Full-year - Chime Communications PLC

Annual Report & Accounts 2008“There is a global conversation going on about business,which is affecting everyone’s reputation. If you don’t takepart in it, your reputation will suffer”. Lord Bell.Public Relations Advertising and Marketing Services Research and Engagement

The Chime Group helps clients create,manage, monitor and market theirbusinesses, brands and reputationsboth in the UK and internationally.Chime is the holding company for the UK’sleading public relations group, Bell Pottinger;the UK’s leading research and engagementgroup, Opinion Leader; and one of the fastestgrowing advertising and marketing servicesgroups in the UK, that includes VCCP,Teamspirit and Fast Track.ContentsFinancial highlights 01Chairman’s statement 02Chief Executive’s review 04Public Relations Division 06Advertising and MarketingServices Division 16Research and Engagement Division 26Finance Director’s review 30Board of Directors 32Executive management team 34Directors’ statement on corporategovernance 36Directors’ remuneration report 40Directors’ report 46Statement of Directors’ responsibilities 48Independent auditors’ report to themembers of Chime Communications plc 49Consolidated income statement 50Consolidated statement of recognisedincome and expense 51Consolidated balance sheet 52Consolidated cash flow statement 53Notes to the consolidated financialstatements 54Independent auditors’ report to themembers of Chime Communications plc 88Company balance sheet 89Notes to the Company financial statements 90Information for shareholders 95

Chairman’s statementChairman’sstatement“2008 has been a verysuccessful year of doubledigit growth, although theoutlook for 2009 is uncertain.So far the impact onbusinesses affected by theeconomic downturn hasbeen offset by growth inother businesses”.Review of operationsOverall the Group has continued to perform well. The Groupacted for 1,381 clients in 2008 compared with 1,379 in 2007.Of these clients, 256 used more than one of our businesses(236 in 2007), which represented 66% of total operatingincome (2007 – 62%).In 2008, 170 clients paid us over £100,000, compared with164 in 2007. Our top 30 clients represented 48% of totaloperating income (2007 – 45%).Our two largest clients represented 18.4% of our operatingincome. Both clients have been retained since 2003, are highmargin and have normal renewal terms. No other clientrepresented more than 3% of our operating income.Average fee income per client in 2008 was £81,000compared with £70,000 in 2007. Average income peremployee was £111,000 in 2008 compared with £105,000in 2007. In 2008, 37% of our income came from overseaswork compared with 34% in 2007.Bell Pottinger retained its position as No. 1 in the PR WeekLeague Table, Fast Track remains No. 1 in the MarketingSponsorship League Table and VCCP won the MarketingWeek Effectiveness Award for the launch of the O2 arena.Divisional performanceTrading conditions deteriorated in the second half of 2008for some of our businesses, whilst others performed aheadof our expectations. The Public Relations Division wasahead of budget for 2008, whilst the Advertising andMarketing Services and Research Divisions werebehind budget.Public Relations continues to be our largest division, being55% of operating income (2007 – 56%), Advertising andMarketing Services was 39% (2007 – 36%) and Research6% (2007 – 8%).Public Relations – Bell Pottinger Group includingGood Relations, Harvard and InsightThe Public Relations Division had an extremely good yearwith a particularly strong second half. Costs were verycarefully controlled and the 13% increase in operatingincome has therefore resulted in a 30% increase in operatingprofit. Our geopolitical, brand, technology and Middle Eastbusinesses all performed ahead of our expectations.Advertising and Marketing Services – VCCP Group,Fast Track and TeamspiritOur Advertising and Marketing Services Division had a flatyear with the first half better than the second half. Our sportsmarketing, direct marketing, digital, search and brand identitybusinesses all performed ahead of 2007.Research – The Research and Engagement GroupThe Research and Engagement Division was budgeted toimprove in the second half of 2008 following the restructuringwe did in the first half. However, due to postponed andcancelled projects their performance continued todeteriorate. We still have confidence in the restructuringwe have done and the first quarter of 2009 is lookingencouraging with a healthy new business pipeline.In addition the launch of Caucus World, our newdigital platform, was delayed due to hold-upsin software development.2Chime Communications plcAnnual Report & Accounts 2008

Chairman’s statementNew business wins in 2008 included:Corporate responsibilityThe Group continues to be carbon neutral and has targetedto reduce its carbon emissions by a further 5% in 2008(2007 – 37%). The Group received a ‘Big Tick’ award fromBusiness in the Community for its work on addressingclimate change.Board changesOn 2 July 2008 The Hon Richard Alston joined the Board.He previously served as Australian High Commissioner to theUnited Kingdom from February 2005 until March 2008, aftera distinguished career in the Australian Parliament as Ministerfor Communications, Information, Technology and Arts from1996 to 2003.On 16 December 2008 David Allen resigned from the Boardand we thank him for his contribution over several years.OutlookWe had an excellent 2008 based on our diversified Group,with particularly strong performances from Public Relations(Bell Pottinger Group) and Sports Marketing (Fast Track).The company’s strategy for 2009 is to control costs,generate cash and focus on new business. We areconcentrating on the growth opportunities we have,which are mainly in international, sports marketing,digital, geopolitical and public sector work.So far the impact on businesses affected by the economicdownturn has been offset by growth in other businesses.Summary of results2008 2007 %£m £m changeActualOperating income 112.1 96.5 +16%Operating profit 18.1 15.7 +15%Operating profit margin 16.2% 16.3%Organic 1Operating income 94.7 86.6 +9%Operating profit 15.3 13.8 +10%1 Excluding acquisitions in 2007 and 2008Public Relations Division2008 2007 %£m £m changeOperating income 61.3 54.1 +13%Operating profit 12.1 9.3 +30%Operating profit margin 19.7% 17.3%Advertising and Marketing Services Division2008 2007 %£m £m changeOperating income 43.8 34.7 +26%Operating profit 6.2 5.6 +11%Operating profit margin 14.1% 16.0%Research and Engagement Division2008 2007 %£m £m changeLord BellChairman11th March 2009Operating income 7.0 7.7 -10%Operating profit 0.4 1.4 -73%Operating profit margin 5.4% 18.1%Chime Communications plcAnnual Report & Accounts 20083

Chief Executive’s reviewA time for trustThe credit crunch has triggereda global conversation aboutbusiness. Governments aretaking part; the media has aleading role; the internet is alivewith comment and criticism;regulators are actively engaged;public policy groups arecontributing and customers ofall types of businesses are vocalin their opinions about what hasgone wrong and what needsto be put right.If you are not taking part in this global debate, it’s unlikelythat you can become part of the solution. Never have thereputations of governments, public bodies, businesses,brands and NGOs depended more on communications.Across the Chime Group, we are working with our clientsin each of these sectors and trying to help them havea constructive voice in the debate. If you don’t take part,you risk your reputation. If you do take part, you needto have clarity on where you stand, what you do andwhat your overall point of view is.So despite the uncertain economic conditions we findourselves in, the need for communication has never beengreater. If you add to this need the continuing explosionof communication options available for our clients – evenpoliticians are Twittering – the need for moderncommunications is clear.A recent research study by Opinion Leader examines thedeclining degree of trust that people have in all organisations.Being seen to push vested interests or demonstratingincompetence undermines trust; understanding customerneeds and addressing them in what a business says anddoes, help to build it. Helping our clients to maintain a trustedvoice in the ongoing debate is where we come in.Trusted organisations are those that can demonstrate thatthey walk in their customers’ footsteps. They are confidentabout being transparent in what they say and in how theyhandle disagreements or criticism. They understand thatcommunication is as much about listening as persuading.They embrace the information age by having a 24/7approach to communication, whether answering thedemands of the media or taking part in social networks.This Annual Report demonstrates how companies that canhelp to build this trust continue to add value to clients despitethe difficult economic climate. Throughout our divisionalreviews you’ll find a number of themes that help to explainthe resilience of our companies’ performance: diversifiedbusiness models; healthy exposure to public sector workin PR and advertising; leading expertise in CorporateResponsibility (CR), where demand is being driven by theregulatory environment; strong growth in internationalbusiness. The progress of our Middle East business andfinally progress in sports marketing which is becoming acritical aspect of major clients communications. I wouldargue, though, that the most important factor is the qualityof the work across all of our divisions, a reputation forinnovative and effective solutions, and a proven trackrecord for building trust and reputation.“Never have the reputationsof governments, publicbodies, businesses, brandsand NGOs depended moreon communications.”4Chime Communications plcAnnual Report & Accounts 2008

Chief Executive’s review“Companies that can helpto build this trust continueto add value to clientsdespite the difficulteconomic climate.”Numerous highlights stand out from the year. VCCP’s‘Alcohol: Know your limits’ campaign combined creativeflair with a deep understanding of digital media and modernopinion-forming and used this to deliver fantastic levelsof engagement around a sensitive message. Teamspirit’saward-winning launch of MetLife in the UK proved justhow powerful a well-constructed brand reputation can be.Fast Track’s Lucozade Sport Performance League helpedamateur footballers across the country to realise theirpotential, whilst building strong grassroots support for thebrand. The groundbreaking study of the impact of Unilever’soperations on Southern Africa, conducted by CorporateCitizenship, is an excellent example of the power ofcommunicating values through actions. Opinion Leader’swork for Bupa demonstrated the strategic role of deliberativeresearch. Meanwhile, the successful election campaign ofPresident Banda in Zambia and innovative work for Müller,Fortnum & Mason and GS4 provided further demonstrationsof the expertise of the PR Division in building powerful andvaluable reputations across all regions, sectors and scenarios.Some of the high-profile activities we wereinvolved in during 2008 include:• Representing Rupiah Banda in the Zambian PresidentialElection; he won• Mubadala’s sponsorship of Ferrari• The Lysander Gatwick Investment Group bid for LondonGatwick Airport• The Food Standards Agency advertising campaign forsaturated fats• Emirates’ sponsorship of the Rugby Sevens World Cup• The new advertising campaign for‘Comparethemarket.com’• The launch of the Department of Health’s new HepatitisC awareness campaign• The launch of the report on the future of the luxuryindustry commissioned by De Beers• BT’s sponsorship of the Paralympic World Cup• The study into the Future of Financial Advice andDistribution on behalf of Aegon• Entry into service of the largest fleet of the world’sbiggest aircraft – the Airbus A380 superjumbo forEmirates AirlineChristopher SatterthwaiteGroup Chief ExecutiveChime Communications plcAnnual Report & Accounts 20085

Public RelationsPublicRelationsDivisionThe Bell Pottinger Group isranked No. 1 in the PR Weekand Marketing magazineleague tables, and comprises22 businesses operating in theUK and around the world.The Group’s companies coverall aspects of public relationsand communications work fromcrisis and issues managementto strategic communicationsand CR consultancy.During a year of exceptional economic uncertainty, the PublicRelations Division has demonstrated the ongoing strength ofits business model and the value of developments carried outwithin the Group over the previous year. Despite the globaldownturn, the Division succeeded in meeting all financialtargets for 2008, continuing to enhance its own reputationthrough high-profile work and adding significant new clientsto its roster. With growth in international and consumerPR solutions offsetting the impact of the downturn onour Corporate and Financial agencies, the Division begins2009 with the same level of retained revenue with whichit commenced the previous year.This robust performance rests on an international approach,to the extent that about half of the Division’s revenues nowcome from outside the UK private sector; on developingservices that are of ongoing value to clients in the currentclimate; and on pioneering collaborative, multi-disciplinaryapproaches that expand the boundaries of traditional publicrelations. Developing opportunities in key markets andincreased market recognition of the value of PR servicesall point towards a continued resilient performance in 2009.Public Relations DivisionBell Pottinger GroupBell Pottinger Sans FrontièresBell Pottinger Corporate & FinancialBell Pottinger Public AffairsBell Pottinger Public RelationsBell Pottinger Business & BrandBell Pottinger Issues & Crisis ManagementBell Pottinger Search RelationsGood RelationsHarvard Public RelationsResonateCorporate CitizenshipDe Factotta GroupInsight MarketingBell Pottinger NorthGood Relations WalesBell Pottinger Communications USABell Pottinger USABell Pottinger Middle EastHarvard GermanyMMKTraffic“This robust performance restson an international approach,to the extent that about halfof the Division’s revenues nowcome from outside the UKprivate sector.”6Chime Communications plcAnnual Report & Accounts 2008

Public RelationsInternational developmentBell Pottinger Middle East expanded its footprint during2008, with new offices in Abu Dhabi and Bahrain addingto its existing operations in Dubai and Doha. Although theeffects of the global downturn have been felt in the region,the flow of new business remains healthy and our presencein the region is increasing the Group’s exposure to keyglobal accounts.The merging of the Bell Pottinger Collective with Bell PottingerSans Frontières, which provides clients with a single pointof contact for the Division’s most senior communicationsadvisors, has helped to increase the flow of global businesswhilst strengthening our ability to deliver exceptional,multi-disciplinary solutions to complex geopolitical briefs.Key international campaigns delivered by the Group during2008 included co-ordinating the successful election campaignof Zambia’s President Banda, high-profile work to buildstronger ties between Belarus and the European Union,our well-regarded support for the Bahrain EconomicDevelopment Board and our management of Madrid’s bidfor the 2016 Olympic Games. We also repitched successfullyon the global PR account for Emirates, a Bell Pottinger clientfor over eight years.Greater exposure to the public sectorAn increased focus on developing our public sector exposureduring 2008 has delivered a number of significant newopportunities that provide scope for enhanced revenue overthe coming year. The Bell Pottinger Group was successfulin securing a position on seven of the Central Officeof Information’s eight PR rosters, securing a vital conduitfor Government work over the medium term. High-profilecampaigns in public health have brought together companiesfrom across the Bell Pottinger Group as well as Chime’smarketing services and research Divisions to delivermulti-disciplinary communications solutions.Regulatory environment drivingdemand for CR servicesCorporate Citizenship, an agency formed by combiningThe Smart Company with The Corporate CitizenshipCompany, continues to set standards in a sector thatis now seen as a non-negotiable investment by most majorcompanies. The current regulatory environment is increasingdemand for credible, transparent CR initiatives. Work such asthe groundbreaking tracking of Unilever’s economic impacton Southern Africa and detailed, global CR consultancy forPearson is establishing Corporate Citizenship as a leaderin this field.Significant growth and expansionin propertyDespite the downturn in the property market, propertyplanning remains an extremely active sector, withsignificant growth in planning application business bothfor Bell Pottinger North and in London. The Division’sspecialist property agency, tta, maintained a healthylevel of property development work, with expansion intoAbu Dhabi and Dubai opening up new markets andproviding opportunities for growth.Investment in people drives newbusiness performanceThe robust new business performance delivered bythe Division in 2008 shows the value of our considerableinvestment in business development skills across allcompanies. Good Relations and Harvard, two of ourportfolio of PR agencies, have continued to respondextremely positively to the recent introduction of newmanagement teams. New clients arriving across thePR Division during 2008 included G4S, the world’s secondlargest employer, for which the Bell Pottinger Group willprovide a range of consultancy and auditing services,Barclaycard, Farnborough Airport and HSBC.Opportunities and outlookAcross the communications marketplace, economicuncertainty is driving demand both for crisis managementPR services and for integrated solutions that can join upconversations with shareholders, governments, customersand other stakeholders. With digital and social networkingexpertise now an intrinsic element of any communicationscampaign, the range of expertise that can be brought tobear from across the PR Division and the broader ChimeGroup gives us a vital competitive advantage in our market.Campaigns launched this year for Müller, Fortnum & Mason,Vodafone and 118 118 are just some examples of Groupwork built around the realities of reputation formingin the digital age.Despite the growing pressure on marketing budgets,Consumer PR remains an area of significant opportunity,with many clients looking to find new, more effective channelsfor engaging consumers and building brand reputation, andthe integrated solutions available through the Bell PottingerGroup offers a vital point of difference in the market.It is an indicator of the extent to which PR has ‘comeof age’ as a marketing tool that spend on the area is beingmaintained despite the pressure that marketing budgetshave come under.Chime Communications plcAnnual Report & Accounts 20087

Public RelationsWinningClient: President Rupiah B Banda of ZambiaAugust 2008. Zambian President Levy Mwanawasa of theMMD Party dies. An election must be held within 90 days.The MMD’s candidate is Rupiah Banda, a former diplomat.The PF opposition have Michael Sata, a political veteran.The PF scent victory. Banda needs advice.Bell Pottinger Sans Frontières fly in. Their team handle everyaspect of his campaign – policy and polling, rallies andrebuttal, tactics and T-shirts.Then, after eight exhausting weeks, Banda’s victory speech.8Chime Communications plcAnnual Report & Accounts 2008

Public RelationsExpressingClient: MencapHow to represent Mencap? By listening to those itrepresents. In 40 workshops and interviews nationwideRare Corporate Design heard from people with learningdisabilities, their families and carers. ‘The voice of learningdisability’ rebranding line resulted.But with one simple speech bubble the identity goesbeyond that, and gives those with a learning disabilitya voice.Chime Communications plcAnnual Report & Accounts 20089

Public RelationsGrowingClient: TescoHow to invigorate Tesco’s annual Computers For SchoolsScheme? Humour. Resonate’s witty ‘Rise of the I.T. girls’story reminded parents exactly how computers benefitchildren, how each voucher is a leg up for a child, not justa piece of paper.The papers loved it, from The Sunday Times to children’stitle First News, with almost 300 positive stories over thecampaign.And for Tesco a PR ROI of 6:1 – buy one, get five free.10Chime Communications plcAnnual Report & Accounts 2008

Public RelationsL(a)unchingClient: GO3GO3 teamed up with David Beckham to produce theirhealthy family food range.Resonate ran the UK launch – lunch for schoolchildrenhosted by Beckham himself on Wembley’s hallowed turf.It was seamless, thanks to Resonate’s work rate. Theymedia-trained GO3’s people, liaised with Beckham’s people,and worked with the Wembley team. Then they ran the bigday, organising 250 excited schoolchildren, and entertainingGO3’s guests, setting up interviews and photoshoots.The result? GO3, Other Brands 0.Chime Communications plcAnnual Report & Accounts 200811

Public RelationsCharmingClient: TexacoHector (aged nine, purple hair) teaches road safety forTexaco. VCCP gave him a busy 2008.His Roadshow (with Good Relations holding Hector’s hand)toured primary schools. His road-safety lessons entertainedclassrooms. His website now includes Hector’s spookyschool St. Oddballs, fantastically mad safety films andparents’ and teachers’ sections. And his reflective, walkingto school ghost gowns flew out of Texaco stations asquickly as parents’ goodwill flew in.Phew, VCCP and Good Relations deserve a nap.12Chime Communications plcAnnual Report & Accounts 2008

Public RelationsScrutinisingClient: UnileverCorporate Citizenship help Unilever answer critical questions:how do their operations affect suppliers, or employees,or the environment?This isn’t window dressing. One study Corporate Citizenshiphelped run – by Prof. Ethan Kapstein of INSEAD – scrutinisedUnilever’s economic impact on South Africa. Oxfam, NGOreps, environmentalists, and more, then scrutinized Kapstein’sresults. The study showed three things: Unilever’s openness;Corporate Citizenship’s diligence; and that every job Unilevercreated indirectly created 20 more in South Africa’sunemployment-riddled economy.Chime Communications plcAnnual Report & Accounts 200813

Public RelationsPhilosophisingClient: HondaEU Directive 2000/53/EC obliged auto manufacturers todetail the end-of-life environmental impact of their cars.‘Excellent!’ thought Good Relations. For decadesHonda had walked the environmental walk whichothers only talked.So while Hondaeco.eu, the 29-language websiteGood Relations conceived and oversaw, gave the dataBrussels demanded, it also laid out Honda’s long-heldeco-philosophy and new green achievements such asInsight, the world’s first low-cost hybrid.An obligation had been made an opportunity.RecyclingEnergyImpactPursuit ofDreamsEmissionsCarDisposal14Chime Communications plcAnnual Report & Accounts 2008

Advertising and Marketing ServicesAdvertisingand MarketingServices DivisionChime’s Advertising andMarketing Services Divisionincludes the agencies of theVCCP Group, the sportsmarketing agency Fast Trackand specialist financial servicesagency Teamspirit.Across the Advertising and Marketing Services Division,Chime’s agencies have found opportunities to maintain orgrow revenues, despite the growing pressure on marketingbudgets. Prospects for the short and medium term remainstrong, supported by increased exposure to public sectorbudgets, innovative integrated offerings and growth in sportsmarketing activity in part resulting from the approach of the2012 Olympic and Paralympic Games in London.VCCP GroupA strong new business performance and an expandingfootprint amongst public sector clients are helping VCCPGroup to meet targets and deliver stable revenues. VCCPhas also expanded internationally, recently opening anoffice in Berlin to stand alongside the presence in Qatarand Abu DhabiVCCP won and launched a major Government campaignon alcohol awareness under the campaign message‘Alcohol: know your limits’, which provides ongoing workacross three separate departments. High profile and hugelysuccessful, the campaign involved the agency developingdifferent iterations of a central campaign theme to fit the keychallenges and messages of the Department of Health,Home Office and Department for Children, Schools andFamilies. The integrated campaign includes TV, print anddigital advertising, with one viral advertisement generatingover a million hits within six weeks. Early research showsa strong impact on attitudes resulting from the campaign,which is aimed at delivering long-term behavioural changeacross a number of key demographics.Further exposure to the public sector comes through VCCPGroup’s work on the Get Real campaign for the School FoodTrust, which integrates advertising across print and digitalmedia with roadshows created by the Group’s promotionalmarketing agency, BMT. VCCP also won the account forthe Food Standards Agency during the year, as wellas a campaign for the National Health Service promotingHepatitis C testing.Despite the downturn, VCCP succeeded in securing severalnew accounts in the financial services sector, launchinghigh-profile through-the-line campaigns for Standard Life andHiscox Insurance. The Group’s direct marketing agency SFWwon a place on the global roster for RSA and the Europeanroster for Visa. VCCP Blue, which was initially designedto offer advertising to clients on challenging budgets, hascontinued its rate of growth by both attracting new clientsand developing its smaller clients into large clients.The success of ongoing work for established clients addsmore stability to the Group’s revenues. VCCP led a hugelysuccessful brand update campaign for O2, which introducedthe campaign message “we’re better, connected” andis continuing to raise the brand’s profile across the musicindustry, building on the success of The O2, now the world’smost popular entertainment venue. BMT and SFW, ourpromotional marketing and direct marketing agencies, gainstability from the 25% of their revenues that are sharedacross the Group, providing a pipeline of ongoing, contractedwork in project-led sectors.Advertising and MarketingServices DivisionThe VCCP GroupVCCPBMTBMT BusinessVCCP BlueVCCP DigitalVCCP HealthVCCP SearchSFWSomeOneSpecialistsFast TrackFast Track SailingFast Track SpainPure MediaStuart HigginsCommunicationsTeamspiritThe Sports BusinessXandY Communications16Chime Communications plcAnnual Report & Accounts 2008

Advertising and Marketing ServicesVCCP Search continues to deliver strong growth, backedby innovative, differentiating technology and adding a vitalelement to successful VCCP campaigns such as that forwww.comparethemarket.com. Launched in 2007, thebranding agency SomeOne is already delivering work forBritish Basketball and the Royal Opera House. VCCP Healthhas made an impressive start, working for two of the tenclients within the specialist healthcare sector.With the Group’s portfolio of clients largely free of exposureto the banking and retail sectors that have seen the mostsignificant cuts in marketing expenditure, prospects for2009 remain strong.Fast TrackThe Division’s full-service sports marketing agency, Fast Track,delivered strong growth across all areas of activity during2008. High-profile work during the year included thecommunications team’s successful activation of BritishTelecom’s partnership with the 2012 Olympic and ParalympicGames in London; the integration of the agency’s eventmanagement and communications offerings to raise theprofile of British Basketball and support the national team’sbid to qualify for the 2012 competition; the ongoing successof the televised indoor and outdoor meetings organised byFast Track for UK Athletics; and the role of Fast Track’sconsultancy in planning activation campaigns for high-profilebrands such as Lucozade Sport, Emirates, Land Rover,HSBC and National Express.Consistent return on investment (ROI) ensures that sportsmarketing remains an attractive channel for brands lookingto maintain a cost-effective profile over the short and mediumterm. The approach of the 2012 Olympic and ParalympicGames in London is helping to boost activity in the market,with seven Tier-1 sponsors signed up to sponsorship dealseach individually worth in the region of £50 million, and allsponsors looking to gain maximum value from their rightsover the three-year period leading up to the Games.Fast Track’s end-to-end offering, from consulting onsponsorship opportunities to developing activation strategies,driving communications and organising and managingevents, positions the agency strongly to benefit from thisincreased activity.TeamspiritTeamspirit, the Division’s specialist financial services agency,continued to perform well during 2008, despite the immensechallenges facing the financial sector. The agency’s expandingdigital and PR offerings, and the consistently high quality ofits integrated work, are helping to maintain demand for itsspecialist services in the current environment.The agency picked up the Institute of Financial Services’Innovation award for Best Marketing Campaign for its launchof MetLife, the world’s largest insurer, in the UK, and tookhome two marketing effectiveness awards from the FinancialServices Forum for its work for unbiased.co.uk and Prudential.Besides MetLife, the year’s major wins included digital workfor Aviva and Abbey and the rebranding of Legal & General’sinvestment management arm through an integratedadvertising and PR campaign.Medium-term prospects for the sector remain robust, withwell-respected brands determined to maintain a marketingprofile during the downturn and digital channels, in particular,offering strong advantages through ROI and detailed trackingof budgets. Financial Services typically leads the economiccycle, with the effects of the downturn felt earlier thanin other sectors and activity likely to increase aheadof an economic upturn.“Prospects for the short andmedium term remain strong,supported by increasedexposure to public sectorbudgets, innovativeintegrated offerings andgrowth in sports marketingactivity resulting from theapproach the 2012 Olympicand Paralympic Gamesin London.”Chime Communications plcAnnual Report & Accounts 200817

