Acquisitions, vendor placing and cash placing

Chime Communications PLC

Acquisitions, vendor placing and cash placing

Highlights

·; Acquisition of Icon, an experiential sports marketing business, specialising in bringing brands to life at sporting events around the world, for an initial consideration of £11 million to be satisfied as to 65% by way of a vendor placing and 35% in new ordinary shares plus deferred contingent consideration. Clients of Icon include UEFA, FIFA and the Ryder Cup

·; Acquisition of minority interests in Bell Pottinger Middle East and Facts International financed primarily from the proceeds of the placing

·; Placing of £12.25 million at 260 pence per ordinary share by way of a vendor placing of £7.15 million and cash placing of £5.1 million underwritten by Numis Securities Limited ('Numis')

·; Cash available for other acquisitions

Lord Bell said 'Sports Marketing has been a great success for Chime and the acquisition of Icon will greatly enhance the range of our activities in this area. Icon is an attractive business at an attractive price. The acquisition of the two minority interests is in line with our strategy of buying out over time minority interests in businesses which Chime has set up with founding management. We continue to look at other acquisitions which will increase the scope of our business and the additional cash raised in the placing will ensure that our balance sheet remains conservatively financed whilst giving us the financial flexibility we need.'

Enquiries

Lord Bell, Chairman 020 7861 8515

Chime Communications

Chris Satterthwaite, Chief Executive 020 7861 8515

Chime Communications

James Henderson / Victoria Geoghegan / 020 7861 3232

Emma Kent

Pelham Bell Pottinger

John Francis, Managing Director 020 8302 4921

Christopher Wilkinson 020 7260 1000

Numis Securities Limited

Acquisitions, vendor placing and cash placing

The Board of Chime Communications PLC ('Chime' or the 'Company') announces that it has today entered into an agreement with the shareholders of Maidstone Road Holdings Limited ('Maidstone' ), the parent company of the Icon group of companies ('Icon' or the 'Icon Group') to acquire the entire issued share capital of Maidstone (the 'Icon Acquisition') for an initial consideration of £11 million of which £7.15 million will be satisfied by way of a vendor placing of 2,750,000 ordinary shares (the 'Vendor Placing') of 25 pence each in the capital of Chime ('Ordinary Shares') (the 'Vendor Placing Shares') and the balance will be satisfied through the issue of 1,443,023 Ordinary Shares (the 'Consideration Shares') .

Maidstone shareholders may also be entitled to receive deferred consideration the terms of which are set out below.

In addition, the Company announces that it will raise a further £ 5.1 million through the placing of 1,961,540 Ordinary Shares (the 'Cash Placing Shares') (the 'Cash Placing'). The net proceeds of the Cash Placing will be used by the Company to satisfy the cash consideration required for the acquisition of minority interests in Bell Pottinger Middle East and Facts International; to meet the expenses of the acquisitions; and to provide finance for further expected acquisitions.

In total 4,711,540 Ordinary Shares (representing the Vendor Placing Shares and the Cash Placing Shares) are being placed with certain institutional investors and WPP plc ('WPP') by Numis at a placing price of 260 pence per Ordinary Share (the 'Placing'), representing a discount of 2.6 per cent. to the closing middle price of 267 pence per Ordinary Share on 5 April 2011, the latest date prior to this announcement. The Placing has been fully underwritten by Numis (save for WPP's participation).

Application will be made for 6,423,793 Ordinary Shares (representing the Vendor Placing Shares, the Consideration Shares, the Cash Placing Shares and the Facts Consideration Shares (as defined below)) (the 'New Ordinary Shares') to be listed on the Official List of the Financial Services Authority and to be admitted to trading by the London Stock Exchange on its main market for listed securities. It is expected that dealings in the New Ordinary Shares will commence on 11 April, 2011. The New Ordinary Shares will, when issued, rank pari passu in all respects with the existing ordinary shares in the Company. Following the issue of the New Ordinary Shares the total number of issued ordinary shares in the Company will be 80,008,622. The Placing is conditional, amongst other things, on the placing agreement between the Company and Numis becoming unconditional and not being terminated.

The Icon Group

The Icon Group, an experiential marketing business, is based in Sidcup in Kent and started its activities in 1949. Icon brings sponsors' brands to life at stadia and major sporting events around the world, usually on the basis of multi-year contracts. Customers include major sporting federations such as UEFA where Icon has assisted in the physical branding of the UEFA Champions League (one of the most successful sporting events in the world) for the past 7 years. Other customers for whom Icon has worked or is currently working include FIFA; the Ryder Cup; the Boat Race; Abu Dhabi Motor Sports; and LTA Wimbledon.

Icon has a manufacturing facility in Sidcup, sources product from suppliers in the Far East and has a physical presence in key countries in the Middle East such as Qatar and Dubai. In addition to branding experiences at sporting events Icon provides experiential marketing for non-sporting commercial brands and recent activities have included work for Aviva and for Adidas at the departure of Team GB for the Winter Olympics in 2010 which was marked by images projected across Somerset House. Icon creates many different brand experiences including the use of images across water features.

Mr John Francis, the Managing Director of Icon, has over 15 years' experience in the sports event industry and remains fully committed to the businesses.

