Interim Results

29th August 2012

CHIME COMMUNICATIONS PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2012

Chime Communications PLC, the International Communications & Sports Marketing group, today announces its unaudited interim results for the six months ended 30th June 2012.

SUMMARY OF RESULTS

These results are the first results to reflect the Group in its continuing form following the sale of some Bell Pottinger businesses and the planned closure of other Bell Pottinger businesses, once two overseas contracts have been completed early in 2013.

HEADLINE FINANCIAL HIGHLIGHTS

Headline results exclude businesses that have been sold or are in the process of being closed.

·; Net cash as at 30th June 2012 of £21.8 million compared to £6.9 million at 30th June 2011 and £3.3 million as at 31st December 2011.

·; New £47 million four year bank facility agreed with RBS.

REPORTED FINANCIAL HIGHLIGHTS

Reported results exclude businesses that have been sold but include businesses that are in the process of being closed.

OPERATIONAL HIGHLIGHTS

·; Strong growth in all areas, especially Sports Marketing

·; Successful execution of 2012 Olympic contracts, Paralympic contracts underway

·; Substantial investment in new offices and new products in VCCP

·; New offices opened in Sydney, Madrid, Moscow and Singapore

·; Completed acquisitions of iLUKA, McKenzie Clark, Harvey Walsh (51%), Succinct and Rough Hill (60%)

·; Disposal of most of the Bell Pottinger businesses completed for £19.6 million

- Rebalancing of the Group

- Significant central cost reduction

- Cash from disposal to be invested in growth areas

·; Exit from the remaining Bell Pottinger geopolitical business largely complete

·; New Chairman being actively sought

Note: 1. All numbers and comments shown in this report are headline unless otherwise stated. During the first half of 2012 all the Bell Pottinger branded businesses were either sold or are in the process of being exited. Chime has been exiting the geopolitical business within Bell Pottinger since late 2011, although there remain two contracts which Chime still has to complete legally. One ends in November 2012 and the other in January 2013. The work has been sub-contracted to third parties and Chime is not expected to make any profit or loss on these contracts in the period to completion. Under accounting standards this line of business does not meet the definition of discontinued at 30 June 2012 due to Chime's legal obligation in the completion of the contracts. Given the substantial exit of this business we have shown the impact in this announcement as if this business was discontinued so as to provide helpful information about our on-going business. Headline figures are also before taking account of amortisation of intangible assets and impairment of goodwill and costs relating to acquisition and restructuring. The appendix to this announcement shows a reconciliation of these headline numbers to the reported numbers.

2. Like for Like comparisons are calculated by taking current year actual results (which include acquisitions from the relevant date of completion) compared with prior year actual results, adjusted to include the results of acquisitions for the commensurate period in the prior year.

Christopher Satterthwaite, Chief Executive, said:

"We are reporting strong income and profit growth in our continuing businesses whilst evolving into an international communications and sports marketing group. We are now well positioned in these high growth sectors, especially sports marketing, which has become the leading way for global brands to engage their audiences as the 2012 Olympic and Paralympic Games have demonstrated. Despite difficult overall economic conditions we anticipate continued growth in our sectors and in our businesses and, as such, the long term outlook for the Group remains very good."

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OVERVIEW

This set of results covers a period in which Chime has developed its business further around its core, market-leading brands and disposed of some non-core assets. The period has seen the Group continue to pursue its transition strategy from being a diversified group with an emphasis on public relations to being an international communications and sports marketing business. The Board believes this strategy leaves Chime well positioned for growth, delivering high-value services across more profitable sectors and growing geographies.

The Group's growth strategy revolves around four key areas: sports marketing, advertising, public relations (including healthcare communications), insight & engagement and four respective brands: CSM Sports & Entertainment, VCCP, Good Relations and CIE.

CSM Sports & Entertainment, which employs over 500 people, is in the top five agencies globally for sports marketing and has offices in 15 different cities in the world. VCCP is an award winning, top ten advertising agency in the UK and has been ranked in the top five of Campaign magazine's new business league table for the last two years. Good Relations is a well-established public relations brand, and is also a top ten UK public relations agency. CIE is a full service insight and engagement division, with a growing digital platform.

The Group's vision is to consolidate its market-leading position by focusing on sectors and geographies yielding more profitable and higher levels of growth, in order to maximise returns to shareholders.

This growth will be fuelled by a variety of drivers, both market and Chime-specific with organic and acquisitive growth opportunities funded by proceeds from the recent disposal, modest use of debt facilities and cash generated from operations.