Chime Advertising division and Marketing ServicesThrivingClient: British Performace BasketballBritish Basketball is thriving. Fast Track gets it knownnationally (an Observer dps featuring 6’9’’ Britain andChicago Bulls star Luol Deng; the women’s team modellingevening wear in The Times) and locally (they even gotfootball off The Echo’s back page in Liverpool).They give a guiding hand to the British Basketball pressoffice, and help stage games – A record-breaking crowdof 7,500 saw Britain play the Czechs at The O2.Towering assist work from Fast Track.18Chime Communications plcAnnual Report & Accounts 2008

Advertising and Marketing Chime Services divisionDistillingClient: Home Office and Department of HealthPeople don’t drink alike. VCCP had to address two drinkingcrowds using one ‘Know your limits’ brand. For bingedrinkers, their commercial employed the potent switchof sober drinkers making a stomach-churning mess ofthemselves before going out. (The viral execution gotone million hits within six weeks.)For social drinkers, the measured approach of alcoholunit totals appearing in drinks. Each approach right,each different, each dovetailing in one endline.You need a clear head to do that.Chime Communications plcAnnual Report & Accounts 200819

Chime Advertising division and Marketing ServicesDetailingClient: Royal Opera House“A modern, yet authentically beautiful work of art.” Thus theRoyal Opera House described SomeOne and ML-N’srebranding of their identity. It was quite a performance: theRoyal Coat of Arms made gloriously detailed when large butmaintaining its resonant crest when small; the crest itselfexpanded slightly allowing details to breathe; a potentpalette of colours employed in printed communicationsand, conveying both modernity and tradition, the sans serifbut stately Gotham font.Bravo.20Chime Communications plcAnnual Report & Accounts 2008

Advertising and Marketing Chime Services divisionDistinguishingClient: O2An agency can create a style of advertising for a brand that’sso distinctive, it makes changes of brand direction mucheasier to navigate. For O2, VCCP created a calm, bubblingblue world.Then O2’s brand promise changed, from ‘See what youcan do’ to ‘We’re better, connected’. But the launchcommercial’s surreally connected world was sorecognisably O2’s, the change was seamless.It sounds simple. It isn’t. VCCP just makes it seem so.Chime Communications plcAnnual Report & Accounts 200821

Chime Advertising division and Marketing ServicesUnitingClient: Lucozade SportOne Fast Track idea for Lucozade Sport brings football’sotbaelite and masses together.The Lucozade Sport Performance League (LSPL): 80amateur teams nationwide. Lucozade Sport scientists visitevery team bearing fitness advice. Barclays Premier Leaguecoaches train a different team every month, their tipspassed on through the website, talkSPORT, Four Four Two,and regional media. Final games are played at ManchesterUnited and Arsenal.Not a trickle-down of goodwill for Lucozade Sport, a flood.22Chime Communications plcAnnual Report & Accounts 2008

Advertising and Marketing ServicesClickingClient: cheapflights.co.ukSearch marketing is merciless. If an agency’s softwaredoesn’t channel the right customers to a website, the clientknows, that hour.VCCP Search’s client, Cheapflights, wanted more of theright customers, a higher return on the money they paidGoogle for clickthroughs.They gave VCCP Search a month’s trial. VCCP Search gavethem their highest ever return (up 40%), more visitors andshrewd advice on marketing Cheapflights.First class results.24Chime Communications plcAnnual Report & Accounts 2008

Advertising and Marketing Chime Services divisionEnliveningClient: MetLifeTeamspirit’s client MetLife– a relatively unknown player inthe market – was to launch an exciting new kind of pension.The Retirement Portfolio guaranteed both capital andincome, bringing certainty into an uncertain world.A powerful product campaign was created – a questionmark was destroyed by dynamite above the headline‘Goodbye uncertainty’. And it certainly worked. Salesincreased by 260% in the first six-week period and thecampaign went on to win an IFS Financial MarketingInnovation Award.MetLife had come alive in the UK.Chime Communications plcAnnual Report & Accounts 200825

Research and EngagementResearch andEngagementDivisionChime’s Research andEngagement Division consistsof Opinion Leader, LedburyResearch, Facts International,Brand Democracy, Caucusand Naked Eye.Research and Engagement DivisionBrand DemocracyCaucusFacts InternationalLedbury ResearchNaked EyeOpinion LeaderPeriods of economic uncertainty typically impact mostseverely on project-based services such as market research.However, international expansion and innovative new offershave ensured that Chime’s Research and EngagementDivision ends 2008 with a stronger outlook for theyear ahead.The Division welcomed a number of significant new clientsduring 2008, with award-winning projects enhancing itsreputation as a market leader. Whilst public sector workcontinues to represent a slim majority of revenues, thecontribution of the private sector has been maintained,with new opportunities developing internationally and newproducts generating increased demand within the UK.Early demand for the innovative offers of Brand Democracy,Caucus and Naked Eye is extremely encouraging for theprospects of these companies.Performance during 2008Opinion Leader, Chime’s pioneering research-basedconsultancy, won a Market Research Society award for itsstudy of the future of financial advice and distribution forAegon UK. A multi-national research programme forBupa focused on developing a consumer-centred globalcommunications strategy, while, for Aviva, the agencyundertook global stakeholder research gauging the brand’sreputation across the UK and Europe. Thames Water and theDepartment for Communities and Local Government alsojoined Opinion Leader’s client roster.The health sector delivered growth during the year, withOpinion Leader winning and conducting a major consultationfor Westminster Primary Care Trust as the basis for the Trust’srebranding and further work for City and Hackney PrimaryCare Trust, the Arthritis Research Campaign and WestMidlands Strategic Health Authority.Ledbury Research, which offers an approach to researchtailored around luxury and high net worth consumers,expanded its scope of international clients significantly duringthe year, with 70% of revenues now coming from outside theUK. De Beers, JP Morgan, Jaguar and UBS were amongthe new clients working with Ledbury in 2008.Facts International delivered a year of revenue growth,extending its data collection platforms to include mobile forthe first time and delivering pioneering fieldwork projects suchas an extensive study to determine the effect of the tobaccoadvertising ban on children’s attitude to smoking.New offers generating demandThe launch of two new companies and the acquisitionof a third has strengthened the Research and EngagementDivision’s reputation as a research pioneer, and generatedsignificant demand amongst both public and privatesector clients.Brand Democracy exceeded all targets during its first yearof operation, with a client list that already includes Diageo,the BBC, Channel 4, Kingfisher and Action for Children.The agency uses techniques pioneered in political researchto establish the relative strength of brands and theirmessages through competitive polling.26Chime Communications plcAnnual Report & Accounts 2008

Research and Engagement“Opinion Leader hasalways maintained itsposition as a pioneerthrough the developmentof innovative techniquesand tools that put insightsand technologies fromacross different sectors atthe disposal of its clients.”The digital research platform developed by Caucus, anothernew launch, harnesses the power of social networks todeliver insights into what people say about clients when theyare “not in the room”. Caucus establishes tailored onlinecommunities, allowing analysis of discussions betweenconsumers rather than a simple dialogue with brandrepresentatives. Such consumer-generated insight providesan exciting opportunity to gauge brands’ true reputationsin a digital environment that increasingly dominatesopinion forming.Caucus also provides the Research and EngagementDivision with a platform for rolling out the large-scaledeliberative consultations that it has pioneered in recentyears. The deliberative approach uses informed dialogueto provide insight into how consumer thinking develops.Naked Eye, another newcomer to the Division, is leadingthe way in the fast-developing field of ethnographic research.The ethnographic approach provides clients with a uniqueperspective on consumers by observing behaviour and usingthis as the basis for research discussions. It moves theboundaries of research techniques: from listening toconsumers to observing the way they actually behave.The value of a distinct positioningEach of these new companies has an offer rooted in theDivision’s commitment to helping brands “walk in theircustomers’ shoes”. This distinct positioning has had a highprofile across the marketing community during the past year.In turbulent times, consumers increasingly favour brands thatare demonstrably in tune with their current needs, withcustomer experience a major driver of reputation. Chime’swell-established position as a research pioneer, withdistinctive tools designed to put brands closer to consumersthan their competitors, has real appeal to clients in suchan environment.Chime Communications plcAnnual Report & Accounts 200827

Chime Research division and EngagementAffirmingClient: Channel 4Channel 4’s position depends on appealing to advertiserswhilst delivering public service value. With reducedadvertising revenues and the funding of public servicebroadcasting under review, this position was under threat.Brand Democracy brought a new perspective to thepicture, providing an understanding of social changein Britain, of the potential role of public service contentand of public support for alternative funding models.High-quality data was crucial to the regulator’s decisionto affirm an ongoing public service role for Channel 4.The show goes on – with the audience clearer than ever.28Chime Communications plcAnnual Report & Accounts 2008

Research and EngagementConsultingClient: BupaBupa operates in 190 countries. How on earth could theydevelop one strategy that made Bupa’s world revolvearound the customer? Globally, with Opinion Leader.Opinion Leader ran forums in three continents and sevencities, from London to Sydney. 400 customers were briefedon the latest healthcare thinking, then had their imaginationssparked with discussions about ‘Customer Utopia’ and‘Planet Perfect’ – what their ideal service would be.Their thoughts formed the core of Bupa’s newglobal strategy.Chime Communications plcAnnual Report & Accounts 200829

Finance Director’s reviewFinance Director’sreviewKey Performance Indicators (KPIs)The Group has further improved the strength of its balancesheet in 2008 and has continued to strengthen its financialcontrols. If the current economic uncertainty continues thenthe importance of both of these will increase. Furtherimprovements are being targeted in 2009.The Group manages its internal operational performanceusing a number of KPIs. The most important of these areas follows:2008 2007Operating profit margin 16.2% 16.3%Staff costs/operating income 61.1% 58.5%Average fee income per client £81,000 £70,000Average fee income per employee £111,000 £105,000% of operating income fromclients shared by more thanone business in the Group 66% 62%% of operating income frominternational work 37% 34%Debtors days 50 days 55 daysCash flow and banking arrangementsNet cash at 31 December 2008 was £6.3 million comparedto £0.8 million at 31 December 2007.The Group benefited from unusually strong cash generationclose to the year end and if this had not occurred theGroup would have had approximately £3 million of debtat 31 December 2008.The Group generated cash from trading activities in 2008of £24.6 million (2007 – £21.4 million) representing a cashconversion on profits before tax of 151% (2007 – 155%).The Group continues to operate well within its bankingcovenants and has a borrowing facility of £32 million whichcontinues until July 2013.Deferred considerationsDeferred considerations still payable, total a maximum of£35.7 million, comprising £18.7 million payable in cash and£17.0 million payable in shares or cash at Chime’s discretion.The timing of these payments is £0.2 million in 2009,£9.8 million in 2010 with the balance payable between2011 and 2014.Capital expenditure and investmentTotal capital expenditure for 2008 was £2.2 million(2007 – £1.9 million). The main categories of investment areleasehold improvements (£0.5 million) fixtures and fittings(£1.3 million), computer software (£0.2 million), and motorvehicles (£0.2 million).ProcurementThe Group operates a central procurement function whichuses the power of the Group to ensure that all businessesbuy materials and services as cost effectively as possible.Operating profitmargin (%)Staff costs /operating income (%)Average fee incomeper client (£’000)15.716.316.260.158.561.16870812006 200720082006 200720082006 2007200830Chime Communications plcAnnual Report & Accounts 2008

Finance Director’s reviewPensionsAll the Group’s employees are entitled to contribute to theGroup’s pension scheme or to personal pension schemes.These are all defined contribution schemes.TaxationThe effective tax charge for 2008 was 31.6% comparedto 32.4% last year. The notional finance costs of deferredconsiderations which are not subject to tax relief and deferredtax charges relating to share option schemes increased theeffective tax charge above the UK corporation tax rate of 28%.DividendsThe dividend has increased in line with the adoption ofa more progressive dividend policy announced this timelast year. The Group now operates a 4 times cover policy.The Board is proposing to pay a final dividend of 3.18p pershare (2007 – 2.40p), giving a total dividend per share of4.72p compared to 3.50p in 2007, this is an increase of35%. The final dividend will be payable on 19 June 2009 toshareholders on the register at 29 May 2009. The expectedex-dividend date is 27 May 2009.Going concernThe Directors have prepared cash flow forecastswhich indicate that the Group has adequate resourcesto continue in operational existence for the foreseeablefuture. In preparing these forecasts the directors havetaken into account the following key factors:• The possible impact of the continued economicdownturn on the Group’s business• Key client account renewals• The level of committed and variable costs• Current new business targets compared to levelsachieved in previous yearsThe Directors have concluded, based on the cash flowforecasts, that it is appropriate to prepare the accountson a going concern basis.OutlookIn 2008 the Group put a lot of emphasis on conserving andgenerating cash. This included reviewing and improving clientcontracts and terms of business, supervision proceduresand credit control. There are no significant deferredconsiderations payable in 2009 so the Group is expectingagain to be cash positive at the end of 2009.The Group will retain its current borrowing facilities so that it iswell placed to deal with any deterioration in trading conditionsin the future.Mark SmithGroup Finance Director11 March 2009Note:More detail on the Group's cash position and facilitiesat 31 December 2008, as well as maturities of the financialliabilities, can be found in note 43 to the financial statements.The principal risks and uncertainties faced by the Groupare included in the Director's report and note 43. Detailson the performance of the entity in the year and thefuture prospects of the Group can be found in theChairman's statement.Details of potential contingent liabilities and potentialcash outflows in relation to these liabilities can be foundin note 38.Average income peremployee (£’000)Income fromshared clients (%)Internationalincome (%)Debtors days(No. of days)1041051116266323437515550532006 200720082006 200720082006 200720082006 20072008Chime Communications plcAnnual Report & Accounts 200831

Board of DirectorsDirectorsBoard of DirectorsLord BellChairmanPiers PottingerDeputy ChairmanChristopher SatterthwaiteChief ExecutiveMark SmithFinance DirectorRodger HughesSenior Non-Executive *‡#Dave AllenNon-Executive(resigned 16 December 2008)Hon. Richard Alston(appointed 2 July 2008)Non-ExecutiveCatherine Biner BradleyNon-Executive *‡#Paul RichardsonNon-Executive *‡#* Member of the Audit Committee‡ Member of the Remuneration Committee# Member of the Nominations CommitteeCOMPANY SECRETARYRobert DavisonLord Bell, aged 67ChairmanLord Bell is one of the best known figures inthe United Kingdom communications industry.He helped found Saatchi & Saatchi in 1970,and as International Chairman he took Saatchi& Saatchi into its position as the first BritishNo. 1 worldwide advertising agency in 1981.He successfully ran the publicity campaigns forthe Conservative Party for the general electionsin 1979, 1983 and 1987.He was appointed Deputy Chairman of LoweHoward-Spink & Bell plc in 1985 and remainedin that position until the formation of ChimeCommunications in 1989. He advised thechairmen of many of Britain’s leadingcompanies and organisations as well as foreignheads of state and international businessleaders and politicians. He was awarded aknighthood in 1990 by Lady Thatcher in herresignation honours and a peerage byTony Blair.Piers Pottinger, aged 55Deputy ChairmanFollowing three years at J Henry SchroderWagg & Co Limited, Piers Pottinger spentthree years as an analyst with stockbrokersLaurence Prust. In 1978, he joined CharlesBarker. He spent two years as Director ofMedia Relations at Manufacturers HanoverTrust in New York before returning to Londonas Managing Director of Sterling FinancialPublic Relations in 1982. He joined GoodRelations City (now Bell Pottinger Corporate &Financial) as Managing Director in 1985 andwas also a director of Good Relations Groupplc. He is currently Chairman of Sportech plc,a Vice President of the National Society forEpilepsy, a Trustee of the Foundation forLiver Research and a director of Racing Welfare.Christopher Satterthwaite, aged 52Chief ExecutiveChristopher Satterthwaite began hiscommercial career as a graduate trainee atHJ Heinz. Since his grounding on the clientside, he has worked for three different kinds ofmarketing communication agencies; IMP 1981– 1993, then the UK’s largest sales promotionand direct marketing agency; HHCL & Partners1993 – 2000, Campaign’s 1990s ‘AdvertisingAgency of the Decade’; and Bell Pottinger2000 – 2001, the UK’s leading Public Relationsagency. Christopher was appointed ChiefExecutive of Chime Communications plc in2002. He is a Non-Executive Director ofCentaur Media plc, appointed in July 2007and is Chairman of The Marketing Society.Mark Smith, aged 53Finance DirectorMark Smith has been a Chartered Accountantsince 1978, having qualified with Touche Ross& Co (now Deloitte LLP). Following two yearsas European Finance Director at RCA Records,he joined Good Relations Group plc in 1984and became its Group Finance Director in1985. In 1986 he became Finance Director ofLowe Bell Communications (now Bell PottingerGroup) and Finance Director of ChimeCommunications at the time of themanagement buy-out in 1989. Since 1989he has also been responsible for all Chime’scorporate transactions. Mark is aNon-Executive Director of Holiday ExtrasHoldings Limited.32Chime Communications plc

Board of DirectorsRodger Hughes, aged 60Senior Non-Executive DirectorRodger Hughes is a Chartered Accountant whowas a partner in PricewaterhouseCoopers for25 years, including four years as ManagingPartner and seven years as Head of theAssurance practice. He has had extensiveexperience advising a wide range of clients onbusiness issues and was for some years thefirm's Advertising Industry leader. He was, until2007, Auditor to the Duchy of Cornwall. Rodgeris a non-executive member of the board ofSimmons and Simmons, the international lawfirm, a member of the Steering Board ofCompanies House and a Non-ExecutiveDirector of Friends Provident plc.Hon. Richard Alston, aged 67Non-Executive DirectorHon. Richard Alston served as Australian HighCommissioner to the United Kingdom fromFebruary 2005 until March 2008, after adistinguished career in the AustralianParliament as a Senator for Victoria from 1986until February 2004. Prior to enteringParliament he had extensive experience as abarrister, practising in common law,commercial and administrative law.From March 1996 to October 2003 he wasFederal Minister for Communications,Information Technology and the Arts. Heserved on the Liberal/National Coalition frontbench continuously for nearly 15 years.As Deputy Leader in the Senate for more thanten years, he was one of the four membersof the Liberal Party leadership group, whichincluded the Prime Minister and the Treasurer.After leaving Parliament, he entered thebusiness sector, where he provided adviceand consulting services in both the nationaland international arenas. He served on theboards of a number of publicly listedcompanies, including Hansen Technologies,UCMS and Broadcast Services Australia,where he was Chairman.He is currently a member of the internationaladvisory board of London-based hedge fundCQS, as well as being an Adjunct Professor atBond University Queensland and a member ofthe Bell Shakespeare and Melba Foundations.Catherine Biner Bradley, aged 55Non-Executive DirectorCatherine Biner Bradley is a Swiss lawyer withoffices in Geneva and Vaud who specialises inbusiness law and in Swiss and internationaltax planning. She founded Bourquin & BinerBradley, where she remains a partner today.She serves on the board of directors of anumber of Swiss and international companies.She was a Director of COLT Telecom plc forfive years, commencing with its initiallisting on the London Stock Exchange in1996, serving during that period on its Auditand Compensation Committees.Paul Richardson, aged 51Non-Executive DirectorPaul Richardson became Group FinanceDirector of WPP Group plc in December 1996after four years with the Company as Directorof Treasury. He is responsible for the Group’sworldwide finance function, including externalreporting, taxation, procurement, property,treasury and internal audit. Previously he spentsix years with the central team of Hanson plcfinancing major acquisitions and disposals. Heis a Chartered Accountant and member of theAssociation of Corporate Treasurers. He is alsoa non-executive director of S.T.W in Australia.Robert Davison, aged 51Company SecretaryRobert joined the Group in 1987 as GroupServices Manager, became Assistant CompanySecretary in 1994 and Director ofAdministration in 1998. Prior to joining theGroup he worked in the music industry for tenyears, initially for PolyGram, including workingon the launch of the compact disc format inEurope, and later with RCA Records. In hiscurrent role he is additionally responsible forthe Group’s centralised functions such as IT,property, HR and risk management. Robert is aFellow of the Institute of Chartered Secretariesand Administrators.Annual Report & Accounts 2008 33

Executive Management TeamExecutive Management TeamPiers Pottinger, aged 55(For biographical details see page 32)Christopher Satterthwaite, aged 52(For biographical details see page 32)Mark Smith, aged 53(For biographical details see page 32)34 Chime Communications plcAdrian Coleman, aged 45Adrian Coleman is one of the foundingpartners of VCCP, which was launched inJanuary 2002. Since joining Chime, Adriannow heads up the Advertising and MarketingServices Division, which includes VCCP, VCCPDigital, VCCP Search, VCCP Blue, BMT andSFW. Prior to this he was Chief Executive ofthe AMD Group (Chime-owned) where heoversaw the media group, responsible forpublishing, design and online, as well asadvertising. Before joining AMD, Adrianwas a partner at HHCL & Partners, a directorof IMP and he started his career working forExxon on the client side. Overall, he has abroad understanding of the marketing mixthrough his previous experience.Viki Cooke, aged 54Following a successful career in advertising,communications and planning, Viki is now jointchair of Chime’s Research and EngagementDivision. Viki has played a leading role indeveloping new thinking about the drivers ofcorporate reputation, the use of deliberativemethods to help shape policy and ways ofidentifying, understanding and engaging withhard-to-reach audiences ranging from thoseat risk of social exclusion to chief executives.Viki is also a Trustee of Global Action Plan andChanging Faces and is a member of WarwickUniversity Council.Sue Farr, aged 53Sue Farr has been a member of theManagement Team of Chime since 2003 andis currently leading Chime’s strategic andbusiness development programme. Prior toChime she was European Managing Directorof Golin/Harris, an IPG-owned public relationsgroup, where she ran several businessesacross Europe. Most of Sue’s client-sidecareer has been spent in broadcasting, firstlyas Director of Corporate Communications forThames Television plc (1990-1993), whichsaw her launch UK Gold, and subsequently asDirector of Marketing for the BBC (1993-2000),where she was responsible for marketingstrategy, planning and implementation acrossall the BBC’s public service brands.Sue is a Trustee of Historic Royal Palaces,Non-Executive Director at Motivcom and adirector of The Marketing Society since 1984,she was the first woman Chair in 1991 – 1992.She was a non-executive director of NewLook plc from 1994 until 1996. She wasChairman of The Marketing Group of GreatBritain in 1999 – 2001. She was voted theAdvertising Woman of the Year in 1997, aWACL Woman of Achievement in 1998 andawarded The Marketing Society ‘Grand Prix’in 1998.Jim Glover, aged 43Jim has worked in the sports marketingindustry for over 16 years. After beginning atIMG specialising in golf clients, Jim joined USbasedgolf management company CornerstoneSports, managing the European office. In 1994he set up Lighthouse Communications, one ofthe first independent agencies to offer thecorporate world independent, impartial adviceon sponsorship. Over the next ten years,Jim built the company into one of the leadingand most respected independent consultingagencies in Europe, responsible for creatingsuccessful sponsorship programmes forHeineken International, GlaxoSmithKline, MMCand Ford. In December 2005, he oversaw thesuccessful acquisition of Lighthouse by leadingsports marketing agency Fast Track and wasasked to join the merged company asManaging Director with responsibility for theclient-facing elements of the business.

