Transcript Slide 1

Chime Communications plc
2010 Preliminary Results
For the Year Ended 31st December 2010
9th March 2011
Agenda
Highlights
Operational Review
Financial Review
Key Performance Indicators
Our Growth Plan
Outlook
2
Financial Highlights
•
Operating income up 21% - organic growth of 7%
•
Operating profit up 36% - organic growth of 21%
•
Margin increased to 18.3%
•
Adjusted earnings per share growth of 13%
•
Dividend per share growth of 19%
•
Net cash of £6.9 million
3
Five Year Highlights
•
Revenue more than doubled
•
Pretax profits risen nearly fourfold
•
Margin risen from 13% to 18%
•
International income risen from 30% of Group revenues to over 50%
•
24 offices overseas
•
Expanded into new areas such as sports marketing and healthcare
•
Enhanced our digital capabilities across the group without acquisitions
4
Five Year Trading History
£ millions
2006
2007
2008
2009
2010
Operating Income
77.9
96.5
112.1
123.1
149.3
Costs
65.7
80.8
94.0
103.0
121.9
Operating Profit/(Loss)
12.2
15.7
18.1
20.1
27.4
Profit/(Loss) Before Tax
11.0
13.8
16.3
18.8
26.5
Operating Profit Margin
15.7%
16.3%
16.3%
16.4%
18.3%
Earnings per Share
15.40p
17.15p
20.19p
22.46p
25.49p
Dividend per Share
2.90p
3.50p
4.72p
5.10p
6.05p
5
Operational Highlights
•
Strong growth in all four divisions
•
International work up to over 50% of total income
•
Integrated our international sports marketing business
•
Public Relations Division No. 1 in the UK
•
Sports Marketing Division No. 1 in Sponsorship League Table
•
VCCP continued to grow European capability
•
Strong digital and social capability across the Group without a single digital aquisition
•
Research returned to profit
•
Further international expansion – 24 overseas offices
•
Continued expansion through acquisitions and start-ups
6
Operating Profit Analysis
£m
2010
2009
Growth %
Organic
Growth %
Operating income
149.3
123.1
21
7
Costs
121.9
103.0
18
5
27.4
20.1
36
21
18.3%
16.4%
26.5
18.8
40
25.49p
22.46p
13
6.05p
5.10p
19
Operating profit
Operating profit margin
Profit before tax
Earnings per share
Total dividend per share
7
Operational Review
8
Segmental Analysis
Operating Income
Operating Profit
Operating
Margin
2010
2009
Growth %
Organic
Growth %
2010
2009
Growth %
Organic
Growth %
2010
2009
Public Relations
72.8
68.2
+7%
-
17.5
14.0
+25%
+19%
24.1%
20.5%
Advertising and
Marketing Services
39.7
31.9
+25%
+25%
4.2
3.9
+7%
+7%
10.6%
12.3%
Sports Marketing
29.5
17.2
+71%
+11%
5.6
3.5
+57%
+1%
18.9%
20.6%
7.3
5.8
+26%
-12%
0.8
(0.2)
-
-
10.3%
-
-
-
-
-
(0.7)
(1.1)
+35%
+35%
-
-
149.3
123.1
+21%
+7%
27.4
20.1
+36%
+21%
18.3%
16.4%
Research
Central Costs
Total
9
10
Public Relations Division
•
Continuing strong contribution from our geopolitical work
•
All other disciplines showed good growth, particularly city and financial, corporate,
public affairs, corporate social responsibility, property and technology
•
Our eight overseas offices in Germany, the Middle East, Singapore and the US all
performed ahead of our expectations
•
Proportion of international client work continues to increase
•
First quarter of 2011 has started particularly well for consumer, financial, corporate,
technology and international
11
12
Advertising and Marketing Services Division
•
VCCP has continued to grow its creative reputation and increase income but margin
remains below the group average as investment in new services (especially digital and
international) also grew – 2011 focus will be on margin improvement
•
Strong growth from offices in Berlin and Prague
•
Specialist offerings in health, search and direct marketing all grown well
•
Teamspirit continued to grow strongly in specialist financial and professional services
communications
•
First quarter of 2011 is expected to be ahead of 2010
13
14
Sports Marketing Division
•
Integration of Fast Track and Essentially as a full service sports marketing business,
under single management structure, is complete. One building from March 2011
