Transcript Slide 1

Chime Communications plc
2009 Interim Results
For the Six Months Ended 30th June 2009
25th August 2009
Agenda
Overview and highlights
The marketplace
Operational review
Financial review
Review of strategic progress
Summary and outlook
2
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%
3
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
4
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
5
Operating Profit Analysis
£m
2009
2008
Growth
All Organic
Operating income
58.4
54.5
7%
Costs
49.0
45.4
8%
9.4
9.1
3%
16.1%
16.8%
8.5
8.2
+4%
10.32p
9.86p
+5%
1.60p
1.54p
+4%
Operating profit
Operating profit margin
Profit before tax
Diluted earnings per share
Dividend per share
6
Operational Review
7
Segmental Analysis
Operating Income
Operating Profit
2009
2008
%
growth
2009
2008
Public Relations
32.0
29.3
+10%
6.7
Advertising and Marketing Services
23.4
21.1
+10%
3.0
4.1
58.4
Research
Central costs
Total
Operating Margin
%
growth
2009
2008
5.3
+25%
20.9%
18.4%
3.4
3.6
-4%
14.8%
17.0%
-26%
0
0.5
-105%
-
11.3%
-
-
(0.7)
(0.3)
-
-
-
54.5
+7%
9.4
9.1
+3%
16.1%
16.8%
8
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
9
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
10
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
11
Diversified Strategy
Operating income
By division
By geography
5% (6%)
45%
40%
(39%)
55%
(55%)
(37%)
55%
(63%)
Public Relations
Advertising and Marketing Services
Research
UK
International
Bracketed figures are full year 2008
12
Organic Income Growth – 2009 first half
10.4%
9.5%
-0.1%
Public Relations
Advertising and Marketing
Services
Research
-5.0%
-13.9%
-26.4%
Chime First Half
UK Full Year Market Place Growth - Source Group M
13
P
B
12.0%
10.0%
10.0%
6.0%
4.0%
2.0%
.
12.0%
M
i sM
c .i s
c
14.0%
Ed
u cE
adt u
i oca
n ti
&on
Tr&
aiT
n ira
ngin
in
g
14.0%
ce
s
Au
t oA
mu
toot
imv
eot
iv
e
16.0%
vSi
cee
rvs
i
16.0%
et
aRi
l e&
taS
i le
&r
18.0%
R
18.0%
In
di
vi
Indu
di a
vi l s
du
al
s
20.0%
PO
N
PO
20.0%
N
22.0%
B2
B
24.0%
22.0%
FM
C
26.0%
24.0%
Le
is
ea
ur
l th
e
ca
re
H
ea
l th
ca
re
B2
B
28.0%
26.0%
H
30.0%
28.0%
B
od
ie
s
8.0%
ub
li c
ub
li c
ov
t/
P
30.0%
od
ie T
s M
Fi
T
na
nc
ia
lS
TM
er
Fi
T
na v ic
es
nc
ia
lS
er
v
Leice
iss
ur
e
G
ov
t/
32.0%
G
En
er
FM
gy
Tr
C
an
G
En & U
sp
e r ti l
o
i
r
gy ti
Tr t,
e
an T
& s
sp rav
U
ti l
or e
i ti
l
t, &
es
Tr T
av o
e l uri
& sm
To
ur
is
m
Pr
op
e
Prrty
op
er
ty
G
Industry Sectors
CHIME REVENUE BY SECTOR
CHIME REVENUE BY SECTOR
32.0%
2009
H1H1
2009
2008
2008
H1H1
8.0%
6.0%
4.0%
2.0%
0.0%
0.0%
14
Financial Review
15
Profit Before Tax
£m
Underlying Trading Profit
2009
First Half
+ 8%
10.4
2008
First Half
+ 23%
9.6
2008
Full Year
+ 16%
19.4
2007
Full Year
+ 32%
16.8
Costs of Share Based Incentive Schemes
(0.6)
(0.5)
(1.3)
(1.0)
Finance Cost of Deferred Considerations
(0.4)
(0.6)
(1.0)
(1.2)
-
0.1
0.2
(0.1)
Write Down of Investments
(0.3)
-
-
-
Onerous Lease Provision
(0.4)
-
-
-
Interest
(0.2)
(0.4)
(1.0)
(0.7)
8.5
8.2
16.3
13.8
2.7
_____
31.6%
2.5
_____
31%
5.1
_____
31.6%
4.4
_____
32.0%
Associates
Profit Before Tax
Taxation