Executive Management TeamDeborah Mattinson, aged 52Deborah Mattinson is joint chair of Chime’sResearch and Engagement Division, and isone of Britain’s leading practitioners ofissue-based research and consultation. Shehas unparalleled expertise in accessing andunderstanding public opinion, in stakeholderdialogue and in citizen engagement. Shewrites and broadcasts widely on publicopinion. She is a Trustee of the GreenAlliance and Dance Umbrella.Kevin Murray, aged 54Kevin Murray is Chairman of the Bell PottingerGroup, the Public Relations Division of ChimeCommunications.Kevin specialises in the field of strategiccommunications and reputation managementand has years of experience advising chairmenand chief executives, as well as managingcomplex and global communications projectsand departments.Previously he was Director of Communicationsfor British Airways and, before that, Directorof Corporate Affairs for AEA Technology, theinternational science and engineering businessthat was floated off from the United KingdomAtomic Energy Authority. Prior to AEA, Kevinwas Group Public Relations Manager forBayer companies in the UK. He is alsoa former national newspaper journalist,magazine publisher and marketing director.Alan Pascoe, MBE, aged 61Following a successful athletics career inwhich he represented Great Britain at threeOlympic Games and won a silver medal, Alanbecame involved in sponsorship, where hehas worked for over 30 years. This hasinvolved managing and delivering major sportsand entertainment programmes, acting as aconsultant to some of the world’s leadingbrands and creating and organising some ofBritain’s most successful events. In the mid-1980s, Alan set up API, which grew tobecome one of the top three sponsorship,television and sports marketing companiesin the world, employing over 300 people in13 offices around the world. After selling APIto the Interpublic Group in 1998, Alan set upFast Track as a specialist sponsorshipconsultancy with the initial task of supportingUK Athletics to revive and re-launch Britishathletics. In September 2003, Alan wasappointed to one of his most challenging rolesyet as Vice- Chairman of the London 2012Olympic bid, which was awarded to Londonby the IOC on 6 July 2005. In 2004 Alan wasvoted Sponsorship Personality of the Year byHollis Publishing and has led Fast Track intoa hugely successful period of growth andindustry recognition, becoming the first-evercompany to win back-to-back sponsorshipindustry awards as well as being nominated asthe leading sponsorship agency in the UK byMarketing Magazine in 2005 and 2006.Ian Priest, aged 45Ian Priest, Founding Partner at VCCP, startedbelow-the-line and migrated to advertising,with excellent integrated credentials.His approach to work is team-based, toencourage respect, fun, ambition and speed.He loves working with like-minded clients andhas proven time and time again that hedelivers outstanding work that gets it right.From Account Executive at IMP in 1986 toManaging Director of HHCL & Partners in1999, Ian’s career has been carved outof brilliant campaigns and hard-nosedbusiness reality.Jon Ridgeon, aged 42Jon is a former two-time Olympic track andfield athlete, world championship silvermedallist at 110m hurdles and graduate fromCambridge University. Post his athletics career,Jon entered sports marketing in 1994, initiallyspecialising in rights marketing. When FastTrack was established in 1998, Jon createdthe communications department beforemoving on to become Managing Director,with particular responsibility for events,communications and rights marketing.Currently, Jon leads a team of close to 50people responsible for delivering a number ofworld-class event and commercial rightsprogrammes including the UK School Games,the Paralympic World Cup and UK Athletics’(UKA) televised event series. Recently, Jon ledthe renegotiation of the Norwich Union/UKAcontract, resulting in a six-year £50 millioncontract, the biggest commercial sponsorshipin British sport outside of football. In additionto his role at Fast Track, Jon is a presenter forSky Sports and has also presented for BBCTelevision and Radio 5 Live.Nick Taylor, aged 56Nick Taylor began his commercial career as agraduate trainee in the Aerospace and Medicaldivisions of Smiths Industries plc. In 1979 hefounded Harvard Public Relations, which wenton to become one of Europe’s leading TMTconsultancies with offices in London, Parisand Munich. Following Harvard’s acquisitionby Chime in 2000, Nick joined the ExecutiveManagement Board with responsibility forChime’s overseas offices; he is also a memberof the Corporate Development Team handlingM&A activity. Nick is a Non-Executive Directorof Merityre Specialists and a member of theChartered Institute of Marketing.Annual Report & Accounts 2008 35

Directors’ statement on corporate governanceDirectors’ statement on corporate governanceCorporate governance reportThe Board of Directors is collectivelyaccountable to the Company’s shareholdersfor good corporate governance and iscommitted to maintaining compliance withthe principles of corporate governancecontained in the Combined Code onCorporate Governance that was issued in2006 by the FRC (The Code).A narrative statement on how the Companyhas applied the Principles throughout the yearended 31 December 2008 and a Statement ofCompliance appears below.NARRATIVE STATEMENTDirectorsThe Company is controlled through the Boardof Directors which, on 31 December 2008comprised four Executive and fourNon-Executive Directors. The biographiesof the current Directors are shown onpages 32 and 33 of this report.During the year Hon. Richard Alston wasappointed (2 July 2008) and Dave Allenresigned (16 December 2008), both asNon-Executive Directors.The Board meets quarterly and additionally asnecessary and is responsible for overall Groupstrategy, acquisitions and the consideration ofsignificant financial matters. It reviews thestrategic direction of the Group’s tradingcompanies, their annual budgets and theirprogress towards achievement of thosebudgets. The Board is responsible forensuring the integrity of financial informationand that the financial controls and systems ofrisk management, both financial and nonfinancial,are robust and appropriate.The Chairman, Lord Bell, is responsible forthe running of the Board and he ensures thatall Directors receive sufficient, accurate andtimely information on financial, business andcorporate issues prior to meetings. He alsoensures that the Non-Executive Directors haveaccess to any further supplementaryinformation they may require should theyrequest it.The Chief Executive’s (ChristopherSatterthwaite) responsibilities focus on coordinatingthe Company’s business andimplementing Group strategy.Both Lord Bell and Christopher Satterthwaiteare due to retire by rotation immediately beforeand are proposed for re-election at theforthcoming AGM.Rodger Hughes is the Senior Non-ExecutiveDirector.New Directors receive a full, formal andtailored induction on joining the Board in orderto further inform them of the Company’sactivities and structure. All Directors are ableto take independent professional advice, at theCompany’s expense, in furtherance of theirduties, if necessary. The Company also makesappropriate training available to all existingDirectors. All Directors, in accordance with theCode, will submit themselves for re-election atleast once every three years.Executive Directors are entitled to acceptexternal appointments outside the Companyand retain the fees from such appointmentsprovided that the Chairman’s permission issought and confirmed by the Board.The Board met on four occasions during2008. Catherine Biner Bradley attended threemeetings. Hon. Richard Alston attended bothof the meetings that took place after hisappointment. All other meetings were fullyattended. When absent from meetings theviews of the director concerned are soughtin advance then put to the meeting in orderto facilitate a comprehensive discussion.Each director continues to make themselvesavailable to their fellow directors and ensureshe/she contributes to the major decisionsbefore the Board.Non-Executive DirectorsThe individual Non-Executive Directors havedifferent skills, experience and qualificationsfrom working presently or previously in variedsectors of the economy and as such they areable to bring independent judgement to bearon matters for consideration by the Board.Rodger Hughes was appointed as a Directorby the Board in July 2007. He became theSenior Non-Executive Director and Chairmanof the Audit, Remuneration and NominationCommittees in October 2007.Hon. Richard Alston was appointed as aDirector by the Board in July 2008 and will beproposed for election by the shareholders atthe forthcoming AGM.Catherine Biner Bradley is due to retire byrotation immediately before and is proposedfor re-election at the AGM.Paul Richardson is the WPP Group plcrepresentative on the Board under thesubscription agreement of 1997 and has beena Director of the Company since that date.Under the Code and due to his length ofservice, Paul will retire immediately before andis proposed for re-election at the AGM.Dave Allen, WPP’s second representative onthe Board, resigned in December 2008.The Board considers its current Non-ExecutiveDirectors to be of sufficient calibre andnumber that their views may be of sufficientweight that no individual or small group candominate the Board’s decision-making process.The Board continues to consider suitablecandidates as Non-Executive Directors.The Non-Executive Directors’ terms andconditions of appointment are available forinspection at the Company’s registered officeon request and will be available, together withthe Executive Directors’ service contracts, atthe forthcoming AGM.Independence ofNon-Executive DirectorsThe Code states that it is for the Board todetermine whether a director is independent incharacter and judgement and considerwhether there are any relationships orcircumstances that are likely to affect adirector’s judgement.In applying the Code, the Board hasconsidered whether the length of service ofPaul Richardson (12 years) has compromisedhis independence. He is experienced andaccomplished in his fields of expertise. In hisassociation with the Company he hasacquired an understanding of the Company’soperations, its markets and the issuesdetermining its success. He has showncommitment to the Company in both time andeffort. The Board does not consider his longservice as a Director to be detrimental or tohave eroded his objectivity and it should notraise any concerns about his ability to performhis duties.Paul Richardson remains the WPP Group plcrepresentative on the Board as stated above.Performance evaluation has shown that hecontinues to have a good record ofinvolvement in Board-level discussions andcontributes additional help to further theCompany’s strategies. The Board considersPaul Richardson to be independent.The question of Non-Executive Directors’shareholdings should also be consideredwhen assessing independence. RodgerHughes and Catherine Biner Bradley eachhold a small number of shares in the Companyas disclosed on page 45. The Board considersthat these holdings are not significant andbelieves this alone should not raise questionsregarding their independence. The Boardconsiders that Directors owning shares in theCompany directly aligns them with theinterests of the shareholders.Following performance evaluations for 2008the Board has considered the independenceof its Non-Executive Directors and considersthem to be independent in both judgementand character and that the circumstancesshown above are unlikely to affect theirrespective judgements when consideringmatters of the Company.36Chime Communications plc

Directors’ statement on corporate governanceAudit CommitteeMembership is restricted to thoseNon-Executive Directors deemed to beindependent by the Board and is shown onpage 32.The Committee met on three occasions duringthe year to discuss accounting, audit andinternal control matters together with reviewingfinancial statements and compliance withaccounting standards and the Company’saccounting policies. The Audit Committee isalso responsible for ensuring that aprofessional and objective relationship existswith the Company’s external auditors. Theexternal auditors are represented at eachmeeting and may request a meeting of theCommittee without management beingpresent if necessary. The Audit Committeealso reviews the work of its sub-committee,The Risk Management Committee, whichoversees the Company’s risk identification andmanagement system.During the year the Committee has additionallyconsidered the review of internal controls andrisk management systems; has monitored theimplementation of the Company’s DisasterRecovery Plan and has developed theresponse to new and revised legislation andregulatory requirements.Each meeting was attended by thefull membership.Remuneration CommitteeThe Committee measures the performance ofthe Executive Directors and of key membersof senior management as a prelude torecommending their annual remuneration. TheCommittee is also responsible for overseeinggrants under the Company’s Co-InvestmentPlan, Executive Share Option Scheme, theSavings-Related Share Option Scheme andthe Deferred Share Plan to employees of theGroup. When required the Chairman, LordBell, attends the meetings but is not actually amember. The remuneration of the Non-Executive Directors is recommended by theChairman and Finance Director and takesaccount of the time spent on Board andCommittee matters. Final decisions aremade by the Board but no director takespart in any discussion regarding his or herown remuneration.During the year the Committee has carriedout performance evaluations and agreedthe remuneration for the Executive Directorsfor 2008.It has reviewed and approved further grantsunder the Company’s Deferred Share Plan forsenior managers and the Savings-RelatedShare Option Scheme, which is open to allstaff after a qualifying period. The Committeecontinues to monitor the administration of theincentive schemes and the performancetargets that apply to each.The Committee has also set the keyperformance indicators for the individualExecutive Directors; approved a formalexpenses policy for the Directors andapproved the disclosures to shareholders inthe financial statements of the Company.In 2008 the Committee met on threeoccasions and all the members were presentat each meeting.Nominations CommitteeMembership of the Nominations Committeeis restricted to independent Non-ExecutiveDirectors as shown on page 32. TheCommittee leads the process of appointmentsto the Board by evaluation of the skills,knowledge and experience required fora particular appointment.The Code requires the Company to have aformalised process for the selection andappointment of new directors. The Boardconsiders that a prescriptive procedure isinappropriate and could prove restrictive andcostly both in terms of identifying potentialcandidates and the selection process itself.The Company does not believe that it shouldcommit to the exclusive use of externalrecruitment consultants although there may beoccasions where this method is employed.The Committee met once during the yearto discuss the appointment of Hon RichardAlston as a Director. All of the memberswere present.Performance evaluationIn line with the Code, the Company carries outannual performance evaluations of the Board,its committees and the individual Directors.The 2008 performance evaluation took placein early 2009. The aim of the evaluation is torecognise the strengths and address anyweaknesses of the management process; toensure that the Board meets its objectives andthat effectiveness is maximised.The Remuneration Committee, led by RodgerHughes, the Senior Independent Non-Executive Director, evaluates the performanceof the Executive Directors. The Board, led bythe Chairman, is responsible for theassessment of the performance of the Non-Executive Directors.The work of the Board and its Committeestogether with the processes used and thebusiness transacted during the year isassessed by the Board, taking into accountthe specific workloads of each forum; theknowledge and expertise of its members; andthe recommendations made to the Boardregarding specific tasks put before theCommittees concerned.Relations with shareholdersThe Company is keen to promote two-waycommunications with its institutional andprivate investors and responds quickly toqueries received. Lord Bell, Chairman;Christopher Satterthwaite, Chief Executive;and Mark Smith, Group Finance Director, arethe Company’s principal spokespersons withinvestors, analysts, the press and otherinterested parties.All shareholders are sent copies of theCompany’s Annual and Interim Reportsand, where appropriate circulars andprospectuses. The Annual and Interimreports are also published on the Groupwebsite, www.chime.plc.uk, together withannouncements, press releases and Companyinformation. This enables investors worldwideto keep informed of the Company’s progress.Shareholders are given at least 21 days’ noticeof the Annual General Meeting at which allDirectors are generally present and at whichquestions are both invited and encouraged.Accountability and auditFinancial reportingA review of the businesses in the Group isincluded in the Chief Executive’s Review. TheBoard uses this, together with the Chairman’sStatement and the Directors’ report onpages 46 to 47 to present a balanced andunderstandable assessment of the Company’sposition and prospects. The directors’responsibilities for the financial statements aredescribed on page 48 of the Report andFinancial Statements.Internal controlThe Board has established a process foridentifying, evaluating and managing significantrisks faced by the Group. The board regularlyreviews the process, which has been inplace from the start of the year to the dateof approval of this report and which is inaccordance with revised guidance on internalcontrol published in October 2005 (theTurnbull Guidance). The Board is responsiblefor the Group’s system of internal control andfor reviewing its effectiveness. The control andrisk management procedures are designed tohighlight any weaknesses and/or failures in thesystems to the Board at the earliest opportunitytogether with action taken and/or proposed.Such a system is designed to manage ratherthan eliminate the risk of failure to achievebusiness objectives, and can only providereasonable and not absolute assuranceagainst material misstatement or loss.Annual Report & Accounts 2008 37

Directors’ statement on corporate governanceInternal control (continued)Information on the Group’s significant risks,together with the relevant control andmonitoring procedures, is reviewed on amonthly basis by the heads of the businessunits under the guidance of a nominatedExecutive Director. This information ispresented to the Executive Directors to assessany identified risks and the overalleffectiveness of the system of internal control.An update on all significant risk managementissues is made to the Board at each quarterlymeeting. Additionally, companies annuallycomplete a review of specified risk areas andtheir local risk management processes underthe supervision of the trading division financedirectors, the Group Internal Auditor and theCompany Secretary. The Company also has asub-committee of the Audit Committee, theRisk Management Committee, that specificallymonitors and investigates potential areas ofrisk raised by the trading companies and bythe Group centralised administrativemanagement in areas such as Property,Human Resources and IT.Given the nature of the Group’s activities, theBoard recognises the risks associated with itsability to attract, motivate and retain talentedemployees. Accordingly, a significant part ofthe Group’s risk management procedures arefocused in this area and the Group continuesto utilise employee benefits schemes shownon 40 and 41 to meet this requirement.The Group has a number of companiesincluding overseas businesses in Germany,the USA and the Middle East. Control of theoverseas businesses is currently affected bydesignated senior executives reporting directlyto the Board.The Board recognises the need to ensure thatestablished risk management procedures andstandards are integrated into all acquiredbusinesses and accordingly potential areasof non-compliance are identified duringthe due diligence process and addressedpost-completion.The internal audit function reports directly tothe Audit Committee. A review of this functionhas been conducted and reported to theBoard within the annual review of the systemof internal controls. Recommended changesto the scope and application of internal auditprocedures have been adopted and theinternal audit programme for the year hasbeen presented to and approved by theAudit Committee.The Group has a clear, written whistleblowingpolicy and procedure available to all staffregarding concerns of employees aboutethical behaviour and non-compliance withregulatory requirements and/or the law.The Group has material investments in a smallnumber of associated companies that are notmanaged by the Group. Accordingly, theGroup can only influence, not control, theirmanagement practices and therefore thereview of internal controls for these operationsis less comprehensive than that for theGroup’s managed operations.Financial controlThe financial control procedures are describedunder the following five headings:1. Financial reporting – The Group has acomprehensive system for reporting financialresults to the Board; each trading companyprepares monthly results with a comparisonagainst budget. The Board reviews these forthe Group as a whole and determinesappropriate action. Towards the end of eachfinancial year the operating units preparedetailed budgets for the following year.Budgets and plans are reviewed andnecessary changes made by the Board beforebeing adopted formally.2. Quality and integrity of personnel – One ofthe Group’s core values is integrity; this isregarded as vital to the maintenance of theGroup’s system of internal financial control andis reflected in the quality and experience of theGroup’s financial staff.3. Operating unit financial controls – Keycontrols over major business risks includereviews against performance indicators andexception reporting. The trading companiesregularly assess their exposure to majorbusiness risks and appropriate action is takenboth at operating and Group level in order toensure that risk is minimised as far as possible.4. Computer systems – The Group’s financialand management information is processedby and stored on data systems. Accordingly,the Group has established controls andprocedures over the security of data held oncomputer systems. The Group has put inplace arrangements for computer processingto continue and data to be retained in theevent of complete failure of any system.5. Controls over central functions – A numberof the Group’s key functions, includingtreasury, taxation, acquisitions and insuranceare dealt with centrally. Each of thesefunctions has clear and detailed proceduresand is required to report to the Board on aregular basis; the treasury details are reporteddaily to the Finance Director.The Audit Committee and AuditorsThe Audit Committee has considered reportsmade to it by the executive management ofthe Group, which assesses the major businessrisks and the control environment against thecriteria for assessing internal financial controlswhich are set out in the guidance for directorson reporting on internal control. The AuditCommittee has reported to the Board that ithas been able to review the effectiveness ofthe Group’s system of internal financial controlfor the accounting year and the period to thedate of approval of the financial statements.The Group has a policy for the employment ofthe auditors for non-audit work. The auditorswork on tax issues for the Group butany increase in fees is strictly controlled bythe Audit Committee. Any other non-auditassignments can be awarded to the auditorsduring the year but only where fees are withinAudit Committee approved limits.Going concern basisAs required by UK company law the Directorshave considered and confirm that it isappropriate to adopt the financial statementson the basis that the Company and Grouphave adequate resources for the foreseeablefuture, as disclosed in the Finance Director’sreview. Therefore the Company and the Groupcontinue to adopt the going concern basis inpreparing the financial statements.Social responsibilityWe are in the business of managing brand andcorporate reputation on behalf of clients andthe Board acknowledges that being sociallyresponsible is an important factor in themanagement of our business.The Board confirms that regular considerationis given to the significance of social,environmental and ethical (SEE) issues (asdefined by the Association of British Insurers),and as part of our wider operational riskframework, identifies significant risksarising from these areas to short-term andlong-term value.The Group also considers corporateresponsibility to be an area of businessopportunity. Our subsidiary, CorporateCitizenship, provides not only a focus for ourinvestment in this field but provides the Groupwith specialist expertise.The Board believes that corporateresponsibility should underpin everythingthat we do. The Group is therefore committedto demonstrating the importance of this, notonly in our work for clients but in our ownworking practices.38Chime Communications plc

Directors’ statement on corporate governanceThe Company measures the performance ofeach of its businesses against a benchmark ofminimum corporate responsibility standards.The standards are designed to be stretchingand, as such, encourage continualimprovement in this important area.We continue to report our corporateresponsibility performance to our stakeholdersvia our website and printed media.These detail not only the principles of ourapproach but also give examples of theinitiatives undertaken.The Company is listed on the FTSE4GoodIndex, which evaluates companiesperformance on a number of corporateresponsibility criteria.EnvironmentThe business of Chime Communications isprimarily in the UK and delivers services toclients based on image, ideas, research andcontent. As such, our direct and indirectimpact on the environment is minimal andconsidered low-risk.However, we acknowledge that ourcustomers, staff and other stakeholders havean interest in our impact on the environmentand as such we have committed to monitorand improve our environmental performancewhere possible. We became Carbon Neutralat the start of 2007. In the first year wereduced our emissions by 37%, winning anaward from Business in the Community in theprocess. In 2008, our aim was to achievefurther reductions (our target was 5%) andembed the new behaviour and data collectionprocesses into our working practices. Ouremissions will be audited against our target inMarch by the Carbon Neutral Company andthe Edinburgh Centre for Carbon Managementand we are confident of meeting our target.Our companies regularly incorporate ourenvironmental performance in businesspresentations as we believe this is an importantconsideration when evaluating reputation.We continue to work with our customers andour supply chain in order to ensure that ourimpact is minimised and that best practiceis achieved.Health and safetyThe Board believes that our people are ourmost important asset. Our businesses do notinclude any industrial or manufacturingprocesses and our staff are mainly officebased.As such, risk of accidents is low.We do acknowledge that we may expose ourstaff to additional areas of risk which, whilstnot unique to Chime (for example, businesstravel, event organisation and lone or remoteworking), do require further scrutiny, mitigationand procedural guidance in order to maximisethe wellbeing of our staff.In 2008, the Board commissioned a review ofour health and safety systems by SafetyExchange Ltd, who provide the Group withspecialist expertise in this area. The findingsconfirmed that our procedures wereappropriate but that these should beformalised and publicised within the Groupmore cohesively. Enhancements weredeployed to improve the awareness and theassessment of risks where they do arise in ourday-to-day business. The revised policy andprocedures were published to staff inSeptember 2008.Employee issuesAs a people business, our reputation dependson the skills, knowledge and integrity of ourpeople. Chime has fostered an entrepreneurialculture and each of our businesses isencouraged to create a stimulating, rewardingand inspiring work environment for our people.Our people continue to be our main priority.We recognise that central oversight on humanresources issues is beneficial and continuallyreview the employment standards across theGroup as part of the general management andrisk identification processes.In order to attract and retain talented staff wecontinue to operate our Executive ShareOption and Savings-Related Share OptionSchemes together with our Deferred SharePlan. We also continue to review our incentiveschemes on an ongoing basis.EthicsThe Group meets all relevant laws, regulationsand codes of practice issued by any relevantGovernment or appropriate regulator. Weensure that all our people are aware andcomply with such standards. In addition,we recognise that integrity is essential tothe maintenance of our reputation in themarketplace. As part of our regular reviewprocess, issues of conduct are identified,reviewed and the Board is alerted asappropriate. We utilise our published Codeof Conduct which formalises the values,behaviour and ethical standards expectedof Chime employees. We maintain ourwhistleblowing policy and procedure andensure that our published standards ofbehaviour are communicated to both newand existing staff.Compliance statementThroughout the year ended 31 December2008 the Company has been in compliancewith the provisions set out in Section 1 of theJune 2006 FRC Combined Code onCorporate Governance, except for Code A.4.6– Processes used by the NominationsCommittee (the reason for non-complianceis shown on page 37); and B.1.4 – ExecutiveDirectors’ remuneration for external nonexecutivedirectorships is not stated, asthis information is available in the financialstatements of the companies concerned.Approved by the Board of Directors andsigned on behalf of the BoardRobert Davison, Secretary11 March 2009Annual Report & Accounts 2008 39

