Chime Communications plc
14 Curzon Street, London W1J 5HN
Tel: 020 7861 8515
E-mail: enquiries@chime.plc.uk
www.chime.plc.uk
Annual Report & Accounts 2005
“Evolving isn’t just about survival; it’s also about success”
Public Relations      Advertising and Marketing Services      Research
CHIME COMMUNICATIONS PLC ANNUAL REPORT 2005
162315 Chime Cover_spine  5/5/06  20:48  Page 1 Financial Highlights 1
Chairman’s review 2
Chief Executive’s review 6
Business review 10
Finance Director’s review 16
Directors’ biographies 18
Directors’ statement on corporate
governance 20
Directors’ remuneration report 25
Directors’ report 30
Statement of directors’ responsibilities 32
Auditors’ report on the Group 33
Consolidated income statement 35
Consolidated statement of recognised
income and expense 36
Consolidated balance sheet 37
Consolidated cash flow statement 38
Notes to the consolidated accounts 39
Auditors’ report on the Company 89
Company balance sheet 90
Notes to the Company accounts 91
Professional advisers, financial
calendar and contact details 95   
The Chime Group helps clients create, manage,
monitor and market their businesses, brands and
reputations both in the UK and internationally.
Contents
Designed and produced by Rare Corporate Design
www.rarecorporate.co.uk
162315 Chime Cover_spine  5/5/06  20:48  Page 2 | 1
Note:
1. Headline figures are shown prior to restructuring
costs (£1.3 million) and discontinued operations.
2. Organic growth (excluding both acquisitions
and disposals) in operating income was 7%
and 16% in operating profit.
Summary of 2005 results
2005 2004 %
Operating income £63.0m £52.1m +21%
Operating profit
Headline £9.5m £7.3m +30%
Statutory £8.2m £7.3m +13%
Profit before tax
Headline £8.6m £6.4m +34%
Statutory £7.3m £6.4m +14%
Earnings per share
Headline 2.9p 2.2p +32%
Statutory 2.5p 2.2p +14%
Dividend per share 0.48p 0.30p +60%
Headline operating profit margin 15.3% 13.7%
Net debt £3.0m £6.3m
Chime Communications plc Financial Highlights
Annual Report & Accounts 2005
162315 chime front  5/5/06  20:49  Page 1 Summary of 2005
The progress we made in 2004 has continued through
2005. Our Advertising and Marketing Services Division 
has started to deliver on our expectations with the very
successful acquisition of VCCP . Each of our three 
divisions has delivered double digit growth in operating
income and profit.
Our operating income grew by 21% from £52.1 million
to £63.0 million and our headline operating profit grew by
30% from £7.3 million to £9.5 million. Despite incurring
restructuring costs of £1.3 million in 2005, the statutory
profit before tax grew by 14% from £6.4 million to
£7.3 million.
Organic growth (excluding both acquisitions and disposals)
in operating income was 7% and 16% in operating profit.
Headline earnings per share grew by 32% from 2.2p per
share to 2.9p per share.
The Board is proposing a final dividend of 0.32p per
share, giving a total dividend per share of 0.48p compared
to 0.30p in 2004 – an increase of 60%.
Our net debt position at 31st December 2005 was
£3.0 million compared to £6.3 million at 31st December
2004.
Review of Operations
(All operating income and profit items in this section are
shown prior to restructuring costs, discontinued operations
and share of results of associates).
In 2005 Public Relations represented 63% (2004 – 70%) of
our operating income, Advertising and Marketing Services
30% (24%) and Research 7% (6%).
Lord Bell, 
Chairman
“We have had a very successful year and
exceeded the City’s expectations for 2005.
This strong performance has continued into
the first quarter of 2006. We are very optimistic
about our future prospects.”
Chime Communications plc Chairman’s review
Annual Report & Accounts 2005
162315 chime front  5/5/06  20:49  Page 2 2 | 3
Public Relations
Operating income for 2005 increased by 11% from
£36.2 million to £40.1 million and operating profit increased
by 24% from £5.5 million to £6.8 million. Operating profit
margin increased from 15.2% in 2004 to 17.1% in 2005.
Bell Pottinger Sans Frontieres continued to be our most
successful business and expanded further its geopolitical
practice. Bell Pottinger Corporate and Financial, our
financial public relations firm, under its new Managing
Director Stephen Benzike has returned to growth and
reconfirmed itself in the top 10. Bell Pottinger Public Affairs
continued to be the number one public affairs consultancy.
Harvard and Insight grew beyond our expectations. Our
operations in Germany, the USA and Dubai all grew. The
downturn in consumer marketing had an effect on our
consumer brands. 
New business wins in 2005 included Budget, Cadbury
Trebor Bassett, Clifford Chance, Criminal Justice I.T.,
DP World, Dubai Aerospace, Green Cross International,
Hero, GSK, Johnson and Johnson, Kimberley Clark,
Nuclear Decommissioning Agency, The Food and Drink
Federation, 118 118, Petrofac, Qatar Financial Centre and
Taylor Woodrow.
Advertising and Marketing Services
Operating income for 2005 increased by 48% from
£12.6 million to £18.6 million and operating profit increased
by 81% from £1.4 million to £2.4 million. Operating profit
margin was 13% in 2005 compared to 11% in 2004.
Following the successful acquisition of VCCP , VCCP
management took over four existing Chime businesses,
Heresy, Rare Digital (now renamed VCCP Digital), Pure
Media and Gasoline. Heresy has been merged in to VCCP
and we have sold 76% of Rare Publishing which was a
loss-making business. Since acquisition, VCCP has entered
the top 20 advertising agencies in the UK.
Our specialist financial services business, Teamspirit,
and our specialist property business TTA, had strong
performances in 2005.
New business wins in 2005 included Callaway, e bookers,
Financial Services Authority, Gala Bingo, GSK, Hyundai,
More Th>n, Nestea, Samsung and Skinny Cow.
Research
Operating income for 2005 increased by 31% from
£3.3 million to £4.3 million and operating profit increased
by 26% from £0.7 million to £0.9 million. Operating profit
margin decreased slightly from 21% to 20%. Both
Opinion Leader Research and The Smart Company (our
Corporate and Social Responsibility Consultancy) showed
good growth.
New business wins in 2005 included London Stock
Exchange, Bank of England, Cancer Research UK,
Home Office, KPMG, Age Concern, Scottish & Newcastle
and BBC Governors.
Business Activity
The Group acted for 1,069 clients in 2005 compared
to 1,012 in 2004. 124 clients paid us over £100,000
compared to 116 in 2004. Our top 30 clients represented
38% of total operating income (2004 – 34%) and our
largest client represented 8.6% of total income (2004 – 3.1%).
183 of our clients were shared with at least two of our
businesses. 
Average fee income per client was £60,000 compared to
£53,000 in 2004. 
30% of our operating income came from international work
outside the UK compared to 24% in 2004.
Productivity improved with operating income per head at
£98,000 compared to £91,000 in 2004.
Major new client wins
162315 chime front  5/5/06  20:49  Page 3 Corporate Activities
In June 2005 we announced the acquisition of VCCP
Limited for an initial consideration of £14.5 million with
deferred consideration of up to £15.5 million.
Considerations, both initial and deferred, are satisfied one
half in cash and one half by the issue of new ordinary shares
in Chime. The initial cash consideration of £7.25 million was
satisfied partly by the issue of 20.4 million shares at 26p and
partly from within the Group’s own resources. Following the
transaction the VCCP Group has taken over the
management of four of Chime’s existing marketing services
businesses. Deferred consideration is payable based on the
pre-tax profit performance of the enlarged Group in the 6
years to 31st December 2010.
