Chime Communications plc

2011 Preliminary ResultsFor the Year Ended 31st December 20117th March 2012

2

Highlights

Our Strategy

Operational Review

Financial Review

Key Performance Indicators

Outlook

Agenda

3

Highlights

4

Financial Highlights

• Seventh successive year of double digit growth

• Reported profit before tax up 16% to £24.7 million (2010: £21.2 million)

• Reported operating income up 10% to £163.6 million (2010: £149.3 million)

• Operating profit* up 16% to £31.9 million (2010: £27.4 million)

• Operating profit margin up to 19.5% (2010: 18.3%)

• Adjusted fully diluted earnings per share growth of 9% to 26.56p (2010: 24.38p)

• Total dividend of 6.58p per share (2010: 6.05p), an increase of 9%

• Net cash of £3.3 million

* Operating profit is shown before restructuring costs of £1.8 million

5

Operating Profit Analysis

£m 2011 2010 Growth % Like for Like Growth %

Operating income 163.6 149.3 10 4

Costs 131.7 121.9 8 3

Operating profit 31.9 27.4 16 9

Operating profit margin 19.5% 18.3% 7

Profit before tax 31.0 26.5 17

Earnings per share (adjusted fully diluted)

26.56p 24.38p 9

Total dividend per share 6.58p 6.05p 9

6

Seven years of growth

Year 2004 2005 2006 2007 2008 2009 2010 2011Profit Before Tax 6.4 8.6 11.1 13.8 16.3 18.8 26.5 31.0Operating Income 52.1 63 77.9 96.5 112.1 123.1 149.3 163.6

7

Operational Highlights

• Strong performance from sports marketing and advertising• Successful realignment of business mix following ending of main American

Government contract• Satisfactory performance of Public Relations Division • Continued investment and expansion in sports marketing• VCCP named Marketing magazine’s “Agency of the Year”• Fast Track named Marketing magazine’s “Sponsorship Agency of the Year”• Established a strong healthcare business• Insight and Engagement Division continuing to recover• Developed digital and social capability organically and through start-ups• Further international expansion – overseas offices now total 27

8

Corporate Developments

Sport

- ICON – Experiential (2011)- Essentially France (2011)- Golden Goal Brazil (2011)- iLUKA – Management and Activation of Major

Events (2012)- McKenzie Clark – Graphics and Digital Design

(2012)

Healthcare

- Reynolds-MacKenzie – Public Relations (2011)- LEC – Advertising (2011)- Succinct – Medical Education (2012)

Marketing Services - Gulliford Consulting – Marketing Consultancy

(2011)- Rough Hill – Youth Marketing (2012)

• Earnings enhancing acquisition strategy reflects market growth opportunities

• Discussions continue on the potential buyout of part of the Public Relations Division, which represents less than 10% of the Group profit

• 40% investment in StratAgile, a data analytics business based in Singapore

99

iLUKA• Management and activation of major events • Specialises in Olympics, winter and summer• Provides strategic advice, operational delivery and

recruiting of new sponsorship clients• Clients include most 2012 Olympic sponsors,

notably BP, Lloyds TSB, EDF Energy, Cadbury, Westfield, NBC and GE

• Opportunity to move iLUKA into other major events such as FIFA World Cups, Rugby World Cups and Cricket World Cups

• 70 staff• Close to breakeven in 2011 with £3.7 million of

operating income• Major 2012 and beyond opportunity as part of

Chime Sports Marketing

Acquisition terms• Conditional agreement• Initial consideration of £5.4 million

(£4.1 million in cash) but offset by about £6 million of cash being acquired

• Deferred consideration of up to £19.6 million dependent on profit performance to 2017

• Overall multiple of 5 times EBIT

10

CSM - Overview

Consultancy, Event Management

& Comms

Sales &Athlete Rep

Branding &Experiential

Major Event Management &

Activation

1111

McKenzie Clark • A leading UK based graphics and

branding specialist• Often works closely with ICON• 58 staff• Operates in sport, live events and

exhibitions, property, museums and visitor attractions and retail

• Owns proprietary software to send artwork around the world

• Clients include Arsenal FC, Chelsea FC, Barclays, BP, Hugo Boss, Land Securities, Lloyds Banking Group, Polo Ralph Lauren and Unilever