Directors’ remuneration reportDirectors’ remuneration reportGroup policy on the remuneration ofdirectors and employeesThis report has been prepared in accordancewith Schedule 7A to the Companies Act1985. The report also meets the relevantrequirements of the Listing Rules of theFinancial Services Authority and describeshow the Board has applied the Principles ofGood Governance relating to directors’remuneration. As required by the Act, aresolution to approve this report will beproposed at the Annual General Meetingof the Company at which the financialstatements will be approved.The Act requires the auditors to report to theCompany’s members on the ‘auditable part’of the Directors’ remuneration report andto state whether in their opinion that part ofthe report has been properly prepared inaccordance with the Companies Act 1985.The report has therefore been divided intoseparate sections for audited and unauditedinformation.Unaudited informationRemuneration CommitteeThe composition, chairmanship and activitiesof the Remuneration Committee are set out onpages 32 and 37. The members of theCommittee receive remuneration as set out inthis report. They abstain from participatingwhere their own interests are concerned andhave no involvement in the day-to-daymanagement of the Group’s operations. OtherDirectors attend meeting by invitation only butthis would not include when matters relating totheir own remuneration arrangements arediscussed. In addition to the current membersof the Committee Julian Seymour (resigned31 December 2007) was a member when theCo-Investment Plan, as detailed later, wasapproved by the Committee.During the financial period under review, theRemuneration Committee sought theassistance of the Chairman and FinanceDirector relating to Directors’ performanceand remuneration. The Committee usedTowers Perrin to provide advice primarilyon competitive market levels and on theperformance-related elements of the ExecutiveDirectors’ remuneration. Towers Perrin werenot contracted to supply any other servicesduring 2008. The Remuneration Committeealso approved the grant of share optionsunder the Savings-Related Share OptionScheme, the grant of shares under theDeferred Share Plan and they approved anexpenses policy for Executive Directors.The Committee’s terms of reference areavailable on request from the CompanySecretary and will be available for inspectionat the forthcoming AGM.Remuneration policyThe Group is committed to attracting andretaining high-quality staff. Remuneration is setat levels commensurate with competing firmsin the same industry and is monitored on aregular basis. The performance measurementof the Executive Directors and key seniormanagement and the determination of theirannual remuneration packages are undertakenby the Committee. More generally, theCommittee reviews executive remunerationarrangements regularly to ensure that theyremain effective, competitive and appropriateto the Group’s circumstances and prospects,and monitors incentive award levels andconsequent company liabilities. It alsoreviews the awards of shares made underthe Deferred Share Plan and of options overshares under the Executive and Savings-Related Share Options schemes in terms oftheir effect on dilution limits.Three of the four Executive Directors spend alarge proportion of their time on fee-earningclient work. Their remuneration packages aretherefore based on the appropriate marketrate for two different functions: one is themanagement of the Group in the executiveroles of Chairman, Deputy Chairman and ChiefExecutive and the other is as client handlersand new business winners. Looked at in thoseterms, their remuneration is considered to bein line with market rates. The Committeeplaces considerable emphasis on theperformance-linked elements of theirremuneration, i.e. Annual Bonus, DeferredShare Incentives and Long-Term Incentives.Executive Directors are entitled to acceptexternal appointments outside the Companyproviding that the Chairman’s permission issought and confirmed by the Board.The fees payable to the Non-ExecutiveDirectors represent compensation inconnection with Board and Committeemeetings and, where appropriate, for devotingadditional time and expertise for the benefit ofthe Group in a wider capacity. Non-ExecutiveDirectors do not participate in the Company’spension or share option or other incentiveplans. The Board considers that the Non-Executive Directors’ remuneration conformswith the requirements of the Combined Code.This Report sets out the Group’sRemuneration policies for the Directors forthe year ended 31 December 2008. Thesepolicies are likely to continue to apply infuture years, unless there are specific reasonsfor change.Remuneration packagesIn 2008 there were five main elements ofthe remuneration packages for ExecutiveDirectors:• basic annual salary and benefits;• annual bonus payments which cannotexceed 50% of salary;• deferred share incentives;• long-term incentive plans; and• pension arrangements.Basic annual salary and benefitsIn setting salary levels, the RemunerationCommittee considers the experience andresponsibility of the Executive Directors andtheir personal performance during the previousyear. The Committee also takes account ofsalary levels within other companies of asimilar size and nature, as well as the rates ofincreases for other employees within theGroup. The Remuneration Committee reviewssalaries with effect from January each year.The benefits provided by the Group to theExecutive Directors consist principally ofpension contributions, a car or car allowanceand private medical insurance.With the exception of the Chief Executive,no increases in salary were awarded to theExecutive Directors in either 2007 or 2008consistent with greater emphasis onincentivising performance through bonuses.Annual bonusThe Executive Directors’ annual bonusarrangements are focused on the achievementof the Group’s short-term financial objectives.The annual bonus allocation is capped at amaximum of 50% of salary for the ExecutiveDirectors, of this up to 25% of the relevantDirector’s salary may be payable if theCompany meets the profit targets set by theBoard. A further maximum of 25% may bepaid to each Executive Director, based on keyperformance indicators linked to the Group’sstated strategy and tailored to their individualroles. Some of these are non-financial. TheRemuneration Committee reviews the specifickey performance indicators for each directorand their overall performance both againstthose indicators and generally. Based on itsassessment, the Committee determines what,if any, further bonus is payable. TheCommittee believes the performance metricschosen align with shareholder value creation.Bonus payments are not pensionable.40Chime Communications plc

Directors’ remuneration reportFor 2008, the key performance indicatorsincluded:• Growth in operating profit margin• Growth in income from international work• Growth in number and value of sharedclients• Growth in average fee per client• Revenue generation• Client retention• Cash management and conversion• Quality of internal control• Management of Chime’s reputationThe Committee considered the performanceof the Directors in February 2009. The profittargets set by the Board have been met in amore challenging market than was anticipatedwhen they were set and performancecompares favourably with that of competitors.The Committee has also assessed that eachof the Directors has achieved or exceededtheir individual key performance indicatorsand, as a result, believes that suchexceptional performance fully justifies themaximum bonus award.The resultant bonuses for 2008 are shown inthe remuneration table on page 45.Deferred Share PlanDuring 2006 the Company introduced aDeferred Share Plan (the Plan). Under the Planrestricted rights over existing ChimeCommunications shares are granted toExecutive Board Directors, subsidiary BoardDirectors and senior employees of the Group.A participant of the Plan must remainemployed by the Group for a period of threeyears after the date of grant for the shares tovest with the employee. There are no otherperformance criteria attached to the restrictedshares. The plan aims to encourage theretention of key employees. All grants underthe Plan are approved by the RemunerationCommittee. The grants under the scheme todate have been relatively modest. TheDeferred Share Plan replaced the ExecutiveShare Option Scheme.The Executive Directors received grants underthe Plan in 2006, but will receive no furtherawards under this Plan for the duration ofthe Co-Investment Plan. Details of theirparticipation are shown in the table on page 44.Co-Investment PlanIn 2006 shareholder approval was granted tointroduce a Co-Investment Plan (CIP). The CIPwas established to align the interests of theCompany’s most senior executives to thethree-year business plan put in place during2006. Participation in the plan is dependentupon the commitment by the executive tomaintain an investment in the Company’sshares until the end of the performanceperiod, over shares with an initial value up to50% of salary capped at a total of £175,000per participant. In return for this commitmentthe executive is granted an award over amaximum of five times as many matchingshares. The number of matching shares thatvest, if any, are dependent upon theachievement of performance targets measuredover a four-year performance period.50% of the matching shares are tied to theaggregate reported earnings per share (EPS)and 50% are tied to total shareholder return(TSR) relative to a peer group of other mediacompanies. The comparator group for awardsin 2006 and 2007 was ITE Group, WilmingtonGroup, M&C Saatchi, Tarsus Group, NextFifteen Communications, Cello Group,Huntsworth, Centaur Media, Future, ChrysalisGroup, Bloomsbury Publishing, Creston,Media Square and Scottish Media Group.The maximum award is for achieving EPSgrowth equivalent to 26% per annumcompounded and a TSR ranking in the top15% of the comparator group. In addition tothe above requirements the RemunerationCommittee must be satisfied as to theunderlying financial performance of theCompany. The Executive Directors will receiveno further awards under any of the Company’slong-term incentive schemes for the durationof this scheme.Relative TSR is recognised as one of the bestindicators of whether a shareholder hasachieved a good return on investing in theGroup relative to its peer group. In addition, anEPS performance condition provides anappropriate measure of the Group’s underlyingfinancial performance.The table on page 45 shows the maximumnumber of shares that will vest with theExecutive Directors should the performancetargets be met in full.Under the rules of the CIP, the RemunerationCommittee has the authority to makeadjustments to the published EPS if eventshappen that make it fair and reasonable todo so.In 2007 it was agreed that an adjustmentwould be made going forward to thepublished EPS relating to the amortisationof a long-term client contract of Fast Track,a business acquired in that year. In the viewof the Remuneration Committee this isan accounting treatment which was notanticipated when the plan was establishedand is not a current trading item. Thisadjustment represents only 2% of EPS.Share Option schemesPreviously the Company has operated anExecutive Share Option Scheme for ExecutiveDirectors, subsidiary Board directors andsenior employees. All executive optionsgranted from November 1997 (other thanspecial executive options) are subject to theGroup achieving during the period of grant, anaverage total shareholder return on the sharesfor the preceding three years which exceedsthe average FTSE 100 TSR for the sameperiod and a percentage growth in EPS whichis at least equal to the percentage growth inthe Retail Price Index plus 6% over threeyears.The exercise price of the optionsgranted under the above scheme is equal tothe market value of the company’s shares atthe time when the options were granted.Executive share options are only expected tobe granted in future if there is a contractualcommitment or in exceptional circumstances.The Company also operates a Savings-Related Share Option Scheme which is opento all employees after an initial qualifyingperiod of employment.PensionsPension contributions on behalf of theExecutive Directors are paid by the Companyto the Group’s money purchase pensionscheme or to a personal pension scheme upto the value of 20% of their basic salary.Directors’ contractsThe Company’s policy is that ExecutiveDirectors should normally be employed onrolling contracts which may be terminated bythe Company giving no more than 12 monthsnotice and which otherwise expire onretirement, currently at age 65. In December2006 the Company agreed a new servicecontract with Lord Bell in order that hemay continue as a director beyond age 65.All Executive Directors and employees haverolling contracts of employment with a noticeperiod that does not exceed 12 months.Any compensation payable on earlytermination of employment contracts wouldbe in line with contractual and statutoryrequirements.Annual Report & Accounts 2008 41

Directors’ remuneration reportThe table below summarises key details in respect of each Director’s contract.Years to Company ExecutiveContract expected notice noticedate retirement period periodExecutive DirectorsLord Bell 7 December 2006 2 12 months 12 monthsPiers Pottinger 10 May 1994 10 12 months 12 monthsChristopher Satterthwaite 6 December 2002 12 12 months 12 monthsMark Smith 10 May 1994 11 12 months 12 monthsNon-Executive DirectorsDate of initial Date of last Noticeappointment re-election periodRodger Hughes 1 July 2007 May 2008 3 monthsHon. Richard Alston 2 July 2008 – 3 monthsCatherine Biner Bradley 11 September 2001 June 2006 3 monthsPaul Richardson 3 December 1998 May 2008 Linked to WPP shareholdingDave Allen (resigned 16 December 2008) 3 December 2001 May 2008 Linked to WPP shareholdingDirector appointments are subject to Board approval and election by shareholders at the Annual General Meeting following appointment and,thereafter, re-election by rotation every three years.There are no provisions for compensation payments on early termination in the Non-Executive Directors’ Terms and Conditions of Appointment.Hon. Richard Alston was appointed by the Board in July 2008 and is retiring in accordance with Article 80 and the requirements of the Code.He is proposed as a Director at the Company’s Annual General Meeting.Chime Communications Total Shareholder Return relative toFTSE 100 and FTSE All-Share Media Sector18016014012010080Performance graphThis graph shows the Company’s performancemeasured by total shareholder return,compared with the performance of the FTSE.All-Share Media Index, also measured by totalshareholder return. The FTSE All-Share MediaIndex has been chosen as the most suitablecomparator as it is the general market index inwhich the Group appears.60402002004 2005 2006 2007 2008Chime Communications – Total Return IndexFTSE All Share Media £ – Total Return IndexFTSE 100 Total Return IndexSource: Thomson Datastream42Chime Communications plc

Directors’ remuneration reportAudited informationDirectors’ emolumentsEmoluments Total TotalSalary excl. pension Pension 31 December 31 Decemberand fees Benefits Bonuses contributions contributions 2008 2007£ £ £ £ £ £ £Executive DirectorsLord Bell* 615,000 109,464 307,500 1,031,964 123,000 1,154,964 966,952Piers Pottinger 401,000 30,192 100,250 531,442 80,200 611,642 569,906Christopher Satterthwaite 400,000 21,017 200,000 621,017 70,000 691,017 518,625Mark Smith 250,000 28,418 125,000 403,418 50,000 453,418 384,519Non-Executive DirectorsRodger Hughes 40,000 – – 40,000 – 40,000 20,000Hon. Richard Alston (appointed 2 July 2008) 12,500 – – 12,500 – 12,500 –Catherine Biner Bradley 25,000 – – 25,000 – 25,000 17,500Paul Richardson – – – – – – –Julian Seymour (resigned 31 December 2007) – – – – – – 30,000Dave Allen (resigned 16 December 2008) – – – – – –Totals 1,743,500 189,091 732,750 2,665,341 323,200 2,988,541 2,507,502*Chairman and highest paid DirectorThe sums paid to Julian Seymour were in respect of consultancy fees.The pension contributions made by the Company are in respect of money purchase schemes. Contributions in respect of Lord Bell, Piers Pottinger,Mark Smith and Christopher Satterthwaite for the year ended 31 December 2007 were £123,000, £80,200, £50,000 and £70,000 respectively.Piers Pottinger and Mark Smith were members of the Group’s defined contribution scheme in 2007.Annual Report & Accounts 2008 43

Directors’ remuneration reportDirectors’ share options, restricted shares and matching sharesThe following unexercised options over shares were held by directors:Executive Share Option Scheme1 January 2008 Post-share 31 December Date from(or on consolidation 2008 (or on Exercise whichDirectors appointment) 14 May 2008 Lapsed resignation) price exercisable Expiry dateLord Bell 100,000 20,000 – 20,000 £10.45 Nov 2003 Nov 2010Lord Bell 306,452 61,290 – 61,290 £0.775 Apr 2006 Apr 2013Piers Pottinger 100,000 20,000 – 20,000 £10.45 Nov 2003 Nov 2010Christopher Satterthwaite 33,333 6,667 – 6,667 £4.50 Oct 2002 Oct 2009Christopher Satterthwaite 500,000 100,000 – 100,000 £0.775 Apr 2006 Apr 2013Mark Smith 100,000 20,000 – 20,000 £10.45 Nov 2003 Nov 2010On 14 May 2008 the Group carried out a 1 for 5 share consolidation, see note 29 to the accounts on page 77.Savings-Related Share Option Scheme1 January 2008 Post-share 31 December Date from(or on consolidation 2008 (or on Exercise whichDirectors appointment) 14 May 2008 Surrendered resignation) price exercisable Expiry dateChristopher Satterthwaite 20,437 4,087 – 4,087 £1.60 July 2009 Dec 2009Mark Smith 20,437 4,087 (4,087) – £1.60 July 2009 Dec 2009The market price of the shares at 31 December 2008 was 51.5p and the range during 2008 was 50p to 183.75p (share price has beenrecalculated to take into account the share consolidation on 14 May 2008, see note 29.There have been no variations to the terms and conditions or performance criteria for share options during the financial year.Deferred Share PlanThe following restricted shares were held by directors:1 January 2008 Post-share 31 December(or on consolidation 2008 (or onDirectors appointment) 14 May 2008 Awarded resignation) Award date Vesting dateLord Bell 214,500 42,900 – 42,900 25 May 2006 25 May 2009Piers Pottinger 139,800 27,960 – 27,960 25 May 2006 25 May 2009Christopher Satterthwaite 122,000 24,400 – 24,400 25 May 2006 25 May 2009Mark Smith 73,200 14,640 – 14,640 25 May 2006 25 May 2009These shares are included as part of the beneficial holdings in the table on page 45.44Chime Communications plc

Directors’ remuneration reportCo-investment Plan – matching sharesThe following matching shares were held by directors:1 January 2008 Post-share 31 December(or on consolidation 2008 (or onDirectors appointment) 14 May 2008 Awarded resignation) Award date Vesting dateLord Bell 2,092,180 418,435 – 418,435 18 September 2006 September 2010Piers Pottinger 2,302,630 460,525 – 460,525 18 September 2006 September 2010Christopher Satterthwaite 2,247,020 449,400 – 449,400 18 September 2006 September 2010Mark Smith 1,632,020 326,400 – 326,400 18 September 2006 September 2010Directors interests in the shares of Chime Communications plcThe Directors of the Company, all of whom were directors for the whole year, unless otherwise indicated, and their interests in the Company at31 December 2008, or on date of resignation, and at 1 January 2008 or date of appointment were:Beneficial holdingsShare options1 January 2008 Post-share 31 December 1 January 2008 Post-share 31 December(or date of consolidation 2008 (or date of (or date of consolidation 2008 (or date ofappointment) 14 May 2008 resignation) appointment) 14 May 2008 resignation)Ordinary Ordinary Ordinary Ordinary Ordinary OrdinaryShares Shares Shares Shares Shares SharesDirectors of 5p each of 25p each of 25p each of 5p each of 25p each of 25p eachLord Bell 1,895,914 379,182 419,182 406,452 81,290 81,290Piers Pottinger 2,145,600 429,120 429,120 100,000 20,000 20,000Christopher Satterthwaite 449,404 89,880 118,451 553,770 110,753 110,754Mark Smith 540,918 108,183 153,194 120,437 24,087 20,000Rodger Hughes 60,265 12,053 12,053 – – –Dave Allen (resigned 16 December 2008) – – – – –Hon. Richard Alston (appointed 2 July 2008) – – – – – –Catherine Biner Bradley 39,514 7,903 7,903 – – –Paul Richardson – – – – – –Lord Bell also held a non-beneficial interest in 169,900 ordinary shares at 1 January 2008 and at 31 December 2008. Christopher Satterthwaitealso held a non-beneficial interest in 118 ordinary shares at 1 January 2008 and at 31 December 2008.ApprovalThis report was approvedby the Board of Directorsand signed on its behalf byRobert Davison, Secretary11 March 2009Annual Report & Accounts 2008 45

Directors’ reportDirectors’ reportThe Directors present their annual report andthe audited financial statements for the yearended 31 December 2008.Business reviewThe principal business of the Group isproviding public relations, advertising, sportsmarketing, market research, direct marketing,design and event management consultancy.A review of the performance and developmentof the Group’s business during the year, itsposition at the year end and its prospects isset out in the Chairman’s statement on pages4 and 5 and Finance Director’s report onpages 30 and 31. The principal risks anduncertainties facing the Group, as well as theGroup’s policies for managing capital can befound within note 43 of the accounts on page86 and within the section headed internalcontrol within the Directors’ statement oncorporate governance on page 36.The Group’s use of financial instruments is setout in note 43 of the financial statements.The Group uses the following key performanceindicators to measure progress towardsobjectives.2008 2007Organic operatingincome growth 9% 11%Organic profit growth 10% 13%(Organic growth excludesacquisitions in 2007and 2008)Operating profit margin 16.2% 16.3%Earnings per share 19.87p 17.15pAverage fee incomeper client £81,000 £70,000Average incomeper employee £111,000 £105,000Staff costs/operatingincome 61.1% 58.5%Net cash £6,324,000 £812,000Results and dividendsThe Group’s income statement is set out onpage 50 and shows a profit before tax for theyear to 31 December 2008 of £16,339,000(2007 – £13,762,000). The Directorsrecommend the payment of a final dividendof 3.18p per ordinary share to be paid on19 June 2009 to the ordinary shareholders onthe register on 29 May 2009, which togetherwith the interim dividend paid on 15 October2008 makes a total of 4.72p per share for theyear (2007 – 3.50p).Directors and their interestsThe Directors’ interests in the shares of ChimeCommunications plc are disclosed as part ofthe Report of the Board to the Shareholderson Directors’ Remuneration on page 40. Detailsrelating to Directors’ share options are alsogiven as part of the Report of the Board to theShareholders on Directors’ Remuneration.There has been no change in the interests ofthe Directors between 31 December 2008 and10 March 2008.At the forthcoming Annual General Meeting,Lord Bell, Christopher Satterthwaite andCatherine Biner Bradley are due to retire byrotation and offer themselves for re-election.Paul Richardson will retire and offer himself forre-election at the Annual General Meeting ashe has been a Non-Executive Director formore than nine years.Hon. Richard Alston was appointed as aDirector by the Board on 2 July 2008 and hasbeen proposed for election at the forthcomingAnnual General Meeting.Other than described in the Report of theBoard to the Shareholders on Directors’Remuneration no Director of the Companyhas, or had during the year, any interestsin the shares of other Group companies orin any transactions which were unusual in theirnature or were significant to the Company’sbusiness.DonationsDuring the year the group donated £36,567(2007 – £39,608) for charitable purposes.The Group’s policy is not to make directdonations to support political parties.However, the nature of the Group’s workis such that to support its commercialactivities, certain companies within the Groupmay need to attend or sponsor events whichare organised by political parties or otherpolitical organisations, for which a charge ismade. In addition, the Group may invite clientsand prospective clients to attend events whichfall within the meaning of the Companies Act2006 provisions. The Companies Act 2006defines “political party”, “political organisation”,“political donation” and “political expenditure”widely and as a result, it is possible thatpolitical organisations may include bodiesconcerned with matters such as policy reviewand law reform, or the representation ofthe business community or sections of it,or the representation of other communities orspecial interest groups.During the year and adopting this widerdefinition, the Group made payments thatmight be deemed to be political donationstotalling £22,000 to various organisations andindividuals principally connected with theConservative Party.46Chime Communications plc

Statement of Directors’ responsibilitiesDirectors’ reportEmployee involvementThe Group operates a policy of informing allemployees on a regular basis of the Group’sfinancial performance. In addition, the Group’sSavings-Related Share Option Scheme,Performance-Related Pay and bonus schemesencourages employees at all levels tocontribute to the achievement of the Group’sshort- and long-term goals.Employment of disabled peopleThe Group gives full and fair consideration toall applications for employment made bydisabled people, having regard to theirparticular aptitudes and abilities. Opportunitiesfor training, career development andpromotion do not disadvantage theseemployees.Acquisition of the Company’sown sharesAt the end of the year, the Directors hadauthority, under the shareholders’ resolutionissued on 14 May 2008, to purchasethrough the market 5,327,504 of theCompany’s own ordinary shares at pricesnot less than 25p per ordinary share and notmore than 5% above the average of themiddle market quotations as derived fromthe London Stock Exchange Daily Official List.This authority will last until the conclusion ofthe next Annual General Meeting.Substantial interestsAt 10 March 2009 the following interests, otherthan those of the Directors set out above, in3% or more of the issued ordinary sharecapital had been notified to the Company:Number ofordinaryshares% ofordinaryshare capitalWPP Group Plc 11,036,718 19.34Fidelity Investments 6,734,919 11.80Aberforth Partners 4,534,000 7.95JP Morgan AssetManagement 1,747,339 3.06Creditor payment termsThe Group’s policy on suppliers is that they willbe paid in accordance with agreed terms andconditions of trade on a regular basis.The number of days outstanding betweenreceipt of invoices and date of payment,calculated by reference to the amount owed totrade creditors at the year end as a proportionof the amounts invoiced by suppliers duringthe year, was 38 days in aggregate for theGroup (2007 – 31). The Company did nothave any trade creditors at 31 December 2008or 2007.AuditorsEach of the Directors at the date of approvalof this report confirms that:• so far as the Director is aware, there is norelevant audit information of which theCompany’s auditors are unaware; and• the Director has taken all the steps thathe/she ought to have taken as a director tomake himself/herself aware of any relevantaudit information and to establish that theCompany’s auditors are aware of thatinformation.This confirmation is given and should beinterpreted in accordance with the provisionsof s234ZA of the Companies Act 1985.On 1 December 2008, Deloitte & Touche LLPchanged its name to Deloitte LLP. Deloitte LLPhas expressed its willingness to continue inoffice as Auditors and a resolution to reappointit will be proposed at the forthcoming AnnualGeneral Meeting.Approved by the Board of Directors andsigned on behalf of the BoardRobert Davison, Secretary11 March 2009Annual Report & Accounts 2008 47

Statement of Directors’ responsibilitiesStatement of Directors’ responsibilitiesThe Directors are responsible for preparingthe Annual Report, Directors’ RemunerationReport and the financial statementsin accordance with applicable lawand regulations.Company law requires the Directors toprepare financial statements for eachfinancial year. The Directors are required bythe IAS Regulation to prepare the Groupfinancial statements under IFRSs (IFRSs) asadopted by the European Union. The Groupfinancial statements are also required by lawto be properly prepared in accordance withthe Companies Act 1985 and Article 4 of theIAS Regulation.International Accounting Standard 1 requiresthat IFRS financial statements present fairlyfor each financial year the Company’sfinancial position, financial performance andcash flows. This requires the faithfulrepresentation of the effects of transactions,other events and conditions in accordancewith the definitions and recognition criteriafor assets, liabilities, income and expensesset out in the International AccountingStandards Board’s ‘Framework for thepreparation and presentation of financialstatements’. In virtually all circumstances,a fair presentation will be achieved bycompliance with all applicable IFRSs.However, Directors are also required to:• properly select and apply accountingpolicies;• present information, including accountingpolicies, in a manner that provides relevant,reliable, comparable and understandableinformation; and• provide additional disclosures whencompliance with the specific requirementsin IFRSs are insufficient to enable usersto understand the impact of particulartransactions, other events and conditionson the entity’s financial position andfinancial performance.The Directors have elected to prepare theparent company financial statements inaccordance with United Kingdom GenerallyAccepted Accounting Practice (UnitedKingdom Accounting Standards andapplicable law). The parent companyfinancial statements are required by law togive a true and fair view of the state of affairsof the Company. In preparing these financialstatements, the Directors are required to:• select suitable accounting policies and thenapply them consistently;• make judgments and estimates that arereasonable and prudent;• state whether applicable UK AccountingStandards have been followed, subject toany material departures disclosed andexplained in the financial statements; and• prepare the financial statements on thegoing concern basis unless it isinappropriate to presume that theCompany will continue in business.The Directors are responsible for keepingproper accounting records that disclose withreasonable accuracy at any time the financialposition of the Company and enable them toensure that the parent company financialstatements comply with the Companies Act1985. They are also responsible forsafeguarding the assets of the Company andhence for taking reasonable steps for theprevention and detection of fraud and otherirregularities.The Directors are responsible for themaintenance and integrity of the corporateand financial information included on theCompany’s website. Legislation in the UnitedKingdom governing the preparation anddissemination of financial statements maydiffer from legislation in other jurisdictions.48Chime Communications plc

