Become a Member

Track your favourite stocks
Create & monitor portfolios
Daily portfolio value

Company	Chg	Chg %
Quickpicks
£	%
Add shares to your quickpicks to display them here!

Interim Results

28th Aug 2013 07:00

RNS Number : 5882M

Chime Communications PLC

28 August 2013

28th August 2013

CHIME COMMUNICATIONS PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2013

Chime Communications PLC, the International Communications & Sports Marketing group, today announces its unaudited interim results for the six months ended 30th June 2013.

SUMMARY OF RESULTS

Overall trading in the first six months of this year has been in line with our expectations. Our Advertising and Marketing Services, Public Relations, Healthcare Communications and Insight and Engagement divisions all had operating profit growth of at least 50%. Healthcare in particular has performed strongly trebling its operating profits and is now established as a strong European healthcare communications brand.

Our Sport and Entertainment division has had a reasonable performance in the first six months of 2013, a year when there is no FIFA World Cup or Olympics and when it has been developing its operations in Brazil and China.

Our international operations have continued to grow with operating income up 40%.

OPERATIONAL HIGHLIGHTS

· All five divisions gaining market share

· Appointment of two new Non-Executive Directors in August 2013

· Acquisition of Complete Leisure, People Marketing and WARL

· Good progress in our Brazilian businesses

· Already secured eight contracts for FIFA World Cup in 2014

HEADLINE FINANCIAL HIGHLIGHTS

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

	2013 £m	2012 £m	% Change	Like for Like Change
Operating Income	77.8	73.7	+6%	-4%
Operating Profit	11.3	11.3	-	+1%
Profit Before Tax	11.2	11.0	+2%	+3%
Operating Profit Margin	14.6%	15.4%
Earnings per Share	9.0p	9.5p	-5%
Interim Dividend	2.20p	2.10p	+5%

· New £70 million bank facility agreed with RBS and HSBC until September 2016

Christopher Satterthwaite, Chief Executive, said:

"The Group has performed well in the first half of the year, driven by our Advertising and Marketing Services, Public Relations, Healthcare Communications and Insight and Engagement divisions which each saw profit growth in excess of 50%.

Our Sport and Entertainment division has performed well so far in a year without a FIFA World Cup or Olympics. The successful delivery at last year's Olympics has enabled us to win a high level of contracts for the FIFA World Cup next year.

We are also pleased with the progress we are making in relation to the Commonwealth Games in Glasgow and the Winter Olympics in Sochi. These both take place in 2014 which we are expecting to be a strong year of growth for our Sport and Entertainment division."

REPORTED FINANCIAL HIGHLIGHTS

	2013 £m	2012 £m	% Change
Operating Income	77.8	75.2	+3%
Operating Profit	1.0	3.5	-73%
Profit Before Tax	0.6	2.2	-73%
Operating Profit Margin	1.2%	4.7%
Earnings per Share	(3.3p)	(0.7p)

Note: 1. All numbers and comments shown in this report are headline unless otherwise stated. The appendix to this announcement shows a reconciliation of these headline numbers to the reported numbers. The headline numbers adjust for the following:

· Deemed remuneration charge add back in respect of the change in accounting policy for earn-out payments £4.3 million and LLP capital based payments (£0.3 million).

· Add back of charges to the income statement in respect of amortisation of intangible assets, impairment of goodwill relating to a foreign subsidiary within the Public Relations division (see note 8) and costs relating to acquisition and restructuring.

· Discontinued business that does not meet the definition of discontinued under the accounting standard. This related to the geopolitical business within Bell Pottinger.

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.

For further information please contact:

Christopher Satterthwaite, Chief Executive 020 7096 5888

Chime Communications

Mark Smith, Chief Operating Officer and Finance Director 020 7096 5888

Chime Communications

James Henderson/ Victoria Geoghegan 020 7861 3925

Bell Pottinger Pelham

OVERVIEW

Advertising and Marketing Services, Public Relations, Healthcare Communications and Insight and Engagement have all grown strongly with profit growth of over 50% in each division compared to the first half of 2012.

Healthcare Communications has shown particularly strong growth with profits increasing 220% at a margin of 20%. We expect this division to be a key growth driver for us in 2013 and beyond as we develop the business and take advantage of the changes in the Healthcare market.

Sports and Entertainment has performed well given there is no FIFA World Cup or Olympics in 2013 and compared to 2012 when the Olympics contributed to a 64% increase in profits. We have continued to invest in our Brazil office and are pleased that this is developing well with several new contracts already won, and a good pipeline of further opportunities for involvement across more areas of the FIFA World Cup in 2014. However, the closure of one of the main stadiums in Rio de Janeiro for which we sell sponsorship has led to a delay in income in the first half of 2013 which we expect will continue to have an impact in the second half. Although Sports and Entertainment revenues will be lower in 2013, we now expect revenues in 2014 to be higher than we were previously forecasting.

Following the appointment of Lord Coe as Chairman of our Sport and Entertainment division, we are continuing to develop the branding and structure of the division to ensure a more integrated approach, including appointing a new Chief Operating Officer of CSM Sport and Entertainment.

New client wins across the group have included: PruHealth, The Football League, Scottish Rugby, Tottenham Hotspur FC, Qatar Foundation, Help for Heroes, Royal London, Courvoisier, Worldpay, Bob Martin, Cirque du Soleil, Unilever - Dove for Men, Coca Cola, VISA, FIFA and Brasil Foods/Sadia.

FIRST HALF KEY PERFORMANCE INDICATORS

Income from Shared Clients

The Group acted for 1,365 clients in first half of 2013 compared to 1,334 in the first half of 2012. 225 of these clients used more than one of our businesses (171 in the first half of 2012) which represented 69% of total operating income (first half 2012: 63%).

Average Fee per Client

Average fee per client for the first half of 2013 was £57,000, compared to £55,000 in the first half of 2012. 226 clients paid us over £50,000 in the first half of 2013 compared to 209 in the first half of 2012. Our largest client represented 13.2% of total income (first half 2012: 13.7%). Our top 30 clients represented 46% of total income compared to 51% in the first half of 2012.

Operating Profit Margin

Operating profit margin for the first half of 2013 was 14.6% compared to 15.4% in the first half of 2012. All our divisions, apart from Sport and Entertainment, showed an improvement in margin in the first half of 2013 and we are particularly pleased that margins in our Advertising and Marketing Services division have improved to close to 10%.

Income from Overseas Offices

Income from overseas offices increased by 40% in the first half of 2013. As a percentage of total income it also increased from 12.3% in first half of 2012 to 16.3% in the first half of 2013. We expect this percentage to increase further in the second half and throughout 2014.

Earnings per Share

Earnings per share in the first half of 2013 was 9.0p (2012 first half: 9.5p). The fully diluted weighted average number of shares in issue increased from 80.7 million in the first half of 2012 to 83.4 million in the first half of 2013.

HEADLINE DIVISIONAL PERFORMANCE

Sport & Entertainment

	2013 £m	2012 £m	% Change	Like for Like Change

Operating Income	24.4	31.4	-22%	-29%
Operating Profit	4.5	7.5	-40%	-29%
Operating Profit Margin	18.5%	24.0%

2013 was always going to be a challenging year for our Sports and Entertainment division but we are pleased with the progress we have made, even though the 2013 first half year performance is less than 2012 when we reported 64% profit increase. We have positioned the division well for future growth in 2014 and beyond, by developing CSM Sport and Entertainment as an international, full service, multi-sport group.

We have continued to increase our international footprint through the acquisition of People Marketing based in Shanghai and Hong Kong and we now have Sports and Entertainment offices in 15 countries.