In July 2005 we acquired Baxter Hulme, a public relations
consultancy based in the north of England for an initial
consideration of £307,500 (£153,750 paid in cash and
£153,750 payable in shares subject to achieving the agreed
profit target for the year to 31st March 2006) with deferred
consideration payable of up to £692,500 dependent on
the pre-tax profits in the two years to 31st March 2008.
The acquisition has strengthened Bell Pottinger North, which
was launched in 2004.
In September 2005 we exercised our option to acquire
the remaining 60% of De Facto Communications. De Facto
is a leading healthcare and life science public relations
consultancy based in London and extends Chime’s
involvement in the important health sector. £182,706 was
paid on the exercise of the option with deferred
consideration of up to £1.8 million payable dependent
on the post-tax profits of De Facto for the four years to
31st December 2008.
On 31st December 2005 we sold the remaining 51%
of shares that we held in HHCL Group Limited to WPP
Group for £2.75 million. We also announced that we would
use some of the proceeds from the sale to begin a
programme to purchase Chime Ordinary Shares over the
next four years. 
In December we sold 76% of the shares of Rare
Publishing to PSP Communications Limited. The performance
of Rare Publishing has been disappointing and it is expected
that this will improve when it is part of a specialist
publishing group. Consideration of up to £382,000 will be
receivable based on the pre-tax profit performance to
31st December 2008.
In January we acquired 55% of Ledbury Research which
provides research and advice to brands and businesses
which market to high net worth consumers. The initial
market investment was £120,000 with further consideration
of up to 160,000 new Chime shares dependent on the two
vendors remaining with the Group and the pre-tax profit
performance over the next four years.
We announced on 1st February that we had cancelled the
warrants over 8,280,320 Ordinary Shares (3.3% of total
share capital) held by The Royal Bank of Scotland in return
for a payment of £800,000. The cancellation payment
equated to a share price of 0.34p. These warrants were
issued in September 2003 as part of our refinancing
arrangements at an exercise price of 24p and entitled The
Royal Bank of Scotland to subscribe for the shares at any
time up to 30th September 2006.
Corporate and Social Responsibilities
In July 2005 we issued our first Corporate Responsibility
Report which reviewed our practices relating to people,
clients, the communities in which we operate and the
natural environment. The report states our aim for the
year ahead.
We take Corporate and Social Responsibility seriously
and will continue to develop and improve our approach.
“Our Advertising and Marketing Services Division is
now achieving growth and profits ahead of our
expectation and there is market momentum in both
the Public Relations and Research Divisions.”
Chime Communications plc Chairman’s review (continued)
Annual Report & Accounts 2005
162315 chime front  5/5/06  20:49  Page 4 4 | 5
Retirement of Non-Executive Director
We are today announcing the retirement from the Board
of Alan Chamberlain. Alan has been associated with the
Group since 1989 both as a Director and a Consultant.
He has provided the board and management of Chime
with invaluable support and advice on corporate strategy,
acquisitions, finance and general management.
Alan will continue to act as a Consultant to the Group.
Outlook
Our Advertising and Marketing Services Division is now
achieving growth and profits ahead of our expectation and
there is market momentum in both the Public Relations and
Research Divisions. This is confirmed by the Group’s
performance for the first quarter of 2006 and we expect it to
be another successful year. 
We have recently agreed a three year forward strategy with
the Board. The highlights of this strategy are:
• To re-position Chime as the leading Modern
Communications Group.
• To continue our progress in margin enhancement with
a target of 18% within three years (currently 15.3%).
• To continue to reduce debt as well as implementing
a share buy back programme as appropriate within
market conditions.
• To increase the number of clients shared between more
than one company in the Group, both across the three
divisions and within each division.
• In new business to increase the average value of
our wins.
• To continue our productivity improvement by increasing
the average income per head.
• To continue our international expansion and grow the
share from its current level of 30% of operating income.
This expansion will come from the Public Affairs sector,
Corporate and Financial and Advertising and Marketing
Services. 
This strategy will be fulfilled by organic activities including
start-ups and possibly small strategic, non-dilutive
acquisitions. 
Lord Bell, Chairman
8 March 2006
“New business wins in 2005 included
Cadbury Trebor Bassett, Budget, Clifford
Chance, Criminal Justice I.T., DP World,
Dubai Aerospace, Green Cross International,
Hero, GSK, Johnson and Johnson, Kimberley
Clark, Nuclear Decommissioning Agency,
The Food and Drink Federation, 118 118,
Petrofac, Qatar Financial Centre Authority
and Taylor Woodrow.”
The top sectors in which
we operate (%)
18% Government and Political
 (2004: 12%)
17% Technology, Media and
 Telecoms (2004: 17%)
12% Financial Services
 (2004: 12%)
8% Property
 (2004: 10%)
8
12
17
18
1,069
£60,000
Clients
Average fee
per client
30%
£98,000
Percentage of operating
income from international
work last year
Operating income
per head
124
8.6%
Number of clients who
paid us over £100,000
in 2005
Percentage of income
represented by our
largest client
(2004: 116)
162315 chime front  5/5/06  20:49  Page 5 Companies that seek to communicate in today’s world
do so in an environment that is constantly changing.
Every week seems to bring a new, previously unconsidered,
channel or format: RSS feeds, EDGE-enabled mobiles,
blogs, Wikipedia, Google, podcasts. At Chime we talk
about a world geared to “watching three screens” rather
than one; and between them, those screens are birthing
new communications opportunities at a pace traditional
marketing models can’t live with. New media don’t meekly
emerge on the edge of the communications world and then
slowly elbow their way to the centre; they materialise bang
in the centre, transforming the environment around them. 
As we’ve discussed in previous Annual Reports, the
subversion of traditional authority structures is also
transforming the way that communication works. Messages
are no longer listened to with deference but judged
demandingly through a frame of reference that each person
develops for his or herself. No item of communication is
safe from critical judgement; a company’s brand and
reputation will ultimately decide how much credibility is
attached to its messaging, yet brand and reputation can no
longer simply be developed by companies: they are
themselves being communicated about by consumers and
their other stakeholders. Marketing and communication
professionals must now adapt to the fact that they have
less control over the messages they produce. 
The transition from “deference to reference” is both
enabling and enabled by the changes in the media
landscape. Web and mobile technology evolve channels
such as Instant Messaging, SMS, blogs and podcasts,
which provide the framework for the largescale sharing of
consumer opinions; the appetite for such organic
opinion-forming in turn triggers the development of yet
more user-controlled communication channels.
“In the modern communications environment, the
rate of change has taken us far beyond a question
of ‘survival of the fittest’. Any communications
company depending on its existing strengths to pull it
through will quickly find itself overtaken by events.”
Christopher Satterthwaite, 
Group Chief Executive
Chime Communications plc Chief Executive’s review
Annual Report & Accounts 2005
162315 chime front  5/5/06  20:49  Page 6 6 | 7
Public Relations Division
Bell Pottinger Sans Frontieres
Bell Pottinger Group
Bell Pottinger Corporate & Financial
Bell Pottinger Public Affairs
Bell Pottinger Business & Brand
Bell Pottinger Consumer
Bell Pottinger Sport & Sponsorship
Bell Pottinger North
Bell Pottinger USA
Bell Pottinger Middle East
Good Relations Corporate
Good Relations Consumer
Good Relations Political
Good Relations Property & Planning
Good Relations Wales
Harvard
Harvard GMBH
MMK
Traffic Advertising
Insight Marketing
Resonate
De Facto
Ozone
Rare Corporate Design
The SMART Company
Advertising & Marketing Services Division
VCCP Group Specialists
VCCP Teamspirit
Gasoline TTA Group
Pure Media
VCCP Digital
SFW
Research Division
Opinion Leader Research
Ledbury Research
Chime Network
Centre
Technology
Web and mobile technology evolve channels such as Instant
Messaging, SMS, blogs and podcasts, which provide the
framework for the largescale sharing of consumer opinions;
the appetite for such organic opinion-forming in turn triggers
the development of yet more user-controlled communication
channels.