Independent auditors’ report to the members of Chime Communications plcIndependent auditors’ report to the members ofChime Communications plcWe have audited the Group financialstatements of Chime Communications plc forthe year ended 31 December 2008 whichcomprise the consolidated income statement,the consolidated statement of recognisedincome and expense, the consolidatedbalance sheet and the consolidated cash flowstatement and the related notes 1 to 43.These Group financial statements have beenprepared under the accounting policies set outtherein. We have also audited the informationin the Directors’ Remuneration Report that isdescribed as having been audited.We have reported separately on the parentcompany financial statements of ChimeCommunications plc for the year ended 31December 2008.This report is made solely to the Company’smembers, as a body, in accordance withsection 235 of the Companies Act 1985. Ouraudit work has been undertaken so that wemight state to the Company’s members thosematters we are required to state to them inan auditors’ report and for no other purpose.To the fullest extent permitted by law, we donot accept or assume responsibility to anyoneother than the Company and the Company’smembers as a body, for our audit work, forthis report, or for the opinions we have formed.Respective responsibilities of directorsand auditorsThe Directors’ responsibilities for preparing theAnnual Report, the Directors’ RemunerationReport and the Group financial statementsin accordance with applicable law andInternational Financial Reporting Standards(IFRSs) as adopted by the European Unionare set out in the Statement of Directors’Responsibilities.Our responsibility is to audit the Group financialstatements in accordance with relevant legaland regulatory requirements and InternationalStandards on Auditing (UK and Ireland).We report to you our opinion as to whetherthe Group financial statements give a true andfair view, whether the Group financialstatements have been properly prepared inaccordance with the Companies Act 1985 andArticle 4 of the IAS Regulation and whetherthe part of the Directors’ remuneration reportdescribed as having been audited has beenproperly prepared in accordance with theCompanies Act 1985. We also report to youwhether in our opinion the information given inthe Directors’ Report is consistent with theGroup financial statements.In addition we report to you if, in our opinion,we have not received all the information andexplanations we require for our audit, or ifinformation specified by law regardingdirector’s remuneration and other transactionsis not disclosed.We review whether the Corporate GovernanceStatement reflects the Company’s compliancewith the nine provisions of the 2006 CombinedCode specified for our review by the ListingRules of the Financial Services Authority, andwe report if it does not. We are not required toconsider whether the Board’s statements oninternal control cover all risks and controls, orform an opinion on the effectiveness of theGroup’s corporate governance procedures orits risk and control procedures.We read the other information contained in theAnnual Report as described in the contentssection and consider whether it is consistentwith the audited Group financial statements.We consider the implications for our reportif we become aware of any apparentmisstatements or material inconsistencieswith the Group financial statements. Ourresponsibilities do not extend to any furtherinformation outside the Annual Report.Basis of audit opinionWe conducted our audit in accordance withInternational Standards on Auditing (UK andIreland) issued by the Auditing PracticesBoard. An audit includes examination, on atest basis, of evidence relevant to the amountsand disclosures in the Group financialstatements and the part of the Directors’Remuneration Report to be audited. It alsoincludes an assessment of the significantestimates and judgements made by theDirectors in the preparation of the Groupfinancial statements, and of whether theaccounting policies are appropriate to theGroup’s circumstances, consistently appliedand adequately disclosed.We planned and performed our audit so as toobtain all the information and explanationswhich we considered necessary in order toprovide us with sufficient evidence to givereasonable assurance that the Group financialstatements and the part of the Directors’Remuneration Report to be audited are freefrom material misstatement, whether causedby fraud or other irregularity or error. In formingour opinion we also evaluated the overalladequacy of the presentation of informationin the Group financial statements and thepart of the Directors’ Remuneration Reportto be audited.OpinionIn our opinion:• the Group financial statements give a trueand fair view, in accordance with IFRSsas adopted by the European Union,of the state of the Group’s affairs as at31 December 2008 and of its profit for theyear then ended;• the Group financial statements have beenproperly prepared in accordance with theCompanies Act 1985 and Article 4 of theIAS Regulation;• the part of the Directors’ remunerationreport described as having been auditedhas been properly prepared in accordancewith the Companies Act 1985; and• the information given in the Directors’Report is consistent with the Groupfinancial statements.Deloitte LLPChartered Accountantsand Registered AuditorsLondon, United Kingdom11 March 2009Annual Report & Accounts 2008 49

Consolidated income statementConsolidated income statementYear ended 31 December 20082008 2007Note £’000 £’000Continuing operationsRevenue 2,3 277,394 206,589Cost of sales (165,304) (110,080)Operating income 112,090 96,509Operating expenses (93,846) (80,605)Amortisation of intangibles (134) (159)Operating profit 5 18,110 15,745Share of results of associates 17 186 (73)Investment income 7 456 214Finance costs 8 (1,393) (938)Finance cost of deferred consideration 8 (1,020) (1,186)Profit before tax 16,339 13,762Tax 9 (5,164) (4,409)Profit for the year from continuing operations 11,175 9,353Discontinued operationsLoss for the year from discontinued operations 10 – (61)Loss for the year from sale of associate – (140)Profit for the year 11,175 9,152Attributable to:Equity holders of the parent 10,783 8,617Minority interest 392 53511,175 9,152Earnings per share(as restated)From continuing operationsBasic 12 19.87p 17.15pDiluted 12 19.59p 16.60pFrom continuing and discontinued operationsBasic 12 19.87p 16.76pDiluted 12 19.59p 16.22p50Chime Communications plc

Consolidated statement of recognised income and expenseConsolidated statement of recognised income and expenseYear ended 31 December 20082008 2007£’000 £’000Loss on revaluation of available for sale investments (113) (23)Exchange differences on translation of foreign operations 1,866 391Net income recognised directly in equity 1,753 368Profit for the year 11,175 9,152Total recognised income and expense for the year 12,928 9,520Attributable to:Equity holders of the parent 12,536 8,985Minority interests 392 53512,928 9,520Annual Report & Accounts 2008 51

Consolidated balance sheetConsolidated balance sheet31 December 20082008 2007Note £’000 £’000Non-current assetsGoodwill 13 113,086 109,909Other intangible assets 14 805 762Property, plant and equipment 15 4,589 4,425Investments in associates 17 858 488Other investments 18 350 350Available for sale investments 19 113 227Due from deferred consideration 20 551 568Deferred tax asset 21 829 1,191121,181 117,920Current assetsWork in progress 22 2,019 1,560Trade and other receivables 23 47,705 42,641Cash and cash equivalents 24 6,804 10,19656,528 54,397Total assets 177,709 172,317Current liabilitiesTrade and other payables 25 (69,536) (58,574)Current tax liabilities 9 (2,706) (2,548)Obligations under finance leases 26 (48) (49)Short-term provisions 28 (388) (16,335)(72,678) (77,506)Net current liabilities (16,150) (23,109)Non-current liabilitiesBank loans 27 – (8,375)Long-term provisions 28 (16,524) (12,406)Obligations under finance leases 26 (16) (53)(16,540) (20,834)Total liabilities (89,218) (98,340)Net assets 88,491 73,977EquityShare capital 29 14,264 13,319Share premium account 30 37,121 32,217Own shares 31 (4,952) (4,381)Equity reserves 32 32,385 32,385Translation reserve 33 2,012 146Accumulated profits/(losses) 34 8,731 (612)Equity attributable to equity holders of the parent 35 89,561 73,074Written put options over minority interests 28 (2,000) –Minority interest 930 903Total equity 88,491 73,977The financial statements were approved by the Board of Directors and authorised for issue on 11 March 2009. They were signed on its behalf by:Mark Smith, Director52 Chime Communications plc

Consolidated cash flow statementConsolidated cash flow statementYear ended 31 December 20082008 2007Note £’000 £’000Net cash from operating activities 36 21,277 15,200Investing activitiesInterest received 330 152Dividends received from investments 126 63Proceeds on disposal of property, plant and equipment 39 60Purchases of property, plant and equipment (2,021) (1,784)Purchases of other intangible assets (207) (66)Acquisition of investment in an associate 17 (117) –Loans granted to associates (59) (178)Acquisition of subsidiaries 37 (10,728) (11,536)Deferred consideration received 20 17 –Net cash used in investing activities (12,620) (13,289)Financing activitiesDividend paid (2,219) (1,624)Dividends paid to minorities (366) (113)(Repayments of)/increases in borrowings (8,375) 5,447Repayments of loan notes (480) (1,333)Repayments of obligations under finance leases (38) (112)Proceeds on issue of ordinary share capital – 328Purchase of own shares (571) (960)Net cash (used in)/from financing activities (12,049) 1,633Net (decrease)/increase in cash and cash equivalents (3,392) 3,544Net funds at beginning of year 10,196 6,652Cash and cash equivalents at end of year 6,804 10,196Annual Report & Accounts 2008 53

Notes to the consolidated financial statementsNotes to the consolidated financial statementsYear ended 31 December 20081. General informationChime Communications plc is a Company incorporated in Great Britain under the Companies Act 1985. The address of the registered office isNo. 14 Curzon Street, London, W1J 5HN, United Kingdom. The nature of the Group’s operations consist principally of public relations, advertising,sports marketing, market research, direct marketing design and event management consultancy.These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Groupoperates. Foreign operations are included in accordance with the policies set out in note 2.2. Significant accounting policiesBasis of accountingThe financial statements have been prepared in accordance with International Financial Reporting Standards. The financial statements have alsobeen prepared in accordance with IFRSs adopted for use in the European Union and therefore comply with Article 4 of the EU IAS Regulation.The financial statements have been prepared on the historical cost basis except for certain financial instruments that are carried at fair value inaccordance with the accounting policies set out below. In the process of applying the Group’s accounting policies, management is required tomake judgements, estimates and assumptions that may affect the financial statements. Management believes that the judgements made in thepreparation of the financial statements are reasonable. However, actual outcomes may differ from those anticipated. The most significant areaswhere such judgements have been necessary are revenue recognition, goodwill, calculation of deferred consideration and accounting for onerouslease provisions. Where judgement has been applied, the key factors taken into consideration are disclosed in the appropriate note in thesefinancial statements.Basis of consolidationThe consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries)made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of aninvestee entity so as to obtain benefits from its activities.On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Anyexcess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost ofacquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the income statement in the periodof acquisition. The interest of minority shareholders is stated at the minority’s proportion of the fair values of the assets and liabilities recognised.The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date ofacquisition or up to the effective date of disposal, as appropriate.Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those usedby the Group.All intra-Group transactions, balances, income and expenses are eliminated on consolidation.Investments in associatesAn associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint control, through participationin the financial and operating policy decisions of the investee.The results, assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting except whenclassified as held for sale. Investments in associates are carried in the balance sheet at cost as adjusted by post-acquisition changes in the Group’sshare of the net assets of the associate, less any impairment in the value of individual investments. Losses of the associates in excess of theGroup’s interest in those associates are not recognised, unless the Group has incurred legal or constructive obligation or made payments on behalfof the associate.Any excess of the cost of acquisition over the Group’s share of the fair values of the identifiable net assets of the associate at the date ofacquisition is recognised as goodwill and is included in the carrying value of the investment. Any deficiency of the cost of acquisition below theGroup’s share of the fair values of the identifiable net assets of the associate at the date of acquisition (i.e. discount on acquisition) is credited in theincome statement in the period of acquisition.Where a Group company transacts with an associate of the Group, unrealised profits and losses are eliminated to the extent of the Group’s interestin the relevant associate.GoodwillGoodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets,liabilities and contingent liabilities recognised.Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised in the income statement and is notsubsequently reversed.On disposal of a subsidiary or associate, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.54Chime Communications plc

Notes to the consolidated financial statementsGoodwill arising on acquisitions before the date of transition to IFRSs has been retained at the previous UK GAAP amounts subject to being testedfor impairment at that date. Goodwill written off to reserves under UK GAAP prior to 1998 has not been reinstated and is not included indetermining any subsequent profit or loss on disposal.Future anticipated payments to vendors in respect of earn-outs are based on the Directors’ best estimates of future obligations, which aredependent on future performance of the interests acquired and assume the operating companies improve profits in line with Directors’ estimatesand are included in liabilities greater or less than one year as appropriate. When earn-outs are to be settled in cash or share consideration, the fairvalue of the consideration is obtained by discounting to present value the amounts expected to be payable in the future. The resulting interestcharge is included within finance costs.Under IFRS, an impairment charge is required for both goodwill and other indefinite lived assets when the carrying amount exceeds the‘recoverable amount’, defined as the higher of fair value less costs to sell and value in use. Our approach in determining the recoverable amountutilises a discounted cash flow methodology, which necessarily involves making numerous estimates and assumptions regarding revenue growth,operating margins, tax rates, appropriate discount rates and working capital requirements. These estimates will likely differ from future actual resultsof operations and cash flows, and it is possible that these differences could be material. In addition, judgements are applied in determining the levelof cash-generating unit we identify for impairment testing and the criteria we use to determine which assets should be aggregated.Revenue recognitionRevenue is measured at the fair value of the consideration received or receivable and comprises the gross amounts billed to clients in respect offees earned, expenses recharged and commission-based income.Operating income comprises commission and fees earned in respect of revenue. Cost of sales include fees paid to external suppliers where theyare retained to perform part or all of a specific project for a client, and the resulting expenditure is directly attributable to the revenue earned.Revenue and operating income are stated exclusive of VAT, sales taxes and trade discounts.Public RelationsRevenue is typically derived from retainer fees and services performed subject to specific agreement. Revenue is recognised when the service isperformed in accordance with the contractual arrangement. Revenue is recognised on long-term contracts, if the outcome can be assessed withreasonable certainty, by including in the income statement revenue and related costs as contract activity progresses.Advertising and Marketing Services and Research and EngagementApart from where it is derived from retainer contracts (as above), operating income is recognised on each contract in proportion to the level ofservices performed. Costs relating to contracts in progress at the balance sheet date are carried forward in work in progress. Losses arerecognised as soon as they are foreseen.LeasingLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.All other leases are classified as operating leases.Assets held under finance leases and the related lease obligations are recorded in the balance sheet at the fair value of the leased assets at theinception of the leases or, if lower, the present value of minimum lease payments. The excess of the lease payments over the recorded leaseobligations is treated as finance charges which are amortised over each lease term to give a constant rate of charge on the remaining balance ofthe obligation.Rental costs under operating leases are charged to the income statement in equal annual amounts over the periods of the leases.Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term or theperiod to the next review.Foreign currenciesTransactions in UK companies denominated in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the datesof the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at therates prevailing on the balance sheet date. Gains and losses arising on retranslation are included in net profit or loss for the period. Non-monetaryitems that are measured in terms of historical cost in a foreign currency are not retranslated.On consolidation, the assets and liabilities of the Group’s overseas operations are translated at the exchange rates prevailing on the balance sheetdate. Income and expenses are translated at the average exchange rates for the period unless exchange rates fluctuate significantly. Exchangedifferences arising, if any, are classified as equity and transferred to the Group’s translation reserve. Such translation reserve differences arerecognised as income or as expenses in the period in which the operation is disposed of.Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss. Translation differences onnon-monetary financial assets, such as investments in equity securities classified as available for sale, are included in the fair value reserve in equity.Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity andtranslated at the closing rate.Annual Report & Accounts 2008 55

Notes to the consolidated financial statementsFinance costsFinance costs which include interest, bank charges and the unwinding of the discount on deferred consideration, are recognised in the incomestatement in the year in which they are incurred.Segmental reportingAs required by IAS 14 (Segment Reporting) the prior year comparatives have been restated to reflect the change in management reporting of TTAPublic Relations within the group. TTA Public Relations was previously reported within Advertising and Marketing Services; it is now included withinPublic Relations. The effect of this change is as follows for 2007: revenue £3,274,000, operating income £2,965,000; operating profit £358,000;capital additions £46,000, depreciation £20,000; segment assets £1,107,000; segment liabilities £454,000.Operating profitOperating profit is stated before the share of results of associate, investment income and finance costs.Retirement benefit costsThe pension cost is the amount of contributions payable by the Group to the defined contribution pension scheme and to personal pensionschemes of certain employees during the accounting period. These are charged as an expense as they fall due.TaxationThe tax expense represents the sum of the tax currently payable and deferred tax.The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because itexcludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liabilitymethod. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extentthat it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities arenot recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assetsand liabilities in a transaction that affects neither the tax profit nor the accounting profit.Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in jointventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will notreverse in the foreseeable future.The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable thatsufficient taxable profits will be available to allow all or part of the asset to be recovered.Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax isalso dealt with in equity.Property, plant and equipmentProperty, plant and equipment are stated at cost net of depreciation and any provision for impairment. Depreciation is provided in equal instalmentsover the estimated useful economic lives of assets, using the following rates:Short-term leasehold improvements 20%Motor vehicles 16.67%Fixtures, fittings and equipment 25%Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term ofthe relevant lease.The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of theasset and is recognised in the income statement.Other intangible assetsOther intangible assets comprise acquired customer relationships and computer software. Customer relationships acquired as part of acquisitionsof business are capitalised separately from goodwill as an intangible if their value can be measured reliably on initial recognition and it is probablethat the expected future economic benefit that are attributable to the asset will flow to the Group. Computer software is capitalised based on thecost incurred to acquire and bring to use the specific software. Intangible assets are stated at cost net of amortisation and any provision forimpairment. The costs are amortised over their estimated useful lives; for customer relationships this is five years and computer software this isfour years.56Chime Communications plc

Notes to the consolidated financial statements2. Significant accounting policies (continued)Impairment of property, plant and equipment and intangible assets excluding goodwillAt each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is anyindication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated inorder to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets,the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful lifeis tested for impairment annually and whenever there is an indication that the asset may be impaired.Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cashflows arediscounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risksspecific to the asset for which estimates of future cash flows have not been adjusted.If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset(cash-generating unit) is reduced to its recoverable amount. An impairment loss is immediately recognised as an expense in the income statement.Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of itsrecoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had noimpairment loss been recognised for the asset (cash-generating unit) in prior years.Work in progressWork in progress is stated at the lower of invoiced cost and net realisable value, net of payments received on account. Cost represents worksupplied from outside the Group awaiting billing to clients at the year-end and directly attributable overhead costs.Financial instrumentsFinancial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual provisionsof the instrument.Cash and cash equivalentsCash comprises cash, overdrafts and cash held on short-term deposit (up to three months). Cash equivalents are cash deposits held on threemonths deposit at the Royal Bank of Scotland plc. The deposits guarantee the loan note creditors. Interest accruing on the deposits is payable tothe holders of the loan notes less any costs arising.Trade receivablesTrade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimatedirrecoverable amounts.InvestmentsInvestments are recognised and derecognised on a trade date where a purchase or sale of an investment is under contract whose terms requirethe delivery of the investment within the timeframe established by the market concerned, and are initially measured at cost, includingtransaction costs.Investments are classified either as available for sale, and are measured at subsequent reporting dates at fair value, or at amortised cost, where nofair value is readily determinable. Gains and losses on available for sale financial assets arising from changes in fair value are recognised directly inequity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity isincluded in the net profit or loss for the period.Bank borrowingsInterest-bearing bank loans and overdrafts are recorded at the fair value of proceeds received, net of direct issue costs.Trade payablesTrade payables are not interest-bearing and are stated at their nominal value.Equity instrumentsEquity instruments issued by the Company are recorded at the fair value of proceeds received, net of direct issue costs.Share-based paymentsThe Group has applied the requirements of IFRS 2 Share-based Payments. IFRS 2 has been applied to all grants of equity instruments after7 November 2002 that were unvested as of 1 January 2005.The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair valueat the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-linebasis over the vesting period, based on the Group’s estimate of shares that will eventually vest and adjusted for the effect of non-market-basedvesting conditions.Fair value is measured for all schemes with market-based conditions by use of the Monte Carlo model. For all other schemes, fair value ismeasured by use of the Black-Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, forthe effects of non-transferability, exercise restrictions and behavioural considerations.Annual Report & Accounts 2008 57

Notes to the consolidated financial statementsA liability equal to the portion of the goods or services received is recognised at the current fair value determined at each balance sheet date forcash-settled share-based payments.The Group also provides employees with the ability to purchase the Group’s ordinary shares at 80% of the current market value. The Group recordsan expense, based on its estimate of the 20% discount related to shares expected to vest on a straight-line basis over the vesting period. Furtherdetails are included in note 40 to the accounts.ProvisionsProvisions are recognised when the Group has a present obligation as a result of a past event and it is probable that the Group will be required tosettle that obligation, and are discounted to present value where the effect is material.Accounting standards, interpretations and amendments to published standards not yet effectiveCertain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group’s accountingperiods beginning on or after 1 January 2009 or later periods, but which the Group has not early adopted. The new standards which are expectedto be relevant to the Group’s operations are as follows:IFRS 8 Operating segments (effective from 1 August 2009) This IFRS specifies how an entity should report information about its operatingsegments in its financial statements. Generally, financial information is required to be reported on the same basis as is used internally for evaluatingoperating segment performance and deciding how to allocate resources to operating segments. Management does not believe this will have amaterial impact on the Group’s financial statements.Amendment to IAS 23 Borrowing Costs (effective from 1 August 2009) This amendment requires the capitalisation of borrowing costs, tothe extent they are directly attributable to the acquisition, production or construction of assets that need a period of time to get ready for theirintended use or sale. Management does not believe this will have a material impact on the Group’s financial statements.Amendment to IAS 1 Presentation of financial statements (effective from 1 August 2009) This amendment requires information infinancial statements to be aggregated on the basis of shared characteristics and introduces a statement of comprehensive income. Preparers willhave the option of presenting items of income and expense and components of other comprehensive income either in a single statement ofcomprehensive income with subtotals, or in two separate statements (a separate income statement followed by a statement of comprehensiveincome).IFRS 3 (revised) Business Combinations and IAS 27 (revised) Consolidated and Separate Financial Statements (effective from1 July 2009) The revised standard will represent a significant change, including greater emphasis on the use of fair value, potentially increasing thejudgement and subjectivity around business combination accounting and requiring greater input by valuation experts; focusing on changes incontrol as a significant economic event – introducing requirements to re-measure interests to fair value at the time control is achieved or lost, andrecognising the impact of all transactions between controlling and non-controlling shareholders not involving a loss of control, directly in equity; andfocusing on what is given to the vendor as consideration, rather than what is spent to achieve the acquisition. Transaction costs, changes in thevalue of contingent consideration, settlement of pre-existing contracts, share-based payments and similar items will generally be accounted forseparately from the business combination, and affect profit or loss. Management is currently assessing the impact of this amendment on theGroup’s financial statements.3. RevenueAn analysis of the Group’s revenue is as follows:Continuing operations2008 2007£’000 £’000(restated)Public Relations 178,955 131,738Advertising and Marketing Services 86,320 61,515Research and Engagement 12,119 13,336Group revenue 277,394 206,589Discontinued operation (note 10) – 512277,394 207,10158Chime Communications plc

