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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 2011 Interim Results For the Six Months Ended 30th June 2011 23rd August 2011
Agenda Highlights Operational Review Financial Review Key Performance Indicators Growth Strategy Outlook
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 • 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
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
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 • 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 • 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 • 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
Diversified Strategy Operating income By division By geography (5%) 5% 24% (21%) 50% (46%) 42% 50% (48%) (54%) 29% (26%)
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 30th June 2011 Note: The split between cash and shares can vary at Chime’s discretion but the above reflects the current expectation
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 £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
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 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
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
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
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
For further information please contact: Chris Satterthwaite or Mark Smith on 020 7861 8515 or go to www.chime.plc.uk