Chime communications plc
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Chime Communications plc. 2011 Interim Results For the Six Months Ended 30 th June 2011 23 rd August 2011. Agenda. Highlights Operational Review Financial Review Key Performance Indicators Growth Strategy Outlook . Financial Highlights.

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Chime communications plc

Chime Communications plc

2011 Interim Results

For the Six Months Ended 30th June 2011

23rd August 2011


Agenda

Agenda

Highlights

Operational Review

Financial Review

Key Performance Indicators

Growth Strategy

Outlook


Financial highlights

Financial Highlights

  • Operating income up 10% - organic growth of 5%

  • Operating profit up 13% - organic growth of 5%

  • Margin increased to 18.5%

  • Earnings per share growth of 9%

  • Interim dividend per share increased by 13%

  • Net cash of £6.9 million


Corporate highlights

Corporate Highlights

  • Acquisition of ICON, an experiential sports marketing business

  • Acquisition of Golden Goal, a sports marketing business in Brazil

  • Acquisition of LEC, a healthcare marketing business

  • Acquisition of Reynolds Mackenzie, a healthcare public relations business

  • Continued International expansion

  • Healthcare start-up progressing well


Five year trading history

Five Year Trading History


Operational highlights

Operational Highlights

  • Strong growth in Advertising and Marketing Services and Sports Marketing Divisions

  • Public Relations flat because of income reduction from a large client

  • Public Relations Division remains No.1 in the UK

  • Research Division’s marketplace remains difficult

  • International work continues at 50% of total income

  • Acquisitions integrating well and already making significant contribution

  • Sports Marketing Division remains No.1 in Sponsorship League Table

  • VCCP now showing return on investments made in previous year

  • Digital expertise continues to grow

  • We continue to examine acquisitions and start-up opportunities in disciplines and geographies in which we do not currently operate or are under-represented


Operating profit analysis

Operating Profit Analysis


Operational review

Operational Review


Public relations division

Public Relations Division

  • Reduction in spend from main US government contract

  • Good growth in City and financial, corporate, corporate social responsibility, consumer and technology

  • Currently eight overseas offices and further offices planned

  • Excellent new business performance so far in 2011


Advertising and marketing services division

Advertising and Marketing Services Division

  • VCCP Group has performed very well with strong growth from main agency, Health, Germany, SFW, Digital, Search and SomeOne

  • New healthcare business, OPEN Health, a full service Healthcare communications consultancy, will start to make a profit contribution in the second half year

  • Teamspirit continued to grow strongly in specialist financial and professional services communications

  • Further margin improvement in this division expected

  • Strong first half performance expected to continue in to second half


Sports marketing division

Sports Marketing Division

  • Strong performance from Essentially businesses including rights sales, player management, sponsorship and events

  • Fast Track slightly behind expectations, but action being taken

  • Acquisition of ICON and Golden Goal going very well

  • Brazil should be a key growth driver over next five years

  • Second half expected to be stronger than first half

  • Key new account wins


Research division

Research Division

  • Flat performance in first half of 2011

  • Difficult marketplace

  • Quantitative research has maintained its performance

  • Qualitative research improving and expected to be profitable during second half

  • Tree (data analytics) exceeded expectations

  • Second half expected to be better than first half


Segmental analysis

Segmental Analysis


Diversified strategy

Diversified Strategy

Operating income

By division

By geography

(5%)

5%

24%

(21%)

50%

(46%)

42%

50%

(48%)

(54%)

29%

(26%)


Industry sectors

Industry Sectors


Chime communications plc

Financial Review


Profit before tax

Profit Before Tax


Cash flow

Cash Flow


Balance sheet

Balance Sheet


Cash position

Cash Position

  • Continue to be cautious

  • Net cash at 30th June 2011 of £6.9 million (30th June 2010: £5.5million – 31st December 2010: £6.9 million)

  • £32 million facility with RBS until July 2013

  • £7.2 million of cash outside the RBS facility – overseas and businesses with minority interest

  • Maximum use of facility in the first half of 2011 £23 million

  • Interest rate of 1.3% above LIBOR (£2 million at 2% above LIBOR)

  • No further cash deferred considerations payable in 2011

  • Well within bank covenants

    • Net debt to EBITDA less than 2.0 times to 30 June 2011 and 1.75 times thereafter

    • Interest cover of more than 4.5 times


Deferred considerations at 30 th june 2011

Deferred Considerations at 30th June 2011

Note: The split between cash and shares can vary at Chime’s discretion but the above reflects the current expectation


Chime communications plc

Key Performance Indicators


Income from shared clients

Income from Shared Clients

70%

65%

66%

66%

62%

2011

first half

2010

2007

2008

2009

Continued emphasis on cross referral of clients

Income from shared clients in first half of 2010 was 60%

Value of shared clients in first half of 2011 increased by 19%


Average fee per client

Average Fee per Client

£64,000

£58,000

£53,000

£51,000

2008

first half

2009

first half

2010

first half

2011

first half

Income from top 30 clients increased by 11%

Clients paying more than £50,000 in half year increased from 212 to 233


Operating profit margin

2011

first half

2010

2007

2008

2009

Operating Profit Margin

18.5%

18.3%

16.4%

16.3%

16.3%

Public Relations, Advertising and Marketing Services and Sports Marketing all improving

Full year objective to maintain margin


International income

International Income

50%

51%

46%

37%

34%

2010

2007

2008

2009

2011

first half

International marketplace and particularly emerging markets have remained strong

Geopolitical work under pressure

Overseas offices across the Group – now 28

Continued emphasis on international work


Chime communications plc

Growth Strategy


Growth strategy

Growth Strategy

  • Growth will come partly through acquisition and partly through organic growth

  • Concentrate on diversified strategy and invest in sectors in which we see above average growth potential

  • Further develop international offices in markets with highest growth potential.

  • Continue to grow our international income above 50%

  • Chime Ventures will continue to develop new services

  • Concentrate on developing our ‘modern’ approach to global reputation management


Chime communications plc

Outlook


Outlook

Outlook

  • Global economic and political outlook is uncertain with lots of change. Many challenges and opportunities exist for short term and long term growth:

    • Sports marketing around the world is expected to continue to grow

    • Communications opportunities should arise out of the Arab Spring

    • Capitalise on our communications expertise in areas of conflict and thus compensate for the loss of revenue from one major client

    • Further expand our digital capabilities as the market place grows

    • Capitalise on strong growth in emerging markets

  • We will also continue to control costs, continue to make earnings enhancing acquisitions and remain cautious about debt


Chime communications plc

Appendices


Chime group offerings

Chime Group Offerings


Chime communications plc

Middle East & Africa

Abu Dhabi

Manama, Bahrain

Bloemfontein, South Africa

Cape Town, South Africa

Doha, Qatar

Dubai

Nairobi, Kenya

Asia

Hong Kong

Kobe, Japan

Singapore

Europe

Berlin, Germany

Brussels, Belgium

France

Hamburg, Germany

Madrid, Spain

Munich, Germany

Prague, Czech Republic

Weg, Germany

Australasia

Adelaide

Auckland, NZ

Dunedin, NZ

Melbourne

North & South America

Boston, USA

Brazil

New York, USA

Ontario, Canada

Tampa, Florida USA

Washington DC, USA

International Offices

Number of overseas offices

2009: 20

2010: 24

2011: 28


Some of our leading clients

Some of Our Leading Clients


Chime communications plc

For further information please contact:

Chris Satterthwaite or Mark Smith

on 020 7861 8515 or go to www.chime.plc.uk


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