself for re-election.4. To re-elect as a director John Amerman who retires by rotation and, being eligible, offers himself for re-election. 5. To re-elect as a director Lord Sharman who was appointed since the last Annual General Meeting and therefore retires. 6. To re-elect as a director Pat Doble who was appointed since the last Annual General Meeting and therefore retires. 7. To re- elect as a director David Verklin who was appointed since the last Annual General Meeting and therefore retires. 8. To re-elect as a director Sir David Hannay who was appointed since the last Annual General Meeting and therefore retires.9. To re-appoint PricewaterhouseCoopers as auditors and to authorise the directors to fix their remuneration.

Special business10. To approve the remuneration policy set out in the financial statements.

11. That the directors be and they are hereby generally and unconditionally authorised to exercise all the powers of the Company toallot relevant securities (within the meaning of section 80 of the Companies Act 1985) up to an aggregate nominal amount of£17,165,944 provided that this authority shall expire (unless previously revoked or varied by the Company in general meeting) atthe conclusion of the next Annual General Meeting of the Company after the passing of this resolution, save that the Companymay before such expiry make an offer or agreement which would or might require relevant securities to be allotted after suchexpiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the authority conferredhereby had not expired.

12. That, subject to the passing of resolution 11 above, the directors be and they are hereby empowered, pursuant to section 95 ofthe Companies Act 1985, to allot equity securities (within the meaning of section 94 of the said Act) for cash pursuant to theauthority conferred by the said resolution 11 above as if section 89 of the said Act did not apply to any such allotment, providedthat this power shall be limited:(a) to the allotment of equity securities in connection with or pursuant to an offer by way of rights issue, open offer or any other

pre-emptive offer in favour of holders of ordinary shares where the equity securities attributable to the interests of suchpersons are proportionate (as nearly as may be) to the numbers of ordinary shares held by them subject to such exclusions orother arrangements as the directors may deem necessary or expedient to deal with fractional entitlements or legal or practicalproblems arising under the laws of, or the requirements of any regulatory body or stock exchange in, any territory orotherwise howsoever; and

(b) to the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to an aggregate nominal valueof £2,697,122

and shall expire (unless previously revoked or varied by the Company in general meeting) at the conclusion of the next AnnualGeneral Meeting of the Company after the passing of this resolution save that the Company may before such expiry make an offeror agreement which would or might require equity securities to be allotted after such expiry and the directors may allot equitysecurities in pursuance of such an offer or agreement as if the power conferred hereby had not expired.

13. That the Company be and is hereby generally and unconditionally authorised to make one or more market purchases (as definedin section 163 of the Companies Act 1985) of its ordinary shares of 5p each provided that:(a) the maximum number of shares which may be purchased is 53,965,158 ordinary shares;(b) the maximum price at which any share may be purchased is the price equal to 5% above the average of the middle market

quotations of such share as derived from the London Stock Exchange Daily Official List for the five business days immediatelypreceding the date of such purchase, exclusive of expenses, and the minimum price at which any share may be purchased isthe par value of such share; and

(c) the authority conferred by this resolution shall expire on 23 November 2001 or, if earlier, at the conclusion of the next AnnualGeneral Meeting of the Company after the passing of this resolution, save that the Company may before such expiry make a

> NOTICE OF MEETING


> NOTICE OF MEETING CONTINUED > GROUP DIRECTORY

AEGIS GROUP PLC11A West Halkin StreetLondon SW1X 8JLTel: (44) 020 7470 5000 Fax: (44) 020 7470 5099E-mail: [email protected]

CARAT INTERNATIONALCarat International LondonParker Tower43-49 Parker StreetLondon WC 2B 5PSUnited KingdomTel: (44) 020 7405 1050 Fax: (44) 020 7405 1058E-mail:[email protected]

Carat International Paris4 Place de SaverneCédex 10692971 Paris La DéfenseFranceTel: (33) 1 41 16 17 18 Fax: (33) 1 41 16 65 48E-mail:[email protected]

Carat International WiesbadenKreuzberger Ring 19D-65205 WiesbadenGermanyTel: (49) 611 9788 0 Fax: (49) 611 9788 500E-mail:[email protected]