•
Fast Track Hong Kong commenced trading in November 2010 and already profitable
•
Acquisition of pmplegacy completed and major client win
•
Essentially Sportseen (rights sales) had a very good year
•
Very strong start to 2011 particularly in rights sales and margin already improving
15
16
Research Division
•
New team performing well and division returned to profitability
•
Facts International (quantitative research) more than doubled profits
•
OLR (qualitative research) completely restructured and expected to become profitable
by end of first quarter
•
Tree (data analytics) exceeded expectations
•
Profitable start to 2011 with strong new business pipeline
17
Diversified Strategy
By division
Operating income
By geography
5% (5%)
20%
(14%)
49%
(55%)
51%
(46%)
49%
(54%)
26%
(26%)
Public Relations
Advertising and Marketing Services
Sports Marketing
Research
UK
International
18
Industry Sectors
Chime Income by Sector
32%
30%
2010
28%
26%
2009
24%
22%
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Govt /
Public
Bodies
TMT
Leisure
Financial
Services
B2B
FMCG
Energy & Transport, Healthcare Property Retail &
Utilities Travel &
Services
Tourism
NPO
Individuals Automotive Education
& Training
Misc
19
Financial Review
20
Profit Before Tax
£m
Underlying trading profit
Cost of share-based incentive schemes
2010
+ 30%
28.6
2009
+ 13%
22.0
2008
+ 16%
19.5
2007
+ 34%
16.9
(1.2)
(1.5)
(1.3)
(1.0)
-
(0.4)
-
-
27.4
20.1
18.2
15.9
0.2
-
0.2
(0.1)
Finance cost of deferred consideration
(0.7)
(0.9)
(1.0)
(1.2)
Interest
(0.4)
(0.4)
(1.0)
(0.7)
Adjusted profit before tax
26.5
18.8
16.4
13.9
Write down of investments
-
(1.0)
-
-
Profit on partial disposal of subsidiaries and associates
-
1.3
-
-
Amortisation of intangibles and impairment of goodwill
(3.0)
(0.3)
(0.1)
(0.1)
Cost of acquisitions
(2.3)
(0.2)
-
-
Profit before tax
21.2
18.6
16.3
13.8
Tax
(6.5)
(5.9)
(5.2)
(4.4)
30.6%
31.6%
31.6%
32.0%
Onerous lease provision
Operating profit
Share of results of associates
Effective tax rate
21
Cash Flow
£m
2010
2009
2008
Profit Before Tax
26.5
18.8
16.3
Associates, Discontinued Operations and Profit on Disposal
(0.2)
-
(0.2)
IRFS Adjustments
1.9
2.4
2.3
Depreciation and Amortisation
2.1
2.4
2.0
Capital Expenditure
(2.2)
(1.5)
(2.1)
Working Capital
(5.6)
(7.2)
6.3
Cash Generated from Trading
22.5
14.9
24.6
Cash Conversion
85%
79%
151%
Taxation
(6.8)
(5.6)
(4.9)
Acquisitions, Disposals & Deferred Considerations
(9.6)
(6.8)
(11.0)
Costs of Acquisitions
(1.4)
(0.2)
-
Dividends
(3.8)
(2.7)
(2.2)
Purchase of Own Shares
(3.1)
(0.9)
(0.6)
4.3
-
-
-
(0.2)
(0.4)
(Decrease)/Increase in Cash
2.1
(1.5)
5.5
Closing Net Cash
6.9
4.8
6.3
Share Placing
Other
22
Balance Sheet
£m
2010
2009
Intangibles
153.8
150.2
Fixed Assets and Investments
4.9
5.2
Net Deferred Tax
0.7
1.4
70.3
50.2
Net (Debt)/Cash
6.9
4.8
Other Liabilities
(83.2)
(70.9)
(3.3)
(4.2)
(13.9)
(19.2)
Provisions
(0.9)
(0.7)
Net Assets
135.3
116.8
Current Assets (exc.Cash)
Current Tax
Deferred Consideration and Minority Interests
23
Strong Cash Position
•
Net cash at 31st December 2010 of £6.9 million (2009: £4.8 million)
•
£32 million facility with RBS until July 2013
•
£9.2 million of cash outside the RBS facility – overseas and businesses with minority interest
•
Maximum use of facility in 2010 - £22 million
•
Interest rate of 1.3% above LIBOR (£2 million at 2% above LIBOR)
•
Cash deferred consideration payable in 2011 of £0.8 million
•
Well within bank covenants
– Net debt to EBITDA less than 2.0 times
– Interest cover of more than 4.5 times
24
Deferred Considerations at 31st December 2010
MAXIMUM PAYMENT
£m
ESTIMATED
Cash
Shares
Total
Cash
Shares
Total
2011
1.0
0.9
1.9
0.8
0.6
1.4
2012
3.4
1.1
4.5
1.9
0.1
2.0
2013
10.1
10.0
20.1
4.9
4.9
9.8
Total
14.5
12.0
26.5
7.6
5.6
13.2
Note: The split between cash and shares can vary at Chime’s discretion but
the above reflects the current expectation.