Our businesses in Brazil are developing well and we have already secured 8 contracts for activity around the FIFA World Cup in 2014 which considerably exceeds activity undertaken by us at the previous World Cup in South Africa in 2010.

Other major sporting events in 2014 that we are involved with include the Winter Olympics (Russia) and the Commonwealth Games (Scotland).

The second half of 2013 will remain challenging with financial performance depending to a large extent on what proportion of major event work for 2014 is completed in 2013.

Our track record of the delivery of London 2012 Olympics and the appointment of Lord Coe has positioned us well for the continued growth of the division. Sports marketing is now at the heart of all sporting events and as the size of sponsorship increases and viewership becomes more global, we are well positioned to take advantage of these opportunities.

Advertising & Marketing Services

	2013 £m	2012 £m	% Change	Like for Like Change

Operating Income	30.0	26.0	+15%	+12%
Operating Profit	2.9	1.9	+55%	+41%
Operating Profit Margin	9.7%	7.3%

In 2013 we have focused on improving the operating profit margin as well as growing operating income, and we are delighted that VCCP has continued its strong new business performance as well as improving its margin. 2012 was a year in which we invested heavily in new client pitches and establishing new businesses. In 2013 investment has been reduced and cost control improved. VCCP is the eighth largest advertising agency in the UK and over recent years has opened offices in Germany, Czech Republic, Spain and Australia. All these offices are now profitable and we expect further cautious international expansion in the future.

The integration of WARL, a shopper marketing business acquired in May 2013, has gone well and further enhanced the range of services the VCCP Group can offer to clients.

Teamspirit, our financial and professional services group, has grown well. It has had an excellent new business performance in the first half of 2013.

We expect the momentum established in the first half to continue with further improvements in margin.

Public Relations

	2013 £m	2012 £m	% Change	Like for Like Change

Operating Income	11.1	9.5	+18%	+18%
Operating Profit	1.5	1.0	+50%	+50%
Operating Profit Margin	13.9%	10.2%

The Good Relations Group is now established as an integrated public relations group following the disposal of Bell Pottinger in June 2012. It is already the 15th largest public relations business in the UK, the sixth ranked digital public relations business and the third ranked technology public relations agency.

It has grown operating profit by 50% in the first half of 2013 with a much improved margin of 13.9%. Jackie Brock-Doyle joined as Chief Executive in June 2013, having previously been Director of Communications at LOCOG. This is a very exciting appointment which should help us expand the range of services we can offer to clients.

Healthcare Communications

	2013 £m	2012£m	% Change	Like for Like Change

Operating Income	8.3	3.8	+115%	+15%
Operating Profit	1.6	0.5	+220%	+19%
Operating Profit Margin	19.7%	13.2%

Following acquisitions in 2011 and 2012 we have now established Open Health as an integrated healthcare communications group with a particular strength in the growing area of market access. Operating profits grew by 220% in the first half of 2013 at a margin of nearly 20% and we see this business as a key driver of our growth in 2014 and beyond.

Insight & Engagement

	2013 £m	2012£m	% Change	Like for Like Change

Operating Income	4.0	3.0	+33%	+33%
Operating Profit	1.2	0.7	+54%	+54%
Operating Profit Margin	28.6%	24.6%

The return to growth of this division in 2012, well above industry rates, has continued into the first half of 2013 with operating profit growth of 54%. This growth in the first half has been driven particularly by the digital research business (Watermelon Research).

We expect this business to continue to grow in 2014 and beyond, although market conditions in Insight and Engagement remain highly competitive in a sector undergoing structural change.

BOARD CHANGES

We are delighted to welcome Martin Glenn and Vin Murria as Non-Executive Directors of Chime with effect from 7th August 2013. Catherine Biner-Bradley retired from the Board in April 2013 and we are very grateful for her contribution over more than twelve years.

CORPORATE ACTIVITY

So far in 2013, we have acquired:

· Complete Leisure (Sports Marketing)

· People Marketing (Sports Marketing, Shanghai and Hong Kong)

· WARL (Advertising and Marketing Services)

CASH FLOW AND BANKING ARRANGEMENTS

Net debt at 30th June 2013 was £14.9 million compared to net cash of £21.8 million at 30th June 2012 and net cash of £4.3 million at 31st December 2012. In addition, at 30th June 2013 there were loan notes outstanding to some employees of £4.8 million, giving total net debt of £19.7 million. Cash outflows in the first half of 2013 included acquisition costs of £13.7 million.

The Group continued to generate cash with cash conversion on headline pretax profits of 106%.

An increased facility has been agreed with RBS and HSBC for £70 million. 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. Cash deferred considerations payable in the remainder of 2013 are £14.6 million; this includes the repayment of loan notes of £4.8 million. The estimated deferred considerations payable in 2014 total £4.8 million and are payable £3.5 million in cash and £1.3 million in shares.

Working capital management is a high priority as we operate in a cash generative industry. Our Sport and Entertainment business can require more working capital than other marketing services businesses and big event contracts can lead to working capital fluctuations which we need to plan carefully. We continue to generate cash and we believe our working capital requirement is similar or better than most of our peer group.

TAXATION

The effective tax rate for the first half of 2013 was 26% compared to the 2012 full year rate of 27.6%.

DIVIDENDS

The Board has declared an interim dividend of 2.20p per share (2012: 2.10p per share). The interim dividend will be payable on 11th October 2013 to shareholders on the register at 20th September 2013. The ex-dividend date is 18th September 2013.

CORPORATE RESPONSIBILITY

Chime continues to focus on its corporate and social responsibilities and we are fortunate to have within our group one of the leading consultancies in this sector, Corporate Citizenship, as part of the Good Relations Group. We reduced our carbon footprint by 10% in 2012 and we have developed good community and young people initiatives including a Chime Youth Board and an apprentice recruitment scheme. The Good Relations Group has launched a "Triple G" brand rating that indicates the future success and sustainability of organisations in a similar way to the "AAA" credit score for organisations' financial performance and hard capital rating. We continue to be listed on the FTSE 4 Good.

OUTLOOK

The strategy we set out last year is being delivered and we expect 2013 to be a good year. Furthermore 2014 is expected to show stronger growth in operating income than forecast, as the FIFA World Cup in Brazil accelerates revenue through our Sport and Entertainment division where we are better positioned than in previous World Cups to secure a larger number of contracts through our expanded offering. We believe this trend will be replicated for the Rio Olympics in 2016.

The years with a FIFA World Cup or an Olympic Games should show stronger growth than those years without these events and the outlook for 2014 is increasingly positive.

We are particularly pleased with the progress of our Brazilian operations in winning business for the World Cup but owing to phasing of some sports contracts, we now expect some income forecast in 2013 to be carried forward into 2014.

In 2013, we will continue to focus on improving margins, particularly in our Advertising division. We expect growth in our Advertising, Public Relations, Healthcare Communications and Insight divisions to continue.