“Our restructuring of Chime has been focused on
creating a Group that successfully evolves alongside
the challenges of modern communication.”
162315 chime front  5/5/06  20:49  Page 7 In the modern communications environment, the rate of
change has taken us far beyond a question of “survival of
the fittest”. Any communications company depending on
its existing strengths to pull it through will quickly find itself
overtaken by events: potential is changing so frequently
and so fast that it is simply impossible for a company’s
culture or intellectual resources to have anticipated every
development. The way in which a company can hope to
survive in such a fast-changing environment is to learn
and develop. 
Our restructuring of Chime has been focused on creating a
Group that successfully evolves alongside the challenges of
modern communication. This approach lay behind our
successful acquisition of VCCP last year. This is an
advertising agency that has evolved to reflect the role of
advertising in the modern communications world; we
therefore believe that the success it has already delivered to
the Group will continue in the years ahead.
VCCP’s approach is based on a realisation that
advertising’s strength lies in a ‘visual narrative’, the delivery
of image and images; not the delivery of detailed,
authoritarian messages telling consumers what to think.
The agency’s work for clients such as O
2
, Coca-Cola and
Dyson shows how effective a strategy it is. 
The arrival of VCCP has enabled Chime’s Advertising and
Marketing Services division to grow rapidly. The division
delivered operating income growth of 48% and operating
profit growth of 81% in the last year, with a margin up from
5% pre VCCP acquisition and 18% post VCCP acquisition
including the strong performances of Teamspirit and TTA.
An evolutionary approach is also central to the strategy of
Opinion Leader Research, which has developed a
consultative approach built on two-way dialogue between
research and audience. Opinion Leader are at the cutting
edge of deliberative research techniques which by involving
the audience provide solutions rather than mere feedback.
The Opinion Leader Group also contains the SMART
Company, a Corporate Responsibility consultancy that acts
as a change management agent for its clients in an area
with an ever-greater impact on corporate reputation. The
Group’s operating income grew by 31% last year, with
operating profit growth up 26% at a healthy margin of 20%.
Chime’s core strength, of course, lies in Public Relations;
this gives us a strong starting position when facing up to
the challenges of modern communications. The one
constant in communication over the last decade has been
the importance of reputation; it’s an importance that will
grow as audiences increasingly judge the credibility of
messages on their perception of the organisation and
people behind them. Our Public Relations division
continues to perform ahead of the market place, with
operating income growth of 11% and operating profit
growth of 24% last year. Bell Pottinger Public Affairs
continues as the number one agency in its sector, and
there were strong performances from Bell Pottinger
Corporate and Financial, Harvard and Insight. The division’s
margin increased from 15.2% to 17.1%.
We believe that we are better positioned than most to meet
the demands of the evolving communications marketplace.
However, it is not enough to evolve once. As part of our
ongoing commitment to change, Chime has developed an
internal learning programme to ensure that our agencies
anticipate developments in their respective environments,
and equip themselves to prosper in these dynamic
landscapes. Offering superior services, evolving in line with
modern communication demands, will support continued
growth in our margins, client retention, and cross-referral
of business with more clients serviced by multiple agencies
in the Group. These are all key elements of the Chime
growth strategy. Evolving isn’t just about survival; it’s also
about success.
Campaign Marketing: Top 100 Agencies 2005 PR Week: Top 100 Agencies 2005
“The one constant in communication over the last decade
has been the importance of reputation”
Chime Communications plc Chief Executive’s review (continued)
Annual Report & Accounts 2005
162315 chime front  5/5/06  20:49  Page 8 8 | 9
Some of the high profile activities we
were involved in during 2005 include:
• DP World’s £3.9 billion contested bid for
P&O Ports
• Your health, your care, your say – UK’s first
ever Citizens’ Summit and the largest public
consultation ever conducted
• Launch of O
2 i-mode, the world’s most
popular mobile internet service
• The launch of “The Ball”, Dyson’s latest
ground breaking vacuum cleaner
• The sale of Marconi’s telecoms business
to Sweden’s Ericsson for £1.2 billion
• BAE Systems’ £2.1 billion purchase of
United Defense Industries
• Two major IPOs creating new FTSE 250
companies – Petrofac and 888.com as
well as a range of AIM admissions
• The NDA’s decommissioning strategy
• The largest ever order for Boeing 777
aircraft for Emirates Airline worth $9.7 billion
• The £100 million sponsorship of Arsenal
and its new Emirates Stadium
• Launch of a new Quality Standard Mark
for English Beef and Lamb
• The 80th anniversary celebrations of
Winnie the Pooh for Walt Disney
• New guide books for Madame Tussauds,
Warwick Castle, Alton Towers and
Chessington World of Adventure
• The £50 million sponsorship of Chelsea
by Samsung featuring Jose Mourinho in
TV advertising
• The promotion of new IT systems for
the Criminal Justice Board
Operating
income growth (£’m)
Advertising and
Marketing Services
+48%
Operating
profit growth (£’m)
+81%
Operating
income growth (£’m)
Research
+31%
Operating
profit growth (£’m)
+26%
Operating
income growth (£’m)
Public Relations
+11%
Operating
profit growth (£’m)
+24%
18.6
12.6
’05 ’04
4.3
3.3
’05 ’04
0.9
0.7
’05 ’04
40.1
36.2
’05 ’04
6.8
5.5
’05 ’04
2.4
1.4
’05 ’04
162315 chime front  5/5/06  20:49  Page 9 Chime Communications plc Business Review
Annual Report & Accounts 2005
Client: Dyson
Chime agencies: VCCP and Bell Pottinger
Project: Launch of the Dyson Ball
Results:
Sales and tracking results have been very positive, including
sales at twice the rate of Dyson’s last launched product, over a
comparative three month period.  
Tracking showed: 
21% of the target recognised the teaser execution, making it
the most efficient Dyson ad to date, with 66% agreeing it was
intriguing and 72% agreeing the advertising is unusual and
different from other advertising.
• The campaign was 4 times as efficient as their previous
advertising campaign.
• 2/3 of the target market recalled seeing advertising for Dyson 
over the campaign period. This is the highest level of recall Dyson
has achieved in the UK to date.
• Dyson ad recall increased from 42% to 66% leading the category
by an even greater gap.
• 84% cited the campaign as ‘eye catching’, 81% ‘easy to 
understand’, 68% ‘intriguing’.
• 69% cited ‘ease of use-manoeuvrability’, as the main 
benefit of the Ball.
• 57% admitted that the advertising would encourage them to buy 
a Dyson.
• ‘Only / first choice brand’ rose from 54 to 63% over the 
campaign, with likelihood to buy rising from 58 to 65%.
• The ad created a significant rise in Dyson’s image scores – for
using state of the art technology, and having lots of ideas and
great expertise, amongst other things.
162315 chime front  5/5/06  20:50  Page 10 10 | 11
162315 chime front  5/5/06  20:50  Page 11 your
your
your
health
care
say
Improving Community Health
and Care Services
Public magazine, The Guardian, September 2005
Health Service Journal, August 18, 2005
Health Service Journal, November 10, 2005
Health Service Journal, August 4, 2005
Chime Communications plc Business Review
Annual Report & Accounts 2005
162315 chime front  5/5/06  20:50  Page 12 Opinion Leader Research made history on 29th October 
2006 conducting the country’s first ever Citizens’ Summit – 
1,000 members of the public, carefully selected to represent
England, brought together to discuss and vote on the future 
of community based health and social care services. 
