Chime Communications boosts pre-tax profits by 20%
LONDON - Lord Bell's Chime Communications has boosted its pre-tax profits by 20% to £3.7m in the first six months of 2005 following the acquisition of advertising agency VCCP.
Chimes's share were up on the news this morning to 27.5p, a rise of 2.8%, which continues the strong performance seen in 2004 where profits jumped to £7m, compared with a loss of £11.3m in 2003.
Chime completed its £30m acquisition of VCCP Group on July 19 after shareholders gave their approval, despite criticism that it was paying too much for the agency.
Lord Bell said that the acquisition had put its marketing services operations on a strong footing.
"We have finally set the marketing services division on the path to growth following the acquisition of VCCP, although in the first half of 2005 this division continued to underperform. Overall, we consider the first half of 2005 to be a good performance," Lord Bell said.
Public relations operating income, from agencies including Bell Pottinger, has performed well and accounted for 64% of operating income, one percentage point more than this time last year.
There were improved performances from Bell Pottinger Corporate and Financial, Resonate, Insight, Rare Corporate Design, Bell Pottinger USA and MMK in Germany.
Operating income for the group's marketing services business accounted for 29% and research operations 7%. Operating income has seen a rise of 5% from £26.9m to £28.4m.
Lord Bell said following the acquisition of VCCP, which will be "the central part of the marketing services division", it expects that operating income next year will represent approximately 54%from public relations, 40% from market services and 6% from research.
New-business wins in 2005 have included; Budget Car Rental, Dyson, Ladbrokes and Cadbury Trebor Bassett.
In August, Chime bought Macclesfield PR agency Baxter-Hulme for a £1m deal. It has been absorbed into Bell Pottinger North.
The group said it is expecting some further restructuring costs in the final half of 2005, which amounted to £650,000 and related to property and personnel. However, costs for the second half of the year are not set to be as high as this.
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