ARGENTINACarat Fax SAAv. L.N Alem 986 P.61001 Capital FederalBuenos AiresTel: (54) 11 4576 7373 Fax: (54) 11 4576 7374Email:[email protected]

AUSTRALIACarat AustraliaLevel 1310 Bridge StreetSydneyNew South WalesTel: (61) 2 8298 6500 Fax: (61) 2 8298 6555E-mail: [email protected]

AUSTRIAHMS Carat AustriaLandstrasser Hauptstrasse 71A-1030 ViennaTel: (43) 17 17 56 100 Fax: (43) 17 17 56 500E-mail: [email protected]

BELGIUMCarat CrystalChaussée de la Hulpe 1891170 BrusselsTel: (32) 2 663 51 11 Fax: (32) 2 663 51 09E-mail: [email protected]

CANADACarat CanadaGroup Carat Stratégem4446 Blvd. St. LaurentSuite 500, MontrealQuebec H2W 1Z5Tel: (1) 514 284 4446 Fax: (1) 514 284 6663E-mail: [email protected]

Carat Cairns130 Spadina AvenueSuite 806, TorontoOntario M5V 2L4Tel: (1) 416 504 3965 Fax: (1) 416 504 3945E-mail: [email protected]

CZECH REPUBLICCarat SpolHMS SpolCeletná 19CS-11622 Praha 1Tel: (420) 2 241 90611 Fax: (420) 2 232 8370E-mail: [email protected]

DENMARKCarat ScandinaviaPilestraede 58, 5th FloorP.O. Box 2050DK-1012 Copenhagen KTel: (45) 33 15 71 20 Fax: (45) 33 15 36 18

Carat DanmarkPilestraede 58, 5th FloorP.O. Box 2089DK-1012 Copenhagen KTel: (45) 77 400 600 Fax: (45) 77 400 500E-mail: [email protected]

FINLANDCarat FinlandUnioninkatu 17SF-00130 HelsinkiTel: (358) 9 6220 230 Fax: (358) 9 6222 199E-mail: [email protected]

FRANCECarat FranceCarat 2010Carat AffichageCarat CycladesCarat DirectCarat ExpansionCarat ExpertCarat KidsCarat MCI/AEACarat MultimediaCarat PresseCarat ProspectiveCarat RadioCarat SantéCarat SPFDCarat SponsorshipCarat SportCarat TV&CinemaIPCSaverne Conseil4 Place de SaverneCédex 10692971 Paris La DéfenseTel: (33) 1 41 16 17 18 Fax: (33) 1 41 16 65 39E-mail:[email protected]:[email protected]

Christine Malleret Conseil13/15 rue de l’Eglise92100 BoulogneTel: (33) 1 41 10 07 77 Fax: (33) 1 41 10 07 70E-mail: [email protected]

Media Consultants62/64 Bd Pereire75017 ParisTel: (33) 1 47 64 34 56 Fax: (33) 1 47 64 34 12E-mail: [email protected]

GS Publishing79/83 rue Bandin92300 Levallois PerretTel: (33) 1 55 21 00 50 Fax: (33) 1 55 21 00 55E-mail: [email protected]

Grap & GidesNord Espace Media27, rue de l’Abbe LemireBP 100459701 Marcq en Baroeul CedexTel: (33) 3 20 65 93 20E-mail: [email protected]

GERMANYCarat WiesbadenHMS WiesbadenHMS & Carat Central ServicesKreuzberger Ring 19D-65205 WiesbadenTel: (49) 611 9788 0 Fax: (49) 611 9788 500E-mail:[email protected]

Carat HamburgHMS GmbH & Co KG Media ServiceDorotheenstrasse 60D-22301 HamburgTel: (49) 40 27 15 90 Fax: (49) 40 27 92 746E-mail: [email protected]

Carat DirectKreuzberger Ring 2165205 WiesbadenTel. (49) 611 7399-0 Fax (49) 611 7399-458E-mail: [email protected]

Carat InteractiveKreuzberger Ring 2165205 WiesbadenTel. (49) 611 7399-0 Fax (49) 611 7399-478E-mail: [email protected]

Carat ExpertKreuzberger Ring 19D-65205 WiesbadenTel: (49) 611 9788 0 Fax: (49) 611 9788 500E-mail: [email protected]