Reconciliation of Condensed Income Statement to headline results for the 6 months ended

30 June 2013

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			Adjustments			Reported Income Statement
		6 months to 30 June 2013	6 months to 30 June 2012	12 months to 31 December 2012	6 months to 30 June 2013	6 months to 30 June 2012	12 months to 31 December 2012	6 months to 30 June 2013	6 months to 30 June 2012	12 months to 31 December 2012
		(unaudited)	(unaudited)	(audited)	(unaudited)	(unaudited)	(audited)	(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Continuing Operations
Revenue		140,237	160,546	330,463	-	7,126	13,771	140,237	167,672	344,234
Cost of sales		(62,428)	(86,827)	(172,898)	-	(5,597)	(11,546)	(62,428)	(92,424)	(184,444)
Operating income		77,809	73,719	157,565	-	1,529	2,225	77,809	75,248	159,790
Operating expenses		(66,469)	(62,393)	(131,888)	(10,422)	(9,331)	(23,009)	(76,891)	(71,724)	(154,897)

Deemed remuneration					4,627	4,589	11,273
Loss on business being discontinued					-	910	962
Amortisation of acquired intangibles and goodwill impairment					4,587	1,321	2,944
Costs of acquisitions and restructuring					1,208	982	5,605

Operating profit		11,340	11,326	25,677	(10,422)	(7,802)	(20,784)	918	3,524	4,893
Other gains and losses		-	-	-	-	(895)	(1,677)	-	(895)	(1,677)
Share of results of associates		541	113	611	-	(51)	(51)	541	62	560
Investment income		7	15	27	-	-	-	7	15	27
Finance costs		(507)	(238)	(664)	-	-	-	(507)	(238)	(664)
Finance cost of deferred consideration		(175)	(196)	(325)	-	-	-	(175)	(196)	(325)
Finance cost of deemed remuneration		-	-	-	(195)	(116)	(270)	(195)	(116)	(270)
Profit before tax		11,206	11,020	25,326	(10,617)	(8,864)	(22,782)	589	2,156	2,544
Tax		(2,913)	(2,956)	(7,090)	358	694	1,890	(2,555)	(2,262)	(5,200)
Profit /(loss) for the period from continuing operations		8,293	8,064	18,236	(10,259)	(8,170)	(20,892)	(1,966)	(106)	(2,656)
Discontinued operations
Profit from discontinued operations		-	1,419	1,053	-	1,562	1,737	-	2,981	2,790
(Loss) / profit for the period		8,293	9,483	19,289	(10,259)	(6,608)	(19,155)	(1,966)	2,875	134

Attributable to:
Equity holders of the parent		7,530	8,582	17,879	(10,259)	(6,608)	(19,155)	(2,729)	1,974	(1,276)
Minority interest		763	901	1,410	-	-	-	763	901	1,410
		8,293	9,483	19,289	(10,259)	(6,608)	(19,155)	(1,966)	2,875	134

Earnings per share
	From continuing and discontinuing operations
Basic		9.12p	10.75p	22.29p				(3.31p)	2.47p	(1.59p)
Diluted		9.03p	10.63p	21.90p				(3.31p)	2.45p	(1.59p)
	From continuing operations
Basic		9.12p	9.58p	21.58p				(3.31p)	(0.66p)	(4.47p)
Diluted		9.03p	9.48p	21.20p				(3.31p)	(0.66p)	(4.47p)

Reconciliation of Business Segments to adjusted results for the 6 months ended 30 June 2013

							Reported Segmental Note
	Headline Operating Income			Adjustments			Operating Income
	6 months to 30 June 2013	6 months to 30 June 2012	12 months to 31 December 2012	6 months to 30 June 2013	6 months to 30 June 2012	12 months to 31 December 2012	6 months to 30 June 2013	6 months to 30 June 2012	12 months to 31 December 2012
	(unaudited)	(unaudited)	(audited)	(unaudited)	(unaudited)	(audited)	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Sports & Entertainment	24,370	31,375	65,942	-	-	-	24,370	31,375	65,942
Advertising and Marketing Services	29,986	25,977	54,313	-	-	-	29,986	25,977	54,313
Public Relations	11,135	9,476	18,850	-	1,529	2,225	11,135	11,005	21,075
Healthcare	8,283	3,845	10,852	-	-	-	8,283	3,845	10,852
Insight & Engagement	4,035	3,046	7,608	-	-	-	4,035	3,046	7,608
	77,809	73,719	157,565	-	1,529	2,225	77,809	75,248	159,790

	Headline Operating Profit			Adjustments			Operating Profit
Sports & Entertainment	4,504	7,527	15,759	(5,954)	(6,193)	(15,320)	(1,450)	1,334	439
Advertising and Marketing Services	2,912	1,884	4,386	(548)	(185)	(416)	2,364	1,699	3,970
Public Relations	1,549	971	1,872	(3,118)	(971)	(1,070)	(1,569)	-	802
Healthcare	1,631	509	2,259	(645)	(258)	(826)	986	251	1,433
Insight & Engagement	1,153	749	2,193	-	-	(68)	1,153	749	2,125
	11,749	11,640	26,469	(10,265)	(7,607)	(17,700)	1,484	4,033	8,769
Unallocated corporate expenses	(409)	(314)	(792)	(157)	(195)	(3,084)	(566)	(509)	(3,876)
Operating profit	11,340	11,326	25,677	(10,422)	(7,802)	(20,784)	918	3,524	4,893

Other gains and losses	-	-	-	-	(895)	(1,677)	-	(895)	(1,677)
Share of results of associates	541	113	611	-	(51)	(51)	541	62	560
Investment income	7	15	27	-	-	-	7	15	27
Finance costs	(507)	(238)	(664)	-	-	-	(507)	(238)	(664)
Finance cost of deferred consideration	(175)	(196)	(325)	-	-	-	(175)	(196)	(325)
Finance cost of deemed remuneration	-	-	-	(195)	(116)	(270)	(195)	(116)	(270)
Profit before tax	11,206	11,020	25,326	(10,617)	(8,864)	(22,782)	589	2,156	2,544

	Headline Operating Profit Margin						Operating Profit Margin
	6 months to 30 June 2013	6 months to 30 June 2012	12 months to 31 December 2012				6 months to 30 June 2013	6 months to 30 June 2012	12 months to 31 December 2012
	(unaudited)	(unaudited)	(audited)				(unaudited)	(unaudited)	(audited)
	%	%	%				%	%	%
Sports & Entertainment	18.5%	24.0%	23.9%				(6.5%)	4.3%	0.7%
Advertising and Marketing Services	9.7%	7.3%	8.1%				8.3%	6.5%	7.3%
Public Relations	13.9%	10.2%	9.9%				(14.1%)	0.0%	3.8%
Healthcare	19.7%	13.2%	20.8%				11.9%	6.5%	13.2%
Insight & Engagement	28.6%	24.6%	28.8%				28.6%	24.6%	27.9%
	15.1%	15.8%	16.8%				1.9%	5.4%	5.5%
Unallocated corporate expenses
Operating profit	14.6%	15.4%	16.3%				1.2%	4.7%	3.1%

Key risks and uncertainties

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 internal and external risks impacting the Group:

· Internal Risks:

o Loss of key clients

o Retention of key personnel

o Reputation and sustainability

o Inappropriate use of social networking

o Management of overseas operations

o Legal and regulatory

o Financial risks

o Acquired goodwill and intangible assets

o Authority to commit

o Contract terms not complied with

o Information systems and data security risks

· External risks:

o Economic and political environment

o Currency exchange rate fluctuations

o Increased industry competition

These risks and their mitigations are described in full on pages 45 to 48 of the 2012 Annual Report and Accounts. 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 2012 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 2013 and anticipate that these will continue to be the key risks and uncertainties during the second half of 2013.

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

6 months ended 30 June 2013

	Note	6 months to30 June 2013	6 months to 30 June 2012*	12 monthsto 31 December2012
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
Continuing Operations
Revenue		140,237	167,672	344,234
Cost of sales		(62,428)	(92,424)	(184,444)

Operating income		77,809	75,248	159,790

Operating expenses	7,8	(76,981)	(71,724)	(154,897)

Operating profit		918	3,524	4,893

Other gains and losses		-	(895)	(1,677)
Share of results of associates		541	62	560
Investment income		7	15	27
Finance costs		(507)	(238)	(664)
Finance cost of deferred consideration		(175)	(196)	(325)
Finance cost of deemed remuneration		(195)	(116)	(270)

Profit before tax		589	2,156	2,544

Tax		(2,555)	(2,262)	(5,200)

Loss for the period from continuing operations		(1,966)	(106)	(2,656)

Discontinued operations
Profit from discontinued operations	5	-	2,981	2,790

(Loss)/profit for the period		(1,966)	2,875	134

Attributable to:
Equity holders of the parent		(2,729)	1,974	(1,276)
Non-controlling interest		763	901	1,410
		(1,966)	2,875	134

Earnings per share
From continuing and discontinued operations
Basic	3	(3.31p)	2.47p	(1.59p)
Diluted	3	(3.31p)	2.45p	(1.59p)

From continuing operations
Basic	3	(3.31p)	(0.66p)	(4.47p)
Diluted	3	(3.31p)	(0.66p)	(4.47p)

* These amounts together with the applicable notes have been restated for the change in accounting policy which resulted from the IFRS IC agenda decision on IFRS 3 and continuing employment (see note 2).