MARKET DRIVERS OF GROWTH

Sports & Entertainment

Revenue growth in the global sponsorship market is forecast by PwC to be 5% per annum, well ahead of general marketing communications growth rates. London 2012 attracted £800m of sponsorship revenues. Brazil 2016 is already attracting major global sponsors at higher levels of sponsorship than London.

Sporting audiences are increasing globally through more consumers accessing sporting content on their mobile devices. By 2015 it is expected that 5.5 billion of the world's 7 billion population will be mobile-enabled and able to access such content.

Naturally, growth rates in emerging markets are particularly strong with FIFA estimating that 70% of its rights sales will be in Asia and Latin America, against a current contribution of 30%. Domestic growth also remains strong with broadcast rights for the English Premier League having recently increased by 70%, a trend which is expected to be replicated globally.

To date in Sports Marketing, Chime has acquired ten businesses, entered 12 markets and grown operating income to over £55 million per annum.

Healthcare (Part of Chime's Public Relations Division)

A similarly positive growth effect is being experienced in the global pharmaceuticals market with Discovery Search Partners forecasting an annual growth rate between now and 2014 of 5-8%.

This growth is likely to add c. $300 billion in additional revenue, increasing the total market size to $1.1 trillion by 2014. Marketing expenditure is expected to be about $100 billion with three distinct changes in spending patterns:

• a decline in sales and advertising focused activity;

• a growth in science-focused medical communications, direct to patient and digital channels; and

• the emergence of "market access" as a major growth sector

In the last 18 months, Chime's 'Open Health' brand has established a credible European footprint with an emphasis on market access. It is challenging the existing legacy healthcare communications brands following four well targeted acquisitions.

Digital

GroupM estimates that online communications will be worth £4.8 billion in 2012 with a growth rate close to 10%. Credit Suisse, the financial services group, forecasts an important shift in the future marketing mix with a far greater contribution from digital applications, social media and online video and the level of disposable income consumers dedicate to this.

In 2012 Chime has launched two start-up digital businesses: Watermelon Research and VCCP Content.

International

Geographically, emerging markets are forecast to experience growth rates well in excess of developed markets. Forecasts from GroupM predict the Asia Pacific, Latin America and Chinese regions all registering year-on-year growth in the range of 8% -13%, well in excess of the UK and Western Europe. China at 13% and Brazil at 10% are two stand-out countries. Chime is well positioned to benefit from this growth with offices in 33 countries, including 14 offices in the top six high-growth regions.

Chime specific drivers of growth

Internally, Chime intends to leverage market drivers of growth via a number of strategic activities including:

Organic Growth

·; Opportunity to build "full service" organic growth in all CSM geographies (London and Brazil first)

·; Opportunity to increase CSM's offering into new sports, eg. motorsport

·; Significant room for growth within existing advertising and marketing services franchise

·; Refocusing of public relations division around "Good Relations"

·; Insight and Engagement full service capability provides basis for continued growth

·; Digital as a platform for VCCP growth. VCCP is already one of the most digital "full service" agency groups

·; Scope to increase cross selling by group companies

·; Margin improvements possible, particularly in advertising and marketing services

·; Tight cost control a priority

Start-Ups/Chime Ventures

Focus will be on digital and technology. Two digital start-ups planned each year.

New Offices

New offices will be opened in high-growth regions and, wherever possible, revenue flow will be planned to precede investment. These new offices are expected to be mainly in sports marketing and advertising.

Acquisitions

The Company is planning further acquisitions where appropriate. Chime has a good recent acquisition record with a 16% return on capital employed for acquisitions in the last five years. Acquisitions are likely to be in new marketing disciplines or geographies and to be earnings enhancing in their first year.

HEADLINE FIRST HALF PERFORMANCE

The continuing business has delivered strong growth registering a 66% increase in operating profit on a 19% increase in operating income.

The Sports Marketing division, which was rebranded 'CSM Sports & Entertainment' during the first half, delivered 39% like-for-like growth in operating income and 161% like for like growth in operating profit. This performance reflects CSM's involvement in London 2012 as well as other client wins.

The VCCP Partnership delivered good income growth of 10% but the margin was lower than planned due to investment in new businesses and new business pitches.

The Public Relations division is being restructured following the disposal of the Bell Pottinger brands for £19.6 million. The Board believes it achieved a very good price for these businesses. The Public Relations division now consists of the Good Relations Group and Open Health, the healthcare communications business which is also growing well.

All areas of the Insight and Engagement division are now profitable and it is showing strong growth with good future prospects as new services and expertise are introduced into the management plans.

