Chief Executive Officer’s review

Doing great work is what really matters

Back in 2001 when the dotcom bubble was bursting our business faced a very difficult road ahead. I was, however, optimistic about our prospects, as I believed we had a strong talent-base and a sound and quite simple strategy - focus on building a global consultancy that does great work. I felt a similar level of optimism as we approached the winter of 2008 when banks were being rescued almost daily and governments around the world were forced to inject vast amounts of capital into their economies. In 2001 we emerged a stronger business. Today, despite recent events, the Company is much larger than it was in 2001, and has an even stronger-talent base and a client list that is the envy of the industry. For the record, the simple strategy remains.

Despite the climate, we grew

Last year we achieved modest revenue growth of 3.6%, to £65.4m (2008: £63.1m). This derived from a stronger US dollar and euro relative to sterling. Profit fared less well, with adjusted profit declining to £5.2m from £6.6m the previous year. That said, the Group did have to incur some significant losses from foreign exchange contracts, which resulted in a £1.7m charge to the profit and loss account. As several analysts noted, had these not occurred, then adjusted profit would actually have risen year on year.

A client base that keeps getting better

Beyond the financial metrics there are several other measures that investors should look at. These include the quality of the Company’s client base. On this front I am pleased to report that the business has maintained an excellent list that includes IBM, Microsoft, Cisco, AMD, salesforce.com, Facebook, Yahoo!, Xerox, Sony, Unilever, Coca-Cola and Boots. I’m also pleased to note that the Group has added some additional blue-chip clients, including Hitachi Data Systems, Autodesk, VMware and HP.

Platforms for future growth

Another important measure of the Group’s performance is its ability to deliver growth in the future. While many businesses have simply hunkered down and focused on survival, we have continued to invest in our future. Shortly after our year end, we made a series of announcements. Firstly, we announced the acquisition of M Booth, a New York-based consumer agency that includes Unilever and JCPenney amongst its clients. Secondly, we announced that we have acquired the PR assets of Upstream Asia, which will become Bite Asia and will give Bite offices in Beijing, Shanghai, Hong Kong, Singapore and Sydney. Thirdly, we announced that we now own 70% of 463 Communications, a public policy consultancy based in Washington, DC and Silicon Valley. Lastly, we announced that in the next few months we will be opening a digital communications consultancy to service clients in the US and Europe.

All you need is LUV

As you can see, we have been busy during these difficult times and I’m proud of the great progress we have made. That said, the economic impact of this latest recession is still being felt in many parts of the world. However, I believe our business is set for what is being described as a ‘LUV’-shaped recovery, i.e. where the models of economic recovery are L-shaped in Europe, U-shaped in the US, and V-shaped in Asia. This would certainly match the signs we have seen during the last six months.

This last year placed some strong challenges in front of our people. They experienced clients being forced to cut back on marketing expenditure due to their declining sales. They witnessed an increasingly active merger and acquisitions market that had clients disappearing (and also appearing) from nowhere. They were engaged in the accelerating trend towards using social-media as a major part of PR campaigns, as traditional media continue to struggle. In all this, they maintained one constant belief: that doing great work is what really matters. I’m delighted to say that in these difficult times they did a lot of great work, which is why today we have a customer base that keeps getting better and an outlook that suggests that, as the world economy emerges from the uncertainty that has enveloped it in the last year, we will be presented with some wonderful opportunities, which we intend to take advantage of.