Acquisition terms• Initial consideration £0.6 million in cash• Deferred consideration up to £3.4 million

dependent on profit performance to 2015• Overall multiple of 4 times EBIT

1212

Rough Hill (60%)

• Youth Marketing, specialising in digital, social and experiential

• Current operating income of £0.9 million and EBIT of £0.2 million

• 20 staff

Acquisition terms• Initial consideration of £0.7 million (£0.5

million in cash)• Put option for remaining 40% from 2016• Overall multiple of EBIT of 5

13

Our Strategy

14

Our Strategy

• Concentrate on fastest growing areas of marketplace– Sports marketing– Healthcare– Digital and social– International

• Continued focus on full range of marketing communications• International expansion led by sport in Southeast Asia, South America, the Middle East

and Asia Pacific• Continue to maintain a strong balance sheet• Focus on new product development and start-ups through Chime Ventures

15

Our Strategy (continued)

• Sports Marketing– Become a global multi sport, full service sports marketing agency. Already No. 1 in

the UK and top 5 globally• Advertising and Marketing Services

– Continue to be led by strong creative work and expand into new services and geographies

• Public Relations– Maintain market position with good growth opportunities. Expand into new services

and geographies• Insight and Engagement

– Continue to rebuild this division and increase digital research capabilities

16

Operational Review

17

Segmental Analysis

  Operating Income Operating Profit Operating Margin

  2011 2010 Growth %

Like for Like Growth %

2011 2010 Growth %

Like for Like Growth %

2011 2010

Public Relations 69.2 72.8 -5% -7% 17.5 17.5 - -1% 25.2% 24.1%

Advertising and Marketing Services

46.5 39.7 +17% +16% 6.4 4.2 +52% +48% 13.8% 10.6%

Sports Marketing 40.0 29.5 +36% +16% 7.7 5.6 +38% +7% 19.2% 18.9%

Insight and Engagement

7.9 7.3 +8% +2% 1.0 0.8 +35% +21% 12.8% 10.3%

Central Costs - -  - - (0.7) (0.7) - - - -

Total 163.6 149.3 +10% +4% 31.9 27.4 +16% +9% 19.5% 18.3%

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Public Relations Division

• The American Government contract reduced and ended earlier than expected

• Healthcare already 4% of Public Relations income, expected to be more than 10% in 2012

• Good growth in city and financial, corporate, consumer, technology and the Middle East

• Major wins include Weetabix, RIM, TalkTalk, Subway, Bathstore, Universal Music, Suzuki, Lotus, BSI, Berkeley Homes, Maersk Oil

• First quarter of 2012 has started well

Operating Income Operating Profit Operating Margin

2011£ millions

2010£ millions

Growth % Like for Like Growth %

2011£ millions

2010£ millions

Growth % Like for Like Growth %

2011 2010

69.2 72.8 -5% -7% 17.5 17.5 - -1% 25.2% 24.1%

19

Advertising and Marketing Services Division

• Strong organic growth in most businesses.

• Margin improvement was a key target in 2011

• Specialist offerings in health, search and digital all shown strong organic growth (one third of income has come from start-ups in the last five years)

• New account wins include: easyJet, Carling, Ancestry.co.uk, Saga, Tate & Lyle Sugar, Just Eat, Muller and a digital and social campaign for Spotify

• Voted Marketing magazine’s “Agency of the Year”

• Good new business pipeline for 2012

Operating Income Operating Profit Operating Margin

2011£ millions

2010£ millions

Growth % Like for Like Growth %

2011£ millions

2010£ millions

Growth % Like for Like Growth %

2011 2010

46.5 39.7 +17% +16% 6.4 4.2 +52% +48% 13.8% 10.6%

20

Sports Marketing Division

• Three good earnings enhancing acquisitions in 2011

• Strong growth in ICON, Fast Track Hong Kong and pmplegacy (event bidding consultancy)

• Other businesses flat but well positioned for growth in 2012

• 2012 has started well and good organic growth expected

• New account wins include: UEFA Champions League (renewal) Baku tender for 2020 Olympics and Investec’s sponsorship of Test Match Cricket

