Chime Communications plc

2010 Interim ResultsFor the Six Months Ended 30th June 201025th August 2010

2

Highlights

Operational Review

Financial Review

Key Performance Indicators

Our Growth Plan

Sports Marketing

Outlook

Agenda

3

Chime Since 2005

• Compound pretax profit growth of 30%

• Earnings per share almost doubled

• Dividend per share more than doubled

4

Five Year Trading History

£ millions 2005 2006 2007 2008 2009 2010 First Half

Operating Income 63.0 77.9 96.5 112.1 123.1 71.1

Costs 54.7 65.7 80.8 94.0 103.0 58.3

Operating Profit 8.3 12.2 15.7 18.1 20.1 12.8

Profit Before Tax 7.3 11.0 13.8 16.3 18.8 12.3

Operating Profit Margin 13.2% 15.7% 16.3% 16.2% 16.4% 18.1%

Earnings per Share 12.45p 15.40p 17.15p 19.87p 22.46p 12.02p

Dividend per Share 2.40p 2.90p 3.50p 4.72p 5.10p 1.84p

5

First Half of 2010

• Operating income up 22% - organic growth of 5%

• Operating profit up 35% - organic growth of 11%

• Profit before tax up 39% to £12.3 million

• Operating margin increased to 18.1% from 16.3%

• Earnings per share growth of 8%

• Interim dividend per share growth of 15%

• Net cash of £5.5 million

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Operational Highlights

• Best first half new business performance in the Company’s history• 91% of full year operating income now contracted• Strong growth in Public Relations and Sports Marketing• International work up 20% with proportion maintained at 46% of total income• Public Relations Group No. 1 in the UK and No. 5 in the world• Sports Marketing Group No. 5 in the world and No. 1 in UK Sponsorship League Table• VCCP – Marketing magazine’s Creative Agency of the Year• Successfully integrated Essentially Group• Acquisition of Tree completed• Completed restructuring of Research Group and returned to growth• Opening of Pelham Bell Pottinger Asia

7

Operating Profit Analysis

£m 2010 2009 Growth % Organic Growth %

Operating income 71.1 58.4 22% 5%

Costs 58.3 48.9 19% 4%

Operating profit 12.8 9.5 35% 11%

Operating profit margin 18.1% 16.3% 11%

Profit before tax 12.3 8.9 39%

Earnings per share 12.02p 11.12p 8%

Interim dividend per share 1.84p 1.60p 15%

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Operational Review

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Segmental Analysis   Operating Income Operating Profit Operating

Margin  2010 2009 %

growth2010 2009 %

growth2010 2009

Public Relations 34.6 32.8 +5% 7.9 6.7 +17% 22.8% 20.6%

Advertising and Marketing Services

18.1 15.5 +17% 1.7 2.0 -14% 9.5% 12.9%

Sports Marketing 14.9 7.1 +111% 3.2 1.5 +118% 21.7% 21.0%

Research 3.5 3.0 +16% 0.4 - - 10.9% -

Central Costs - -  - (0.4) (0.7) -48% - -

Total 71.1 58.4 +22% 12.8 9.5 +35% 18.1% 16.3%

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Public Relations

• Strong cost control

• Improvement across all sectors

• Strong growth from financial public relations, public affairs, corporate public relations, corporate and social responsibility, property and international

• Geopolitical continues to perform well

• Proportion of international work continues to increase

• Prospects remain good for the second half across the Group

• Wins include Airbus Global, Alternative Hotel Group, Golden Agri, The Government of Sri Lanka, Kurt Geiger, Nintendo, Port of Dover, powerPerfector, St. Tropez, United Arab Emirates University, Qatar Holdings, Qatari Diar and Homesun

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Advertising and Marketing Services

• Strong revenue growth. Wins include Freesat, Gatwick Express, News International, Land Securities, O2 Digital, Unilever and Zoopla

• Increase in resources to cope with new business pitches and gearing up digital capability