REPORTED FIRST HALF PERFORMANCE

·; Reported operating income has increased due to strong growth in Sports Marketing which has more than offset the decrease in the Public Relations businesses being closed.

·; Reported operating profit has reduced due to a loss in the Public Relations businesses that are being closed and the related costs of closure; however, this has been partly offset by the increase in operating profit in Sports Marketing.

·; Reported operating profit margin has declined mainly in the businesses being closed. This has been partly offset by an increase in the operating profit margin of Sports Marketing.

FIRST HALF KEY PERFORMANCE INDICATORS

Income from Shared Clients

The Group acted for 1,334 clients in the first half of 2012 compared to 996 in the first half of 2011. 171 of these clients used more than one of our businesses (140 in the first half of 2011) which represented 63% of total operating income (first half 2011: 61%).

Average Fee per Client

Average fee per client for the first half of 2012 was £55,000, in line with the first half of 2011. 209 clients paid us over £50,000 in the first half of 2012 compared to 155 in the first half of 2011. Our largest client represented 14% of total income (first half 2011: 17%). Our top 30 clients represented 51% of total income compared to 54% in the first half of 2011.

Operating Profit Margin

Operating profit margin for the first half of 2012 was 15.4% compared to 14.1% in the first half of 2011.

Income from Overseas Offices

Income from overseas offices increased by 4% in the first half of 2012, although as a percentage of total income it reduced from 16% in the first half of 2011 to 12% in the first half of 2012. Much of our future growth is expected to come from international offices so we expect this percentage to increase substantially in 2013 and beyond.

Earnings per Share

Earnings per share in the first half of 2012 increased to 9.3p (2011 first half: 7.1p).

HEADLINE DIVISIONAL PERFORMANCE

Sports & Entertainment

London 2012 has been an excellent contributor to this division and the work we have undertaken will act as a strong sales and marketing platform for the proliferation of high profile sports events globally. Income was up 64% and operating profit was up 68%.

During the first half of the year the Company completed the acquisitions of iLUKA and McKenzie Clark, both of which are integrating well and are on track to be earnings enhancing in the full year.

Planning for both the FIFA World Cup in 2014 and the 2016 Olympics in Brazil are progressing with sponsorship revenue expected to grow significantly. A growing international new business pipeline and planned acquisitions mean that CSM should perform well in the coming years.

CSM London 2012 activity has included:

·; Direct involvement in the bid including securing commercial partners, drawing up key legacy plans and providing the Bid's Vice-President, Alan Pascoe

·; Consulting for four of LOCOG's primary sponsors: GSK, BT, BP & G4S

·; Managing the attendance of 40,000 guests through hospitality programmes including event hospitality for 12 sponsors and 13,000 VIPs

·; Design of the Olympic pictograms (Chime brand design agency, Someone)

·; Creation of the UK Schools games and Paralympic World Cup

·; Rights sales on behalf of five GB Olympic sports' National Governing Bodies

·; Event presentation of 18 Olympic and eight Paralympic sports

·; 'Event Look', 'Branding' and 'Wayfinding' for every event and city dressing throughout the UK

·; Created and built sponsor facilities for EDF, BP and Olympic Club for the IOC

Advertising & Marketing Services

The VCCP Partnership has shown good operating income growth of 10%, but investment has increased costs in this business. Had this investment not been made, the margin would have been close to our target of 15%. VCCP is now a UK top ten agency.

The business has implemented start-ups in Spain and Australia and in Content, Media and Direct Marketing. There was also a sizeable investment in new business pitches in the first half which has led VCCP to be third in the UK new business league table. Further investment in these start-ups is expected in the second half.

Rough Hill, a youth marketing business, was acquired in April 2012 and this is integrating well.

Teamspirit, the specialist financial services full service agency, is also looking to develop new sector specific areas of expertise, eg. B2B and technology.

Public Relations

The disposal of Bell Pottinger was completed in the first half and the remaining geopolitical business is in the process of being closed. The Good Relations Group provides an excellent platform for growth in this division, with a strong client list including Weetabix, Compare the Market, Airbus and TalkTalk.

Good Relations is targeting to become a top five agency group in the UK. This division also includes: Open Health, the full service healthcare business, which has shown strong growth, as well as completing the acquisitions of Harvey Walsh and Succinct.

Insight & Engagement

CIE had an excellent first half year with operating income growing by 18% and operating profit growing by 148%. Margin has improved from 9.1% to 19.0%.

The newly launched digital research business (Watermelon Research) is already profitable and has excellent future prospects.