HMS FrankfurtMergenthalerallee 1-3D-65760 EschbornTel: (49) 6196 9004 0 Fax: (49) 6196 9004 222E-mail: [email protected]

MWOOsterwaldstrasse 4080805 MunchenTel: (49) 89 361 9450 Fax: (49) 89 361 94550E-mail: [email protected]

PAPHermannstrasse 40D-20095 HamburgTel: (49) 40 3395 60 Fax: (49) 40 3395 6193E-mail: [email protected]: [email protected]

GREECECarat Hellas392 Mesogion Ave153 43-Agia ParaskeviAthensTel: (30) 1 600 8200 Fax: (30) 1 600 8500E-mail: [email protected]

HONG KONGCarat Asia PacificRoom 2201-4Kinwick Centre32 Hollywood RoadCentral, Hong KongTel: (852) 2523 4222 Fax: (852) 2523 2380E-mail: [email protected]

contract to purchase shares which would or might be completed or executed wholly or partly after such expiry and may makea purchase of shares pursuant to such contract as if the authority conferred by this resolution had not expired.

14. That the Company’s Articles of Association be amended as set out below:(a) That Article 10 of the Company’s Articles of Association be deleted and the following new Article 10 be adopted in

substitution therefor:“Every share certificate shall be executed under a seal or in such other manner as the Directors having regard to the terms ofuse and any listing requirements may authorise. The Directors may by resolution decide, either generally or in any particularcase or cases, that any signatures on any share certificates need not be autographic but may be applied to the certificates bysome mechanical means or may be printed on them or that the certificates need not be signed by any person.”

(b) That new Article 122(A) be inserted:“All or any of the members of the board or any committee of the board may participate in a meeting of the board or thatcommittee by means of a conference telephone or any communication equipment which allows all persons participating inthe meeting to speak to and hear each other. A person so participating shall be deemed to be present in person at themeeting and shall be entitled to vote or be counted in a quorum accordingly. Such a meeting shall be deemed to take placewhere the largest group of those participating is assembled, or, if there is no such group, where the chairman of the meetingthen is.”

By order of the Board

John RossCompany Secretary

11A West Halkin StreetLondon SW1X 8JL

27 March 2000

NotesA member entitled to attend and vote at the meeting may appoint one or more proxies to attend and, on a poll, vote instead of him. A proxy need not bea member of the Company. A proxy form is enclosed for your use and, if used, should be deposited with the Company’s Registrars (ComputershareServices PLC, PO Box 457, Owen House, 8 Bankhead Crossway North, Edinburgh EH11 0XG) not less than 48 hours before the time appointed for theholding of the meeting. Return of the proxy form will not affect the right of a member to attend and vote at the meeting.

Copies of all directors’ service contracts with the Company or its subsidiaries of more than one year’s duration, and the register of directors’ interests, willbe available for inspection at 11A West Halkin Street, London SW1X 8JL during normal business hours on any business day from the date of this noticeuntil the conclusion of the meeting.


THAILANDCarat Thailand19th Floor, Emporium Tower622 Sukhumvit 24 Road Klongton Klontoey Bangkok 10110Tel: (662) 664 9726 32 Fax: (662) 664 9735E-mail: [email protected]

UKRAINECarat UkraineSichnegovo Povstannia Wulitza 32512010 KievTel: (380) 44 290 8531 Fax: (380) 44 290 0825E-mail : [email protected]

UNITED KINGDOMCarat Group UKParker Tower43-49 Parker StreetLondon WC2B 5PSTel: (44) 020 7430 6300 Fax: (44) 020 7430 6319E-mail: [email protected]

Carat LondonParker Tower43-49 Parker StreetLondon WC2B 5PSTel: (44) 207-430 6000 Fax: (44) 207-430 6299E-mail: [email protected]

Carat DirectParker Tower43-49 Parker StreetLondon WC2B 5PSTel: (44) 207-430 6000 Fax: (44) 207-430 6299E-mail: [email protected]

Carat InsightParker Tower43-49 Parker StreetLondon WC2B 5PSTel: (44) 207-430 6340 Fax: (44) 207-430 6341E-mail: [email protected]