It was the largest deliberative consultation exercise ever 
undertaken in the UK. Participants learnt about the issues, 
understood the trade-offs and then voted on the priorities. 
Innovative technology connected a team of analysts to the 
debate enabling them to track its progress and identify 
common themes as they emerged.
The Department of Health believe this project marks the 
beginning of a new age of policy-making: “We are not
going to do consultation in the old way any more. This is
a completely new way of doing things. We have broken
new ground here.” Patricia Hewitt
The Citizens' Summit was top domestic news story for
most of the day running on national radio, television and
in the press.
The Prime Minister, Tony Blair, and the Secretary of State
for Health, Patricia Hewitt, launched the White Paper on
13th January 2006.
Key recommendations identified by participants and
included in the white paper were:
• GPs’ surgeries open for longer hours 
• Making it easier to get an appointment
• More NHS Walk-in centres
• Shifting emphasis in health and social care towards
prevention
• NHS Lifecheck – a self-assessment tool for identifying
health problems and getting help
• More support for carers 
The findings also show strong public support for such
events to be held in the future. Nine out of ten participants
in the Citizens’ Summit agreed that events like this should
be conducted on other topics in the future.
Client: Department of Health
Chime agency: Opinion Leader Research
Project: ‘Your Health Your Care Your Say’ Citizens’ Summit
12 | 13
162315 chime front  8/5/06  14:58  Page 13 Client: Vauxhall Motors
Chime agency: Bell Pottinger
Project: Vauxhall Tribes
The Brief:
• Build brand equity amongst young Londoners
Communicate:
• Style and design
• Driving excitement
• Offer something uniquely ‘London’
Activity:
• Create a series of exclusive invitation only events
under the ‘Vauxhall Tribes’ banner
• Going Underground: an exclusive, hidden London
event in an underground car-park. Event featured
new urban sport ‘Parkour’ demonstrations by
Urban Freeflow  from Channel 4’s ‘Jump Britain’
documentary, plus skateboarding with Pete King,
BMX displays and music from drum and bass
king Peshay and Ross Allen
• Vauxhall Tribes Unsigned: a competition in
association with ‘Touch’ magazine for budding
urban musicians with judges including Peshay
and Roll Deep. Capacity audience at the event
• Female Only Parkour Workshop: run by Urban
Freeflow, the event was 900% oversubscribed
• Parkour Workshop Roadshows: a series of six
workshops around the country, all oversubscribed
and heavily supported through editorial in youth
and newspaper regional titles
Results:
• Over 110 pieces of coverage
• Millward Brown – Vauxhall’s external
evaluation tool confirmed that August had
been the best month for coverage and the
second highest month ever for ticking the two
key messages of ‘innovative style and design’
and ‘driving excitement’
• 92% of consumer feedback was positive
• As a result of success, GM is rolling out similar
activity across Europe
Chime Communications plc Business Review
Annual Report & Accounts 2005
162315 chime front  5/5/06  20:51  Page 14 Time Out, September 30, 2005
Angel Magazine, August 2005
E14 Magazine, September 2005
14 | 15
162315 chime front  5/5/06  20:51  Page 15 Banking Arrangements
Net debt at 31st December 2005 was £3.0 million
compared to £6.3 million at 31st December 2004. As was
the case in 2004, the Group continues to have unusually
high levels of cash paid in advance from clients just prior to
the year end. Whilst this may continue it is estimated that if
it returned to more normal levels, net debt would increase
by about £4.0 million.
In early 2006 the Group has agreed a new three year
borrowing facility with the Royal Bank of Scotland for
£15 million until March 2009.
The Group is operating comfortably within its banking
covenants with EBITA interest cover in 2005 of 11.5 times
compared to the minimum covenant requirement of 4.5
times and net debt to EBITDA at 31st December 2005 of
0.3 times (compared to the covenant requirements of less
than 2.25 times).
Balance Sheet
The main movement in the balance sheet during the year
related to the acquisition of VCCP with goodwill arising from
the acquisition of £22.8 million. Net assets at 31 December
2005 were £53.7 million compared to £34.7 million at
31 December 2004.
Dividends
The Board is proposing a final dividend of 0.32p, giving
a total dividend per share of 0.48p (2004 – 0.30p).
This final dividend of 0.32p will be paid on 22 June 2006
to shareholders on the register at 26th May 2006. The
expected ex-dividend date is 24th May 2006.
The Board, subject to the trading conditions at the time,
expects to continue to pay dividends in the future in line
with the Group’s policy of 5 times over with two thirds of
the value being paid as a final dividend and one third as
an interim dividend.
“The Group has agreed a new three year
borrowing facility with the Royal Bank
of Scotland.”
Mark Smith, 
Group Finance Director
Chime Communications plc Finance Director’s review
Annual Report & Accounts 2005
162315 chime front  5/5/06  20:51  Page 16 16 | 17
Restructuring and Vacant Property Costs
The Group provided in 2003 for the expected cost of
its empty property and the costs of properties that had
been sublet or assigned at rents below the rent the Group
was paying.
In 2005 the Group incurred restructuring costs of
£1.3 million. These related primarily to the integration of
four of our existing marketing services businesses in to
the VCCP Group leading to excess property and
redundancy costs.
Following this resolution the provision at 31st December
2005 for vacant property costs was £743,000 (2004 –
£753,000) which relates primarily to one building near
Heathrow and one in West London.
The building in West London has been sublet in early 
2006 at rates similar to those being paid by the Group.
The building near Heathrow is approximately 12,000
square feet and the Group has a lease which runs to
September 2016. The current rental cost is £350,000 per
annum with upwards only rent reviews due in September
2010 and 2015.
At 31st December 2004, 5,000 square feet remained
un-occupied. The Group re-occupied 2,500 square feet
from 1st January 2006 and the remaining 2,500 square
feet has been sublet. The rental income achieved on the
sublet parts is lower than the rent currently paid under the
lease. Whilst rental levels in the Heathrow area are
improving they are not forecast to return to the level being
paid by the Group until the rent review due in 2010. This
has been taken into account when assessing the
adequacy of the remaining provision.
Taxation
The headline rate for the Group remains at 31%. However,
there has been a one off reduction in the first half year of
£560,000 as a result of agreeing some prior year tax
charges.
This reduction together with some further reductions in the
second half year has resulted in an effective tax charge for
the year of 22%.
Rates for future years are expected to return to the normal
rate of 31%.
Pensions
All Group employees are entitled to contribute to the
Group’s pension scheme or to personal pension schemes.
These are all defined contribution schemes.
International Financial Reporting Standards (IFRS)
In line with all companies listed on European Stock
Exchanges, Chime adopted IFRS from 1st January 2005.
The comparative results for 2004 are also set out under
IFRS.
The three principal changes that have resulted from
this are:
1. Share based payments, reflecting the costs of options
with a charge in 2005 of £235,000 compared to £162,000
in 2004. (This change is now also required under UK
Accounting Standards).
2. The reversal of the share of profits of associates until
brought forward losses have been covered. This was nil in
2005 and a cost of £453,000 (prior to tax) in 2004.
3. The costs of discounting deferred acquisition provisions
which are included in finance costs. This amounted to a
charge of £222,000 in 2005 compared to £87,000 in 2004.