Condensed Consolidated Statement of Comprehensive Income

6 months ended 30 June 2013

	6 months to 30 June 2013	6 months to 30 June 2012*	12 monthsto 31 December2012
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000

(Loss)/ profit for the period	(1,966)	2,875	134
Items that may be reclassified subsequently to profit or loss:
Profit on revaluation of available for sale investments	76	25	4
Exchange differences on translation of foreign operations	467	(635)	(560)
Total comprehensive (loss)/income for the period	(1,423)	2,265	(422)

Attributable to
Equity holders of the parent	(2,186)	1,369	(1,821)
Non-controlling interest	763	896	1,399
	(1,423)	2,265	(422)

Condensed Consolidated Balance Sheet as at 30 June 2013

	Note	As at 30 June 2013	As at 30 June 2012*	As at 31 December2012
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
Non-current assets
Goodwill	8	189,998	169,414	178,109
Other intangible assets		3,685	3,153	3,234
Property, plant and equipment		7,767	7,893	6,865
Investments in associates		6,242	5,206	5,719
Other investments		430	1,145	354
Deferred consideration receivable		282	344	307
Other financial assets		-	-	300
Deferred tax asset		2,193	1,378	2,084
		210,597	188,533	196,972

Current assets
Work in progress		8,852	5,539	2,783
Trade and other receivables		72,059	84,340	59,403
Deferred consideration receivable		-	1,250	1,000
Current tax receivable		65	-	65
Cash and cash equivalents		16,275	35,101	17,892
		97,251	126,230	81,143

Total assets		307,848	314,763	278,115
Current liabilities
Trade and other payables		(94,527)	(113,492)	(70,714)
Current tax liabilities		(4,086)	(3,245)	(3,850)
Obligations under finance leases		(63)	(56)	(107)
Bank loans and overdrafts		(415)	(13,002)	(144)
Deferred consideration		(4,626)	(8,671)	(3,966)
Deemed remuneration		(1,425)	(7,450)	(13,815)
Short-term provisions		(1,334)	(97)	(1,208)
		(106,476)	(146,013)	(93,804)

Net current liabilities		(9,225)	(19,783)	(12,661)
Non-current liabilities
Bank loans payable after more than one year		(30,672)	-	(13,385)
Deferred consideration		(9,541)	(6,803)	(11,984)
Deemed remuneration		(1,822)	(390)	(864)
Long-term provisions		(1,185)	(225)	(1,462)
Obligations under finance leases		(2)	(172)	(20)
		(43,222)	(7,590)	(27,715)

Total liabilities		(149,698)	(153,603)	(121,519)
Net assets		158,150	161,160	156,596

Equity
Share capital		21,421	20,464	20,522
Share premium account		90,210	81,709	81,943
Own shares		(1,748)	(3,404)	(2,554)
Capital reduction reserve		32,385	32,385	32,385
Translation reserve		643	47	176
Accumulated profit		13,621	28,805	22,772
Equity attributable to equity holders of the Parent		156,532	160,006	155,244
Non-controlling interests		1,618	1,154	1,352
Total equity		158,150	161,160	156,596

Condensed Consolidated Statement of Changes in Equity

6 months to 30 June 2013

	Share capital	Share premium	Own shares	Capital reduction reserve	Translation reserves	Accumulated profit/(loss)	Total	Non-controlling interests	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2012	20,237	79,986	(4,191)	32,385	668	29,303	158,388	973	159,361
Total comprehensive income for the period	-	-	-	-	(630)	1,999*	1,369	896	2,265
Transactions with owners:									-
Acquisition of subsidiaries	226	1,737	-	-	-	-	1,963	189	2,152
Issued to staff under options	1	5	-	-	-	-	6	-	6
Share issue costs	-	(19)	-	-	-	-	(19)	-	(19)
Disposed of on exercise of options	-	-	1,160	-	-	(1,160)	-	-	-
Purchase of own shares	-	-	(373)	-	-	-	(373)	-	(373)
Purchase of non- controlling interest	-	-	-	-	-	-	-	-	-
Equity dividends	-	-	-	-	-	(3,645)	(3,645)	-	(3,645)
Credit in relation to share based payments	-	-	-	-	-	539	539	-	539
Tax on share based payment exercises	-	-	-	-	-	-	-	-	-
Dividends to non-controlling interests	-	-	-	-	-	-	-	(1,030)	(1,030)
Recycle purchase of non-controlling interest on disposal	-	-	-	-	9	1,769	1,778	126	1,904
Disposal of subsidiary	-	-	-	-	-	-	-	-	-
Balance at 30 June 2012	20,464	81,709	(3,404)	32,385	47	28,805	160,006	1,154	161,160
Total comprehensive income for the period	-	-	-	-	81	(3,271)	(3,190)	503	(2,687)
Transactions with owners:
Acquisition of subsidiaries	-	2	-	-	-	-	2	7	9
Issued to staff under options	58	233	-	-	-	-	291	-	291
Share issue costs	-	(1)	-	-	-	-	(1)	-	(1)
Disposed of on exercise of options	-	-	984	-	-	(907)	77	-	77
Purchase of own shares	-	-	(134)	-	-	-	(134)	-	(134)
Purchase of non- controlling interest	-	-	-	-	-	(1,781)	(1,781)	(22)	(1,803)
Equity dividends	-	-	-	-	-	(1,704)	(1,704)	-	(1,704)
Credit in relation to share based payments	-	-	-	-	-	1,394	1,394	-	1,394
Tax on share based payment exercises	-	-	-	-	-	283	283	-	283
Dividends to non-controlling interests	-	-	-	-	-	-	-	(292)	(292)
Recycle purchase of non-controlling interest on disposal	-	-	-	-	-	1	1	2	3
Disposal of subsidiary	-	-	-	-	48	(48)	-	-	-
Balance at 31 December 2012	20,522	81,943	(2,554)	32,385	176	22,772	155,244	1,352	156,596

Condensed Consolidated Statement of Changes in Equity (continued)

	Share capital	Share premium	Own shares	Capital reduction reserve	Translation reserves	Accumulated loss	Total	Non-controlling interests	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000

Balance at 1 January 2013	20,522	81,943	(2,554)	32,385	176	22,772	155,244	1,352	156,596
Total comprehensive income for the period	-	-	-	-	467	(2,653)	(2,186)	763	(1,423)
Transactions with owners:
Acquisition of subsidiaries	886	8,225	-	-	-	-	9,111	126	9,237
Issued to staff under options	13	58	-	-	-	-	71	-	71
Share issue costs	-	(16)	-	-	-	-	(16)	-	(16)
Disposed of on exercise of options	-	-	(194)	-	-	-	(194)	-	(194)
Purchase of own shares	-	-	1,000	-	-	(1,000)	-	-	-
Purchase of non- controlling interest	-	-	-	-	-	-	-	(102)	(102)
Equity dividends	-	-	-	-	-	(4,381)	(4,381)	(589)	(4,970)
Credit in relation to share based payments	-	-	-	-	-	(503)	(503)	-	(503)
Tax on share based payment exercises	-	-	-	-	-	-	-	-	-
Dividends to non-controlling interests	-	-	-	-	-	-	-	-	-
Recycle purchase of non-controlling interest on acquisitionl	-	-	-	-	-	(614)	(614)	-	(614)
Disposal of subsidiary	-	-	-	-	-	-	-	-	-
Investment by non-controlling interests	-	-	-	-	-	-	-	23	23
Exchange differences on translation of foreign operations	-	-	-	-	-	-	-	45	45
Balance at 30 June 2013	21,421	90,210	(1,748)	32,385	643	13,621	156,532	1,618	158,150