Carat InteractiveParker Tower43-49 Parker StreetLondon WC2B 5PSTel: (44) 207-430 6320 Fax: (44) 207-430 6330E-mail: [email protected]

Carat BusinessParker Tower43-49 Parker StreetLondon WC2B 5PSTel: (44) 207-430 6399 Fax: (44) 207-430 6373E-mail: [email protected]

BBJ Media ServicesOrion House5 Upper St Martin’s LaneLondon WC2H 9EATel: (44) 020 7379 9000 Fax: (44) 020 7497 1177E-mail: [email protected]

PosterscopePosterscope International Cardinal Tower, 12 Farringdon RoadLondon EC1M 3HSTel: (44) 020 7336 6363 Fax: (44) 020 7490 4030E-mail: [email protected]

Posterscope ManchesterBuilding 22Exchange Quay, Salford QuaysGreater Manchester M5 3EQTel: (44) 161 848 8997 Fax: (44) 161 848 8961E-mail: [email protected]

Feather BrooksbankThe Old Assembly Hall37 Constitution StreetLeith EH6 7BJ EdinburghTel: 44 131 555 2554 Fax: 44 131 555 2556E-mail: [email protected]

Feather Brooksbank3 Park GateGlasgow G3 6DLTel: 44 141 332 3382 Fax: 44 141 332 3389E-mail: [email protected]

Feather Brooksbank Manchester3rd Floor, Blackfriars HouseThe Parsonage, Manchester M3 2JATel: (44) 161 834 9793 Fax: (44) 161 835 1363E-mail: [email protected]

USACarat North America Carat Insight3 Park AvenueNew York NY 10016Tel: (1) 212 252 0050 Fax: (1) 212 252 1250E-mail: [email protected]

Carat New York3 Park AvenueNew York NY 10016Tel: (1) 212 591 9164 Fax: (1) 212 689 6005E-mail: [email protected]

Carat Los Angeles1925 Century Park East18th FloorLos Angeles CA 90067Tel: (1) 310 557 2585 Fax: (1) 310 557 3009E-mail: [email protected]

Carat Memphis5830 Mt. Moriah, Suite 6Memphis TN 38115Tel: (1) 901 362 0254 Fax: (1) 901 365 4223E-mail: [email protected]

Carat ChicagoCarat ICG 401 North Michigan Avenue14th FloorChicago, IL 60611Tel: (1) 312 384 4500 Fax: (1) 312 384 5100E-mail: [email protected]

Carat Atlanta3400 Peachtree Road N.E.Suite 1500Atlanta GA 30326Tel: (1) 404 231 1232 Fax: (1) 404 239 9755E-mail: [email protected]

Carat Dallas15950 N.Dallas ParkwaySuite 725Dallas TX 75248Tel: (1) 972 716 0777 Fax: (1) 972 716 9935E-mail:[email protected]

Carat FreemanCarat Freeman Face-to-FaceCarat InteractiveTwo Wells AvenueNewton MA 02459Tel: (1) 617 303 3000 Fax: (1) 617 303 3063E-mail:[email protected]

Carat Freeman San FranciscoCarat San Francisco30 Maiden Lane4th FloorSan Francisco CA94108Tel: (1) 415 315 5400 Fax: (1) 415 352 0610E-mail: [email protected]

MMAMMA/Carat Inc15 River Road, Suite 101WiltonConnecticut 06897Tel: (1) 203 834 3300 Fax: (1) 203 834 3333E-mail: [email protected]

MMA EuropeParker Tower43-49 Parker StreetLondon WC2B 5PSTel: (44) 020 7430 6555 Fax: (44) 020 7430 6556Email: [email protected]

MARKET FACTSHeadquarters3040 West Salt Creek LaneArlington HeightsIllinois 60005Tel: +1 (847) 590 7000 Fax: +1 (847) 590 7010E-mail: [email protected]

1201 Peachtree Street, N.E.400 Colony Square, Suite 200Atlanta, Georgia 30361Tel: +1 (404) 870 9130 Fax: +1 (404) 870 9135E-mail: [email protected]

14643 Dallas Parkway, Suite 636, L8865Dallas, Texas 75240Tel: +1 (972) 338 7880 Fax: +1 (972) 387 4441E-mail: [email protected]