Mark Smith, Group Finance Director
8 March 2006
£3.0m
0.48p
Net Debt
Total dividend
per share
(2004: £6.3m)
162315 chime front  5/5/06  20:51  Page 17 Lord Bell Chairman
Piers Pottinger Deputy Chairman
Mark Smith Finance Director
Christopher Satterthwaite Chief Executive
Julian Seymour Senior Non-executive*‡#
Dave Allen Non-executive
Catherine Biner Bradley Non-executive *
Alan Chamberlain Non-executive
(resigned 9 March 2006)
Lord Hannay Non-executive *‡#
Paul Richardson Non-executive *
Dame Sue Tinson Non-executive ‡#
* Member of the Audit Committee
‡ Member of the Remuneration Committee
# Member of the Nominations Committee
Tim Bell, aged 64
Chairman
Tim Bell is one of the best known figures in the 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 British
number one worldwide advertising agency in 1981. He
successfully ran the publicity campaigns for the
Conservative Party for the general elections in 1979, 1983
and 1987. He was appointed Deputy Chairman of Lowe
Howard-Spink & Bell plc in 1985 and remained in that
position until the formation of Chime Communications in
1989. He advises the chairmen of many of Britain’s leading
companies and organisations, as well as foreign heads of
state and international business leaders and politicians. He
was awarded a knighthood in 1990 by Lady Thatcher in her
resignation honours and a peerage by Tony Blair.
Piers Pottinger, aged 52
Deputy Chairman 
Following three years at J Henry Schroder Wagg & Co
Limited, Piers Pottinger spent three years as an analyst with
stockbrokers Laurence Prust. In 1978, he joined Charles
Barker. He spent two years as Director of Media Relations
at Manufacturers Hanover Trust in New York before
returning to London as Managing Director of Sterling
Financial Public Relations in 1982. He joined Good
Relations City (now Bell Pottinger Corporate and Financial)
as Managing Director in 1985 and was also a director of
Good Relations Group plc. He is currently Chairman of
Sportech plc, Director of Newmarket Investments plc, Vice
President of the National Society for Epilepsy and a Trustee
of the Foundation for Liver Research.
Mark Smith, aged 50
Finance Director
Mark Smith has been a Chartered Accountant since 1978
having qualified with Touche Ross & Co (now Deloitte &
Touche LLP). Following two years as European Finance
Director at RCA Records, he joined Good Relations Group
plc in 1984 and became its Group Finance Director in 1985.
In 1986, he became Finance Director of Lowe Bell
Communications (now Bell Pottinger Communications)
and Finance Director of Chime Communications at the
time of the management buy-out in 1989. Mark is a
Non-Executive Director of Holiday Extra Holdings Limited.
Chime Communications plc
Annual Report & Accounts 2005
Directors Directors’ biographies
162315 new chime pg18-96  5/5/06  20:52  Page 18 18 | 19
Christopher Satterthwaite, aged 49
Chief Executive
Christopher Satterthwaite began his commercial career as a
graduate trainee at HJ Heinz. Since his grounding on the
client side, he has been part of three different kinds of
marketing communication agencies, for all of which he
became Chief Executive: IMP 1981-1993, then the UK’s
largest sales promotion and direct marketing agency; HHCL
& Partners 1993-2000, ‘Campaign’s 1990s Advertising
Agency of the Decade’; Bell Pottinger 2000-2001, the UK’s
leading Public Relations agency. Christopher was appointed
Chief Executive of Chime Communications plc in 2002.
Julian Seymour, aged 61
Senior Non-Executive Director
Julian Seymour has been involved throughout his career in
the financial management of businesses in the
communications industry, most recently as Director of
Corporate Finance at Lowe Group plc. From 1991 to 2000,
he was the director of Lady Thatcher’s private office. He has
been a Director of Chime Communications since the
management buy-out in 1989.
Dave Allen, aged 49
Dave Allen is CEO of Team Vodafone. He oversees and
integrates the activities of the 30 WPP operating companies
who work for Vodafone around the world. He took on this
role full time in January 2006. Prior to that he was CEO of
Enterprise IG, a leading brand and identity consultancy
owned by WPP . He joined WPP in 1986 through the
acquisition of Sampson Tyrrell. He started his career at Kodak
where he worked in various positions in Sales and Marketing.
Catherine Biner Bradley, aged 52
Catherine Biner Bradley is a Swiss lawyer with offices in
Geneva and Vaud who specialises in business law and in
Swiss and international tax planning. She founded Bourquin
& Biner Bradley where she remains a partner today. She
serves on the board of directors of a number of Swiss and
international companies, including Majestic Management
and Consulting (MMC) SA, Borange SA, Gefinor Finance,
Sci Etche Senta, Sci Pholykors, Sci Tevinac and Cypress
International Partners Limited. She has been a Director of
COLT Telecom plc for five years commencing with its initial
listing on the London Stock Exchange in 1996, serving
during that period on its Audit and Compensation
Committees.
Lord Hannay, aged 70
Lord Hannay is an Independent member of the House of
Lords (since 2001), and a member of its EU Select
Committee. He was formerly the UK Permanent
Representative to the United Nations (1990-1995) and UK
Permanent Representative to the European Community
(1985-1990). He was also head of the Foreign Office Energy
Department from 1977 to 1979. He was the British
Government’s Special Representative for Cyprus (1996-
2003) and he is Pro-Chancellor of the University of
Birmingham. He was a member of the UN Security
General’s High Level Panel on Threats, Challenges and
Change (2003-2004). He is Chair of the United Nations
Association of the UK.
Paul Richardson, aged 48
Paul Richardson became Group Finance Director of WPP
Group plc in December 1996 after four years with the
Company as Director of Treasury. He is responsible for the
Group’s worldwide finance function, including external
reporting, taxation, procurement, property, treasury and
internal audit. Previously he spent six years with the central
team of Hanson plc financing major acquisitions and
disposals. He is a Chartered Accountant and member of
the Association of Corporate Treasurers.
Dame Sue Tinson, aged 63
Dame Sue Tinson has extensive business and political
experience. She is a consultant with ITN and is a Non-
Executive Director of The Yorkshire Building Society and
St. Ives plc. Prior to them being taken over she was a Non-
Executive Director of both ASDA and Freeserve. Dame
Sue’s main career was with ITN where she produced News
at Ten for eleven years and was ITN’s Associate Editor.
Company Secretary
Robert Davison, aged 48
Robert was appointed Company Secretary in December
2004. He joined the Group in 1987 as Group Services
Manager, became Assistant Company Secretary in 1994
and Director of Administration in 1998. Prior to joining the
Group, Robert worked in the music industry for ten years in
a variety of roles ranging from procurement to logistics
and administration. Robert is a Fellow of the Institute
of Chartered Secretaries and Administrators.
162315 new chime pg18-96  5/5/06  20:52  Page 19 Corporate Governance Report
The Board of Directors is collectively accountable to the
Company’s shareholders for good corporate governance
and is committed to achieve compliance with the Principles
of Corporate Governance as set out in the 2003 FRC Code
which forms part of the Listing Rules of the Financial
Services Authority (“The Code”).
A narrative statement on how the Company has applied the
Principles and a Statement of Compliance appears below.
Narrative Statement
Directors
The Company is controlled through the Board of Directors
which is comprised of four executive and six non-executive
directors, whose biographies are set out on pages 18 to 19
of this Report and Financial Statements.
The Board meets quarterly and is responsible for overall
Group strategy, acquisitions and the consideration of
significant financial matters. It reviews the strategic direction
of trading companies, their annual budgets and their
progress towards achievement of those budgets. The
Board is responsible for ensuring the integrity of financial
information and that the financial controls and systems of
risk management are robust and appropriate.