Notes to the consolidated financial statements4. Business and geographical segmentsBusiness segmentsFor management purposes, the Group is currently organised into three operating divisions – Public Relations, Advertising and Marketing Servicesand Research and Engagement. These divisions are the basis on which the Group reports its primary segment information.Principal activities are as follows:Public RelationsThe Public Relations Division comprises some of the leading names in the industry, including Bell Pottinger, Good Relations, Harvard, Insight,Resonate, De Facto and Corporate Citizenship. It is the ranked No. 1 PR group in the UK in the PR Week public relations consultancy league tablefor 2007. It serves major UK and international brands, as well as governments, government departments, pharmaceutical and healthcarecompanies, charities, not-for-profit organisations, professional service firms, consumer brands and famous people.Advertising and Marketing Services (‘AMS’)The AMS Division possesses specialist skills in advertising and marketing services – direct marketing, digital communication, sponsorshipexploitation, point of sale, sales promotion and specialist media planning and buying. It also specialises in the niche markets of property andfinancial services.Research and EngagementThe Research and Engagement Division is made up of Opinion Leader, Ledbury Research and Facts International. Opinion Leader Research is oneof the UK’s leading research consultancies and Ledbury Research provides research and advice to brands who market and sell to high net worthconsumers.Segment information about these businesses is presented below:AdvertisingEliminationand Research of results ofPublic Marketing and discontinuedRelations Services Engagement operations Elimination Consolidated2008 £’000 £’000 £’000 £’000 £’000 £’000RevenueExternal sales 178,955 86,320 12,119 – 277,394Inter-segment sales 10,106 18,604 2,352 – (31,062) –Total revenue 189,061 104,924 14,471 – (31,062) 277,394Inter-segment sales are charged at prevailing market prices that would also be available to unrelated third parties.Segment resultOperating income 61,352 43,778 6,960 – – 112,090Operating profit 12,115 6,166 376 – – 18,657Unallocated corporate expenses (547)Operating profit 18,110Share of results of associates 186Investment income 456Finance costs (1,393)Finance costs of deferred consideration (1,020)Profit before tax 16,339Tax (5,164)Profit for the year 11,175Annual Report & Accounts 2008 59

Notes to the consolidated financial statements4. Business and geographical segments (continued)Advertisingand ResearchPublic Marketing andRelations Services Engagement Consolidated2008 £’000 £’000 £’000 £’000Other segment informationCapital additions 774 1,206 41 2,021Depreciation and amortisation 828 1,112 96 2,036Balance sheetAssetsSegment assets 71,272 94,379 8,273 173,924Available for sale financial assets 113Investments in associates 858Unallocated corporate assets 2,814Consolidated total assets 177,709LiabilitiesSegment liabilities 43,416 26,026 2,202 71,644Unallocated corporate liabilities 17,574Consolidated total liabilities 89,218Segment information about these businesses is presented below:AdvertisingandEliminationPublic Marketing Research of results ofRelations Services and discontinued(restated) (restated) Engagement operations Elimination Consolidated2007 £’000 £’000 £’000 £’000 £’000 £’000RevenueExternal sales 132,250 61,515 13,336 (512) – 206,589Inter-segment sales 6,228 15,949 1,708 (247) (23,638) –Total revenue 138,478 77,464 15,044 (759) (23,638) 206,589Inter-segment sales are charged at prevailing market prices that would also be available to unrelated third parties.Segment resultOperating income 54,502 34,704 7,711 (408) – 96,509Operating profit 9,252 5,557 1,395 86 – 16,290Unallocated corporate expenses (545)Operating profit 15,745Share of results of associates (73)Investment income 214Finance costs (938)Finance costs of deferred consideration (1,186)Profit before tax 13,762Tax (4,409)Profit for the year 9,35360Chime Communications plc

Notes to the consolidated financial statementsAdvertisingandPublic Marketing ResearchRelations Services and(restated) (restated) Engagement Consolidated2007 £’000 £’000 £’000 £’000Other segment informationCapital additions 946 759 96 1,801Depreciation and amortisation 711 786 84 1,581Balance sheetAssetsSegment assets 72,594 86,313 9,085 167,992Available for sale financial assets 227Investments in associates 488Unallocated corporate assets 3,610Consolidated total assets 172,317LiabilitiesSegment liabilities 36,372 20,223 3,564 60,159Unallocated corporate liabilities 38,181Consolidated total liabilities 98,3402007Discontinued operationsDiscontinued operations had the following effect on the segment results of Public Relations, analysed into continuing and discontinuedcomponents.RevenuePublicDiscontinued Continuing Relations£’000 £’000 £’000External sales 512 128,464 128,976Inter-segment sales 247 5,746 5,993Total revenue 759 134,210 134,969ResultOperating profit/(loss) (86) 8,980 8,894The segment results from discontinued operations stated above is equal to the loss before tax from discontinued operations in note 10, whichprovides a reconciliation to the net loss from discontinued operations.Annual Report & Accounts 2008 61

Notes to the consolidated financial statements4. Business and geographical segments (continued)Geographical segmentsThe Group’s operations are located in the United Kingdom, Germany, the Middle East and USA. The Group’s Advertising and Marketing Servicesand Research and Engagement divisions are located solely in the United Kingdom. Public relations is carried out in the United Kingdom, Germany,the Middle East and USA.The following table provides an analysis of the Group’s revenue by geographical market, based on the billing location of the client:Revenue by geographical market2008 2007£’000 £’000United Kingdom 109,601 104,713Europe, Middle East and Africa 116,857 93,575USA and rest of the world 50,936 8,301277,394 206,589Revenue of £nil from the Group’s discontinued operations in 2008 was derived from the United Kingdom (2007 – £690,000).The following is an analysis of the carrying amount of segment assets, and additions to tangible assets and intangible assets, analysed by thegeographical area in which the assets are located:Carrying amount ofsegment assetsCapital additions2008 2007 2008 2007£’000 £’000 £’000 £’000United Kingdom 171,217 166,928 1,761 1,726Europe, Middle East and Africa 5,993 4,966 210 69USA and rest of the world 499 423 50 6177,709 172,317 2,021 1,8015. Operating profitProfit from continuing operations has been arrived at after charging/(crediting):2008 2007£’000 £’000Depreciation of owned property, plant and equipment 1,852 1,355Depreciation of assets held under finance leases 20 48Amortisation of other intangible assets – computer software 30 19Amortisation of other intangible assets – customer relationships 134 159Rentals under operating leases – property 6,305 5,265Loss on disposal of property, plant and equipment 17 29Staff costs (see note 6) 68,591 57,381Net foreign exchange profits (20) (29)Auditors’ remuneration for audit services (see below) 422 32762Chime Communications plc

Notes to the consolidated financial statementsA more detailed analysis of auditors’ remuneration is provided below:2008 2008 2007 2007£’000 % £’000 %Fees payable to the Company’s auditors for the audit of the Company’s annual accounts 80 19 66 20Fees payable to the Company’s auditors and their associates for other services pursuant to legislation 30 7 30 9The audit of the Company’s subsidiaries pursuant to legislation 158 37 140 43Total audit fees 268 63 236 72Tax services 47 11 41 13Other services 107 26 50 15Total non-audit fees 154 37 91 25In 2007, in addition to the audit fees detailed above, £244,000 of fees were capitalised as part of costs of acquisition of Fast Track Sales Limited,Facts International Limited, The Corporate Citizenship Company and Stuart Higgins Communications Limited. These can be analysed as follows:corporate finance services – £80,000, tax services £64,000 and fees in relation to services pursuant to such legislation – £100,000.6. Staff costsThe average monthly number of employees (including Executive Directors) was:2008 2007NumberNumberPublic Relations 458 456Advertising and Marketing Services 492 407Research and Engagement 63 531,013 9162008 2007Their aggregate remuneration comprised: £’000 £’000Wages and salaries 57,698 47,371Social security costs 6,331 6,277Pension costs – defined contribution plans (see note 41) 3,270 2,765Fair value of share options granted to Directors and employees 1,292 96868,591 57,3817. Investment income2008 2007£’000 £’000Available for sale investments:Dividend received 126 63Loans and receivables at amortised cost:Interest on bank deposits 93 128Interest on cash-backed loan notes 192 15Other interest receivable 45 8456 214Annual Report & Accounts 2008 63

Notes to the consolidated financial statements8. Finance costs2008 2007£’000 £’000Other financial liabilities held at amortised cost:Interest on bank overdrafts and loans (1,185) (873)Interest on cash-backed loan notes (192) (15)Interest on non-cash-backed loan notes – (42)Interest on obligations under finance leases (6) (8)Other interest payable (10) –(1,393) (938)Finance cost of deferred consideration (1,020) (1,186)(2,413) (2,124)9. Tax2008 2007£’000 £’000Current tax:UK corporation tax at 28.5% (2008 – 30%) 5,536 4,691Adjustment in respect of prior years (484) (641)5,052 4,050Foreign tax: 86 110Adjustment in respect of prior years (8) –5,130 4,160Deferred tax:Current year originating temporary differences 68 130Adjustment in respect of prior years (34) 94Tax charge for the year 5,164 4,384UK corporation tax is calculated at 28.5% of the estimated assessable profit for the year (2007 – 30%).Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.The charge for the year can be reconciled to the profit per the income statement as follows:2008 2008 2007 2007£ % £ %Profit before tax 16,339 13,762Tax at the UK corporation tax rate of 28.5% (2007 – 30%) 4,656 28.5 4,061 30.0Tax effect of expenses that are not deductible in determining taxable profits 1,066 6.5 491 3.6Income not taxable (38) (0.2) (18) (0.1)Deemed interest on deferred consideration 306 1.8 356 2.6Tax effect of utilisation of tax losses not previously recognised (198) (1.2) 23 0.2Prior year corporation tax adjustment (493) (3.0) (641) (4.7)Prior year deferred tax adjustment (34) (0.2) 94 0.7Effect of different tax rates of subsidiaries operating in other jurisdictions (101) (0.6) 18 0.1Tax expense and effective tax rate for the year 5,164 31.6 4,384 32.4Discontinued operations – 255,164 4,40964Chime Communications plc

Notes to the consolidated financial statements10. Discontinued operationsThe results of the discontinued operations which have been included in the consolidated income statement, are as follows:2008 2007£’000 £’000Revenue – 759Expenses – (845)Net loss before tax – (86)Attributable tax credit – 25Net loss on disposal of discontinued operations – (61)The effect of discontinued operations on segment results is disclosed in note 4.On 30 June 2007 the Group disposed of the trade and assets in Rare Corporate Design Limited to its management. There were no attributabledisposal costs. At the same time Chime took a 40% stake in the new entity.11. Dividends2008 2007Amounts recognised as distributions to equity holders in the year: £’000 £’000Final dividend for the year ended 31 December 2007 of 2.40p (2006 – 2.00p) per share 1,352 1,043Interim dividend for the year ended 31 December 2008 of 1.54p (2007 – 1.10p) per share 867 5812,219 1,624Proposed final dividend for the year ended 31 December 2008 of 3.18p (2007 – 2.40p) per share 1,789 1,262The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in thesefinancial statements.Under an arrangement dated 3 April 1996, The Chime Communications Employee Trust which holds 1,508,965 ordinary shares representing 2.6%of the Company’s called-up share capital, has agreed to waive dividends on 804,108 ordinary shares, the difference being those shares held underthe Deferred Share Plan.Dividends per share have been restated to take into account the share consolidation carried out on 14 May 2008.Annual Report & Accounts 2008 65

Notes to the consolidated financial statements12. Earnings per shareFrom continuing and discontinued operationsThe calculation of the basic and diluted earnings per share is based on the following data:Earnings2008 2007 2007(as restated) (as previouslyreported)Basic 19.87p 16.76p 3.35pDiluted 19.59p 16.22p 3.24pEarnings for the purposes of basic earnings per share, being net profit attributable to£’000 £’000equity holders of the parent 10,783 8,617Number of shares Number Number NumberWeighted average number of ordinary shares for the purposes of basic earnings per share 54,279,428 51,404,909 257,024,547Effect of dilutive potential ordinary shares:Share options 754,319 1,720,077 8,600,383Weighted average number of ordinary shares for the purposes of diluted earnings per share 55,033,747 53,124,986 265,624,930From continuing operations2008 2007 2007(as restated) (as previouslyreported)Basic 19.87p 17.15p 3.43pDiluted 19.59p 16.60p 3.32p£’000 £’000 £’000Profit attributable to equity holders of the parent 10,783 8,617Adjustments to exclude loss for the year from discontinued operations – 61Adjustment to exclude loss for the year from sale of associate – 140Earnings from continuing operations for the purpose of basic earnings per share excludingdiscontinued operations 10,783 8,818The denominators used are the same as those detailed above for both basic and diluted earnings per share from continuing anddiscontinued operations.From discontinued operations2008 2007 2007(as restated) (as previouslyreported)Basic – (0.39)p (0.08)pDiluted – (0.38)p (0.08)pThe denominators used are the same as those detailed above for both basic and diluted earnings per share from continuing anddiscontinued operations.Earnings per share have been restated to take into account the share consolidation carried out on 14 May 2008.66Chime Communications plc

Notes to the consolidated financial statements13. Goodwill2008 2007Cost £’000 £’000Carrying amount at 1 January 109,909 74,730Exchange differences 1,019 275Recognised on acquisition of a subsidiary (see note 37) 932 32,466Other changes in respect of prior year acquisitions 1,226 2,438At 31 December 113,086 109,909The adjustment arising on prior year acquisitions relates to the contingent consideration being re-assessed based on results as follows:2008£’000VCCP Limited (62)Ledbury Research Limited (24)Baxter Hulme PR & Marketing Limited 13Corporate Citizenship Limited (2)Stuart Higgins Communications Limited 787Fast Track Sales Limited 516Bullnose (2)1,226Goodwill consists of the following substantial holdings:2008£’000VCCP Limited 29,820Fast Track Sales Limited 27,819Bell Pottinger Public Relations Limited 8,487Harvard Public Relations Limited 7,737Corporate Citizenship Limited/The Smart Company.Net Limited 7,16381,026Other acquired goodwill on the acquisition of 24 companies 32,060113,086In accordance with the Group’s accounting policy, the carrying values of goodwill and other intangible assets are reviewed for impairment annuallyor more frequently if events or changes in circumstances indicate that the asset might be impaired. The 2008 impairment review was undertakenas at 31 December 2008. The review assessed whether the carrying value of goodwill was supported by the net present value of future cashflows derived from assets using a projection period of up to five years for each cash-generating unit. The basis for this is the 2009 budget withconservative growth rates thereafter based on available GDP data. The 2009 budgets are based on management’s best estimates taking intoaccount prior period results and industry knowledge. After the projection period, steady growth has been assumed at rates not exceeding longtermaverage growth rates for the industry for each cash-generating unit, with no improvements in operating margin being assumed. Annual growthrate of 2.0% (2007 – 2.5%) and a pre-tax discount rate of 10.4% (2007 – 9.2%) have been assumed.Annual Report & Accounts 2008 67

Notes to the consolidated financial statements14. Other intangible assetsCustomer ComputerRelationships Software TotalCost £’000 £’000 £’000At 1 January 2008 864 722 1,586Additions – 207 207At 31 December 2008 864 929 1,793Accumulated amortisationAt 1 January 2008 159 665 824Charge for the year 134 30 164At 31 December 2008 293 695 988Carrying amount at 31 December 2008 571 234 805Carrying amount at 31 December 2007 705 57 762Customer relationships are being amortised over their useful economic life of five years.Customer ComputerRelationships Software TotalCost £’000 £’000 £’000At 1 January 2007 – 656 656Additions 864 66 930At 31 December 2007 864 722 1,586Accumulated amortisationAt 1 January 2007 – 646 646Charge for the year 159 19 178At 31 December 2007 159 665 824Carrying amount at 31 December 2007 705 57 762Carrying amount at 31 December 2006 – 10 1068Chime Communications plc

Notes to the consolidated financial statements15. Property, plant and equipmentShort-termFixtures,leasehold Motor fittings andimprovements vehicles computers TotalCost £’000 £’000 £’000 £’000At 1 January 2008 4,643 647 5,623 10,913Additions 527 180 1,314 2,021Acquisition of subsidiary – – 1 1Exchange differences – 20 241 261Disposals (122) (213) (727) (1,062)At 31 December 2008 5,048 634 6,452 12,134Accumulated depreciationAt 1 January 2008 3,081 313 3,094 6,488Charge for the year 602 98 1,172 1,872Exchange differences – 3 187 190Eliminated on disposal (122) (161) (722) (1,005)At 31 December 2008 3,561 253 3,731 7,545Carrying amount at 31 December 2008 1,487 381 2,721 4,589Carrying amount at 31 December 2007 1,562 334 2,529 4,425The carrying amount of the Group’s motor vehicles includes an amount of £77,650 in respect of assets held under finance leases. The carryingamount of the Group’s fixtures, fittings and computers includes an amount of £4,621 in respect of assets held under finance leases. As stated innote 26, the Group’s obligations under finance leases are secured by the lessor’s charges over the leased assets.Short-termFixtures,leasehold Motor fittings andimprovements vehicles computers TotalCost £’000 £’000 £’000 £’000At 1 January 2007 3,669 647 5,869 10,185Additions 709 62 1,030 1,801Acquisition of subsidiary 511 136 482 1,129Exchange differences – 4 77 81Disposals (246) (202) (1,835) (2,283)At 31 December 2008 4,643 647 5,623 10,913Accumulated depreciationAt 1 January 2007 2,878 376 3,959 7,213Charge for the year 429 93 881 1,403Exchange differences – 1 65 66Eliminated on disposal (226) (157) (1,811) (2,194)At 31 December 2008 3,081 313 3,094 6,488Carrying amount at 31 December 2007 1,562 334 2,529 4,425Carrying amount at 31 December 2006 791 271 1,910 2,972Annual Report & Accounts 2008 69

Notes to the consolidated financial statements16. Subsidiaries and associatesThe Group’s principal trading subsidiaries and associated undertakings, which are all incorporated in Great Britain (except where noted)are listed below:Proportionof ordinaryshares held andCompany Nature of business voting rightsSubsidiariesBell Pottinger Communications Limited Public Relations 100%Bell Pottinger Communications USA LLC* Public Relations 100%Bell Pottinger Corporate and Financial Limited Financial Public Relations 100%Bell Pottinger Group Limited Public Relations 100%Bell Pottinger Middle East FZ LLC > Public Relations 70%Bell Pottinger Public Affairs Limited Political Public Relations 100%Bell Pottinger Public Relations Limited Consumer Public Relations & Sports Marketing 100%Bell Pottinger USA Inc * Public Relations 100%Bullnose Limited Public Relations 63%Branded Moments Of Truth Limited Consumer Marketing 80%Caucusworld Limited Research 75%Corporate Citizenship Limited + Corporate and Social Responsibility Consultancy 100%Corporate Citizenship Company Inc* Corporate and Social Responsibility Consultancy 100%De Facto Communications Limited + Healthcare Public Relations 100%Good Relations Limited Public Relations 100%Facts International Limited + Research 75%FIL Market Research Limited + Research 100%Fast Track Events Limited Event Management 100%Fast Track Sales Limited + Marketing Consultancy and Event Management 100%Fast Track Sailing Limited Sports Marketing Consultancy 60%Fast Track Sports Media Consultancy Espana S.L.^ Sports Marketing Consultancy 52%Harvard Public Relations GmbH @ Public Relations 100%Harvard Public Relations Limited + Public Relations 100%Insight Marketing & Communications Limited + Public Relations 100%Ledbury Research Limited + Market Research 55%Lighthouse Communications Limited Sponsorship Selection 100%MMK Markt- & Medien-Kommunication GmbH @ Public Relations 100%Naked Eye Research Limited + Research 55%Opinion Leader Research Limited Market Research 100%Ozone Marketing Communications Limited Healthcare Public Relations 100%Pure Media Group Limited Media Buying 100%Resonate Communications Limited Consumer Public Relations 100%Stephens Francis Whitson Limited Direct Marketing 55%Stuart Higgins Communications Limited + Sports Marketing Consultancy 100%Teamspirit Limited + Financial Services Advertising and Marketing 100%Teamspirit Corporate and Business Limited Financial Services Advertising and Marketing 55%The Sports Business Limited Sports Marketing Consultancy 100%70Chime Communications plc

Notes to the consolidated financial statementsProportionof ordinaryshares held andCompany Nature of business voting rightsTraffic Werbeagentur GmbH @ Public Relations 100%The Smart Company.Net Limited + Corporate and Social Responsibility Consultancy 100%TTA Public Relations Limited + Property Marketing 70%VCCP Limited + Advertising and Marketing 100%VCCP GmbH @ Advertising and Marketing 100%VCCP Blue Limited Advertising and Marketing 100%VCCP Digital Limited Digital Advertising and Marketing 100%VCCP Search Limited Search Engine Marketing 60%AssociatesMeropa Communications (Pty) Limited ±+ Public Relations 20%Rare Corporate Design Limited Corporate Design 40%Colour TV Limited Television Production 45%The Agency of Someone Limited Branding and design 40%X & Y Communications Limited + Public Relations 29%± Incorporated in South Africa@ Incorporated in Germany* Incorporated in America^ Incorporated in Spain> Incorporated in Dubai+ Direct subsidiary/associate of Chime Communications plcThese companies operate principally in their country of incorporation.17. Investments in associates2008 2007£’000 £’000Carrying value of investments 167 50Carrying value of loans to associates 370 342Share of profits 321 96858 488Aggregate amounts relating to associates2008 2007£’000 £’000Total assets 2,220 1,086Total liabilities (1,282) (909)Net assets 938 177Revenue 5,794 2,874Profit/(loss) for the year 225 (73)Included in the above liabilities owed by the associates are loans from the Group of £370,472 (2007 – £342,800).A list of the significant investments in associates, including the name, country of incorporation, proportion of ownership interest is given in note 16.Annual Report & Accounts 2008 71

Notes to the consolidated financial statements18. Other investmentsOther investments comprise a 10% holding in PSP Holdings Ltd. This has been recorded at cost, less any provision for impairment, as its fairvalue cannot be reliably measured as there is no active market.19. Available for sale investments2008 2007£’000 £’000Fair value 113 227The investments included above represent investments in listed equity securities that present the Group with opportunity for return throughdividend income and trading gains. They have no fixed maturity or coupon rate. The investment was held at fair value at 31 December 2008.The fair value of these securities is based on quoted market prices. The investment at 31 December 2008 comprised 1,562,500 shares inClipper Ventures Limited.20. Due from deferred considerationAmounts shown are due from the disposal of Smithfield Financial Limited, being the potential deferred consideration due after one year.Management has assessed the credit risk associated with the balance and is satisfied that the balance is recoverable. £16,986 was received in theyear towards the deferred consideration. Management believes the carrying value is a reasonable approximation of the value of the asset.21. Deferred tax2008 2007Deferred tax asset movement £’000 £’000At 1 January 2008 1,191 1,747Acquisition of subsidiaries 7 80Charge to equity (335) (411)Charge to the profit and loss account (34) (225)At 31 December 2008 829 1,191Analysis of deferred tax assetCapital allowances in excess of depreciation 487 416Short-term temporary differences 103 61Share-based payments 239 699Losses – 15829 1,191Losses of £0.8 million (2007 – £0.8 million) and $5.0 million in the US (2007 – $4.4 million) have not been recognised in deferred taxation due toinsufficient certainty that there will be appropriate profits available in the future to utilise them.At the balance sheet date, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries for which deferredtax liabilities have not been recognised was £1,929,000 (2007 – £1,209,000). No liability has been recognised in respect of these differencesbecause the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will notreverse in the foreseeable future.22. Work in progress2008 2007£’000 £’000Amounts recoverable on customer contracts 2,019 1,56072Chime Communications plc

Notes to the consolidated financial statements23. Trade and other receivables2008 2007£’000 £’000Amounts receivable from provision of services 38,813 35,691Other debtors 2,185 1,390Prepayments and accrued income 6,707 5,56047,705 42,641The ageing of the current trade receivables is as follows:2008 2007£’000 £’000Not overdue 13,781 17,905Less than 30 days 15,769 11,569Between 30 and 60 days 3,396 3,070Between 60 and 90 days 2,914 1,384Between 90 and 180 days 2,320 1,238Between 180 days and 360 days 1,270 972More than 360 days 188 39639,638 36,534Provision for irrecoverable trade receivables (825) (843)38,813 35,691The average credit period taken on provision of services is 50 days (2007 – 55 days). The Group’s trade receivables are stated after allowancesfor bad and doubtful debts. This allowance has been determined by considering specific doubtful balances and by reference to past defaultexperience, an analysis of which is as follows.2008 2007£’000 £’000At 1 January 843 583Amounts charged to admin expenses 833 692Acquisitions – 38Trade receivables written off (869) (487)Amounts recovered during the year 18 17At 31 December 825 843The directors consider that the carrying amount of trade and other receivables approximates their fair value. Trade and other receivables arepredominantly non-interest-bearing. Concentrations of credit risk with respect to trade receivables are limited due to the Group’s customer basebeing large, unrelated and largely billed in advance. Due to this, the directors believe there is no further credit risk provision required in excess ofthe allowance for bad and doubtful debts.24. Cash and cash equivalentsCash and equivalents include £416,055 of cash held as security for cash-backed loan notes. These are held at Royal Bank of Scotland and areredeemable on demand by the loan note holders. See note 25 for further details.Annual Report & Accounts 2008 73