16133 Ventura Boulevard, Suite 1000EncinoCalifornia 91436Tel: +1 (818) 380 1480 Fax: +1 (818) 380 1485E-mail: [email protected]

18400 Von Karman Avenue, Suite 610IrvineCalifornia 92612Tel; +1 (949) 476 2323 Fax: +1 (949) 476 6461E-mail: [email protected]

1650 Tysons BoulevardMcLeanVirginia 22102Tel: +1 (703) 790 9099 Fax: +1 (703) 790 9181E-mail: [email protected]

7900 S.E. 28th StreetMercer IslandWashington 98040Tel: +1 (206) 236 5970 Fax: +1 (206) 236 5971E-mail: [email protected]

65 Madison AvenueMorristownNew Jersey 07960Tel: +1 (973) 605 8800 Fax: +1 (973) 605 5202E-mail: [email protected]

One Apple HillNatickMassachusetts 01760Tel: +1 (508) 655 0777 Fax: +1 (508) 655 0033E-mail: [email protected]

> GROUP DIRECTORY CONTINUED

HUNGARYHMS Carat HungaryKs̆öztelek utca 6H-1092 BudapestTel: (36) 1 216 9660/2 Fax: (36) 1 216 9661E-mail: [email protected]

INDIACarat India – Bombay81 Barodawala MansionDr Annie Besant RoadWorliMumbai 400 018Tel: (91) 22 498 4062 Fax: (91) 22 498 4072E-mail: [email protected]

Carat India – DelhiH23 South Extension, Part 1New Delhi 110 049Tel: (91) 11 460 1357 Fax: (91) 11 469 3915E-mail: [email protected]

IRELANDAIM Carat55 Main StreetDonnybrookDublin 4Tel: (353) 1 260 2690 Fax: (353) 1 260 0444Email: [email protected]

Posterscope Ireland2 The Mews70 Fitzwilliam LaneDublin 2Tel: (353) 1 676 2115 Fax: (353) 1 676 7210Email: [email protected]

ITALYGroup Carat ItaliaCarat ExpertCarat VisionVia Durini 2820122 MilanoTel: (39) 02 77 6961 Fax: (39) 02 77 696299E-mail: [email protected]

Carat OutdoorCarat ItaliaC. so G. Ferraris, 22 bis10121 TorinoTel: (39) 011 563 661 Fax: (39) 011 544 847E-mail: [email protected]

Carat ItaliaHorizonVia L. il Magnifico, 1050129 FirenzeTel: (39) 055 462 231 Fax: (39) 055 496 612E-mail: [email protected]

Carat ItaliaViale Parioli 6000197 RomaTel: (39) 06 808 8178 Fax: (39) 06 807 8456E-mail: [email protected]

HorizonVia Cusani1020121 MilanoTel: (39) 02 776 96500 Fax: (39) 02 890 10901E-mail: [email protected]

HorizonViale Pariole 6000197 RomaTel: (39) 06 807 7360 Fax: (39) 06 807 8456E-mail: [email protected]

MALAYSIACarat Malaysia43c Jalan SS 25/2Taman Bukit Emas47301 Petaling Jaya Tel: (60) 3 704 8366 Fax: (60) 3 704 8291E-mail: [email protected]

NETHERLANDSCarat NederlandMuseum PlazaWeteringschans 87B1017 RZ AmsterdamTel: (31) 20 530 4500 Fax: (31) 20 530 4530E-mail: [email protected]

NORWAYCarat Inter-MediaCarat Media & ResearchCarat MediakanalenCarat ConsultingPilestredet 8N-0180 OsloTel: (47) 22 82 82 82 Fax: (47) 22 82 82 80E-mail: [email protected]

PHILIPPINESCarat Philippines6/F Athenaeum Building160 Alfaro St, Salcedo VillageMakati CityTel: (632) 750 0989 Fax: (632) 750 0975E-mail: [email protected]

POLANDHMS Carat PolskaUl Goszczynskiego 12PL-02-616 WarszawaTel: (48) 22 646 1789 Fax: (48) 22 646 1790E-mail: [email protected]

PORTUGALCarat PortugalRua General Firmino Miguel 3-61600 LisboaTel: (351) 21 724 0000 Fax: (351) 21 724 0095E-mail: [email protected]