CORPORATE ACTIVITY

The sale of certain Bell Pottinger businesses to a management team was completed on 30th June 2012 for a consideration of £19.6 million. This was made up of:

·; £13.9 million in cash paid at completion

·; £1 million in cash payable by 30th June 2013

·; A 25% shareholding in the new company that now owns these Bell Pottinger businesses (£4.1 million)

·; £0.6 million of deferred consideration liability that has been transferred

The total consideration represents an 8x EBIT multiple for 2011.

So far in 2012, we have acquired:

·; iLUKA (sports marketing)

·; McKenzie Clark (healthcare)

·; Harvey Walsh (51%) (healthcare)

·; Succinct (healthcare)

·; Rough Hill (60%) (youth marketing)

CASH FLOW AND BANKING ARRANGEMENTS

Net cash at 30th June 2012 was £21.8m compared to £6.9m at 30th June 2011. The Group continued to generate cash with cash conversion on profits of 190%.

A new four year borrowing facility has been agreed with RBS for £47m. This runs until September 2016, with an interest rate of between 1.75% and 2.25%, depending on use of the facility compared to EBITDA. Deferred considerations payable in the remainder of 2012 are £2.6 million. The estimated deferred considerations payable in 2013 total £12.9 million and are payable £7.4 million in cash and £5.5 million in shares. Given the Group's current cash position it is considering purchasing shares in the marketplace to satisfy some or all of this share element, rather than using new shares.

TAXATION

The effective tax rate for 2012 was 26.7% compared to 25.7% for 2011.

DIVIDENDS

The Board has declared an interim dividend of 2.10p per share (2011: 2.08p per share). The interim dividend will be payable on 12th October 2012 to shareholders on the register at 21st September 2012. The ex-dividend date is 19th September 2012.

OUTLOOK

The transition from a diversified group with an emphasis on public relations to an international communications and sports marketing group is well advanced. The group is building market leading brands to challenge and win market share from the competition in market sectors that are growing ahead of general marketing communication disciplines.

Despite a challenging macro-economic environment, Chime anticipates positive organic growth especially from its sports marketing division, which has doubled its income in the first half of the year already.

With further acquisitions planned, tight cost control, new banking facilities agreed and positive contributions from the other divisions, the outlook for the Group remains good.

Reconciliation of Condensed Income Statement to headline results for the period ended 30 June 2012

The reconciliation below sets out the headline results of the group and the related adjustments to the reported Income Statement that the directors consider necessary in order to provide an indication of the underlying trading performance.

Headline figures are presented with the exit of the Public Advocacy and Defacto businesses classed as discontinued operations.

Reconciliation of Business Segments to adjusted results for the period ended 30 June 2012

Headline figures are presented with the exit of the Public Advocacy and Defacto businesses classed as discontinued operations.

Key risks and uncertainties

As described more fully on pages 44 and 45 of the 2011 Annual Report and Accounts, and in addition to the general economic and competitive risks affecting businesses operating in the Group's markets, the following are considered to be the principal risks impacting the Group:

·; The Group receives a significant portion of its revenues from a limited number of large clients, and the loss of those clients would adversely impact the Group's prospects, business, financial condition and result of operations.

·; The Group must ensure it retains and develops personnel at all levels

·; Acquired goodwill and other intangible assets recorded on the Group's balance sheet with respect to acquired companies may become impaired

·; The Group is subject to currency rate risk

The Group performs a comprehensive annual risk assessment exercise involving all senior management teams around the Group to identify report and evaluate operational risks facing the business and ensure appropriate actions are undertaken to manage these risks.

The Directors have considered whether these risks have changed since the 2011 Annual Report and Accounts were published, but do not consider that the level of risk that the Group is exposed to has increased in the first half of 2012 and anticipate that these will continue to be the key risks and uncertainties during the second half of 2012.

Going Concern

The directors have assessed the future funding requirements of the Group and are of the opinion that the Group has adequate resources to fund its operations for the foreseeable future. Therefore they believe that it is appropriate to prepare the accounts on a going concern basis. For further details please see Note 2 to the Financial Statements.

Condensed Consolidated Income Statement

Six months ended 30th June 2012

* These amounts together with the applicable note have been represented for discontinued operations (note 5), in line with IFRS 5.

Condensed Consolidated Statement of Comprehensive Income

Six months ended 30th June 2012

Condensed Consolidated Balance Sheet as at 30th June 2012

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Condensed Consolidated Statement of Changes in Equity

Condensed Consolidated Statement of Changes in Equity (continued)

Condensed Consolidated Cash Flow Statement

Six months ended 30th June 2012