Condensed Consolidated Cash Flow Statement

6 months to 30 June 2013

	Note	6 months to30 June 2013	6 months to 30 June 2012	12 monthsto 31 December2012
		(unaudited)	(unaudited)	(audited)
		£'000	£'000	£'000
Net cash from operating activities	10	(70)	15,979	11,984

Investing activities
Interest received		7	15	26
Dividends received from investments and associates		11	-	116
Proceeds on disposal of property, plant and equipment		8	71	87
Purchases of property, plant and equipment		(2,293)	(1,945)	(3,105)
Purchases of other intangible assets		(46)	-	(27)
Loans repaid by/(granted to) investments and associates		-	15	(106)
Acquisition of subsidiaries (net of cash acquired)		(11,931)	(2,308)	(10,829)
Acquisition of option		-	-	(300)
Acquisition of available for sale investment		-	-	(100)
Disposal of subsidiaries/associate			11,826	11,358
Deferred consideration received		1,025	163	450

Net cash used in investing activities		(13,219)	7,837	(2,430)

Financing activities
Dividend paid		(4,380)	(3,645)	(5,349)
Dividends paid to minorities		(589)	(1,030)	(1,322)
Increase in borrowings		31,107	5,172	14,073
Repayment of borrowings		(13,569)	-	(8,313)
Repayment of obligations under finance leases		(65)	(52)	(168)
Proceeds on issue of ordinary share capital		55	2	278
Purchase of own shares		(194)	(388)	(430)
Investment by non-controlling shareholder		22	-	-
Purchase of non-controlling interests		(415)	(231)	(1,889)

Net cash used in financing activities		11,972	(172)	(3,120)

Net (decrease)/increase in cash and cash equivalents		(1,317)	23,644	6,434

Cash and cash equivalents at beginning of period		17,892	11,320	11,320
Effect of foreign exchange rate changes		(300)	137	138
Cash and cash equivalents at end of period		16,275	35,101	17,892

Cash and cash equivalents comprise cash at bank, loan note deposits less overdrafts. Taking into account the following borrowings net cash was:

Cash and cash equivalents	16,275	35,101	17,892
Bank loans	(31,087)	(13,002)	(13,529)
Finance leases	(65)	(228)	(127)
Loan notes outstanding	(4,824)	(58)	(58)
Overall net (borrowings)/cash	(19,701)	21,813	4,178

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

As at 30 June 2012 £3,941,597 was classified as restricted cash due to short-term contractual obligations with third parties.

Notes:

1. Business Segments

For management purposes, the Group is currently organised into five operating segments: Sports & Entertainment, Advertising and Marketing Services, Public Relations, Insight and Engagement and Healthcare.

Principal activities are as follows:

Sports & Entertainment

The Sports & Entertainment division is the 4th largest Sport & Entertainment group in the world, and includes ICON, the Essentially Group, iLUKA and Fast Track. In the UK market, Fast Track and Essentially are number one and number two respectively in the sponsorship leagues tables (Marketing Magazine, November 2012).

Advertising and Marketing Services ('AMS')

The AMS division includes the VCCP Group and Teamspirit. It possesses specialist skills in advertising and marketing services, direct marketing, digital communication, search relations, point of sale, sales promotion, data consultancy and technical design, multimedia content, youth marketing and experiential, marketing consulting, retail and shopper marketing and specialist media planning and buying. It also specialises in the niche market of financial services.

Public Relations

The Good Relations Group is a fully integrated brand communications and CSR consultancy servicing more than 400 clients in the UK and internationally. Companies include: Corporate Citizenship, a best-in-class global CSR consultancy, inEvidence, a market-leading and global business-to-business customer advocacy agency, Good Relations Brand Communications, one of the UK's leading consumer brand and B2B public relations agencies, Harvard, a renowned technology public relations business and TTA Property, an award-winning property public relations business.

Insight & Engagement

The Insight and Engagement division brings together some of the country's leading insight specialists with the most extensive and innovative research solutions to help their clients to reach faster conclusions, make better decisions and develop more informed solutions.The Insight and Engagement division is made up of Opinion Leader Research, Facts International and Watermelon Research.

Healthcare

Open Health, a healthcare communications and market access group was formed in 2011, and comprises organically developed and acquired businesses. The group brands are Open LEC, Open Plan, Reynolds McKenzie, Succinct, The Earth Works, Harvey Walsh and pH Associates.

Comparatives

As discussed in note 2 the comparatives for the 6 months ended 30 June 2012 were restated. This has the following effect on the segmental analysis:

i. Change in accounting policy resulting from IFRS IC agenda decision on IFRS 3 and continuing employment resulting in a deemed remuneration charge, this charge relates to the Sport & Entertainment division.

In addition the following changes have been made to reflect changes in the way the group operates and the manner in which information in respect of decision making is presented:

ii. Healthcare division is now reported as a separate segment whereas it was previously reported as part of Public Relations

iii. Tree (London) Limited is now reported as part of Advertising and Marketing Services (previously part of Insight & Engagement)

The impact for the 6 months ended 30 June 2012 is as follows:

2012 £'000	Sport & Entertain-ment £'000	Advertising and Marketing Services £'000	Public Relations £'000	Healthcare £'000	Insight & Engage-ment £'000
Revenue
(i)	-	-	-	-	-
(ii)	-	-	(4,653)	4,653	-
(iii)	-	1,693	-	-	(1,693)
Revenue adjustment	-	1,693	(4,653)	4,653	(1,693)

Operating income
(i)	-	-	-	-	-
(ii)	-	-	(3,845)	3,845	-
(iii)	-	1,543	-	-	(1,543)
Operating income adjustment	-	1,543	(3,845)	3,845	(1,543)

Operating profit
(i)	(4,589)	-	-	-	-
(ii)	-	-	251	(251)	-
(iii)	-	54	-	-	(54)
Operating profit adjustment	4,589	54	251	(251)	(54)

Segment information about these businesses is presented below.

