Chime this week announced a 4% rise in like-for-like income for the year ended 31 December 2011, but saw its PR revenues fall by 7% on a like-for-like basis.
Revenues were up by 10% overall to £163.6m and Bell is convinced negative headlines about the ethical practices of the group’s PR division have had no impact on trading.
‘It’s had no effect whatsoever,’ he told PRWeek, referring to the sting operation carried out by the Bureau of Investigative Journalism. ‘The phone never stops ringing - we’re pitching all the time and continuing to win business.’
Writing in the Press Gazette this week, Bell hit out at the ‘deception’ and ‘inaccuracy’ of the stories targeting his firm via an undercover sting operation. Chime is awaiting the verdict of a complaint it has made to the PCC about the reports.
He told PRWeek: ‘It was a completely unnecessary, unfortunate and I think rather unpleasant process carried out... But it’s had no impact at all.’
He said the first quarter performance of the PR business ‘very good’ and ‘ahead of expectation’ in a market that is proving to be ‘to the surprise of outside commentators, rather stable’.
However, Bell remained tight lipped over his plans to lead a management buyout of a proportion of Chime’s PR business.
Last week WPP CEO Martin Sorrell told the London Evening Standard that the buy-back plans 'set a terrible precedent' and were not 'logical'. WPP has a shareholding of around 18 per cent of Chime, but it is thought that Sorrell’s views are not seen as a significant block to any deal and that discussions are continuing to advance.
‘Conversations are positive, but that doesn’t mean that the outcome will be positive,’ Bell said.
Chime’s earnings statement revealed that the businesses affected by the potential buyout accounted for under 10 per cent of group profit. Chime’s 2011 group operating profit stood at £31.9m, meaning the PR businesses targeted account for a maximum profit of just £3.2m.
The PR division’s operating profit margin was 25.2 per cent, suggesting that the businesses being targeted would have combined revenues of around £12m. However this figure is likely to be significantly higher as the PR division’s profit margin was boosted by the lucrative US government contracts Chime held through the majority of 2011.
The group’s PR businesses overall grew in 2011 if the impact of the US Government work is excluded, which hints at the scale of the contract. PR revenues were down £3.6m and fell by 7 per cent on a like-for-like basis despite Chime only announcing the early ending of the State Department contract in November.
The figures do suggest that any deal by Bell and Piers Pottinger to take parts of the PR businesses private will leave the majority of the PR division with Chime. However, it is thought a significant number of senior Bell Pottinger staff would be expected to leave the group to help form the new company.
It is also thought key parts of the business, including City arm Pelham Bell Pottinger, are included in the talks. Importantly, though, Chime only holds a 60% stake in Pelham, with the balance already being held by individuals at the agency and other pre-merger shareholders.
Bell concluded: ‘If anything happens it will be done in the best interests of Chime and its shareholders, which oddly enough is how I’ve always behaved and will continue to behave.’