Notes to the consolidated financial statements25. Trade and other payables2008 2007£’000 £’000Trade creditors 25,318 14,701Other taxation and social security 3,126 3,226Accruals and deferred income 38,366 37,733Other creditors 2,310 2,007Loan notes 416 90769,536 58,574The average credit period taken for trade purchases is 38 days (2007 – 31 days). The Directors consider that the carrying amount of tradepayables approximates to their fair value.The loan notes are guaranteed against the loan note deposits of the same amount included within cash and cash equivalents. Interest accruingon the deposit is payable to the holders of the loan notes less any costs arising.Loan notes totalling £416,055 are outstanding as part of the initial and contingent consideration on the acquisition of HHCL Group Limited, RooseHoldings Limited and VCCP Limited.Loan notes totalling £5.5 million were issued to senior employees of HHCL Group Limited in two instalments, the balance outstanding at31 December 2008 being £0.277 million (2007: £0.29 million). The loan notes are repayable on giving 90 days’ notice to the loan note holder.Loan notes totalling £8.6 million were issued to the original shareholders of Roose Holdings Limited as part of the initial and contingentconsideration. The loan notes are repayable at anytime after one year from the date of issue. The balance outstanding at 31 December 2008 is£0.002 million (2007 – £0.02 million).Loan notes totalling £7.7 million were issued to the original shareholders of VCCP Limited for the contingent consideration. The loan notes arerepayable at any time after six months from the date of issue. The balance outstanding at 31 December 2008 is £0.136 million (2007 – £nil).Interest payable on loan notes is in the range of 1.5% to 5.85%.The loan notes are guaranteed by Royal Bank of Scotland plc, unless otherwise stated, who hold a deposit of £0.42 million against them.The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.26. Obligations under finance leasesAmounts payable under finance leasesMinimum Present Minimum Presentlease value of lease lease value of leasepayments payments payments payments2008 2008 2007 2007£’000 £’000 £’000 £’000Within one year 53 48 57 49Between one and two years 16 16 42 42Between two and three years – – 12 1169 64 111 102Less: future finance charges (5) – (9) –Present value of finance lease obligations 64 64 102 102Less: Amount due for settlement within 12 months (shown under current liabilities) (48) (49)Amount due for settlement after 12 months 16 53It is the Group’s policy to lease certain of its motor vehicles, fixtures, fittings and equipment under finance leases. The lease term is three years.The finance lease bears interest at variable rate of 1.4% above base rate.All lease obligations are denominated in sterling.The fair value of the Group’s lease obligations approximates their carrying amount.The Group’s obligations under finance leases are secured by the lessors’ charges over the leased assets.74Chime Communications plc

Notes to the consolidated financial statements27. Bank overdrafts and loans2008 2007£’000 £’000Bank loans – 8,500Cost of raising finance – (125)– 8,375The borrowings are repayable as follows:On demand or within one year – –In the second year – 8,375In the third to fifth year – –– 8,375Amount due for settlement after 12 months – 8,375All borrowings are in sterling.Cash deposits and bank loans are held at either variable rates of interest or at rates fixed for periods of no longer than three months.The principal features of the Group’s borrowings are as follows:(i)The Group has a rolling overdraft facility of £2 million. The overdraft facility is repayable on demand.(ii) The Group has a committed facility. The facility is £30 million. The term of the facility is until 30 June 2013.(iii)(iv)The bank loan bears interest at 1.3% above LIBOR and the overdraft bears interest at 1.3% above base rate.A cross-guarantee exists between each of the subsidiaries and the parent company. Royal Bank of Scotland plc holds debentures over theassets of the Company and its subsidiaries in respect of the bank loans.(v) The weighted average interest rate applied in the period is 6.08% (2007 – 6.01%)At 31 December 2008, the Group had available £30 million (2007 – £14.5 million) of undrawn committed borrowing facilities in respect of whichall conditions precedent had been met.The fair values of bank overdrafts and loans are determined by considering the maturity dates and market rates of interest. At 31 December 2008there was no material difference between the fair value of financial assets and financial liabilities and their book value.Annual Report & Accounts 2008 75

Notes to the consolidated financial statements28. ProvisionsDeferred/ Deferred/ GrossContingent Contingent obligationconsideration consideration under put Vacant– shares – cash options property Total£’000 £’000 £’000 £’000 £’000At 1 January 2008 15,149 12,897 – 695 28,741On acquisition of subsidiaries 100 550 – – 650Adjustment to prior year acquisitions 564 654 – – 1,218Discounting charge to the income statement (19) (109) – – (128)Change in payment method (2,058) 2,058 – – –Charged to the income statement 572 449 – – 1,021Payments made (5,854) (10,318) – (418) (16,590)Written put options over minority interests – – 2,000 – 2,000At 31 December 2008 8,454 6,181 2,000 277 16,912Included in current liabilities – 207 – 181 388Included in non-current liabilities 8,454 5,974 2,000 96 16,5248,454 6,181 2,000 277 16,912The vacant property provision remaining at 31 December 2008 relates to three buildings, one near Heathrow, one in Chelsea and one inLondon Bridge.The Heathrow building is approximately 12,000 sq ft and the Group has a lease which runs to September 2016. The current rental cost is£350,000 per annum with upward-only rent reviews due in September 2010 and 2015. The Group has sublet 7,000 sq ft, the remaining 5,000 sqft is occupied by Group companies. The rental income achieved on the sublet space is lower than that rent currently being paid under the lease.The Chelsea building is approximately 20,000 sq ft and the Group has a lease which runs to June 2015. The current rental cost is £566,000 perannum with an upward rent review due in June 2010. The building is fully sublet. The rent achieved is no less than that being paid under the lease.The provision covers the unwinding of the rent-free periods given to the tenants.The London Bridge office is approximately 2,700 sq ft and the Group has a lease which runs to March 2009. The current rental cost is £68,000 perannum. The office is currently vacant and provision has been made for the costs to the end of the lease.Contingent consideration relates to acquisitions made in current and previous years. The amounts payable are dependent on the future profits ofthe companies acquired. Further details of the deferred considerations arising from current year acquisitions are shown in note 38.The contingent consideration shares comprises shares to be issued in respect of acquisitions and has been shown as a liability in accordance withIAS 32 Financial Instruments: Presentation and Disclosure.Details of contingent consideration shares to be issued and their basis are disclosed in note 38. The number of shares to be issued in all instancesis based on the current market value prior to the issue of the shares.Timing of payments of deferred consideration is set out in the relevant Sale and Purchase Agreements but amounts payable are dependent uponfuture results.76Chime Communications plc

Notes to the consolidated financial statementsThe gross obligation under put option has arisen as a result of a shareholders’ agreement with a minority interest. The value of the option has beenestimated with regards to future profitability of the operation based on multiples of earnings.Deferred/ Deferred/Contingent Contingentconsideration consideration Vacant– shares – cash property Total£’000 £’000 £’000 £’000At 1 January 2007 7,334 7,552 414 15,300On acquisition of subsidiaries 7,019 4,782 – 11,801Adjustment to prior year acquisitions 1,224 1,214 – 2,438Discounting charge to the income statement 646 540 – 1,186Change in payment method (143) 143 – –Charged to the income statement – – 380 380Payments made (931) (1,334) (99) (2,364)At 31 December 2007 15,149 12,897 695 28,741Included in current liabilities 7,880 8,155 300 16,335Included in non-current liabilities 7,269 4,742 395 12,40615,149 12,897 695 28,74129. Share capital2008 2007Number Nominal Number Nominal(as restated) value (as restated) value£’000 £’000Authorised: at 1 January and 31 December ordinary shares at 25p each 152,814,279 38,204 152,814,279 38,204Called up, allotted and fully paid at 1 January ordinary shares at 25p each 53,275,051 13,319 50,736,937 12,684Issues relating to contingent consideration of VCCP Limited 3,782,849 945 – –Issues relating to contingent consideration of De Facto Communications Limited – – 225,745 56Issues relating to the acquisition of Fast Track Sales Limited – – 2,000,000 500Issues relating to contingent consideration on The Smart Company.Net Limited – – 115,832 29Issued to staff under share options – – 196,537 50Called up, allotted and fully paid at 31 December 57,057,900 14,264 53,275,051 13,319The Company has one class of ordinary shares which carry no right to fixed income.All numbers of shares have been restated to take into account the 1 for 5 share consolidation carried out on 14 May 2008.On 30 April 2008 3,782,849 shares were issued in respect of contingent consideration for VCCP Limited. The fair value of these shares was£1.2975 each (as revalued).Annual Report & Accounts 2008 77

Notes to the consolidated financial statements30. Share premium account2008 2007£’000 £’000Balance at 1 January 32,217 26,594Premium arising on issue of equity shares 4,904 5,623Balance at 31 December 37,121 32,21731. Own shares2008 2007£’000 £’000Balance at 1 January (4,381) (5,968)Disposed on exercise of options – 2,747Purchase of own shares (571) (1,160)Balance at 31 December (4,952) (4,381)The own shares reserve represents the cost of shares in Chime Communications plc purchased in the market and held by the Chime CommunicationsEmployee Trust to satisfy options under the Group’s Share Options Scheme, Deferred Share Plan and Co-Investment Plan (see note 40).The Chime Communications Employee Trust (the Trust) was established in 1997 in Jersey. The trustee is Halifax EES Trustees International Limited.The beneficiaries of the Trust are employees and former employees of the Company and the Group (including any Director) and the spouses andchildren or stepchildren of such employees or former employees. The purpose of the Trust is to facilitate and encourage the ownership of shares byemployees. Distributions from the Trust are agreed by the trustee on recommendations from the Board of Directors of Chime Communications plc.The Trust currently holds 1,508,965 ordinary shares which have a nominal value of £377,241 and over which options were granted in April 1999,November 2000 and April 2003, deferred shares in May 2006, July 2007 and May 2008 and Co-Investment Plan shares in September 2006 andMarch 2007. In 2008 406,833 (2007 – 434,042 post-consolidation) shares were purchased at a nominal value of £101,708, representing 0.71% ofthe called-up share capital at 31 December 2008. Cost associated with these shares amounted to £4,274. All costs of the Trust are borne byChime Communications plc and expensed through the income statement. The Trust has opted to waive all dividends with the exception of thoseshares allocated under the Deferred Share Plan (see note 41). The market value of the shares in the Trust at 31 December 2008 was £777,117(2007 – £1,983,840).78Chime Communications plc

Notes to the consolidated financial statements32. Equity reserves2008 2007£’000 £’000Balance at 1 January 32,385 32,385Balance at 31 December 32,385 32,385Capital reduction reserve relates to the capital reduction undertaken in October 2003.The reserve will not be treated as realised profits of theCompany until any debt or claim outstanding as at 1 July 2003 has been repaid or remedied. If on 1 July 2013 there remains only liabilitiesoutstanding in relation to property leases the amount outstanding to the reserve may be released and the undertaking discharged or replaced bynew share issues.33. Translation reserves2008 2007£’000 £’000Balance at 1 January 146 (245)Exchange differences on translation of overseas operations 1,866 391Balance at 31 December 2,012 14634. Accumulated profit/(loss)2008 2007£’000 £’000Balance at 1 January (612) (5,592)Profit for the year attributable to equity holders of the parent 10,783 8,617Dividends paid (2,219) (1,624)Credit in relation to share-based payments 892 557Revaluation of available for sale investment (113) (23)Loss on disposal of own shares held in treasury – (2,547)Balance at 31 December 8,731 (612)The share-based payments reserve arises from the cost of share-based payment transactions with employees, which is credited to equity inaccordance with IFRS 2 Share-Based Payments.35. Reconciliation of equity attributable to equity holders of parent2008 2007£’000 £’000Balance at 1 January as previously reported 73,074 59,858Dividends paid (2,219) (1,624)Credit in relation to share-based payments 892 557Purchase of own shares (571) (1,160)Own shares disposed of on exercise of options – 200Total recognised income and expense for the year attributable to equity holders of the parent 12,536 8,985Increase in share capital 5,849 6,258Balance at 31 December 89,561 73,074Annual Report & Accounts 2008 79

Notes to the consolidated financial statements36. Notes to the cash flow statement2008 2007£’000 £’000Operating profit 18,110 15,745Adjustments for:Loss from discontinued operation – (86)Share-based payment expense 1,292 968Translation differences 727 119Depreciation of property, plant and equipment 1,872 1,403Amortisation of other intangible assets 30 19Amortisation of acquired intangibles 134 159Loss on disposal of property, plant and equipment 17 29(Decrease)/increase in provisions (418) 281Operating cash flows before movements in working capital 21,764 18,637Increase in work in progress (459) (840)Increase in receivables (4,878) (8,027)Increase in payables 11,274 10,169Cash generated by operations 27,701 19,939Income taxes paid (4,961) (3,869)Interest paid (1,463) (870)Net cash from operating activities 21,277 15,200Additions to fixtures and equipment during the year amounting to £nil and additions to motor vehicles during the year amounting to £nil werefinanced by new finance leases (2007 – £17,757).Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and othershort-term liquid investments with a maturity of three months or less.Net cash and cash equivalents at the beginning of the year comprise bank balances of £10,196,000 (2007 – £6,652,000) and overdrafts of £nil(2007 – £nil).80Chime Communications plc

Notes to the consolidated financial statements37. Acquisition of subsidiariesOn 29 February 2008, the Group acquired 55% of the issued share capital of Naked Eye Research Limited. The fair value of the considerationgiven for the acquisition was £96,822. An initial payment of £50,000 was satisfied on completion in cash. Costs relating to the acquisitionamounted to £33,914, all of which have been paid in the year. The Group has provided for contingent consideration of £50,000 to date, dependenton profits to 2013. This has been discounted to a net present value of £46,822, with the resulting discounting charge of £3,178 to be takenthrough the income statement over the period.On 20 March 2008, the Group acquired 100% of the issued share capital of MC Bio Communications Limited. The fair value of the considerationgiven for the acquisition was £313,581. An initial payment of £1 was satisfied on completion in cash. Costs relating to the acquisition amounted to£49,255, all of which have been paid in the year. The Group has provided for contingent consideration of £400,000 to date, dependent on profitsto 2013. This has been discounted to a net present value of £313,580, with the resulting discounting charge of £86,420 to be taken through theincome statement over the period.On 2 April 2008, the Group acquired 100% of the issued share capital of Bankbrae Holdings Limited, holding company of The Sports BusinessLimited. The fair value of the consideration given for the acquisition was £361,838. An initial payment of £200,000 was satisfied on completion incash. Costs relating to the acquisition amounted to £65,752, all of which have been paid in the year. The Group has provided for contingentconsideration of £200,000 to date, dependent on profits to 2011. This has been discounted to a net present value of £161,838, with the resultingdiscounting charge of £38,162 to be taken through the income statement over the period.The fair value of the net liabilities acquired by these acquisitions was £11,151, resulting in goodwill of £932,313 which has been capitalised as anintangible fixed asset.In the post-acquisition period, the acquired companies contributed £62,999 to the profit on ordinary activities before taxation and £768,761to revenue.The goodwill calculation for the acquisition is as follows:Book Fair value Fairvalue adjustments valueNet assets acquired: £’000 £’000 £’000Trade and other receivables 173 – 173Cash and cash equivalents 133 – 133Trade and other payables (311) – (311)(5) – (5)Minority interest (6)(11)Goodwill 932Total consideration 921Satisfied by:Cash 250Directly attributable costs 149Deferred consideration 522921Net cash outflow arising on acquisition:Cash consideration 399Cash and cash equivalents acquired (133)266Goodwill arises from anticipated profitability and future operating synergies from the combination.If these acquisitions had been completed on the first day of the financial year they would have contributed £970,285 to Group revenue and£107,501 to profit before tax attributable to equity holders of the parent.Other deferred consideration of £16,172,621 was settled during the year in respect of acquisitions made in previous years by cash paymentsof £10,318,646 and £5,853,975 by the issue of shares; £126,604 of cash paid in the year relates to costs in respect of prior year acquisitions.In addition £16,144 was paid to acquire an additional 39% of Bullnose Limited. The total payment in respect of the purchase of subsidiaryundertakings was therefore £10,860,316. Cash acquired on acquisition amounted to £132,393, therefore the net cash effect in respect ofsubsidiary undertakings was £10,727,923.Annual Report & Accounts 2008 81

Notes to the consolidated financial statements38. Contingent liabilities and commitmentsIn addition to the potential deferred and contingent consideration as disclosed in note 28 of £14,635,000 at 31 December 2008 there was amaximum financial commitment of £19,101,033 relating to unprovided deferred contingent consideration payable in respect of acquisitions ofsubsidiary undertakings. This relates to the acquisition of Fast Track Sales Limited (£12,245,000), The Corporate Citizenship Company Limited(£2,206,034) and Stuart Higgins Communications Limited (£700,000) in 2007, MC Bio Communications Limited (£1,849,999) and BankbraeHoldings Limited (£2,100,000) in 2008.Fast Track Sales Limited – The maximum contingent consideration payable is £25,000,000, however provision has only been made of£12,755,000 in the accounts to date (before discounting). The contingent consideration is a multiple of seven times earnings before interest andtax the average profits for the following periods: average of the three years 2007 to 2009 inclusive, and average of the three years 2010 to 2012inclusive. The contingent consideration would be satisfied by the issue of new shares until the amount of total consideration paid has been satisfiedas to 50% in cash and 50% in new shares. Thereafter, the contingent consideration would be satisfied 50% in loan notes and 50% by the issue ofnew shares. Chime has the right to pay a higher percentage in cash if it so wishes.The Corporate Citizenship Company Limited – The maximum contingent consideration payable is £4,206,034, however provision has onlybeen made for £2,000,000 in the accounts to date (before discounting). The contingent consideration is a multiple of 4.75 times the averageearnings before interest and tax for the following periods: average of the three years 2007 to 2009 inclusive, and average of the two years 2010 to2011 inclusive. The contingent consideration would be satisfied entirely in loan notes or cash.Stuart Higgins Communications Limited – The maximum contingent consideration payable is £1,750,000, however provision has only beenmade for £1,050,000 in the accounts to date (before discounting). The contingent consideration is a multiple of 4.5 times the average earningsbefore interest and tax for the three years 2008 to 2010 inclusive. The contingent consideration would be satisfied 50% in cash and 50% by theissue of new shares. Chime has the right to pay a higher percentage in cash if it so wishes.MC Bio Communications Limited – the maximum contingent consideration payable is £2,249,999, however provision has only been made for£400,000 in the accounts to date (before discounting). The contingent consideration is a multiple of four times the average profits before tax for thefollowing periods: average of the three years 2008 to 2010 inclusive, and average of the three years 2011 to 2013 inclusive. The contingentconsideration would be satisfied entirely in loan notes.Bankbrae Holdings Limited – the maximum contingent consideration payable is £2,300,000, however provision has only been made for£200,000 in the accounts to date (before discounting). The contingent consideration is a multiple of 4.5 times the average profits before tax forthe following periods: average of the two years 2008 to 2009 inclusive, and average of the two years 2010 to 2011 inclusive. The contingentconsideration would be satisfied 50% in cash and 50% by the issue of new shares. Chime has the right to pay a higher percentage in cash if itso wishes.For further detail on the calculation of deferred consideration provided see note 28.39. Operating lease arrangementsThe Group as lessee2008 2007£’000 £’000Minimum lease payments under operating leases recognised as an expense for the year 34,479 36,001At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases,which fall due as follows:2008 2007£’000 £’000Within one year 127 109In the second to fifth years inclusive 7,112 3,605After five years 27,240 32,28734,479 36,001Operating lease payments represent rentals payable by the Group for its office properties and for certain office equipment.82Chime Communications plc

Notes to the consolidated financial statementsThe Group as lessorAt the balance sheet date, the Group had contracted with tenants for the following future minimum lease payments:2008 2007£’000 £’000Within one year 46 120In the second to fifth years inclusive 343 2,034After five years 6,399 –Property rental income earned during the year was £999,000 (2007 – £912,000).40. Share-based paymentsEquity-settled share option planThe Group operates four share plans; an executive share option scheme, an employee savings-related scheme, a deferred share scheme and aCo-Investment Plan.The exercise price of the options granted under the Executive Share Option Scheme is equal to the market value of the Company’s shares at thetime when the options are granted. The vesting period is generally three years but if they are special options it is five years. If the options remainunexercised after a period of ten years from the date of grant, the options expire. Furthermore, options are forfeited if the employee leaves theGroup before the options vest. All executive options granted from November 1997 (other than special executive options) are subject toperformance criteria as set out in the report to the shareholders on Directors’ remuneration.The exercise price of the options granted under the employee Savings-Related Scheme is 80% of the market value at the date of offer. The vestingperiod is five years, if the options remain unexercised six months after this date, the options expire. Furthermore, the options are forfeited if theemployee leaves the Group before the options vest.Under the Deferred Share Plan, restricted shares are awarded to employees at nil cost to the employee. The vesting period is three years from thedate of award. If the employee leaves the Group before vesting then the restricted shares are forfeited. The employee receives the dividend on theshares during the vesting period.The matching shares awarded under the Co-Investment Plan are awarded to employees at nil costs. The vesting period is either 3.5 years orfour years depending on when the award was made. If the employee leaves the Group before vesting then the matching shares are forfeited. If theemployee disposes of any of their committed shares then the matching shares awarded would be reduced accordingly retrospectively.The matching shares awarded are subject to performance criteria as set out in the report to the shareholders on Directors’ remuneration.Share Options2008 2007 restatedWeightedWeightedaverageaverageexercise priceexercise priceOptions (in £) Options (in £)Outstanding at beginning of year 1,999,008 £2.468 2,812,841 £2.225Granted during the year 290,311 £1.125 159,868 £2.350Lapsed during the year (186,377) £2.048 (518,886) £2.703Surrendered in the year (11,000) £2.218Exercised during the year – – (454,815) £1.160Outstanding at the end of the year 2,091,942 £2.320 1,999,008 £2.468Exercisable at the end of the year 1,202,534 – 1,257,857The weighted average share price at the date of exercise for share options exercised during the year was £nil (2007 – £1.160). The optionsoutstanding at 31 December 2008 had a weighted average exercise price of £ 2.320 (2007 – £2.468), and a weighted average remainingcontractual life of 1,543 days (2007 – 1,853 days). In 2008 options were granted on 18 May, the aggregate of the estimated fair values of theoptions granted on that date is £67,483. In 2007 options were granted on 23 May, the aggregate of the estimated fair values of the optionsgranted on those dates is £84,334.Annual Report & Accounts 2008 83

Notes to the consolidated financial statements40. Share-based payments (continued)The fair value was calculated using the Black-Scholes model (2007 – Black-Scholes).In valuing the options, the following assumptions were used:2008 2007(restated)Weighted average share price £1.400 £2.930Weighted average exercise price £1.125 £2.350Expected volatility 33.58 33.58%Expected life – savings-related scheme 5 years 5 yearsRisk-free rate 5.0% 5.5%Dividend yield 2.50% 1.89%Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous two years. The expected lifeused in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions andbehavioural considerations.Deferred Shares20072008 restatedDeferred DeferredShares SharesOutstanding at beginning of year 406,732 244,750Awarded during the year 348,575 172,282Lapsed during the year (50,450) (10,300)Outstanding at the end of the year 704,857 406,732The restricted shares were awarded on 28 May 2008. The share price at the date of award was £1.257 (2007 – £2.775). The remaining contractuallife is 579 days (2007 – 685 days). The estimated fair values of the restricted shares awarded is £346,644 (2007 – £370,459).The fair value was calculated with reference to the share price at the date of award.Co-Investment Plan20072008 restatedMatching MatchingShares SharesOutstanding at beginning of year 2,923,000 2,591,000Surrendered in the year (493,415) –Granted during the year – 332,000Outstanding at the end of the year 2,429,585 2,923,000There were no matching shares awarded in the year. In 2007 the share price at the date of award was £2.425. The remaining contractual life is626 days. The estimated fair value of the matching shares granted is £nil (2007 – £391,618).The fair value of the matching shares allocated to the market-based performance criteria was calculated using the Monte Carlo model.84Chime Communications plc

Notes to the consolidated financial statementsIn valuing the shares, the following assumptions were used:2008 2007£’000 £’000Weighted average share price – £0.498Expected volatility – 33.58%Expected life – 3.5 yearsRisk-free rate – 5.02%Dividend yield – n/aExpected volatility was determined by calculating the historical volatility of the Group’s share price over the previous two years.The fair value of the matching shares allocated to the non-market-based performance criteria was made with reference to the share price at thedate of award discounted for expected dividends.The Group recognised total expenses of £1,292,000 and £968,000 related to equity-settled share-based payment transactions in 2008 and2007 respectively.41. Retirement benefit schemesThe Group operates a defined contribution pension scheme for the benefit of the majority of employees. This is an independently administeredfund, the assets of which are held separately from those of the Company. The amounts charged in this year and the prior year are disclosedin note 6.42. Related party transactionsTransactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed inthis note (details of subsidiaries are included in note 16). Transactions between the Group and its associates are disclosed below. Transactionsbetween the Company and its subsidiaries and associates are disclosed in the Company’s separate financial statements.Trading transactionsDuring the year, Group companies entered into the following transactions with related parties who are not members of the Group:Amounts Amounts Amounts Amountsowed by owed to owed by owed toSale of Purchase related related Sale of Purchase related relatedservices of services parties parties services of services parties parties2008 2008 2008 2008 2007 2007 2007 2007£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000AssociatesColour TV 30 – 16 – 67 – – –Meropa – – 335 – – – 374 –Rare Corporate Design 171 315 11 31 112 300 91 50Rare Publishing 2 6 – – 3 – 1 –Someone 225 27 2 – – – – –X & Y Communications 35 53 112 35 41 – 49 –Sales of goods to related parties were made on an arms length basis.The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have been madefor doubtful debts in respect of the amounts owed by related parties.Annual Report & Accounts 2008 85

