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Chime Communications plc

Chime Communications plc 2009 Interim Results For the Six Months Ended 30 th June 2009 25 th August 2009 Agenda Overview and highlights The marketplace Operational review Financial review Review of strategic progress Summary and outlook

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Chime Communications plc

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  1. Chime Communications plc 2009 Interim Results For the Six Months Ended 30th June 2009 25th August 2009

  2. Agenda Overview and highlights The marketplace Operational review Financial review Review of strategic progress Summary and outlook

  3. Overview • Approach to 2009 • Exploit diversified model • Continue investment in international and digital growth sectors • Control costs in difficult sectors • Generate cash • Strong first half in difficult marketplace • Operating income up 7% and operating profit up 3% • Margin 16.1% compared to full year 2008 of 16.2% • Excellent performance from Public Relations Division • Advertising and Marketing Services Division slightly behind 2008 due mainly to phasing of income • Research Division disappointing but action being taken • Net cash of £18.1 million (31st December 2008 - £6.3 million) • Dividend increased by 4%

  4. Highlights of the Six Months • 26 awards won across the Group in 2009 to date – most notably Resonate: Gold winner of Guardian Media Award and Gold Cannes Lion. Good Relations: Gold Cannes Lion for best integrated campaign for BPEX. VCCP: Silver and Gold at British Television Advertising Awards for Home Office binge drinking and Silver Creative Circle Award. Teamspirit: 2 Golds, 2 Silvers, 2 Bronzes at Money Marketing Awards • Emirates’ sponsorship of World Twenty 20 – Fast Track • HSBC’s sponsorship of British and Irish Lions Tour – Fast Track • Gabon election campaign – Bell Pottinger • Ukraine election campaign – Bell Pottinger • Kazakhstan online promotion – Bell Pottinger • Tunisia tourism promotion – Bell Pottinger • VCCP wins Merck Sharp and Dohme • VCCP wins Muller Rice • Bell Pottinger wins Bupa • Chime wins another Big Tick • Compare the Meerkat increases traffic by 83% • VCCP wins npower

  5. Highlights of the Six Months • VCCP wins Southern Trains • VCCP Search enters the top 15 search companies in the UK • The O2 becomes the world’s most successful entertainment venue • Bell Pottinger wins Daiichi Sankyo Europe • Bell Pottinger wins National Grid • Bell Pottinger wins National Express • Caucus World wins the Department of Health’s Adult Autism Strategy • Fast Track brings Usain Bolt to the UK for Aviva • Fast Track wins BP Olympic strategy • Fast Track wins the Lawn Tennis Association • Bell Pottinger wins RHJ bid for Opel • Bell Pottinger represents Heritage Oil in $6 billion merger • Acquisition of Ptarmigan in Leeds whose clients include Camelot and Alibaba • Bell Pottinger wins Duke Street • Bell Pottinger retains Hewlett Packard • Bell Pottinger retains Qatar Foundation on two year contract • VCCP wins Emirates UK

  6. Operating Profit Analysis

  7. Operational Review

  8. Segmental Analysis

  9. Public Relations Division • Extremely good performance and good cost control • Margin improved to 21% • Proportion of international work continues to increase • Less good performance from public affairs, financial public relations and technology public relations • Strong performance from geopolitical, corporate and social responsibility, the Middle East and consumer

  10. Advertising and Marketing Services Division • Digital and Search activities continue to grow very strongly (up over 50% in operating profit) • VCCP winning streak: Merck Sharp and Dohme, Muller Rice and Muller Corners, npower, Southern Trains and Emirates UK • Income in VCCP and Fast Track weighted towards the second half but costs remain constant • International work growing, for example Germany and Middle East • Expected to show operating profit growth for full year

  11. Research Division • Disappointing performance at Opinion Leader in weak market • Facts International – new contracts will ensure very strong second half • New digital platform – Caucus World – started to win clients but not yet profitable • Second half expected to return to profit • New management and repositioning planned

  12. Diversified Strategy Operating income By division By geography (6%) (37%) (39%) (55%) (63%) Bracketed figures are full year 2008

  13. Organic Income Growth – 2009 first half

  14. Industry Sectors

  15. Financial Review

  16. Profit Before Tax

  17. Cash Flow

  18. Constant Currency Comparison Trading Profits

  19. Strong Cash Position • Current net cash of £18.1 million • £32 million facility to July 2013 • Interest rate of 1.3% above LIBOR • Well within bank covenants which are : • Ratio of net debt to EBITDA is to be less than 2.0 times • Interest cover to be greater than 4.5 times

  20. Deferred Considerations Maximum Payments Notes: 1. Fast Track represents £25 million of the above and Corporate Citizenship £4.2 million 2. At Chime’s option, share based payments can be paid in cash

  21. Balance Sheet

  22. Review of Strategic Progress

  23. Key Performance Indicators

  24. Our Strategic Plan • Concentrate on areas with potential for long term growth • Target double digit growth in operating income and profits • Target double digit growth in earnings per share • Increase the number and value of shared clients • Improve the average fee per client • Grow our international income • Maintain strong cost control

  25. Outlook

  26. Outlook • The outlook is good although economic uncertainty hangs over the market • Our business model is becoming more attractive and more relevant to clients • Reputation management is now more important than ever • Our digital work and expertise is growing and expanding and our international model is becoming more competitive • It appears that this year being a one stop shop, integrated and diversified, channel neutral and low cost is the new black • Big is not as beautiful or as safe as it once was • As marketing expenditure continues to decline, internet solutions become more effective. We think this is a permanent change • Our small cost base compared to the big four gives us a real competitive advantage • The new business pipeline is strong, a large proportion of second half operating income is committed (nearly 90%), our costs are under control, our cash management is strong and we have the opportunity to make some strategic acquisitions to develop our business ready for a possible upturn at some point in 2010 • We have had a good first half and by delivering the highest pretax profit in our history we have outperformed the market and our competition • We remain cautiously optimistic for the full year

  27. Appendices

  28. Appendix - Golden Decade of British Sport

  29. Some of Our Leading Clients

  30. Five Year Trading History * Restated for share consolidation

  31. 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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