• Many opportunities already being identified particularly in Brazil for 2013 and beyond

Operating Income Operating Profit Operating Margin

2011£ millions

2010£ millions

Growth % Like for Like Growth %

2011£ millions

2010£ millions

Growth % Like for Like Growth %

2011 2010

40.0 29.5 +36% +16% 7.7 5.6 +38% +7% 19.2% 18.9%

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Chime at the Olympics

• Organising the in-stadia activities for 18 Olympic sports and 8 Paralympic sports.• Activating Olympic sponsorship programmes for BT, GSK, G4S and the National Lottery • Handling on behalf of LOCOG all event look, branding and wayfinding across all Olympic venues.

Also appointed to do the same for the GLA across London and all other UK cities involved in Olympic branding programmes

• Securing commercial partnerships with corporate sponsors for five Olympic sports: athletics, basketball, triathlon, gymnastics and paralympic sport

• Ambassador programmes for Oscar Pistorius, Roger Black, Sharron Davies and Mark Foster• Providing strategic guidance on the Olympic Opportunity and hands on activation around guest

engagement programmes for 12 Olympic clients including BP, Coca Cola, Samsung, NBC and the International Olympic Committee (iLUKA)

• Undertaking detailed legacy studies around the Olympic Stadium and other venues for the Olympic Delivery Authority

22

CSM Opportunities

2013Ashes in UKLions Tour to AustraliaHeineken CupChampions LeagueConfederations Cup, BrazilRugby World Cup 7’s, MoscowTri-NationsSuper RugbyTest Match Cricket2020 Olympic BiddingIRB U20 Rugby World Cup

2014FIFA World Cup, BrazilWinter Olympics, RussiaHeineken CupChampions LeagueIRB Sevens World SeriesTest Match CricketTri-NationsSuper RugbyCommonwealth Games, GlasgowIRB U20 Rugby World Cup

2015Ashes in UKRugby World Cup, EnglandHeineken CupChampions LeagueIRB U20 Rugby World Cup Test Match CricketTri-NationsSuper Rugby

2012London OlympicsEuropean ChampionshipsChampions LeagueTest Match CricketSuper RugbyTri-Nations RugbyU20 IRB World Cup, SA2020 Olympic BiddingUK School GamesIRB World 7’s Series

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Sports Marketing Growth Plans• Expand full service capability into existing overseas offices

• Expand into new territories, eg. China, South America, Asia Pacific and Middle East

• Expand into additional sports, eg. football and mass participation

• Further expand range of services

• Further acquisitions

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Insight and Engagement Division

• Continuing recovery with good margin improvement

• Tree, our data analytics business, continues to grow

• The combined qualitative and quantitative business also grew

• New account wins include Aviva, HMRC, Green Flag, O2, Post Office, Wellcome Trust and British Red Cross

• 40% investment in StratAgile (Singapore) to support Tree

• New digital research business (Watermelon Research) started and already profitable

Operating Income Operating Profit Operating Margin

2011£ millions

2010£ millions

Growth % Like for Like Growth %

2011£ millions

2010£ millions

Growth % Like for Like Growth %

2011 2010

7.9 7.3 +8% +2% 1.0 0.8 +35% +21% 12.8% 10.3%

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Diversified Strategy

UK International

Operating income

Public RelationsAdvertising and Marketing ServicesSports MarketingInsight and Engagement

By division5%

25%

28%

42%

By geography

53%

47%

(49%)

(26%)

(20%)

(5%)

(51%)

(49%)

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Industry Sectors

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

22%

TMT Leisure Govt / PublicBodies

FinancialServices

B2B FMCG Energy &Utilities

Healthcare Transport,Travel &Tourism

Property Retail &Services

Automotive NPO Individuals Education &Training

Misc

Chime Income by Sector

2011

2010

27

Financial Review

28

Profit Before Tax£m 2011 2010

Underlying trading profit +14% 32.7 + 30% 28.6

Cost of share-based incentive schemes (0.8) (1.2)

Headline operating profit 31.9 27.4

Share of results of associates 0.3 0.2

Finance cost of deferred consideration (0.8) (0.7)