Notes to the consolidated financial statements42. Related party transactions (continued)Remuneration of key management personnelThe remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categoriesspecified in IAS 24 Related Party Disclosures.2008 2007£’000 £’000Short-term employee benefits 2,989 2,508Share-based payment 442 4473,431 2,95543. Financial instrumentsThe Group’s principal financial instruments comprise bank loans, bank overdraft, finance leases, cash and short-term deposits. The main purposeof the financial instruments is to provide finance for the Group’s operations. The Group has various other financial assets and liabilities such astrade receivables and trade payables, which arise directly from operations.The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk and foreign currency risk. The policy for managingthese risks is reviewed and agreed with the Board.The Group uses financial instruments to manage its bank borrowings, this is done by the use of foreign exchange rate swaps. The Group does nothold or issue derivative financial instruments for financial trading purposes but derivatives that qualify for hedge accounting are accounted for astrading instruments. Derivative financial instruments are initially recognised at fair value at the contract date and continue to be stated at fair value atthe balance sheet date with gains and losses on revaluation being recognised immediately to the income statement.Capital risk management: The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns whilemaximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt,which includes the borrowings discussed in note 27, cash and cash equivalents and equity attributable to equity holders of the parent, comprisingissued capital, reserves and retained earnings as disclosed in notes 29 to 35.2008 2007£’000 £’000Cash and cash equivalents 6,804 10,196Bank loans – (8,375)Finance leases (64) (102)Loan notes outstanding (416) (907)Equity attributable to equity holders of the parent (89,564) (73,074)(83,240) (72,262)Externally imposed capital requirement: Under the terms of the Group’s banking covenants the Group must meet certain criteria based on interestand dividend cover and net debt to EBITDA. There have been no breaches of the banking covenants in the current or prior year.Interest rate risk: The Group manages its interest rate risk by the use of fixed rate and variable rate financial debt. Fixed interest rates are forperiods of up to three months at a time. The interest rate margins paid by the Group on financial debt are disclosed in notes 26 and 27. Surpluscash deposits earn interest based on LIBID. If interest rates had been 1% higher during the period under review the impact to profit before taxwould have been a decrease of £120,770 (2007 – £93,260), conversely if interest rates had been 1% lower during the period under review theimpact to profit before tax would have been an increase of £119,645 (2007 – £92,450). The impact on shareholders’ equity would have been£116,025 (2007 – £65,280) if interest rates had been worse by 1%, and £82,155 (2007 – £64,740) if interest rates had been better by 1%.Liquidity risk: On 20 August 2008, the Group agreed to committed facilities of £30 million. The facility matures in June 2013. There is also anuncommitted facility available of £2 million, which is reviewed on a rolling basis. At 31 December 2008 the Group had net cash of £6,324,000.86Chime Communications plc

Notes to the consolidated financial statementsMaturity of borrowings: The maturity profile for the anticipated cash flows including interest in relation to the Group’s borrowings on anundiscounted basis and which therefore differs from both fair value and carrying value is as follows.The borrowings are repayable as follows: £’000On demand or within one year 464In the second year 16In the third to fifth year –480All other financial liabilities are considered current except the financial liability relating to the put option.Foreign currency risk: Management does not believe foreign currency risk to be material. The Group has one overseas associate, MeropaCommunications (Pty) Limited, which trades in South Africa. At 31 December 2008 the Group had a debtor relating to the partial disposal of itsshareholding in Meropa. This is payable in South African rand and is valued at £80,370 which is payable within one year. No interest is payable onthese loans. The Group had not entered into forward currency transactions with regards this loan. Fluctuations in the value of the South Africanrand against sterling would give rise to foreign exchange differences which would be taken through the profit and loss account.The Group has nine overseas subsidiaries which trade in Europe, America and the Middle East. At 31 December 2008 the net foreign currencymonetary net assets were £1,565,401 (2007 – £627,000) in Europe, £1,237,013 (2007 – £218,992) in America and £9,790 (2007 – £nil) in theMiddle East.The Group does on occasion agree to bill clients in a currency other than the local currency, it also makes some purchases overseas where thesupplier bills in their local currency. In some instances where it is viewed appropriate the proceeds from the client are kept in currency so as tominimise the foreign exchange exposure on the transaction if there are third-party costs to be paid out of the funds in that currency. In thisinstance the Group uses short-term foreign exchange swaps to manage the Group’s borrowings. The fair value of the swaps entered into at31 December 2008 is estimated at £29,973 (2007 – £28,821). There were three swaps open over the year end. This amount is based on themarket values of equivalent instruments at the balance sheet date.Market price risk: The Group’s exposure to market price risk comprises interest rate risk and currency rate risk. The Group regularly monitors theseexposures which, setting aside the interrelationships between such rates and their wider impact on the economy, are not considered to have asignificant impact on the Group.Fair values of financial assets and financial liabilities: At 31 December 2008 there was no material difference between the fair value of financialassets and financial liabilities and their book value.Credit risk: The Group considers its maximum exposure to credit risk to be as follows:2008 2007£’000 £’000Trade receivables 38,813 35,691Deferred consideration receivable 551 56839,364 36,259Further details of the ageing of trade receivables can be found in note 23 to the financial statements.Concentrations of credit risk with respect to trade receivables are limited due to the Group’s customer base being large and unrelated.Annual Report & Accounts 2008 87

Independent auditors’ reportIndependent auditors’ report to the members ofChime Communications plcWe have audited the parent companyfinancial statements of ChimeCommunications plc for the year ended31 December 2008 which comprise theCompany balance sheet and the relatednotes 1 to 16. These parent companyfinancial statements have been preparedunder the accounting policies set out therein.We have reported separately on theGroup financial statements of ChimeCommunications Plc for the year ended31 December 2008 and on the informationin the Directors’ remuneration report that isdescribed as having been audited.This report is made solely to the Company’smembers, as a body, in accordance withsection 235 of the Companies Act 1985.Our audit work has been undertaken so thatwe might state to the Company’s membersthose matters we are required to state tothem in an auditors’ report and for no otherpurpose. To the fullest extent permittedby law, we do not accept or assumeresponsibility to anyone other than theCompany and the Company’s members asa body, for our audit work, for this report,or for the opinions we have formed.Respective responsibilities of directorsand auditorsThe Directors’ responsibilities for preparingthe Annual Report and the parent companyfinancial statements in accordance withapplicable law and United KingdomAccounting Standards (United KingdomGenerally Accepted Accounting Practice) areset out in the Statement of Directors’Responsibilities.Our responsibility is to audit the parentcompany financial statements in accordancewith relevant legal and regulatoryrequirements and International Standards onAuditing (UK and Ireland).We report to you our opinion as to whetherthe parent company financial statementsgive a true and fair view and whether theparent company financial statements havebeen properly prepared in accordance withthe Companies Act 1985. We also report toyou whether in our opinion the Directors’report is consistent with the parent companyfinancial statements.In addition we report to you if, in ouropinion, the Company has not kept properaccounting records, if we have not receivedall the information and explanationswe require for our audit, or if informationspecified by law regarding Directors’remuneration and other transactions is notdisclosed.We read the other information contained inthe Annual Report as described in thecontents section and consider whether it isconsistent with the audited parent companyfinancial statements. We consider theimplications for our report if we becomeaware of any apparent misstatements ormaterial inconsistencies with the parentcompany financial statements. Ourresponsibilities do not extend to any furtherinformation outside the Annual Report.Basis of audit opinionWe conducted our audit in accordance withInternational Standards on Auditing (UK andIreland) issued by the Auditing PracticesBoard. An audit includes examination, on atest basis, of evidence relevant to theamounts and disclosures in the parentcompany financial statements. It alsoincludes an assessment of the significantestimates and judgements made by theDirectors in the preparation of the parentcompany financial statements, andof whether the accounting policiesare appropriate to the Company’scircumstances, consistently applied andadequately disclosed.We planned and performed our audit so asto obtain all the information and explanationswhich we considered necessary in order toprovide us with sufficient evidence to givereasonable assurance that the parentcompany financial statements are free frommaterial misstatement, whether caused byfraud or other irregularity or error. In formingour opinion we also evaluated the overalladequacy of the presentation of informationin the parent company financial statements.OpinionIn our opinion:• the parent company financial statementsgive a true and fair view, in accordancewith United Kingdom Generally AcceptedAccounting Practice, of the state of theCompany’s affairs as at 31 December2008;• the parent company financial statementshave been properly prepared inaccordance with the Companies Act1985; and• the information given in the Directors’Report is consistent with the parentcompany financial statements.Deloitte LLPChartered Accountants andRegistered AuditorsLondon11 March 200988Chime Communications plc

Company balance sheetCompany balance sheetYear ended 31 December 2008Fixed assets2008 2008 2007 2007Note £’000 £’000 £’000 £’000Investment in subsidiaries 4 122,664 120,293Other investments 5 350 350Current assets123,014 120,643Debtors 7 825 7,539Short-term investments 8 416 313Cash at bank and in hand – 2,9471,241 10,799Creditors: amounts falling due within one year 9 (5,990) (17,888)Net current liabilities (4,749) (7,089)Total assets less current liabilities 118,265 113,554Creditors: amounts falling due after more than one year 10 (14,428) (20,386)Net assets 103,837 93,168Capital and reservesShare capital 12 14,264 13,319Share premium account 12 37,121 32,217Share-based payment reserve 13 3,063 1,771Merger reserve 13 3,780 3,780Capital reduction reserve 13 32,385 32,385ESOP reserve 13,16 (4,952) (4,381)Retained earnings 13 18,176 14,077Equity shareholders’ funds 103,837 93,168The financial statements were approved by the Board of Directors and authorised for issue on 11 March 2009. They were signed on its behalf by:Mark Smith, DirectorAnnual Report & Accounts 2008 89

Notes to the company financial statementsNotes to the Company financial statementsYear ended 31 December 20081. Accounting policiesBasis of preparationThe separate financial statements of the Company are drawn up in accordance with the Companies Act 1985 and United Kingdom generallyaccepted accounting principles (UK GAAP).The preparation of financial statements in conformity with generally accepted accounting principlesrequires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actualresults could differ from those estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision andfuture periods if the revision affects both current and future periods.The particular accounting policies adopted are described below. They have all been applied consistently throughout the year and the prior year.The financial statements are prepared on a going concern basis as explained in the Directors’ Report.Cash flowThe Company has taken advantage of the exemption contained in FRS 1 “Cash flow statements” and has not produced a cash flow statement.Financial instrumentsThe Company has taken advantage of the exemption contained in FRS 29 “Financial Instruments: Disclosures” and has not produced anydisclosures required by that standard, as full FRS 29 disclosures are available in Chime Communications Plc Annual Report for the year ended31 December 2007.Related partiesThe Company has taken advantage of the exemption contained in FRS 8 “Related party disclosures” and has not reported transactions with fellowGroup undertakings.Accounting conventionThe financial statements are prepared under the historical cost convention.InvestmentsIn the Company’s accounts, investments in subsidiary and associate undertakings are stated at cost less provision for any impairment in value.Deferred considerationWhen earn-outs are to be settled in cash or shares with a fixed monetary value, the fair value of the consideration is obtained by discounting topresent value the amounts expected to be payable in the future.The resulting interest charge is included within finance costs of deferred consideration.Financial instrumentsFinancial assets and financial liabilities, in respect of financial instruments, are recognised on the balance sheet when the Company becomes aparty to the contractual provisions of the instrument.Financial liabilities and equity instrumentsFinancial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangementsentered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residualinterest in the assets of the Company after deducting all of its liabilities and includes no obligation to deliver cash or other financial assets.Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.Share-based paymentsThe Group operates a number of equity-settled share-based compensation plans for the employees of subsidiary undertakings, using theCompany’s equity instruments.The fair value of the compensation given in respect of these share-based compensation plans is recognised as acapital contribution to the Company’s subsidiary undertakings, over the vesting period. The capital contribution is reduced by any paymentsreceived from subsidiary undertakings in respect of these share-based payments.Dividends paid or receivedDividends paid and received are included in the financial statements in the period in which the related dividends are actually paid or received or, inrespect of the Company’s final dividend for the year, approved by shareholders.Going concernThe Directors have prepared cash flow forecasts which indicate that the Company has adequate resources to continue in operational existence forthe foreseeable future. In preparing these forecasts the Directors have taken into account the following key factors:• The possible impact of the continued economic downturn on the Group’s business• Key client account renewals• The level of committed and variable costs• Current new business targets compared with levels achieved in previous yearsThe Group currently has a borrowing facility of £32 million, which continues until July 2013. This facility is subject to banking covenants.At year end the Company was not utilising its loan facility.The Directors have concluded, based on the cash flow forecasts, that it is appropriate to prepare the accounts on a going concern basis.90Chime Communications plc

Notes to the company financial statements2. Profit of parent companyAs permitted by Section 230 of the Companies Act 1985, the profit and loss account of the parent company is not presented as part of theseaccounts. The parent company’s profit for the financial year amounted to £6,318,000 (2007 – £6,971,000).3. Equity dividendsThe equity dividends paid from the Company are disclosed in note 11 of the consolidated financial statements.4. InvestmentsInvestments inand loans to Equityassociated interest inundertakings subsidiaries TotalThe Company £’000 £’000 £’000CostAt 1 December 2008 348 119,945 120,293Additions – 921 921Adjustment to prior year acquisitions – 1,218 1,218Transfer of investment to subsidiary – (13) (13)Loans to associated undertakings 59 – 59Share-based payments – 1,292 1,292Reduction of carrying value (29) (1,075) (1,104)Foreign exchange (2) – (2)At 31 December 2008 376 122,288 122,664Investments inand loans to Equityassociated interest inundertakings subsidiaries TotalThe Company £’000 £’000 £’000CostAt 1 December 2007 294 84,264 84,558Additions – 32,758 32,758Adjustment to prior year acquisitions – 2,438 2,438Loans to associated undertakings 54 – 54Share-based payments – 968 968Reduction of carrying value – (483) (483)At 31 December 2007 348 119,945 120,2935. Other investmentsOther investments comprise unlisted equity investment in PSP Holdings Ltd. This has been recorded at cost, less any provision for impairment, asits fair value cannot be reliably measured as there is no active market.6. Subsidiaries, associates and joint venturesThe Company’s principal trading subsidiaries and associated undertakings, which are all incorporated in Great Britain (except where noted) arelisted in note 16 of the consolidated financial statements.Annual Report & Accounts 2008 91

Notes to the company financial statementsNotes to the Company financial statementsYear ended 31 December 20087. Debtors2008 2007£’000 £’000Prepayments and accrued income – 39Amounts owed by Group undertakings 772 7,403Other debtors 53 97825 7,539Due within one year 825 7,539Due after more than one year – –825 7,5398. Short-term investments2008 2007£’000 £’000Loan note cash deposit 416 313The loan note cash deposit of £0.4 million (2007 – £0.3 million) relates to a cash deposit held on three months’ notice at Royal Bank of Scotlandplc. The deposit guarantees £0.4 million (2007 – £0.3 million) of the loan note creditors of £0.4 million (2007 – £0.9 million). Interest accruing onthe deposit is payable to the holders of the loan notes less any costs arising (see note 24 and note 25 of the consolidated financial statements).9. Creditors: amounts falling due within one year2008 2007£’000 £’000Bank overdraft 3,661 –Deferred/contingent consideration 207 16,035Amounts owed to Group undertakings 1,158 –Loan notes 416 907Current taxation 80 233Other taxation and social security costs 4 7Other creditors – 3Accruals and deferred income 464 7035,990 17,88810. Creditors: amounts falling due after more than one year2008 2007£’000 £’000Deferred/contingent consideration 14,428 12,011Bank loans – 8,37514,428 20,386Due in more than one year but not more than two years 9,766 8,548Due in more than two years but not more than five years 4,591 6,843Due in more than five years 71 4,99514,428 20,386No interest attaches to the deferred consideration, which is payable in sterling and euros.92Chime Communications plc

Notes to the company financial statements11. Borrowings2008 2007£’000 £’000Bank loans – 8,375Loan notes 416 907416 9,282Due within one year or on demand 416 907Due in more than one year but not more than two years – 8,375Due in three to five years – –416 9,282Maturity analysisBank overdraft/loansWithin one year or on demand – –Between one and two years – 8,375Between two and five years – –Loan notesWithin one year or on demand 416 907416 9,28212. Share capital and share premium accountThe movements on these items are disclosed in notes 29 and 30 to the consolidated financial statements.13. Statements of movements on reservesShare-based Capital Profitpayment Merger reduction ESOP and lossreserve reserve reserve reserve account£’000 £’000 £’000 £’000 £’000Balance at 1 January 2008 1,771 3,780 32,385 (4,381) 14,077Retained profit for the year – – – – 6,318Dividend payable – – – – (2,219)Capital contribution given relating to share-based payments 1,292 – – – –Purchase of own equity shares held in treasury – – – (571) –Balance at 31 December 2008 3,063 3,780 32,385 (4,952) 18,176Share-based Capital Profitpayment Merger reduction ESOP and lossreserve reserve reserve reserve account£’000 £’000 £’000 £’000 £’000Balance at 1 January 2007 803 3,780 32,385 (5,968) 11,214Retained profit for the year – – – – 6,971Dividend payable – – – – (1,561)Capital contribution given relating to share-based payments 968 – – – –(Purchase)/Disposal of own equity shares held in treasury – – – 1,587 (2,547)Balance at 31 December 2007 1,771 3,780 32,385 (4,381) 14,077Annual Report & Accounts 2008 93

Notes to the company financial statementsNotes to the Company financial statementsYear ended 31 December 200814. Contingent liabilities and commitmentsIn addition to the potential deferred consideration as shown in note 9 and 10 of £14,635,000 at 31 December 2008 there was a maximumfinancial commitment of £19,101,033 relating to unprovided deferred contingent consideration payable in respect of acquisitions of subsidiaryundertakings. This relates to the acquisition of Fast Track Sales Limited (£12,245,000), The Corporate Citizenship Company Limited (£2,206,034)and Stuart Higgins Communications Limited (£700,000) in 2007, MC Bio Communications Limited (£1,849,999) and Bankbrae Holdings Limited(£2,100,000) in 2008.Fast Track Sales Limited – The maximum contingent consideration payable is £25,000,000, however provision has only been made of £12,755,000in the accounts to date (before discounting). The contingent consideration is a multiple of seven times earnings before interest and tax of theaverage profits for the following periods: average of the three years 2007 to 2009 inclusive, and average of the three years 2010 to 2012 inclusive.The contingent consideration would be satisfied by the issue of new shares until the amount of total consideration paid has been satisfied as to50% in cash and 50% in new shares. Thereafter, the contingent consideration would be satisfied 50% in loan notes and 50% by the issue of newshares. Chime has the right to pay a higher percentage in cash if it so wishes.The Corporate Citizenship Company Limited – The maximum contingent consideration payable is £4,206,034, however provision has only beenmade for £2,000,000 in the accounts to date (before discounting). The contingent consideration is a multiple of 4.75 times the average earningsbefore interest and tax for the following periods: average of the three years 2007 to 2009 inclusive, and average of the two years 2010 to 2011inclusive. The contingent consideration would be satisfied entirely in loan notes or cash.Stuart Higgins Communications Limited – The maximum contingent consideration payable is £1,750,000, however provision has only been madefor £1,050,000 in the accounts to date (before discounting). The contingent consideration is a multiple of 4.5 times the average earnings beforeinterest and tax for the three years 2008 to 2010 inclusive. The contingent consideration would be satisfied 50% in cash and 50% by the issue ofnew shares. Chime has the right to pay a higher percentage in cash if it so wishes.MC Bio Communications Limited – the maximum contingent consideration payable is £2,249,999, however provision has only been made for£400,000 in the accounts to date (before discounting). The contingent consideration is a multiple of four times the average profits before tax for thefollowing periods: average of the three years 2008 to 2010 inclusive, and average of the three years 2011 to 2013 inclusive. The contingentconsideration would be satisfied entirely in loan notes.Bankbrae Holdings Limited – the maximum contingent consideration payable is £1,150,000, however provision has only been made for £200,000in the accounts to date (before discounting). The contingent consideration is a multiple of 4.5 times the average profits before tax for the followingperiods: average of the two years 2008 to 2009 inclusive, and average of the two years 2010 to 2011 inclusive.The contingent consideration wouldbe satisfied 50% in cash and 50% by the issue of new shares. Chime has the right to pay a higher percentage in cash if it so wishes.15. Share-based paymentsThe Company currently uses a number of equity-settled share plans to grant options and shares to the directors and employees of its subsidiaryundertakings. As at 31 December 2008, the Company had 2,091,942 ordinary share options outstanding (2007 – 1,999,008 as restated).The Company has made a capital contribution to its subsidiary undertakings in relation to share-based payments. At 31 December 2008, thecumulative capital contribution net of payments received from subsidiary undertakings was £3.1 million (31 December 2007 – £1.8 million. Duringthe year ended 31 December 2008, the capital contribution arising from share-based payments was £1.3 million (2007 – 1.0 million). The Companydoes not incur a profit and loss account charge in relation to share-based payments.Full details of share-based payments, share option schemes and share plans are disclosed in note 40 to the consolidated financial statements ofChime Communication plc.16. Own sharesThe own shares reserve represents the cost of shares in Chime Communications plc purchased in the market and held by The ChimeCommunications Employee Trust to satisfy options under the Group’s share options schemes, Deferred Shares Plan and the Co-Investment Plan.Further details are disclosed in note 30 of the Group accounts.94Chime Communications plc

Information for shareholdersInformation for shareholdersFINANCIAL CALENDAR 13 May 2009 Annual General Meeting: 12 noon,14 Curzon Street, London W1J 5HN27 May 2009 Ex-Dividend Date 2008 Final Dividend29 May 2009 Record Date 2008 Final Dividend19 June 2009 Payment of 2008 Final Dividend26 August 2009 Announcement of 2009 Interim Results23 September 2009 Ex-Dividend Date 2009 Interim Dividend25 September 2009 Record Date 2009 Interim Dividend16 October 2009 Payment of 2009 Interim DividendSHARE PRICE Share price at 31 December 2008 51.5 penceHigh during the year (3 January 2008)Low during the year (22 December 2008)183.75 pence49.5 penceBALANCE ANALYSIS SUMMARY Number of Number of Balance as atholdings holdings 28 FebruaryRange Individuals corporate bodies 2009 %1 – 1,000 252 39 94,896 0.171,001 – 10,000 143 85 831,816 1.4610,001 – 100,000 48 64 4,210,375 7.38100,001 – 1,000,000 15 42 18,218,459 31.931,000,001 – 10,000,000 5 8 22,665,635 39.7210,000,001 – to highest 0 1 11,036,718 19.34Total 463 239 57,057,899 100.00Annual Report & Accounts 2008 95

Information for shareholdersInformation for shareholdersPROFESSIONAL ADVISERSFINANCIAL ADVISERS ANDSTOCKBROKERSNumis Securities LimitedCheapside House138 CheapsideLondon EC2V 6LHAUDITORSDeloitte LLPChartered AccountantsLondonUnited KingdomSOLICITORSSlaughter & MayOne Bunhill RowLondon EC1Y 8YYBANKERSRoyal Bank of Scotland plc280 BishopsgateLondon EC2M 4RBREGISTRARSComputershare Investor Services plcRegistrar’s DepartmentPO Box 82The PavilionsBridgwater RoadBristolBS99 7NHweb.queries@computershare.co.ukTel: 0870 889 3278www.computershare.comREGISTERED OFFICE14 Curzon StreetLondon W1J 5HNRegistered in England No: 1983857CONTACT DETAILSChime Communications14 Curzon StreetLondon W1J 5HNwww.chime.plc.ukLord Bell – Chairmanlord.bell@chime.plc.ukChristopher Satterthwaite –Group Chief Executivecsatterthwaite@chime.plc.ukMark Smith – Group Finance Directormsmith@chime.plc.ukRobert Davison – Company Secretaryrdavison@chime.plc.uk96Chime Communications plc

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Chime Communications plc14 Curzon Street, London W1J 5HNTel: 020 7861 8515E-mail: enquiries@chime.plc.ukwww.chime.plc.uk