The Chairman, Lord Bell, is responsible for the running of
the Board and he ensures that all directors receive
sufficient, accurate and timely information on financial,
business and corporate issues prior to meetings. He also
ensures that the non-executive directors have access to any
further supplementary information they may require should
they request it. 
The Chief Executive’s (Chris Satterthwaite) responsibilities
focus on co-ordinating the Company’s business and
implementing Group strategy.
Julian Seymour is the Senior Non-Executive Director.
The Non-Executive Directors’ terms and conditions of
appointment are available for inspection at the company’s
registered office on request and will be available, together
with the Executive Directors’ service contracts at the
forthcoming Annual General Meeting.
All directors are able to take independent professional
advice, at the Company’s expense, in furtherance of their
duties, if necessary. The Company also makes appropriate
training available to all existing directors as well as ensuring
that new directors receive training. All directors, in
accordance with The Code, will submit themselves for re-
election at least once every three years. 
Executive directors may be permitted to take a limited number
of external non-executive directorships in non-competing
companies, subject to the approval of the Board.
The Board met on four occasions during 2005. Dave Allen,
Catherine Biner Bradley, Paul Richardson and Dame Sue
Tinson were absent for one meeting. The other Directors
attended all meetings. When absent from meetings the
views of the director concerned are usually sought in
advance then put to the meeting in order to facilitate a
comprehensive discussion. Each director continues to
make themselves available to their fellow directors and
ensures he/she contributes to the major decisions before
the Board. 
Non-Executive Directors
The individual directors have different skills, experience and
qualifications with certain of them presently or previously
working in other sectors in the economy and they are able
to bring independent judgement to bear on matters for
consideration by the Board. 
The Board considers its non-executive directors to be of
sufficient calibre and number that their views may be of
sufficient weight that no individual or small group can
dominate the Board’s decision-making process.
Independence of Non-Executive Directors
The Code states that it is for the Board to determine whether
a director is independent in character and judgement and
consider whether there are any relationships or
circumstances that are likely to affect a director’s judgement.
In applying The Code, the Board has considered whether
the length of service of Lord Hannay (10 years) and
Julian Seymour (12 years) has compromised their
independence. The directors concerned are experienced
and accomplished in their fields of expertise. In their
association with the Company they have acquired an
understanding of the Company’s operations, its markets
and issues determining its success. Each has shown
commitment in both time and effort. The Board does not
consider that the long association between each of them
and the Group has eroded their objectivity and should not
raise any concerns about their ability to perform their duties.
The question of non-executive directors’ shareholdings
should also be considered when assessing independence.
Catherine Biner Bradley, Dame Sue Tinson and Lord
Hannay each hold a small number of shares in the company
set out on page 29. The Board considers that these
holdings are not significant and believes these alone should
not raise questions regarding the independence of the
Directors concerned.
Chime Communications plc Directors’ statement on corporate governance 
Annual Report & Accounts 2005
Directors’ statement on corporate governance 
162315 new chime pg18-96  5/5/06  20:52  Page 20 20 | 21
Paul Richardson and Dave Allen are WPP plc’s
representatives on the Board under the subscription
agreement of 1997. The performance evaluation of these
two directors has shown that they both have a good record
of involvement in board level discussions and their efforts
to contribute to and to further the Company’s strategies
have been significant. The Board considers these directors
to be independent.
In addition to his directorship, Alan Chamberlain was also
employed by the Company as a consultant advising on
acquisitions, disposals and operational issues. His fees for
this consultancy work and his membership of the executive
share option scheme are set out on pages 27 and 28.
During the year Alan continued to serve the Company in
this respect and, as such, should not be considered
independent under rule A.3.1 of The Code.
On 9 March Alan resigned as a Director of the Company in
order to pursue other interests. The Board would like to
acknowledge his significant contribution to the Company.
Following performance evaluations for 2005, that took place
early in 2006, the Board has considered the independence
of its non-executive directors and considers Julian Seymour,
Lord Hannay, Catherine Biner Bradley, Dame Sue Tinson,
Paul Richardson and Dave Allen to be independent in both
judgement and character and that the circumstances
shown above are unlikely to affect their respective
judgements when considering matters of the Company.
Board Committees
In addition to each of the trading companies being
managed by separate boards of directors, the Board has
three standing Committees. 
Each Committee operates within written terms of reference
and these are available on request from the Company
Secretary and will also be available for inspection at the
forthcoming Annual General Meeting as set out in the
Notice of meeting.
Audit Committee
The Committee met twice during the year to discuss
accounting, audit and internal control matters together with
reviewing financial statements and compliance with
accounting standards and the Company’s accounting
policies. The Audit Committee is also responsible for
ensuring that a professional and objective relationship exists
with the Company’s external auditors. The external auditors
are represented at each meeting and may request a
meeting of the Committee without management being
present if necessary. The Audit Committee also reviews the
work of the Company’s Risk Management Group as part of
the company’s risk identification and management system.
The Chairman of the Audit Committee is Julian Seymour
and membership is restricted to those non-executive
directors deemed to be independent by the Board and is
shown on page 18.
In 2005 the Committee met formally twice during the year.
Each meeting was attended by the full membership except
Paul Richardson and Catherine Biner Bradley who were
each absent for one meeting.
Remuneration Committee
Under the Chairmanship of Julian Seymour the Committee
measures the performance of the Executive Directors and
of key members of senior management as a prelude to
recommending their annual remuneration. The Committee is
also responsible for overseeing grants under the company’s
Executive and Savings-Related Share Option Schemes to
both the Directors and to employees of the Group. The
Chairman, Lord Bell, attends the meetings when required and
serves as technical advisor, but is not actually a member. The
remuneration of the non-executive directors is recommended
by the Chairman and Finance Director and takes account of
the time spent on Board and Committee matters. Final
decisions are made by the Board but no director takes part in
any discussion regarding his or her own remuneration. The
Report of the Board on Directors’ Remuneration is set out on
page 25 and includes details of directors’ incentive payments
and the related performance criteria.
In 2005 the Committee met only once during the year and
all members attended.
Nominations Committee
The Nominations Committee is chaired by Julian Seymour
and membership of the Committee is restricted to
independent non-executive directors as shown on page 18.
The Committee leads the process of appointments to the
Board by evaluation of the skills, knowledge and experience
required for a particular appointment. The Committee did
not meet during the year as there were no new
appointments to the Board.
162315 new chime pg18-96  5/5/06  20:52  Page 21 The Code requires the company to have a formalised
process for the selection and appointment of new directors.
The Board has undertaken to draft and approve such a
process by the 2006 Annual General Meeting or prior to the
appointment of any new director, whichever is the sooner.
Performance Evaluation
In line with The Code, the Company carries out formal
performance evaluations of the Board, its committees and
individual directors. 2005 performance is currently being
evaluated and this process will be completed prior to the
publication of the Annual Report. The aim is to recognise
the strengths and address any weaknesses of the
management process, to ensure that the Board meets its
objectives and that effectiveness is maximised.
The Non-Executive Directors, led by Julian Seymour, the
senior independent director, evaluate the performance of
the Executive Directors. The Board, led by the Chairman, is
responsible for the assessment of the performance of the
Non-Executive Directors. 
The work of the Committees is assessed by the Board,
taking into account the specific workloads of each
committee; the knowledge and expertise of its members;
and the recommendations made to the Board regarding
specific tasks put before them.
Relations with Shareholders
The Company is keen to promote two-way communications
with its institutional and private investors and responds
quickly to queries received. Lord Bell, Chairman; Chris
Satterthwaite, Chief Executive; and Mark Smith, Group
Finance Director, are the Company’s principal
spokespersons with investors, analysts, the press and other
interested parties. 