Effective Tax Rate
16
Cash Flow
£m
First Half
2009
First Half
2008
Profit Before Tax
8.5
8.1
Associates & Discontinued Operations
0.2
(0.1)
IRFS Adjustments
1.0
1.1
Depreciation and Amortisation
1.2
1.0
(0.6)
(0.9)
7.3
(8.2)
17.6
1.0
206%
12%
Taxation
(3.0)
(2.2)
Acquisitions, Disposals & Deferred Considerations
(0.3)
(10.7)
Dividends
(1.8)
(1.4)
Purchase of Own Shares
(0.7)
(0.5)
-
(0.3)
Increase/(Decrease) in cash
11.8
(14.1)
Closing net cash/(debt)
18.1
(13.2)
Capital Expenditure
Working Capital
Cash generated from trading
Cash Conversion
Other
17
Constant Currency Comparison
Trading Profits
£000s
2009
At 2008 Rate
Actual
2009
Actual
2008
Public Relations
6,465
6,710
5,380
Advertising and Marketing
Services
3,425
3,446
3,589
Research
(23)
(23)
460
Central
(706)
(706)
(302)
9,161
9,427
9,127
18
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
19
Deferred Considerations
Maximum Payments
£m
Notes: 1.
2.
Cash
Shares
Total
2009
2010
2011
2012
2013
2014
3.1
1.2
4.1
8.2
1.9
6.8
0.9
1.1
8.2
-
9.9
2.1
5.2
16.4
1.9
Total
18.5
17.0
35.5
Fast Track represents £25 million of the above and Corporate Citizenship £4.2 million
At Chime’s option, share based payments can be paid in cash
20
Balance Sheet
£m
30 June
2009
30 June
2008
31 December
2008
113.4
111.6
113.9
Fixed Assets and Investments
5.7
6.3
6.5
Net Deferred Tax
0.8
1.2
0.8
Current Assets (exc.Cash)
45.4
53.8
49.7
Net (Debt)/Cash
18.1
(13.2)
6.3
Other Liabilities
(72.4)
(59.1)
(69.1)
(2.4)
(2.9)
(2.7)
(16.8)
(13.0)
(16.6)
Provisions
(0.5)
(0.5)
(0.3)
Net Assets
91.3
84.2
88.5
Intangibles
Current Tax
Deferred Consideration
21
Review of Strategic Progress
22
Key Performance Indicators
2009 First Half
2008 First Half
Shared Clients
- Number
- % of total income
169
68%
159
56%
Average fee per client
£64,000
£51,000
Operating profit margin
16.1%
16.8% (FY–16.2%)
£26.5 million
£18.5 million
International income
23
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
24
Outlook
25
Outlook
•
•
•
•
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•
•
•
•
•
•
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
26
Appendices
27
Appendix - Golden Decade of British Sport
2010
Ryder Cup, Celtic Manor
2011
UEFA European Champions League Final, Wembley
2012
Olympic and Paralympic Games
2013
Rugby League World Cup
2014
Commonwealth Games, Glasgow
2015
Rugby Union World Cup
(2018
FIFA World Cup?)
2019
Cricket World Cup
28
Some of Our Leading Clients
29
Five Year Trading History
£000’s
2004
2005
2006
2007
2008
2009
First Half
Operating Income
52,076
63,032
77,921
96,509
112,090
58,373
Costs
44,948
54,696
65,686
80,764
93,980
48,946
Operating Profit/(Loss)
7,128
8,336
12,235
15,745
18,110
9,427
Profit/(Loss) Before Tax
6,424
7,325
11,034
13,762
16,339
8,521
Operating Profit Margin
13.7%
13.2%
15.7%
16.3%
16.2%
16.1%
Earnings per Share*
11.0p
12.45p
15.40p
17.15p
19.87p
10.44p
Dividend per Share*
1.50p
2.40p
2.90p
3.50p
4.72p
1.60p
* Restated for share consolidation
30
For further information please contact:
Chris Satterthwaite or Mark Smith
on 020 7861 8515 or go to www.chime.plc.uk