Full-year - Chime Communications PLC

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Notes to the consolidated financial statementsA liability equal to the portion of the goods or services received is recognised at the current fair value determined at each balance sheet date forcash-settled share-based payments.The Group also provides employees with the ability to purchase the Group’s ordinary shares at 80% of the current market value. The Group recordsan expense, based on its estimate of the 20% discount related to shares expected to vest on a straight-line basis over the vesting period. Furtherdetails are included in note 40 to the accounts.ProvisionsProvisions are recognised when the Group has a present obligation as a result of a past event and it is probable that the Group will be required tosettle that obligation, and are discounted to present value where the effect is material.Accounting standards, interpretations and amendments to published standards not yet effectiveCertain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group’s accountingperiods beginning on or after 1 January 2009 or later periods, but which the Group has not early adopted. The new standards which are expectedto be relevant to the Group’s operations are as follows:IFRS 8 Operating segments (effective from 1 August 2009) This IFRS specifies how an entity should report information about its operatingsegments in its financial statements. Generally, financial information is required to be reported on the same basis as is used internally for evaluatingoperating segment performance and deciding how to allocate resources to operating segments. Management does not believe this will have amaterial impact on the Group’s financial statements.Amendment to IAS 23 Borrowing Costs (effective from 1 August 2009) This amendment requires the capitalisation of borrowing costs, tothe extent they are directly attributable to the acquisition, production or construction of assets that need a period of time to get ready for theirintended use or sale. Management does not believe this will have a material impact on the Group’s financial statements.Amendment to IAS 1 Presentation of financial statements (effective from 1 August 2009) This amendment requires information infinancial statements to be aggregated on the basis of shared characteristics and introduces a statement of comprehensive income. Preparers willhave the option of presenting items of income and expense and components of other comprehensive income either in a single statement ofcomprehensive income with subtotals, or in two separate statements (a separate income statement followed by a statement of comprehensiveincome).IFRS 3 (revised) Business Combinations and IAS 27 (revised) Consolidated and Separate Financial Statements (effective from1 July 2009) The revised standard will represent a significant change, including greater emphasis on the use of fair value, potentially increasing thejudgement and subjectivity around business combination accounting and requiring greater input by valuation experts; focusing on changes incontrol as a significant economic event – introducing requirements to re-measure interests to fair value at the time control is achieved or lost, andrecognising the impact of all transactions between controlling and non-controlling shareholders not involving a loss of control, directly in equity; andfocusing on what is given to the vendor as consideration, rather than what is spent to achieve the acquisition. Transaction costs, changes in thevalue of contingent consideration, settlement of pre-existing contracts, share-based payments and similar items will generally be accounted forseparately from the business combination, and affect profit or loss. Management is currently assessing the impact of this amendment on theGroup’s financial statements.3. RevenueAn analysis of the Group’s revenue is as follows:Continuing operations2008 2007£’000 £’000(restated)Public Relations 178,955 131,738Advertising and Marketing Services 86,320 61,515Research and Engagement 12,119 13,336Group revenue 277,394 206,589Discontinued operation (note 10) – 512277,394 207,10158Chime Communications plc
Notes to the consolidated financial statements4. Business and geographical segmentsBusiness segmentsFor management purposes, the Group is currently organised into three operating divisions – Public Relations, Advertising and Marketing Servicesand Research and Engagement. These divisions are the basis on which the Group reports its primary segment information.Principal activities are as follows:Public RelationsThe Public Relations Division comprises some of the leading names in the industry, including Bell Pottinger, Good Relations, Harvard, Insight,Resonate, De Facto and Corporate Citizenship. It is the ranked No. 1 PR group in the UK in the PR Week public relations consultancy league tablefor 2007. It serves major UK and international brands, as well as governments, government departments, pharmaceutical and healthcarecompanies, charities, not-for-profit organisations, professional service firms, consumer brands and famous people.Advertising and Marketing Services (‘AMS’)The AMS Division possesses specialist skills in advertising and marketing services – direct marketing, digital communication, sponsorshipexploitation, point of sale, sales promotion and specialist media planning and buying. It also specialises in the niche markets of property andfinancial services.Research and EngagementThe Research and Engagement Division is made up of Opinion Leader, Ledbury Research and Facts International. Opinion Leader Research is oneof the UK’s leading research consultancies and Ledbury Research provides research and advice to brands who market and sell to high net worthconsumers.Segment information about these businesses is presented below:AdvertisingEliminationand Research of results ofPublic Marketing and discontinuedRelations Services Engagement operations Elimination Consolidated2008 £’000 £’000 £’000 £’000 £’000 £’000RevenueExternal sales 178,955 86,320 12,119 – 277,394Inter-segment sales 10,106 18,604 2,352 – (31,062) –Total revenue 189,061 104,924 14,471 – (31,062) 277,394Inter-segment sales are charged at prevailing market prices that would also be available to unrelated third parties.Segment resultOperating income 61,352 43,778 6,960 – – 112,090Operating profit 12,115 6,166 376 – – 18,657Unallocated corporate expenses (547)Operating profit 18,110Share of results of associates 186Investment income 456Finance costs (1,393)Finance costs of deferred consideration (1,020)Profit before tax 16,339Tax (5,164)Profit for the year 11,175Annual Report & Accounts 2008 59
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Full-year - Chime Communications PLC

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