• VCCP offices in Berlin and Prague ahead of expectation

• VCCP Health now well positioned for growth. Wins include Omega Pharma and Roche

• Teamspirit, our specialist financial services communications business, grew very strongly

• Second half prospects very good with first contribution from O2 Digital account

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Sports Marketing

• Marketplace and performance remains strong

• Wins include Mizuno, Lycra, GSK ,BP, BT, GE, Investec, Lebara and Tottenham Hotspur

• Integration of Essentially and Fast Track progressing well

• Cost savings being made

• Clear growth plan being developed

• Fast Track Middle East continues to grow

• Essentially performed ahead of our expectation

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Research Group

• Marketplace performance is improving.

• Wins include British Gas, Cheapflights.co.uk, Comres Election Polling, Ofgem, Olympic Development Authority

• Management restructuring now complete

• Return to profits

• Very strong at Facts International (quantitative research)

• Opinion Leader (qualitative research) not expected to improve until next year

• Tree now joined and trading ahead of expectations

• Second half year expected to be better than first half

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Diversified Strategy

UK International

Operating income

Public RelationsAdvertising and Marketing ServicesSports MarketingResearch

By division5%

21%

25%

49%

By geography

54%

46%

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Operating Income by Industry Sector

• TMT• Financial Services• Leisure• B2B• FMCG• Travel & Tourism• Government & Public Bodies

+19%+34%+59%+62%

+138%+118%

-16%

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Financial Review

17

Profit Before Tax

£m 2010 First Half

2009 First Half

2009 Full Year

2008 Full Year

Underlying Trading Profit 13.5 10.5 22.0 19.5

Cost of Shares Based Incentive Schemes Finance Cost of Deferred ConsiderationsAssociatesOnerous Lease ProvisionInterest

(0.7)(0.4)

0.1-

(0.2)

(0.6)(0.4)

-(0.4)(0.2)

(1.5)(0.9)

- (0.4)(0.4)

(1.3)(1.0)

0.2-

(0.9)

Profit Before Tax 12.3 8.9 18.8 16.5

Taxation 3.3 2.7 5.9 4.4

Effective Tax Rate 31.6% 31.6% 31.6% 31.6%

The above excludes:Amortisation of Intangibles (0.7) (0.1) (0.3) (0.1)Costs of Acquisitions and Restructuring (1.3) - (0.2) -Write Down of Investments - (0.3) (1.0) -Profit on Partial Disposal of Subsidiaries - - 1.3 -

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Cash Flow£m First Half 2010 First Half 2009

Profit Before Tax 12.3 8.9

Associates, Discontinued Operations and Profit on Disposal (0.1) -

IFRS Adjustments 1.0 1.0

Depreciation and Amortisation 1.0 1.0

Capital Expenditure (1.0) (0.6)

Working Capital 1.8 7.3

Cash Generated from Trading 15.0 17.6

Cash Conversion 121% 197%

Taxation (3.9) (3.0)

Acquisitions, Disposals & Deferred Considerations (8.5) (0.3)

Costs of Acquisitions & Restructuring (1.0) -

Dividends (2.5) (1.8)

Purchase of Own Shares (3.0) (0.7)

Other 4.6 -

Increase in Cash 0.7 11.8

Closing Net Cash 5.5 18.1

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Balance Sheet

£m 30 June 2010 30 June 2009 31 December 2009

Intangibles 154.7 113.4 149.9

Fixed Assets and Investments 4.9 5.7 5.2

Net Deferred Tax 1.6 0.8 1.4

Current Assets (exc.Cash) 51.6 45.4 50.6

Net Cash 5.5 18.1 4.8

Other Liabilities (73.0) (72.4) (71.0)

Current Tax (3.7) (2.4) (4.2)

Deferred Consideration (12.4) (16.8) (19.2)

Provisions (0.6) (0.5) (0.7)