	Revenue			Operating income

	6 months to30 June 2013	6 monthsto 30 June 2012	12 monthsto 31 December2012	6 months to30 June 2013	6 monthsto 30 June 2012	12 monthsto 31 December2012
	(unaudited)	(unaudited)	(audited)	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000	£'000	£'000	£'000

Sport & Entertainment	53,915	92,475	171,380	24,370	31,375	65,942
Advertising and Marketing Services	53,282	45,211	104,995	29,986	25,977	54,313
Public Relations	18,066	19,954	40,931	11,135	11,005	21,075
Healthcare	9,621	4,653	13,315	8,283	3,845	10,852
Insight & Engagement	5,353	5,379	13,613	4,035	3,046	7,608
	140,237	167,672	344,234	77,809	75,248	159,790

	Operating Profit			Operating Profit Margin

	6 months to30 June 2013	6 monthsto 30 June 2012	12 monthsto 31 December2012	6 months to30 June 2013	6 monthsto 30 June 2012	12 monthsto 31 December2012
	(unaudited)	(unaudited)	(audited)	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000	%	%	%

Sport & Entertainment	(1,450)	1,334	439	(5.9%)	4.3%	0.7%
Advertising and Marketing Services	2,364	1,699	3,970	7.9%	6.5%	7.3%
Public Relations	(1,569)	-	802	(14.1%)	0.0%	3.8%
Healthcare	986	251	1,433	11.9%	6.5%	13.2%
Insight & Engagement	1,153	749	2,125	28.6%	24.6%	27.9%
	1,484	4,033	8,769	1.9%	5.4%	5.5%
Unallocated corporate expenses	(566)	(509)	(3,876)
Operating profit	918	3,524	4,893	1.2%	4.7%	3.1%

Other gains and losses	-	(895)	(1,677)
Share of results of associates	541	62	560
Investment income	7	15	27
Finance costs	(507)	(238)	(664)
Finance cost of deferred consideration	(175)	(196)	(325)
Finance cost of deemed remuneration	(195)	(116)	(270)
Profit before tax	589	2,156	(2,544)

Geographical segments:

The Group's operations are located in the United Kingdom, Europe, the Middle East, the Far East, the USA, South America, Africa and Asia Pacific. The Sport & Entertainment division is located in the United Kingdom, the Middle East, The Far East, South America, Europe, Africa and Asia Pacific. The Group's Advertising and Marketing Services division is located in the United Kingdom, Continental Europe and Australasia. Public relations is carried out in the United Kingdom, Europe, Africa, the Middle East, the Far East and the USA. Insight and Engagement is carried out in the United Kingdom and Australia and the Healthcare division is located solely in the United Kingdom.

2. Basis of preparation

The interim report for the six months ended 30th June 2013 is unaudited but has been reviewed by the auditors, Deloitte LLP, and their report to Chime Communications plc is set out on page 32.

The interim report for the six months ended 30th June 2013 has been prepared in accordance with IAS 34 'Interim financial reporting' as adopted by the European Union. The consolidated interim report should be read in conjunction with the annual financial statements for the year ended 31st December 2012, which has been prepared in accordance with IFRS as adopted by the European Union. The financial information contained in the consolidated interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The figures for the year ended 31st December 2012 have been extracted from the statutory financial statements which have been filed with the Registrar of Companies, and represented for discontinued operations (note 5), in line with IFRS 5. The auditors' report on those financial statements was unqualified and did not contain a statement made under Section 498 (2) or (3) of the Companies Act 2006.

The figures for 30 June 2012 have been restated for the change in accounting policy resulting from IFRS IC agenda decision on IFRS 3 and continuing employment.

The effects of this change in policy are summarised below:

	6 months to 30 June2012	Yearended 31 Dec2011
	£'000	£'000
Consolidated income statement
Administrative expenses - remuneration expense	(4,589)	(3,034)
Finance costs of deferred consideration/deemed remuneration (net)	26	9

Decrease in profit for the financial year	(4,563)	(3,025)

	6 months to 30 June2012	Yearended 31 Dec2011
	p	p

Decrease in basic earnings per share	(5.72)	(3.93)
Decrease in diluted earnings per share	(5.65)	(3.85)

	30 June2012	31 Dec2011	1 Jan2011
	£'000	£'000	£'000
Consolidated balance sheet
Goodwill	(11,375)	(8,501)	-
Deferred consideration	11,517	8,611	-
Deemed remuneration	(4,705)	(3,135)	-

Decrease in net assets	(4,563)	(3,025)	-

The annual financial statements of Chime Communications Plc are prepared in accordance with IFRS as adopted by the European Union. Except as described below, the accounting policies adopted in the preparation of the half year condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31st December 2012.

· Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

· Headline numbers have been removed from the face of the income statement, which are now located elsewhere within the announcement.

Going Concern Basis

In preparing forecasts the Directors have taken into account the following key factors:

· The rate of growth of the UK and global economy on the Group's business during the economic recovery;

· Key client account renewals;

· Planned acquisitions and disposals;

· Anticipated payments under deemed remuneration and deferred and contingent consideration;

· The level of committed and variable costs; and

· Current new business targets compared to levels achieved in previous years.

The Groups forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current facility and banking covenants.

The Group increased the existing borrowing facility to £70 million (from £47 million) in June 2013. This facility continues until September 2016 and is subject to banking covenants.

The directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the interim financial statements.

Discontinued Operations

Discontinued operations, as per IFRS 5, have been disclosed separately, including the representation of comparative information as required by the standard.

3. Earnings per share

	6 months to30 June2013	6 monthsto 30 June2012	12 monthsto 31 December2012
	(unaudited)	(unaudited)	(audited)
From Continuing and Discontinued Operations
Earnings per share
Basic	(3.31p)	2.47p	(1.59p)
Diluted	(3.31p)	2.45p	(1.59p)


Earnings	£'000	£'000	£'000

Earnings for the purpose of basic earnings per share being net profit attributable to the equity holders of the parent	(2,729)	1,974	(1,276)


Number of shares	Number	Number	Number

Weighted average number of ordinary shares for the purposes of basic earnings per share	82,570,786	79,831,117	80,203,311

Effect of dilutive potential ordinary shares:
Share options and deferred shares	785,733	874,601	1,444,168

Weighted average number of ordinary shares for the purposes of diluted earnings per share	83,356,519	80,705,718	81,647,479

From Continuing Operations
Earnings per share
Basic	(3.31p)	0.66p	(4.47p)
Diluted	(3.31p)	0.66p	(4.47p)

Earnings	£'000	£'000	£'000

Net (loss)/profit attributable to equity holder of the parent	(2,729)	1,974	(1,276)
Adjustment to exclude profit from discontinued operations	-	(2,981)	(2,790)
Adjustment to exclude non-controlling interest of discontinued operations	-	484	484
Earnings from continuing operations for the purpose of basic earnings per share being net profit attributable to the equity holders of the parent.	(2,729)	(523)	(3,582)

From discontinued operations	-	2,981	2,790

Earnings per share
Basic	-	3.13p	2.88p
Diluted	-	3.09p	2.83p

4. Dividends

The proposed interim dividend was approved by the Board on 22nd August 2013 and has not been included as a liability as at 30th June 2013. The dividend will be paid on 11th October 2013 to those shareholders on the register at 20th September 2013. The ex-dividend date is 18th September 2013.

Under an agreement dated 3rd April 1996, The Chime Communications Employee Trust has agreed to waive dividends in respect of 455,485 ordinary shares representing 0.5% of the company's called-up share capital.

	6 monthsto 30 June2013	6 monthsto 30 June2012	12 monthsto 31 December2012
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Amounts recognised as distributions to equity holders in the period (approved):

Interim dividend for the year ended 31 December 2012 of 2.10p per share (2011: 2.08p per share)	-	-	1,704

Final dividend for the year ended 31 December 2012 of 5.14p (2011: 4.50p) per share	4,381	3,643	3,645

	4,381	3,643	5,349

Amounts not recognised as distributions to equity holders in the period (declared):

Proposed interim dividend for the year ended 31 December 2013 of 2.20p (2012: 2.10p) per share	1,897	1,914	-

5. Discontinued Operations

On 18 June 2012, the Group entered into a sale agreement to dispose of the Bell Pottinger businesses to BPP Communications Limited, ('BPP Communications'). The businesses sold to BPP Communications included the entities Bell Pottinger Public Relations Limited, Pelham Bell Pottinger Limited (60%), Bell Pottinger Public Affairs Limited, Pelham Bell Pottinger Asia Pte Limited, Bell Pottinger Middle East FZ-LLC and Bell Pottinger Bahrain S.P.C and the trade and assets of Bell Pottinger Sans Frontières, Bell Pottinger USA Inc and Bell Pottinger Central. These companies carried out part of the Group's public relations operations.