All shareholders are sent copies of the Company’s Annual
and Interim Reports and, where appropriate, circulars and
prospectuses. The Annual and Interim reports are also
published on the Group website, www.chime.plc.uk,
together with announcements, press releases and company
information, which enables investors worldwide to keep
informed on the Company’s progress. Shareholders are
given at least twenty days notice of the Annual General
Meeting at which all Directors are generally present and at
which questions are both invited and encouraged.
Accountability and Audit
Financial reporting
A review of the businesses in the Group is included in the
Chief Executive’s Review. The Board uses this, together
with the Chairman’s Statement and the Directors’ report on
pages 30 to 31 to present a balanced and understandable
assessment of the Company’s position and prospects.
The directors’ responsibilities for the financial statements
are described on page 32 of the Report and Financial
Statements.
Internal control
The directors are responsible for the Group’s system of
internal control, including financial, operational and
compliance controls and risk management, and for
reviewing its effectiveness. Due to the limitations that are
inherent in any system of internal control it is designed to
manage rather than eliminate risk and can provide only
reasonable and not absolute assurance against material
misstatement or loss.
The Board has established a process for identifying,
evaluating and managing significant risks faced by the
Group. The effectiveness of this process is reviewed
annually by the Board and accords with the guidance set
out in ‘Internal Control: Guidance for Directors’ as published
in September 1999.
Information on the Group’s significant risks, together with
the relevant control and monitoring procedures, is reviewed
on a monthly basis by the heads of the business units under
the guidance of a nominated executive director. This
information is presented to the executive directors to assess
any identified risks and the overall effectiveness of the
system of internal control. An update on all significant risk
management issues is made to the Board at each quarterly
meeting. Additionally, companies annually complete a
review of specified risk areas and their local risk
management processes under the supervision of the
trading division finance directors, the Group Internal Auditor
and the Company Secretary. The Company also has a sub-
committee of the Audit Committee, the Risk Management
Group, that specifically monitors and investigates potential
areas of risk raised by the trading companies and by Group
administrative management such as Property, Human
Resources and IT.
Given the nature of the Group’s activities the Board
recognises the risks associated with its ability to attract,
motivate and retain talented employees. Accordingly a
significant part of the Group’s risk management procedures
are focused in this area and have led to the introduction of
the detailed employee benefits schemes.
In recent years the Group has acquired a number of
companies including overseas businesses in Germany and
the United States of America. The Board recognises the
need to ensure that established risk management
procedures are integrated into all acquired businesses and
accordingly potential areas of non-compliance are identified
Chime Communications plc Directors’ statement on corporate governance (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 22 22 | 23
during the due diligence process and addressed post
completion. Control of the overseas businesses is currently
effected by designated senior executives reporting directly
to the Board.
The internal audit function reports directly to the Audit
Committee. A review of this function has been conducted
and reported to the Board within the annual review of the
system of internal controls. Recommended changes to the
scope and application of internal audit procedures have been
adopted and the internal audit programme for the year has
been presented to and approved by the Audit Committee.
The Group has a written whistle blowing statement and
procedure available to all staff regarding concerns of
employees about ethical behaviour and non-compliance
with regulatory requirements and/or the law.
The Group has material investments in a small number of
associated companies that are not managed by the Group.
Accordingly the Group can only influence, not control, their
management practices and therefore the review of internal
controls for these operations is less comprehensive than
that for the Group’s managed operations.
Financial control 
The financial control procedures are described under the
following five headings:
1. Financial reporting – The Group has a comprehensive
system for reporting financial results to the Board; each
trading company prepares monthly results with a
comparison against budget. The Board reviews these for
the Group as a whole and determines appropriate action.
Towards the end of each financial year the operating
units prepare detailed budgets for the following year.
Budgets and plans are reviewed and necessary changes
made by the Board before being adopted formally.
2. Quality and integrity of personnel – One of the Group’s
core values is integrity; this is regarded as vital to the
maintenance of the Group’s system of internal financial
control and is reflected in the quality and experience of
the Group’s financial staff. 
3. Operating unit financial controls – Key controls over
major business risks include reviews against
performance indicators and exception reporting. The
trading companies regularly assess their exposure to
major business risks and appropriate action is taken both
at operating and Group level in order to ensure that risk
is minimised as far as possible.
4. Computer systems – Much of the Group’s financial and
management information is processed by and stored on
computer systems. Accordingly, the Group has
established controls and procedures over the security of
data held on computer systems. The Group has put in
place arrangements for computer processing to continue
and data to be retained in the event of complete failure
of any system.
5. Controls over central functions – A number of the
Group’s key functions, including treasury, taxation,
acquisitions and insurance are dealt with centrally. Each
of these functions has clear and detailed procedures and
is required to report to the Board on a regular basis; the
treasury details are reported daily to the Finance Director.
The Audit Committee and Auditors
The Audit Committee has considered reports made to it by
the executive management of the Group, which assesses
the major business risks and the control environment
against the criteria for assessing internal financial control
which are set out in the guidance for directors on reporting
on internal control. The Audit Committee has reported to
the Board that it has been able to review the effectiveness
of the Group’s system of internal financial control for the
accounting year and the period to the date of approval of
the financial statements.
The Company has a policy for the employment of the
auditors for non-audit work. The auditors work on tax
issues for the company but any increase in fees is strictly
controlled by the Audit Committee. Any other non-audit
assignments can be awarded to the auditors during the
year but only where fees are within Audit Committee
approved limits.
Going concern basis
As required by UK company law the Directors have
considered and confirm that it is appropriate to adopt the
financial statements on the basis that the Company and
Group have adequate resources for the foreseeable future.
Therefore the Company and the Group continue to adopt
the going concern basis in preparing the financial
statements.
Social Responsibility Guidelines
The Group is in the business of managing brand and
corporate reputation on behalf of clients and the Board
acknowledges that being socially responsible is also an
important factor in the management of the business.
The Board confirms that regular consideration is given to
the significance of social, environmental and ethical (SEE)
issues (as defined by the Association of British Insurers),
162315 new chime pg18-96  5/5/06  20:52  Page 23 and as part of the wider operational risk framework,
identifies significant risks arising from these areas to
short-term and long-term value.
The Group also considers Corporate Social Responsibility
(CSR) to be an area of business opportunity. A subsidiary of
the Group, The SMART Company provides not only a focus
for investment in this field but provides the Group with
specialist expertise. 
The Board believes that Corporate Responsibility should
underpin everything that the Group does. The Company is
therefore committed to demonstrating the importance of this
not only in work for clients but in working practices adopted.
In 2005 the Group published its first corporate responsibility
report, establishing not only the principles of approach to
this area but also setting a benchmark for future
performance improvements.
Environment
The business of Chime Communications is primarily in the
UK and delivers services to clients based on image, ideas,
research and content. As such, direct and indirect impact
on the environment is minimal and considered low risk.
Nevertheless, there is growing interest from customers
and staff in the environmental practices of all companies.
In 2004 the Group established a formal system for
collecting data regarding procedures and their impact on
the environment, results of which were reported on in
the Corporate Social Responsibility Report.
Health & Safety
The Board believes that people are the Group’s most
important asset. The Group’s businesses do not include
any industrial or manufacturing processes and all staff are
office based. As such, risk of accidents is low. The Group
continues to review, maintain and enhance its practices
in this area in line with perceived risks, new legislative
requirements and best practice.
Employee Issues
As a people business, the Group reputation depends on the
skills, knowledge and integrity of its people. Chime
Communications has fostered an entrepreneurial culture and
each of its businesses is encouraged to create a stimulating,
rewarding and inspiring work environment for its people.