Interest (0.4) (0.4)

Adjusted profit before tax 31.0 26.5

Amortisation of intangibles (1.9) (1.5)

Impairment of goodwill and write down of investments (1.4) (1.5)

Cost of acquisitions (1.2) (2.3)

Restructuring Costs (1.8) -

Reported profit before tax 24.7 21.2

Tax (7.5) (6.5)

Effective tax rate 27.6% 28.4%

Minority Interest 1.7 1.6Note: Effective tax rate excludes impairment of goodwill and costs of acquisitions, neither of which is tax deductible

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Cash Flow£m 2011 2010 2009

Profit Before Tax 31.0 26.5 18.8

Associates, Discontinued Operations and Profit on Disposal (0.3) (0.2) -

IRFS Adjustments 1.6 1.9 2.4

Depreciation and Amortisation 2.7 2.1 2.4

Capital Expenditure (5.0) (2.2) (1.5)

Working Capital (11.6) (5.6) (7.2)

Cash Generated from Trading 18.4 22.5 14.9

Cash Conversion 59% 85% 79%

Taxation (6.9) (6.8) (5.6)

Acquisitions, Disposals & Deferred Considerations (16.5) (9.6) (6.8)

Costs of Acquisitions (3.6) (1.4) (0.2)

Dividends (5.0) (3.8) (2.7)

Purchase of Own Shares (0.9) (3.1) (0.9)

Share Placing 12.3 4.3 -

Other (1.4) - (0.2)

(Decrease)/Increase in Cash (3.6) 2.1 (1.5)

Closing Net Cash 3.3 6.9 4.8

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Balance Sheet

£m 2011 2010

Intangibles 180.2 153.8

Fixed Assets and Investments 9.6 4.9

Net Deferred Tax 1.0 0.7

Current Assets (exc.Cash) 72.6 70.3

Net (Debt)/Cash 3.3 6.9

Other Liabilities (77.9) (83.2)

Current Tax (4.4) (3.3)

Deferred Consideration and Minority Interests (21.7) (13.9)

Provisions (0.3) (0.9)

Net Assets 162.4 135.3

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Cash and Banking

• Net cash at 31st December 2011 of £3.3 million (2010: £6.9 million)

• £32 million facility with RBS until July 2013

• New facility now being negotiated

• £13.5 million of cash outside the RBS facility – overseas and businesses with minority interest

• Maximum use of facility in 2011 - £23 million

• Interest rate of 1.3% above LIBOR (£2 million at 2% above LIBOR)

• Cash deferred consideration payable in 2012 of £2.8 million

• Well within bank covenants

– Net debt to EBITDA less than 1.75 times

– Interest cover of more than 4.5 times

32

Deferred Considerations (Including 2012 Acquisitions)

MAXIMUM PAYMENT ESTIMATED

£m Cash Shares Total Cash Shares Total

2012

2013

2014

2015 and Beyond

3.0

17.6

4.8

32.9

0.8

16.4

1.1

15.7

3.8

34.0

5.9

48.6

2.8

7.7

4.2

17.0

0.8

7.1

1.1

7.3

3.6

14.8

5.3

24.3

Total 58.3 34.0 92.3 31.7 16.3 48.0

Note: The split between cash and shares can vary at Chime’s discretion but the above reflects the current expectation.

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Key Performance Indicators

34

Income from Shared Clients

62%66%

70%

2007 2008 2009

• Further progress in 2011 and a continued emphasis for the group

• Number of shared clients increased (17%), value increased (12%)

2010

66%68%

2011

35

Average Fee per Client

£70,000£81,000

£89,000

2007 2008 2009

• 21% increase in clients caused mainly by acquisitions

• Top 30 clients represented 45% of total income (49% in 2011)

• Clients paying more than £100,000 per annum increased from 205 to 242

• Two largest clients represented 19.0% of total income. All other continuing clients under 3%

