Announcement of Audited Preliminary Results for the Year Ended 31st December 2012

Wednesday, 06 March 2013

Chime Communications plc, the international communications and sports marketing group, today announces its preliminary results for the year ended 31st December 2012.

Operational Highlights

  • Strong growth in Sport and Entertainment, Healthcare and Insight and Engagement
  • Successful completion of Olympic and Paralympic contracts
  • Sport & Entertainment operating profit increased by 105%
  • Substantial investment in new digital products in VCCP, CIE and Good Relations.
  • Healthcare now established as the fifth division of Chime, operating profit increased to £2.2 million from £0.2 million
  • Strong organic growth in Insight and Engagement division, operating profit up to £2.2 million from £0.7 million
  • New offices opened in Madrid, Moscow, Singapore, Sochi and Sydney
  • Acquisitions of iLUKA, McKenzie Clark, Harvey Walsh (51%), Succinct, Rough Hill (60%) and pH Associates
  • Disposal of most of the Bell Pottinger businesses completed for £19.6 million
  • Lord Coe appointed as Executive Chairman of CSM Sport and Entertainment
  • Lord Davies of Abersoch appointed as Chairman of the Group

Christopher Satterthwaite, Chief Executive of Chime Communications, said:

“2012 was a year of strong performance for Chime’s on-going businesses. During the period, we realigned the Group as an international communications and sports marketing business, invested in our digital offering and opened new offices in Europe, the Far East and Australasia which offer good potential returns.  This concentration of activity in specific sectors and expansion geographically positions us strongly for future, long-term growth.

The Board is delighted that Lord Davies of Abersoch has become our new Chairman.  We are already working closely with him on the continued development of the Group.”

Headline Results

These results reflect the Group in its continuing form following the sale of most of the Bell Pottinger businesses and the planned closure of other Bell Pottinger businesses, once an overseas contract has been completed in 2013.

 

2012
£m

2011
£m

2012
% Change

2012 Like for Like % Change

Operating Income

157.5

116.3

+35%

+20%

Operating Profit

25.7

15.6

+64%

+64%

Profit Before Tax

25.3

14.9

+70%

 

Operating Profit Margin

16.3%

13.4%

  

 

Earnings Per Share

21.2p

12.8p

+66%

 

Total Dividend

7.24p

6.58p

+10%

 
  • Net cash as at 31st December 2012 of £4.2 million (2011: £3.3 million).
  • Total dividend for the year increased by 10% to 7.24p (2011: 6.58p)
  • £47 million facility agreed with RBS until September 2016

Reported Results

Reported results exclude businesses that have been sold but include businesses that are in the process of being closed. 

The Group has always accounted for earn-out payments as a capital item and believes this reflects the substance of the arrangements, particularly as the Group has a policy of paying proper market rate salaries and packages to all staff including those who benefit from earn-outs.  However, IFRS IC issued a clarification of IFRS3 on 22nd January 2013 which required earn-out payments conditional upon continued employment to be treated as a charge to the Income Statement.  Whilst the Directors do not believe that the treatment reflects the substance of the arrangements, they have complied with it and this has resulted in a charge of £11.5 million in 2012 for deemed remuneration (2011 also restated for a charge of £3.1 million).

On a reported basis the operating profit was £4.9 million (2011: £18.7 million) and the profit before tax was £2.5 million (2011:  £17.8 million).  The two most significant components of this reduction are the completion of one major contract (£11.9 million) and an increase in the deemed remuneration charge in respect of earn-out arrangements.  In addition, costs of acquisitions and restructuring and loss on disposal and impairments increased.  The majority of the charges are not tax deductible nor do they arise in entities with minority shareholders.  Reported earnings per share was negative as a consequence of these charges.

 

2012
£m

2011
(Restated) £m

2012
Change

Operating Income

159.8

131.4

+22%

Operating Profit

4.9

18.7

-74%

Profit Before Tax

2.5

17.8

-86%

Operating Profit Margin

3.1%

14.2%

 

Earnings Per Share

(4.4p)

13.0p

 

 

Note: 1

1. All numbers and comments shown in this report are headline unless otherwise state.  The appendix to this announcement shows a reconciliation of these headline numbers to the reported numbers.  The headline numbers adjust for the following:

  • Business in the process of being discontinued – During 2012 all the Bell Pottinger branded businesses were either sold or were in the process of being exited.  Chime has been exiting the geopolitical business within Bell Pottinger since late 2011, although there remains one contract which ends in April 2013.  The work has been sub-contracted to third parties and Chime is not expected to make any profit or loss on this contract in the period to completion.  Under accounting standards this line of business does not meet the definition of discontinued at 31st December 2012 due to Chime’s legal obligation in the completion of the contract.  Given the substantial exit of this business, we have shown the impact in this announcement as if this business was discontinued so as to provide helpful information about our on-going business.
  • Deemed remuneration charge add back in respect of the change in accounting policy for earn-out payments as explained above.
  • Add back of charges to the income statement in respect of amortisation of intangible assets, impairment of goodwill and costs relating to acquisition and restructuring.

2. Like for Like comparisons are calculated by taking current year actual results (which include acquisitions from the relevant date of completion) compared with prior year actual results, adjusted to include the results of acquisitions for the commensurate period in the prior year.

For further information please contact:

Christopher Satterthwaite, Chief Executive                                020 7096 5825
Chime Communications

Mark Smith, Chief Operating Officer and Finance Director        020 7096 5833
Chime Communications

James Henderson/ Victoria Geoghegan/Elizabeth Snow           020 7861 3925
Pelham Bell Pottinger

To read full results click here (PDF)