Interim - Chime Communications PLC

Chime Communications plcFacts International, after a difficult first quarter, has had anextremely good second quarter with several new client wins.These client wins should lead to strong growth in the secondhalf of 2009.Overall the year is likely to remain difficult but we expect theDivision to return to making profits in the second half of 2009.During the course of the remainder of the year we will bring innew management and reposition the Research Division withthe expectation of a strong performance in 2010.Cash flow, banking arrangements anddeferred considerationsNet cash at 30 June 2009 was £18.1 million compared tonet debt at 30 June 2008 of £13.2 million and net cash at 31December 2008 of £6.3 million. The Group continued tofocus on improving its credit control and cash collectionprocesses but also benefited, once again, from unusuallyhigh cash receipts close to the period end. Without thesereceipts the cash balance would probably have been similarto the balance at 31 December 2008.The Group generated cash from trading activities in thefirst half of 2009 of £17.6 million (H1 2008: £1.0 million)representing a cash conversion of 206% (H1 2008: 12%).Excluding the improvement in working capital, cashgenerated from trading in the first half of 2009 was £10.3million and cash conversion was 121%.The Group continued to operate well within its bankingcovenants and has a borrowing facility of £32 million whichcontinues until July 2013.Deferred considerations still payable total a maximum of£35.5 million, comprising £18.5 million payable in cash and£17.0 million payable in shares or cash at Chime’s discretion.No payments are payable in the remainder of 2009, £9.9million is payable in 2010, £2.1 million in 2011 with thebalance payable between 2012 and 2014, subject to targetsbeing met.TaxationThe effective tax charge for the first half of 2009 was 31.6%in line with the full year 2008. This is expected to continue forthe full year 2009.DividendsThe Board has declared an interim dividend of 1.60p pershare (H1 2008: 1.54p).Outlook• The outlook is good although economic uncertaintyhangs over the market.• Our business model is becoming more attractive andmore relevant to clients.• Reputation management is now more important than ever.• Our digital work and expertise is growing and expandingand our international model is becoming morecompetitive.• It appears that this year being a one stop shop,integrated and diversified, channel neutral and low costis the new black.• Big is not as beautiful or as safe as it once was.• As marketing expenditure continues to decline, internetsolutions become more effective. We think this is apermanent change.• Our small cost base compared to the big four gives usa real competitive advantage.The new business pipeline is strong, a large proportion ofsecond half operating income is committed (nearly 90%),our costs are under control, our cash management is strongand we have the opportunity to make some strategicacquisitions to develop our business ready for a possibleupturn at some point in 2010.We have had a good first half and by delivering the highestpretax profit in our history we have outperformed the marketand our competition.We remain cautiously optimistic for the full year.Lord BellChairman24th August 2009The interim dividend will be payable on 16 October 2009to shareholders on the register at 25 September 2009.The ex-dividend date is 23 September 2009.4