25
Key Performance Indicators
26
Income from Shared Clients
66%
70%
66%
62%
2007
2008
2009
2010
•
Continued emphasis on cross referral of clients
•
Number of shared clients increased (20%), value increased
(15%). Essentially figures are included from 2010.
27
Average Fee per Client
£81,000
£100,000
£89,000
£70,000
2007
2008
2009
2010
•
More large clients; less smaller clients
•
Income from top 30 clients increased by 5%
•
Clients paying more than £100,000 per annum increased from 150 to 205
28
Operating Profit Margin
18.3%
16.3%
16.3%
16.4%
2007
2008
2009
2010
•
Strong cost control in Public Relations Division in 2010
•
2011 objective to maintain margin
29
International Income
51%
46%
37%
34%
2007
•
•
•
•
2008
2009
2010
International marketplace and particularly emerging markets have remained
strong
Geopolitical work remained strong in 2010
Overseas offices – now 24
Continued emphasis on international work in 2011
30
Our Growth Plan
31
Objectives
•
More than double profits within the next four years
•
Maintain a high margin with careful cost control
•
Remain debt free
32
Growth through ‘Modern’ Communications Strategy
•
Concentrate on diversified strategy and invest both organically and through acquisitions
in sectors in which we see above average growth, eg. public relations, sports marketing,
healthcare and digital
•
Further develop international offices in markets with highest growth potential. Hong
Kong now completed
•
Continue to grow our international income above 50%
•
Continue new service development to fuel organic growth, eg. international public affairs
and healthcare
•
Launch of Chime Ventures to develop further new services
•
Concentrate on developing our ‘modern’ approach to global reputation management
33
Outlook
34
Outlook
Remain cautious, as for the last three or four years, about the UK and global economies
•
Main drivers for organic growth expected to be:
–
–
–
–
–
–
–
Sports Marketing
VCCP Group margin improvement
Financial public relations
Digital and social communications
Research
Healthcare with the launch of Open Health
International development
•
Continue to control costs
•
Expand our range of services and geographical reach through acquisitions and start-up.
Acquisition only on an earnings enhancing basis
•
Remain cautious about debt
35
Appendices
36
Organic Income Growth - 2010
Public Relations
Advertising and Marketing
Services
Sports Marketing
25.0%
11.0%
10.4%
9.0%
7.0%
4.6%
0%
Research
6.2%
3%
0%
-12%
-17.0%
Chime 2010
Chime 2009
UK Marketplace Growth 2010
Source: Group M
37
Chime Group Offerings
Advertising & Marketing Services
Public Relations
Research
Sports Marketing
Branding & Design
Design & Implementation
Digital/Online
Direct Marketing &
Consumer Loyalty
Healthcare Advertising & Marketing
Integrated Advertising
Media Planning & Buying
Natural & Paid Search
Marketing
Recruitment Advertising
Social Communications
Business to Business
Consumer
Corporate Design & Literature
Corporate Communications
Corporate Responsibility
Crisis & Issues Management
Digital & Search
Financial Communications
Internal Communications
Internal Relations
Public Affairs
Public Sector
Reputation Management
Property
Advertising Research
B2B Research
Brand Audits
Consumer Research
Corporate Responsibility Research
Data Processing & Modelling
Database Building
Econometrics
Ethnographic Research
Face to Face Research
Focus Group
International Research
New Product Development
Research
Online Research
Product Testing Research
Qualitative & Quantitative Research
Segmentation Research
Sponsorship Consultancy &
Planning
Sports Rights Property Negotiations
Rights Management
Sponsorship Activation
Sports and Consumer PR
Event Creation
Event Management
Experiential Event Delivery
Hospitality Management
Athlete and Celebrity Management
Commercial Strategy Development
Rights Marketing
Reputation Management
Corporate Hospitality
38
Middle East& Africa
Abu Dhabi
International Offices
Manama, Bahrain
Bloemfontein, South Africa
Cape Town, South Africa
Number of overseas offices
2009: 20
2010: 24
2011: 25
Doha, Qatar
Dubai
Nairobi, Kenya
Asia
Hong Kong
Kobe, Japan
Europe
Singapore
Berlin, Germany
Brussels,
Belgium
Montpellier,
France
Hamburg,
Germany
Madrid, Spain
Munich,
Germany
Prague, Czech
Republic
Australasia
America
Boston
New York
Tampa, Florida
Washington DC
Adelaide
Auckland, NZ
Dunedin, NZ
Melbourne
39
Some of Our Leading Clients
40
For further information please contact:
Chris Satterthwaite or Mark Smith
on 020 7861 8515 or go to www.chime.plc.uk