RUSSIACarat Russ-Media23a ul.ChasovayaMoscow 125315Tel: (7) 095 785 0949 Fax: (7) 095 785 0951E-mail: [email protected]

SINGAPORECarat Media Services1 Scotts Road19-04 Shaw CentreSingapore 228208Tel: (65) 834 9339 Fax: (65) 333 6385Email: [email protected]

SLOVAK REPUBLICHMS Carat SlovakiaPO Box 45Budkova 13810 01 Bratislava 11Tel: (421) 7 5464 0221 Fax: (421) 7 5464 0242E-mail: [email protected]

SPAINCarat EspañaCarat ExpertFèlix Boix 7-928036 MadridTel: (34) 9 1 353 6200 Fax: (34) 9 1 350 1260E-mail: [email protected]

Carat EspañaCarat ExpertAvenida Diagonal, 60108028 BarcelonaTel: (34) 9 3 363 2400 Fax: (34) 9 3 419 89 02E-mail: [email protected]

Publisal CaratEdf. MetroaldeCtra. Bilbao – Galdacano, 6448004 BilbaoTel: (34) 9 4 459 8600Fax: (34) 9 4 411 7880E-mail: [email protected]

SWEDENCarat SwedenSveavägen 24-26P.O. Box 7054S-103 86 StockholmTel: (46) 8 698 68 00 Fax: (46) 8 791 84 64

Carat SwedenÖstra Larmgatan 13P.O. Box 318, S-40125 GöteborgTel: (46) 31 743 05 00 Fax: (46) 31 743 05 01E-mail: [email protected]

Carat SwedenStortorget 11Box 4223, S-203 13 MalmöTel: (46) 40 664 6500 Fax: (46) 40 664 6501E-mail: [email protected]

MediekompetensSödra Hamngatan 53Göteborg (S-411 06)Tel: (46) 31 801 801 Fax: (46) 31 806 806E-mail: [email protected]

MediekompetensSveavägen 9P.O. Box 7783S-10396 StockholmTel: (46) 8 566 14650 Fax: (46) 8 566 14690E-mail: [email protected]

SWITZERLANDMicom CaratRotbuchstrasse 46CH - 8037 ZurichTel: (41) 1 365 2525 Fax: (41) 1 365 2526E-mail: [email protected]

TAIWANCarat United Media Services7/F., 7 Heng Yang RoadTaipei, Taiwan, R.O.C.Tel: (8862) 2388 7007 Fax: (8862) 2388 7008Email: [email protected]

TURKEYCarat TurkeyPark Maya Sitesi, Barklay 19A, Kat:5, D:14Ebulula Caddesi, Gul SokakAkatlar, 80630 – IstanbulTel: +90 (212) 283 67 57 (pbx) Fax: +90 (212) 283E-mail: [email protected]

Financial calendar24 May 2000 Annual General Meeting5 June 2000 Ex-dividend date9 June 2000 Last date for transfers30 June 2000 Final dividend payable12 September 2000 Announcement of interim resultsEarly October 2000 Interim dividend payableEarly March 2001 Preliminary announcement of results for the year ending 31 December 2000

Share priceFrom 1 January 1999 to 29 February 2000 (pence per ordinary share)

Total number of shares traded in 1999: 872 million Average monthly volume of shares traded in 1999: 72 million

RegistrarsThe Company’s share register is administered by Computershare Services PLC and all correspondence regarding ordinary shares should besent to them at the address shown on page 27.

Shareholder Information on the InternetComputershare Services PLC, the Company’s Registrar, has introduced a facility where shareholders are able to access details of theirshareholding in the Company over the Internet, subject to complying with an identity check. This service can be accessed on theirwebsite – http://www.computershare.com

Aegis Group plc’s websiteUpdated information, including recent press releases and the current market price of the Company’s ordinary shares, is available on theCompany’s website, http://www.aegisplc.com