Net Assets 128.6 91.3 116.8

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Strong Cash Position

• Net cash at 30th June 2010 of £5.5 million (30th June 2009: £18.1 million – 31st December 2009: £4.8 million)

• £32 million facility with RBS until July 2013

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

• Cash payments for acquisitions and deferred considerations of £9.5 million in first half of 2010

• No further deferred considerations in 2010 and cash deferred considerations expected to be no more than £0.7 million in 2011

• Expect to be at least cash neutral at end of 2010

• Well within bank covenants

– Net debt to EBITDA less than 2.0 times

– Interest cover of more than 4.5 times

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Deferred Considerations Outstanding

£m Cash Shares Total

20102011201220132014

01.23.48.01.9

00.91.1

12.4-

02.14.5

20.41.9

Total 14.5 14.4 28.9

Maximum payments

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

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Income from Shared Clients

56%

68%60%*

56%

2008 20092007 2010

• Value of income from shared clients in first half of 2010 rose by 7% from £40 million to £43 million.

2010 operating income includes Essentially Group. If this was excluded, the 2010 percentage of income from shared clients would be 65%.*

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Average Fee per Client

£51,000

£64,000

£53,000

£45,000

2008 20092007 2010

• Essentially has a large number of smaller clients and as a result the Group acted for 1,353 clients in the first half of 2010 compared to 908 in the first half of 2009. If these are excluded 2010 first half average fee per client is the same as 2009.

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Operating Profit Margin

16.9%

16.3%

18.1%

16.7%

2008 20092007 2010

• Strong cost control

• Most businesses performing well

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International Income

34%

46% 46%

33%

2008 20092007 2010

• Income from international work rose from £27 million to £32 million

• International marketplace remains good

• Geopolitical work remains strong

• Overseas offices performing well

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Our Growth Plan

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Objectives

• More than double profits within the next four years

• Maintain a high margin with careful cost control

• Remain debt free

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Growth Through ‘Modern’ Communications Strategy

• Concentrate on diversified strategy and invest in sectors in which we see above average growth, eg. sports marketing

• Continue new service development to fuel organic growth, eg. international public affairs, search marketing

• Develop international offices in markets with highest growth potential building on success in the Middle East: Pelham Bell Pottinger Asia opened in 2010; Hong Kong and Rio de Janeiro as further opportunities

• Build on ‘leading edge’ reputation in digital and social marketing to win accounts similar to O2 Digital

• Concentrate on providing ‘integrated’ solutions to major global organisations seeking ‘modern’ ways to manage their reputation

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Spotlight on Sport

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The Group

We are made up of 330 people across the Sports Marketing Group – Top 5 in the world.

We operate in 10 cities across the following regions:– Europe – UK, Spain– Australasia – Australia, New Zealand– Middle East – Abu Dhabi– Asia – Japan– Africa – South Africa– Looking at possible operations in South America (Brazil) &

Hong Kong

Financial– 21% of Chime’s H1 operating income

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Size of Market

• 2009 projected worldwide sponsorship market: $44.4bn

• Of all forms of sponsorship, sport accounts for 71%:

$0.7bn

$4.1bn

$3.0bn

$2.7bn

$2.2bn $31.7bn

Sports

Entertainment Tours & Attractions

Causes

Festivals, Fairs & Annual Events

Arts

Associations & MembershipOrganisations

Total$44.4bn

2009 (projected)

Source: SportBusiness in Numbers 09-10, IEG Consultancy

Worldwide Sponsorship Spending by Property Type

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Regional growth rates:

Regional performance of Sports Marketing

Regional performance: Compound Annual Growth Rates (CAGRs)2010-2013

3.6

4.13.9

4.3

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

North America EMEA Asia Pacific Latin America

CA

GR

2010 -

2013 (

%)

Source: PricewaterhouseCoopers LLP (UK), Wilkofsky Gruen Associates

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Top Ten Sponsored Sports by value:

Top Ten Sponsored Sports in 2009 by Value

$2,607m (348 deals)