Following the acquisition of Essentially Group in 2009 Chime has been a significant participant in the sale of advertising for major sporting events such as Cricket test matches and Rugby internationals. This business has shown very substantial growth since the acquisition. The acquisition of Icon significantly increases Chime's sports marketing business in the football arena. In addition Chime currently purchases advertising space on behalf of clients and will be able, where appropriate, to offer a fully integrated product offering to advertisers working with other parts of Chime's Sports Marketing Group. Icon's expertise in the projection of images will also be of potential value to all Chime's marketing clients.

Chime sees significant growth opportunities for Icon resulting from the Olympic Games in London in 2012 and in Rio in 2016 and in utilising the contacts and relationships with major world sporting federations that Icon will bring to the Sports Marketing division. The experiential marketing activity is also a business which other Chime companies will market to their clients.

Icon's contracts for annual sporting events tend to be on a multi-year basis and whereas contracting parties to Icon historically tended to be local organisers there is an increasing trend for such contracting parties to be the international sporting federations. There is therefore significant benefit to the Icon business in becoming part of a larger international group.

Under the terms of the Icon Acquisition, Chime has agreed to pay initial consideration of £11 million of which £7.15 million will be satisfied through the Vendor Placing and the balance through the issue of the Consideration Shares. The Consideration Shares are subject to orderly marketing restrictions such that no shares can be sold for 12 months following the date of issue and only 50% may be sold in the following 12 months. In addition, two further tranches of deferred consideration may become payable. The first tranche will be calculated as 4.75 times average 2011 and 2012 earnings before interest and tax (' EBIT') less the initial consideration and will be payable in 2013. The second tranche will be calculated as 4.75 times average 2013 and 2014 EBIT less both the initial consideration and the first tranche and will be payable in 2015. In both cases, the deferred consideration will be satisfied 50% in loan notes and 50% through the issue of shares in Chime (although Chime retains the right to pay the share consideration through the issue of loan notes). A further payment of £0.6 million will be made to Maidstone shareholders representing surplus cash in Maidstone. Following completion a sum of £0.6 million will be immediately paid to Chime as a dividend. In the event that the Placing does not become unconditional Chime has the right (but not the obligation) to complete the acquisition of Icon and settle in cash that part of the initial consideration which would have been satisfied through the Vendor Placing.

For the year ended 31 December 2010, Icon reported revenue of £18.8 million and EBIT of £1.9 million after one-off items totalling £0.2 million. At 31 December 2010 the gross assets of Icon were £8.6 million. On 7 February 2011 Icon acquired for cash consideration of £1 million the trade and assets of Stanford Logistical Support Limited ('SLS'), a company which focuses on the events industry for the delivery and implementation of city dressing and event branding. For the year ended 30 November 2010 SLS had revenue of £2.1 million and net profit of £0.2 million.

The acquisition of Icon is expected to be earnings enhancing in the 2011 financial year.

Bell Pottinger Middle East FZ-LLC ('Bell Pottinger Middle East') and Facts International Limited ('Facts International')

Bell Pottinger Middle East

Tom Mollo is a founding partner of Bell Pottinger Middle East and whilst he remains fully committed to the business Chime and Tom Mollo have agreed that it would be appropriate for Chime (through Bell Pottinger Communications Limited) to purchase his 20% founding interest. This acquisition took place on 30 March 2011. The total cash payment is £1 million and in addition deferred consideration may be payable based on 5 times average EBIT for 2011, 2012 and 2013 capped at £0.9 million. Following the acquisition Chime now owns 90% of the shares of Bell Pottinger Middle East which had revenue in the financial year ended 31 December 2010 of £3.7 million.

Facts International

Facts International was set up by Chime and Nick Lamb in 2007 following the acquisition of a predecessor business. Under the terms of the shareholder agreement between Chime and Nick Lamb Chime may purchase Nick Lamb's 25% holding at Nick Lamb's request at any point after February 2010. An agreement has been reached on the terms of the acquisition and Chime will pay Nick Lamb £1.7 million made up of £1 million in cash and 269,230 Ordinary Shares (the 'Facts Consideration Shares'). There is also a potential deferred payment capped at £0.1 million. In the year ended 31 December 2010 Facts International reported revenue of £3.4 million and EBIT of £1.3 million.

Both Tom Mollo and Nick Lamb are committed to remaining with Chime and have entered into new incentive arrangements going forward.

Current trading

Trading in 2011 is in line with the statements made in the Outlook section of the audited preliminary results for the year ended 31 December 2010 announced on 9 March 2011. Chime expects the acquisition of Icon and the minority interests set out above to be earnings enhancing in the current financial year.

Chime is continuously looking at ways of growing its businesses either through acquisition or through organic development. Acquisitions will always be financed prudently and Chime intends to maintain a conservative balance sheet structure particularly taking account of the significant seasonality in working capital and the fact that cash balances in overseas subsidiaries and subsidiaries with minority interests are not included when assessing the total utilisation of Chime's loan facilities.

Chime is also in negotiations with a Brazilian sports marketing business. This is relevant to the next Football World Cup and the next Olympics, both of which are in Brazil. In addition Chime is looking at various possible health care acquisitions.