Lord Bell and Piers Pottinger were Chairman and Deputy-chairman of Chime Communications plc, and are shareholders of BPP Communications, and as such the disposal is noted as a related party transaction.

The disposal was completed on 30 June 2012, on which date the control of the Bell Pottinger Businesses passed to the acquirer.

The total consideration was £19.6m, settled in £13.9m cash, shares representing a 25% holding in BPP Communications Limited valued at £4.1m, an amount of £1.0m which was been deferred for a period up to 30 June 2013 and £0.6m of deferred consideration liability transferred. The £1.0m was received in June 2013. BPP Communications Limited has been recognised as an associate at the balance sheet date.

The results of the discontinued operations which have been included in the consolidated income statement were as follows:

	6 monthsto 30 June2013	6 monthsto 30 June2012	12 monthsto 31 December2012
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000

Revenue	-	29,319	29,319

Operating income	-	14,763	14,763

Operating (loss)/profit	-	(54)	(54)

(Loss)/profit before tax	-	(54)	(54)

Attributable tax expense	-	236	-

Profit on disposal of discontinued operations	-	2,931	2,967

Attributable tax expenses	-	(132)	(123)

Net profit attributable to discontinued operations	-	2,981	2,790

Attributable to:
Equity holders of the parent	-	2,497	2,306
Non-controlling interests	-	484	484

In the 6 months to 30 June 2012 the Bell Pottinger businesses contributed £0.5m to the Group's net operating cash flows, paid £0.1m in respect of investing activities and paid £0.9m in respect of financing activities.

A profit of £3.0m arose on the disposal of the Bell Pottinger Business, being the proceeds of disposal less the carrying amount of the subsidiaries net assets and attributable goodwill.

6. Business combinations

In the first half of 2013, the Group made a number of acquisitions in order to grow the business.

The Sport and Entertainment division made 2 main acquisitions as follows:

· Complete Leisure Group which owns the rights to all Lord Coe's income streams over the next fifteen years. Primarily, these income streams constitute commissions, royalties and consulting income. Lord Coe is one of the most high profile figures in world sport and the proposed acquisition of CLG will assist CSM Sport & Entertainment in its ambition to become one of the top three sports and entertainment businesses in the world ; and

· People Marketing is a sports marketing and communications agency based in Shanghai. It will significantly enhance the geographical spread of CSM Sport and Entertainment's activities and provide access to the Chinese and South East Asia markets.

The VCCP Partnership made 1 main acquisition as follows:

· WARL Group Limited which brings specialist retail and shopper skills to the VCCP Partnership.

Complete Leisure Group

On 30 January 2013 the group exercised its option to acquire Lord Coe's 93% interest in The Complete Leisure Group Limited ('CLG'), a company incorporated in the United Kingdom, for initial consideration of £1.96 million in cash. This was in addition to the payment in November 2012 of £0.3 million for acquiring the option bringing total consideration to £2.26m. A further 6% was acquired from minority shareholders for £0.11 million bringing the total share acquired to 99%.

Additional amounts are payable to Lord Coe contingent on the results of the business, capped at the maximum of £10.2 million (undiscounted). As at 30 June 2013, £0.9 million (discounted for finance costs) has been provided for as deemed remuneration. The deemed remuneration is expected to be paid in 2015 and 2017. The total maximum consideration and deemed remuneration payable for CLG is £12.6 million.

CLG was acquired by Chime's Sport and Entertainment division.

The fair value of the net assets acquired is detailed below.

	Provisional Book value £'000	Fair value adjustments £'000	Provisional fair values £'000

Intangible fixed assets	-	1,895	1,895
Other investments	79	(79)	-
Debtors and other current assets	103	-	103
Cash at bank	636	-	636
Creditors	(228)	(436)	(664)
Net assets	590	1,380	1,970
Goodwill			432
Minority Interest			(138)
Fair value of consideration			2,264

Cash consideration			2,264
Cash acquired			(636)
Cash outflow arising on acquisition			1,628

The adjustment to investments is to de-recognise investments in non-core businesses. The adjustment to intangible fixed assets is to recognise £1.9 million of intangibles relating to customer contracts and relationships.

Costs amounting to £94,954 have been expensed during the year and are included in operating expenses.

Goodwill represents the rights held by CLG to Lord Coe's income streams for the next 15 years. Lord Coe is one of the most high profile figures in world sport and the proposed acquisition of CLG will assist CSM Sport & Entertainment in its ambition to become one of the top three sports and entertainment businesses in the world

CLG contributed revenue of £0.7 million and an operating loss of £0.6 million (after deemed remuneration charge of £0.9 million) to the results of the Group since acquisition. If the acquisition had been completed at the beginning of the year, management estimate that Group revenue for the period would have been £140.2 million and Group operating profit would have been £0.9 million.

WARL Group

On 15 May 2013 the group acquired 100% of The WARL Group Limited ('WARL'), a company incorporated in the United Kingdom, for initial consideration of £5.1 million, of which £1.3 was paid in shares and £3.8 million was paid in cash.

Additional amounts are payable contingent on the results of the business, capped at the maximum of £8.3 million (undiscounted). As at 30 June 2013, £0.2 million (discounted for finance costs) has been provided for as deemed remuneration. The deemed remuneration is expected to be paid in 2016 and 2019. The total maximum consideration and deemed remuneration payable for WARL is £13.4 million.

WARL was acquired by Chime's Sport and Entertainment division.

The fair value of the net assets acquired is detailed below.

	Provisional Book value £'000	Fair value adjustments £'000	Provisional fair values £'000

Intangible fixed assets	88	(88)	-
Property, plant and equipment	109	-	109
Debtors and other current assets	3,905	-	3,905
Cash at bank	381	-	381
Creditors	(3,049)	-	(3,049)
Net assets	1,434	(88)	1,346
Goodwill			3,700
Fair value of consideration			5,046

Cash consideration			5,046
Cash acquired			(381)
Cash outflow arising on acquisition			4,665

The adjustment to intangible fixed assets is to de-recognise £0.1 million that were recognised on an internally generated basis. Due to the proximity of the transaction to the issue of these interim financial statements the information required to prepare the intangible valuation for the business combination is as yet unavailable.

Costs amounting to £256,752 have been expensed during the year and are included in operating expenses.

Goodwill represents the specialist retail and shopper marketing skills held by WARL, which adds significant capacity to VCCP's existing offering for integrated communications.

WARL contributed revenue of £1.8 million and operating profit of £0.1 million (after deemed remuneration charge of £0.1 million) to the results of the Group since acquisition. If the acquisition had been completed at the beginning of the year, management estimate that Group revenue for the period would have been £143.4 million and Group operating profit would have been £1.5 million.

People Marketing

On 15 May 2013 the group acquired 100% of People Marketing Limited ('PM'), a company incorporated in the United Kingdom, for initial consideration of £10.8 million. This consideration was payable over 2 tranches, one of £2.2 million in cash and a second tranche of £8.6 million payable via cash (£7.5 million) and shares (£1.1 million). The second tranche is dependent on a number of structuring conditions being finalised. These conditions were filled in July 2013 and the second payment was made.

Additional amounts are payable contingent on the results of the business, capped at the maximum of Hong Kong $97.0 million (approximately £8.2 million undiscounted). As at 30 June 2013 no provision has been made for deemed remuneration in accordance with the expected profile of payment. The deemed remuneration is expected to be paid in 2015 and 2016. The total maximum consideration and deemed remuneration payable for PM is Hong Kong $225.0 million (approximately £19.1 million).

PM was acquired by Chime's Sport and Entertainment division.

The fair value of the net assets acquired is detailed below.