Analysis of ordinary shareholdings at 31 December 1999

Size of holdings No. of holders % No. of shares %

1 – 1,000 1,188 41.11 466,522 0.041,001 – 10,000 898 31.07 3,183,874 0.3010,001 – 25,000 170 5.88 2,790,990 0.2625,001 – 50,000 99 3.42 3,672,990 0.3450,001 – 100,000 94 3.25 6,714,168 0.62100,001 – 250,000 139 4.81 22,530,846 2.09250,001 – 500,000 87 3.01 30,763,213 2.85500,001 – 1,000,000 75 2.60 54,304,253 5.031,00,001 – 10,000,000 115 3.98 349,000,570 32.3510,000,001 – 25,000,000 19 0.66 297,242,172 27.5525,000,001 + 6 0.21 308,179,277 28.57

2,890 100.00 1,078,848,875 100.00

> SHAREHOLDER INFORMATION AND FINANCIAL HISTORY

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Jan 99 Mar 00Mar 99 May 99 Jul 99 Nov 99Sep 99 Jan 00

> GROUP DIRECTORY CONTINUED

902 BroadwayNew YorkNew York 10010Tel: +1 (212) 460 8585 Fax: +1 (212) 353 1724E-mail: [email protected]

201 East Fifth StreetCincinnatiOhio 45202Tel: +1 (513) 241 4433 Fax: +1 (513) 732 8734E-mail: [email protected]

Market Facts of Canada, Ltd77 Bloor Street, WestToronto, Ontario M5S 3A4Tel: (416) 964 6262 Fax: (416) 964 5882E-mail: [email protected]

1200 McGill CollegeMontreal, Quebec H3B 4G7Tel: (514) 875 7570 Fax: (514) 875 1416E-mail: [email protected]

Royal City Centre610 – 6th StreetNew Westminster, B.C. V3L 3C2Tel: (604) 517 0070 Fax: (604) 517 0079E-mail: [email protected]

BAIGlobal, Inc.580 White Plains RoadTarrytown, New York 10591Tel: +1 (914) 332 5300 Fax: +1 (914) 631 8300E-mail: [email protected]

Marketing Strategy and Planning, Inc1775 Broadway, Suite 715New York 11570Tel: +1 (212) 373 7800 Fax: +1 (212) 307 9095E-mail: [email protected]

Strategy Research Corporation100 N.W. 37th AvenueMiami, Florida 33125Tel: +1 (305) 649 5400 Fax: +1 (305) 649 6312E-mail: [email protected]

Product Intelligence, Inc100 Merrick RoadRockville CentreNew York 11570Tel: +1 (516) 764 4156 Fax: +1 (516) 764 4158E-mail: [email protected]

Tandem Research Associates Inc200 Route 17 SouthMahwah, New Jersey 07430Tel: +1 (201) 529 5540 Fax: +1 (201) 529 2659E-mail: [email protected]

2 Executive Boulevard, Suite 300Suffern, New York 10901Tel: +1 (914) 369 4900 Fax: +1 (914) 369 1840E-mail: [email protected]

Motoresearch2520 Industrial RowTroy, MI 48084Tel: +1 (248) 288 8500 Fax: +1 (248) 288 8520E-mail: [email protected]

AMI GROUP DIRECTORY

HEAD OFFICEAsia Market Intelligence Group9/F Leighton Centre, 77 Leighton RoadCauseway Bay, Hong KongTel: (852) 2881 5388 Fax: (852) 2881 5918E-mail: [email protected]

AMI COUNTRY OFFICESChina/Hong Kong9/F Leighton Centre, 77 Leighton RoadCauseway Bay, Hong KongTel: (852) 2881 5388 Fax: (852) 2881 6521E-mail: [email protected]

China (regional office)9/F Leighton Centre, 77 Leighton RoadCauseway Bay, Hong KongTel: (852) 2881 5388 Fax: (852) 2881 6521E-mail: [email protected]

China (Beijing)Room 1108, Beijing Huapu International PlazaNo. 19 Chaoyangmenwai AveBeijing, PR China 100020Tel: (86) 10 6599 2070-83 Fax: (86) 10 6599 2068E-mail: [email protected]

China (Guangzhou)6F, Jinhe BuildingNo. 183, Xiao Bei RoadGuangzhou 510045, PR ChinaTel: (86) 20 8354 6210 Fax: (86) 20 8354 6240E-mail: [email protected]

China (Shanghai)11/F Unit 24-29, Pine City Tower777 Zhao Jia Bang RoadShanghai 200 032, PR ChinaTel: (86) 21 6443 3590 Fax: (86) 21 6443 3717E-mail: [email protected]