$1,797m (89 deals)

$272m (61 deals)

$258m (69 deals)

$256m (42 deals)

$237m (62 deals)

$227m (64 deals)

$205m (95 deals)

$184m (54 deals)

$173m (58 deals)

$297m

$308m (72 deals)

$170m (38 deals)

$214m

$200m

$467m (71 deals)

$335m (63 deals)

$994m (77 deals)

$2,674m (282 deals) Football / Soccer

Olympics

Rugby Union

Tennis

Motorsport - Formula 1

Baseball

Cricket

Golf

American Football

Basketball

2009

2008

Source: The World Sponsorship Monitor 2009

2008 figures for Basketball were unavailable.

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The growing popularity of sport and audience delivery

The Growing Popularity of Sport: Increasing Average TV Audiences for Major Events

593m (Beijing 2008)

252m (Beijing 2008)

178m (Beijing 2008)

166m (Germany v Spain 2008)

104m (NEP v NY Giants 2008)

98m (Man Utd v Chelsea 2008)

80m (Brazilian Grand Prix 08)

23m (Federer v Nadal 2008)

23m (Canada v Russia 2008)

20m

19m (US Masters Final Day 2008)

17m

14m (Stage 9, 2008)

140m (Athens 2004)

105m (Athens 2004)

93m (Athens 2004)

161m (Portugal v Greece 2004)

97m

72m (ACMilan v Liverpool 2007)

78m (Brazilian Grand Prix 07)

21m (Federer v Nadal 2007)

6m (Canada v Finland 2007)

12m

21m (US Masters Final Day 2007)

24m

12m (Final Stage 2007)

Olympic Games: Opening Ceremony

Olympic Games: Closing Ceremony

Olympic Games: 100 Men's 100m Final

Football: Euro Championships final

American Football: NFL Super Bowl

Football: Champions League Final

Formula One

Tennis: Wimbledon men's final

Ice Hockey: World Championship final

Basketball: NBA finals

Golf

Baseball: MLB World Series

Cycling: Tour de France

Event Average Audience

Source: futures sport + entertainment, TV Sports Markets

(Indianapolis Colts v Chicago Bears 2007)

(Boston Celtics v LA Lakers, game 6, 2008)(Cleveland Cavaliers v SA Spurs, game 4, 2007)

(Philadelphia Phillies v Tampa Bay Rays, game 5, 2008)(Boston Red Sox v Colarado Rockies, game 4, 2007)

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Chime’s opportunity

• Concentrate on top 10 sports: we work in 8/10 already.

Olympics & Paralympics

Rugby Union Tennis Formula 1

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Chime’s opportunity

• Concentrate on top 10 sports: we work in 8/10 already.

BasketballGolf FootballCricket

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Concentrate on EMEA, Asia Pacific and Latin America

Latin America

EMEA

Asia Pacific

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Leverage ‘full service’ and specialist Chime offering v fragmented competition

IPG WPP Publicis Omnicom Havas

- Octagon - Prism& Fragmented

- Fragmented - Fragmented - Fragmented

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A Decade of Sport

2010 2011 2012 2013 20142010 2011 2012 2013 2014

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

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Why is all this increasingly important?

Increasing media fragmentation:

– Sport and entertainment bring audiences together– Shared passion and participation through TV, spectators,

participants and children taking part– Engagement in a way traditional media cannot achieve– Importance to brands and governments:

– Event bidding– Domestic health agenda

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Build a world leading full-service sports marketing brand

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Outlook

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Outlook

• Our H1 profits are up again – by nearly 40%• Growth areas

– M&A and corporate activity– Global regulation and international public affairs– Country promotion– Green technology– Corporate and social responsibility– Sports and sporting events– Internet and mobile technology

• We have a strong management team and are developing the ‘stars’ of the future• We have brilliant clients who share our commitment to finding new and better ways to gain value

from their communications investment• We remain cautious but optimistic that we will continue to outperform the market

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Appendices

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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