	Provisional Book value £'000	Fair value adjustments £'000	Provisional fair values £'000

Debtors and other current assets	246	-	246
Creditors	(62)	-	(62)
Net assets	184	-	184
Goodwill			10,667
Fair value of consideration			10,851

Cash consideration			9,767
Share consideration			1,084
Cash acquired			-
Cash outflow arising on acquisition			10,851

Due to the proximity of the transaction to the issue of these interim financial statements the information required to prepare the intangible valuation for the business combination is as yet unavailable.

Costs amounting to £751,980 have been expensed during the year and are included in operating expenses.

Goodwill represents the specialist skills held by PM which will significantly enhance the geographical spread of CSM Sport and Entertainment's activities and provide access to the Chinese and South East Asia markets.

PM contributed revenue of £0.4 million and operating profit of £0.2 million to the results of the Group since acquisition. If the acquisition had been completed at the beginning of the year, management estimate that Group revenue for the period would have been £140.6 million and Group operating profit would have been £1.2 million.

7. Deemed Remuneration

	6 monthsto 30 June2013	6 monthsto 30 June2012	12 monthsto 31 December2012
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000

Deemed Remuneration charge on acquisition of subsidiaries	4,297	4,589	11,273
Deemed Remuneration charge LLP capital contribution	330	-	-
Total	4,627	4,589	11,273

8. Goodwill

	As at 30 June2013	As at 30 June2012	As at 31 December2012
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000

Carrying amount at 1 January	178,109	168,220	168,220
Exchange differences	140	(749)	(738)
Recognised on acquisition of subsidiaries	14,499	17,026	26,170
Transfer in from other financial assets	300	-	-
Other changes in respect of prior year acquisitions	57	(2,566)	(3,024)
Disposal	-	(12,517)	(12,519)
Impairment	(3,107)	-	-
At 30 June / 31 December	189,998	169,414	178,109

Other changes in respect of prior year acquisitions predominantly include:

· The comparatives relating to other changes in respect of prior year acquisitions include revisions to the estimate of deferred consideration payable relating to acquisitions completed under IFRS (2004).

The impairment relates to a write-down of goodwill in a German subsidiary MMK. It is expected that this business will be sold in the second half of 2013.

In 2012 other changes in respect of prior year acquisitions predominantly include:

· Revision of provisional goodwill relating to Gulliford Consulting Ltd, due to more information becoming available relating to the business at acquisition, which lead to the fair value of deferred consideration estimate being reduced by £2,078,300;

· Provisional goodwill recognised on the prior year acquisition of Essentially France Ltd reduced following the recognition of an intangible asset for customer relationships of £436,380, after more information became available during the period relating to the business at acquisition; and

· Revisions to the estimate of deferred consideration payable relating to acquisitions completed prior to the implementation of IFRS 3 (revised 2008).

9. Issue of ordinary share capital

During the period, the Group issued shares as follows:

1,494,501 shares at 249.92 pence per ordinary share were issued on 3 April 2013 in relation to the acquisition of ICON Display Limited.

1,530,322 shares at 264.40 pence per ordinary share were issued on 3 April 2013 in relation to the acquisition of iLUKA Limited.

521,062 shares at 255.40 pence per ordinary share were issued on 30 May 2013 in relation to the acquisition of WARL Group Limited.

48,572 shares were issued to staff in relation to share schemes at prices between £0.675 and £2.15.

10. Notes to the consolidated cash flow statement

	6 monthsto 30 June2013	6 monthsto 30 June2012	12 monthsto 31 December2012
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000

Operating profit	918	3,524	4,893

Adjustments for:
Loss on discontinued operations before tax	-	(54)	(54)
Share based payment (credit)/expense	(503)	539	1,933
Deemed remuneration	4,627	4,589	11,274
Changes to deferred consideration	(63)	-	-
Translation differences	697	(426)	(268)
Depreciation of property, plant and equipment	1,545	1,622	3,209
Amortisation of intangible fixed assets and impairment of goodwill	1,480	1,322	2,944
Impairment of goodwill	3,107	-	-
Loss on disposal of property, plant and equipment	16	103	434
Decrease / (increase) in provisions	(482)	(54)	2,371
Operating cash flows before movements in working capital	11,342	11,165	26,736
(Increase)/decrease in work in progress	(4,736)	(2,007)	1,124
(Increase)/decrease in receivables	(10,091)	(14,273)	10,736
Increase/(decrease) in payables	7,084	24,751	(19,099)
Cash generated from operations	3,599	19,636	19,497
Income taxes paid	(3,256)	(3,425)	(6,926)
Interest paid	(413)	(232)	(587)
Net cash from operating activities	(70)	15,979	11,984

11. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. During the year Group companies entered into the following significant transactions with related parties who are not members of the Group.

	6 months to 30th June 2013 (unaudited)
Associates	Sale of services £'000	Purchase of services £'000		Amounts owed by related parties £'000			Amounts owed to related parties £'000

Bell Pottinger LLP	963	160		100			124
Bell Pottinger Private Limited	616	-		668			-
Colour TV Limited	12	-		-			-
Naked Eye Research Limited	6	3		-			3
Rare Corporate Design Limited	40	94		-			3
StratAgile	-	12		-			10
The Agency of Someone Limited	-	142		7			119
The Brand Marketing Team Limited	97	225		166			-
X&Y Communications Limited	23	-		14			-

	6 months to 30th June 2012 (unaudited)
Associates	Sale of services £'000		Purchase of services £'000		Amounts owed by related parties £'000	Amounts owed to related parties £'000

BPP Communications Limited	-		-		1,291	369
The Brand Marketing Team Limited	103		82		67	57
Rare Corporate Design Limited	94		99		29	109
Naked Eye Research Limited	28		-		-	13
Ledbury Research Limited	14		-		-	6
The Agency of Someone Limited	-		15		-	-
X&Y Communications Limited	9		-		-	-
Colour TV Limited	3		-		-	-

	12 months to 31st December 2012 (audited)
Associates	Sale of services £'000		Purchase of services £'000		Amounts owed by related parties £'000	Amounts owed to related parties £'000

Bell Pottinger Private Limited	542		202		10	-
Bell Pottinger Public Affairs Limited	53		54		24	-
Bell Pottinger Public Relations Limited	863		197		605	21
Bell Pottinger Sans Frontiers	166		31		75	5
Pelham Bell Pottinger	240		130		72	17
Pelham Singapore	17		-		-	-
Bell Pottinger Middle-East	5		1		-	-
The Brand Marketing Team Limited	91		3		3	-
Colour TV Limited	20		-		12	-
Ledbury Research Limited	51		4		18	-
Naked Eye Research Limited	48		1		-	-
Rare Corporate Design Limited	85		187		35	9
Rare Publishing Limited	-		70		-	-
StratAgile Limited	-		5		5	-
The Agency of Someone Limited	3		268		-	53
X&Y Communications Limited	19		-		-	-
Bell Pottinger Communications USA	10		-		-	432

The disposal of the Bell Pottinger businesses to BPP Communications Limited in 2012 was a related party transaction, please refer to note 5 for further detail.

Forward looking statements

The interim management report contains certain forward looking statements in respect of Chime Communications plc and the operation of its subsidiaries. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. Nothing in this announcement should be construed as a profit forecast.

Responsibility statement

We confirm that to the best of our knowledge;

(a) the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

By order of the board

Mark Smith

Finance Director

28th August 2013

INDEPENDENT REVIEW REPORT TO CHIME COMMUNICATIONS PLC

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013 which comprises the income statement, the balance sheet, the statement of changes in equity, the cash flow statement and related notes 1 to 11. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

28 August 2013

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR KDLFLXVFXBBQ

Related Shares:

FTSE 100 Latest

Value8,275.66

Change0.00