China (Wuhan)8/F Business Science Building2-1 Huiji RoadWuhan 430010, PR ChinaTel: (86) 27 8286 4793 Fax: (86) 21 8286 4396E-mail: [email protected]

Hong Kong9/F Leighton Centre, 77 Leighton RoadCauseway Bay, Hong KongTel: (852) 2881 5388 Fax: (852) 2881 5918E-mail: [email protected]

IndonesiaPlaza Chase Podium, 6th FloorJl. Jend. Sudirman Kav 21Jakarta 12920, IndonesiaTel: (62) 21 521 3420 Fax: (62) 21 521 3424E-mail: [email protected]

Korea705 West Wing Eunseok Building1-30 Yeonji-Dong, Chongro-KuSeoul, KoreaTel: (82) 2 741 3091 Fax: (82) 2 741 3096E-mail: [email protected]

MalaysiaUnit 801D, Level 8, Tower DUptown 5, 5 Jl. SS21/39, Damansara Uptown47400 Petaling Jaya, Selangor Darul EhsanMalaysiaTel: (60) 3 925 2244 Fax: (60) 3 925 9944E-mail: [email protected]

PhilippinesUnit 1704, West TowerPhilippine Stock Exchange CentreExchange Road, Ortigas Centre, Pasig CityMetro Manila, PhilippinesTel: (63) 2 638 5228 Fax: (63) 2 637 9233E-mail: [email protected]

Singapore175A Bencoolen Street#11-00 Burlington SquareSingapore 189650Tel: (65) 333 1511 Fax: (65) 333 0585E-mail: [email protected]

Taiwan10th and 11th Floors, Rooms A133 Min Sheng East Road, Sec. 3Taipei, TaiwanTel: (886) 2 2719 9056 Fax: (886) 2 2717 0346E-mail: [email protected]

Thailand10th Floor, Sethiwan Tower139 Pan Road, Silom, BangkokThailandTel: (66) 2 237 9262 Fax: (66) 2 237 9267E-mail: [email protected]


> FIVE YEAR SUMMARY

1999 1998 1997 1996 1995

Profit and loss:

Turnover £4,791.8m £4,130.0m £3,652.5m £3,452.5m £3,400.9m

Gross profit £281.7m £221.0m £191.8m £179.5m £165.2m

% Gross profit to turnover 5.9% 5.4% 5.3% 5.2% 4.8%

Operating profit (before amortisation of goodwill

and exceptional items) £66.6m £50.6m £44.4m £41.9m £36.7m

Profit before tax, amortisation of goodwill and

exceptional items £64.6m £51.1m £43.5m £41.0m £33.6m

Profit before tax £67.3m £50.6m £45.6m £39.6m £33.6m

Effective underlying tax rate 28.9% 28.4% 28.0% 27.0% 25.3%

Profit for the financial year £47.0m £35.5m £32.8m £28.0m £23.5m

Cash flow:

Operating cash flow £76.3m £57.0m £54.5m £42.7m £35.0m

Net (debt)/funds at the year end £(15.1)m £36.9m £(2.2)m £(7.6)m £(17.9)m

Balance sheet:

Goodwill on acquisitions £242.2m £17.0m – – –

Other fixed assets £33.5m £17.8m £15.6m £15.4m £16.6m

Net current liabilities £(64.7)m £(75.3)m £(93.3)m £(79.6)m £(70.4)m

Creditors: amounts falling due after more than one year £(110.0)m £(21.1)m £(27.8)m £(28.5)m £(42.5)m

Provisions for liabilities and charges – – £(0.2)m £(2.3)m £(7.0)m

Net assets/(liabilities) £101.0m £(61.6)m £(105.7)m £(95.0)m £(103.3)m

Shareholder returns:

Basic earnings per share 4.6p 4.0p 3.8p 3.3p 2.8p

Diluted earnings per share 4.4p 3.7p 3.4p* 3.0p* 2.6p*

Ordinary dividend rate per share 1.0p 0.85p 0.7p 0.6p –

*As restated under Financial Reporting Standard 14

Designed and produced by Merchant with NavyBlue.Printed by Fulmar Colour Printing Company Limited.

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