2010

£100,000

£90,000

2011

36

Operating Profit Margin

16.3% 16.4%

18.3%

16.3%

2008 20092007 2010

• All divisions showed good growth in margin

• Long term target remains at 20%

19.5%

2011

37

Outlook

38

Outlook

• Re-alignment of the business reflecting a major uplift in the Sports Marketing Division• 2012 and beyond looks exciting for Chime’s Sports business with strong growth expected• Good growth expected in Advertising and Marketing Services• Healthcare expected to grow strongly and become another driver of growth• Maintained focus on Public Relations • Further acquisitions planned• Further start-ups planned• Cost control and retention of high margin will remain a priority• Remain cautious about debt

39

Appendices

40

Chime Group Offerings

Advertising & Marketing Services Public Relations Research Sports Marketing

Branding & DesignConsumer LoyaltyContent/PublishingDesign & ImplementationDigital/OnlineDirect Marketing &ExperientialFinancial Services Integrated Marketing & Public RelationsHealthcare Advertising & MarketingHealthcare CommunicationsIntegrated AdvertisingInternal CommunicationsMarketingMedia Planning & BuyingMobile MarketingNatural & Paid SearchSocial Communications

B2B Communications Brand Engagement CEO CommunicationsCEO Counselling Change & Internal CommunicationsConflict CommunicationsConsumer Public Relations Corporate Social Responsibility Corporate Public Relations Crisis & Issues Management Digital Communications Employee Communications Financial Public Relations Media Relations Media & Presentation TrainingMultimedia ContentPolitical ConsultancyRegulatory Affairs Reputation Management Strategic CommunicationsTechnology Communications

Advertising ResearchAffluent ResearchB2B ResearchBrand AuditsBusiness IntelligenceCustomer SatisfactionConsumer ResearchCorporate Responsibility ResearchData Processing & ManagementInsight (Analytics)Digital & Online ResearchEconometricsEthnographic ResearchFace to Face ResearchFocus GroupsInternational ResearchNew Product Development ResearchPharmaceutical ResearchProduct Testing ResearchQualitative & Quantitative ResearchSegmentation Research

Athlete and Celebrity ManagementBuildings Wraps, Projections and Lighting DisplaysCommercial Strategy DevelopmentCity and Venue DressingCorporate HospitalityEvent and Experiential BrandingEvent Experience and Sport PresentationsEvent CreationEvent ManagementExperiential Event DeliveryGrassroots & Community CSR programmesHospitality ManagementMajor Sporting Event Bidding & Legacy PlanningPerimeter AdvertisingReputation ManagementRight ManagementRights MarketingSports, Consumer and Crisis Public RelationsSports Rights Property NegotiationsSponsorship Activation & PlanningSponsorship Consultancy & Planning

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Five Year Trading History

£ millions 2007 2008 2009 2010 2011

Operating Income 96.5 112.1 123.1 149.3 163.6

Costs 80.8 94.0 103.0 121.9 131.7

Operating Profit/(Loss) 15.7 18.1 20.1 27.4 31.9

Profit/(Loss) Before Tax 13.8 16.3 18.8 26.5 31.0

Operating Profit Margin 16.3% 16.3% 16.4% 18.3% 19.5%

Earnings per Share(adjusted fully diluted)

16.60p 19.91p 21.51p 24.38p 26.56p

Dividend per Share 3.50p 4.72p 5.10p 6.05p 6.58p

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NORTH & SOUTH AMERICA

Boston, USA

Brazil

New York, USA

Ontario, Canada

Tampa, Florida USA

Washington DC, USA

EUROPE

Ashford

Berlin, Germany

Brussels, Belgium

Cardiff

Glasgow

Hamburg, Germany

Leeds

Liverpool

London

Macclesfield

Madrid, Spain

Munich, Germany

Paris, France

Portsmouth

Prague, Czech Republic

Weg, Germany

ASIA

Hong Kong

Tokyo, Japan

Singapore

AUSTRALASIA

Adelaide

Auckland, NZ

Dunedin, NZ

Melbourne

UK & International Offices

MIDDLE EAST & AFRICA

Abu Dhabi

Manama, Bahrain

Cape Town, South Africa

Doha, Qatar

Dubai

Nairobi, Kenya

Number of overseas offices2009: 202010: 242011: 27

43

Some of Our Leading Clients

For further information please contact:

Chris Satterthwaite or Mark Smith on 020 7861 8515 or go to www.chime.plc.uk