Chime Communications recognises that greater central
oversight on human resources issues may be beneficial and
continually reviews the employment standards across the
Group as part of the general management and risk
identification processes.
The Group has continued to operate Executive and
Savings-Related Share Option Schemes and to attract
and retain talented staff and will continue to review its
incentive schemes on an ongoing basis.
Ethics
The Group meets all relevant laws, regulations and codes of
practice issued by any Government or appropriate regulator.
The Group ensures that all its people are aware and comply
with such standards. In addition, the Group recognises that
integrity is essential to the maintenance of its reputation in
the marketplace. As part of its regular review process,
issues of conduct are identified, reviewed and the Board
alerted as appropriate.
Compliance Statement
Throughout the year ended 31 December 2005 the
Company has been in compliance with the provisions set
out in Section 1 of the July 2003 FRC Combined Code on
Corporate Governance, except for Code A.4.6 – Processes
used by the Nominations Committee (the reason for non-
compliance is shown on page 22) and B.1.4. – Executive
Directors’ remuneration for external non-executive
directorships, as this is available in the financial statements
of the companies concerned.
Approved by the Board of Directors and signed on behalf of
the Board. 
Robert Davison, Secretary
8 March 2006
Chime Communications plc Directors’ statement on corporate governance (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  8/5/06  16:24  Page 24 24 | 25
Report of the Board to the shareholders on directors’ remuneration
Group policy on the remuneration of directors
and employees
This report has been prepared in accordance with Schedule
7a to the Companies Act 1985. The report also meets the
relevant requirements of the Listing Rules of the Financial
Services Authority and describes how the Board has
applied the Principles of Good Governance relating to
directors’ remuneration. As required by the Act, a resolution
to approve this report will be proposed at the Annual
General Meeting of the company at which the financial
statements will be approved.
The Act requires the auditors to report to the Company’s
members on the ‘auditable part’ of the Directors’
Remuneration Report and to state whether in their opinion
that part of the report has been properly prepared in
accordance with the Companies Act 1985. The report has
therefore been divided into separate sections for audited
and unaudited information.
Unaudited Information
Remuneration Committee
The Remuneration Committee is comprised entirely of
independent non-executive directors and meets as required
but at least once a year. The members of the Committee
are Julian Seymour (Chairman), Lord Hannay and Dame
Sue Tinson.
None of the Committee has any personal financial interest
(other than as a shareholder), conflicts of interest arising
from cross-directorships or day-to-day involvement in the
running of the business. The Committee makes
recommendations to the Board for final approval. 
No director plays a part in any discussion about his or her
own remuneration.
In determining the directors’ remuneration for the year,
the Committee consulted Lord Bell (Chairman) about
its proposals. 
The Committee has access to professional advice from
inside and outside the Company. 
Remuneration Policy
The Group is committed to attracting and retaining high
quality staff. Remuneration is set at levels commensurate
with competing firms in the same industry and is monitored
on a regular basis. The performance measurement of the
executive directors and key senior management and the
determination of the annual remuneration package are
undertaken by the Committee.
Executive directors are entitled to accept external
appointments outside the company providing that the
Chairman’s permission is sought.
The remuneration of the non-executive directors is
recommended by the Chairman and Finance Director
and takes account of the time spent on Board and
Committee matters.
Remuneration Packages
There are five main elements of the remuneration package
for executive directors and senior management:
• Basic annual salary and benefits
• Annual bonus payments which cannot exceed 30%
of salary
• Share option incentives
• Long-term incentive plans
• Pension arrangements
The benefits provided by the Group to the executive
directors consist principally of a car or car allowance and
private medical insurance.
A bonus of 15% of the relevant executive director’s salary
may be paid to each director if profit targets set by the
Board are met. A further 15% may be paid to each
executive director if profit targets set by the Board are
exceeded by at least 30%.
The Company has operated an Executive Share Option
Scheme for Executive Board Directors, subsidiary Board
Directors and senior employees. All executive options
granted from November 1997 (other than special executive
options) are subject to the Group achieving, during the
period of grant, an average total shareholder return on the
shares for the preceding three years which exceeds the
average FTSE 100 total shareholder return for the same
period and a percentage growth in earnings per share
which is at least equal to the percentage growth in the
Retail Price Index plus 6% over three years. Executive share
options granted before November 1997 have no
performance criteria. The exercise price of the options
granted under the above scheme is equal to the market
value of the company’s shares at the time when the options
are granted.
162315 new chime pg18-96  5/5/06  20:52  Page 25 Lord Bell has special executive options over 1,000,000
ordinary shares. These special options will not ordinarily be
exercisable less than five years from the date of grant and
are subject to a performance target of growth in diluted
earnings per ordinary share being achieved such as would
place the Group in the upper quartile of the FTSE 100
companies compiled by reference to growth in diluted
earnings per share over the same period.
Starting in 2006 the Board has decided to grant restricted
rights over existing Chime Communications shares rather
than Executive Share Options. All grants under this new
scheme will be approved by the Remuneration Committee.
Executive Share Options are only expected to be granted in
future if there is a contractual commitment or in exceptional
circumstances.
The Company also operates a Savings-Related Share
Option Scheme which is open to all employees after an
initial qualifying period.
Pension contributions on behalf of the Executive Directors
are paid by the Company to the Group’s money purchase
pension scheme or to a personal pension scheme up to the
value of 20% of their basic salary.
Directors’ Contracts
All executive directors and employees have rolling contracts
of employment with a notice period that does not exceed
twelve months. The Directors’ service contracts will be
available for inspection at the Annual General Meeting. Any
compensation payable on early termination of employment
contracts is considered on a case by case basis.
Performance Graph 
The following graph shows the company’s performance
measured by total shareholder return, compared with the
performance of the FTSE All Share media index and the
FTSE 100, both also measured by total shareholder return:
Chime total shareholder return relative to FTSE 100
and FTSE All Share media sector
All are total return rebased to 100.
Source: Perfect Analysis
(www.perfectanalysis.perfectinfo.com)
0
20
40
60
80
100
120
2001 2002 2003 2004 2005
Chime Communications
FTSE All Share media return
FTSE 100
Chime Communications plc Report of the Board to the shareholders on directors’ remuneration (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 26 Audited Information
Directors’ emoluments
Emoluments Total Total
Salary excl. pension Pension 31 December 31 December
and fees Benefits Bonuses contributions contributions 2005 2004
Name £££££££
Executive directors
Lord Bell * 615,000 46,951 92,250 754,201 123,000 877,201 784,106
Piers Pottinger 401,000 32,463 60,150 493,613 80,200 573,813 509,954
Mark Smith 210,000 27,999 31,500 269,499 42,000 311,499 277,434
Christopher Satterthwaite 350,000 19,679 52,500 422,179 70,000 492,179 445,655
Non-executive directors
Alan Chamberlain
(resigned 9 March 2006) 137,500 – – 137,500 – 137,500 137,500
Julian Seymour 30,000 – – 30,000 – 30,000 30,000
Catherine Biner Bradley 17,500 – – 17,500 – 17,500 17,500
Lord Hannay 17,500 – – 17,500 – 17,500 17,500
Dame Susan Tinson 17,500 – – 17,500 – 17,500 17,500
Paul Richardson –––––––
Dave Allen –––––––
Totals 1,796,000 127,092 236,400 2,159,942 315,200 2,474,692 2,237,149
* Chairman and highest paid director
Alan Chamberlain was paid a fee of £17,500 in respect of his work as a non-executive director. The balance of his
remuneration relates to work carried out by him for the Group on acquisitions and disposals.
The sums paid to Julian Seymour are 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 2004 were £123,000,
£80,200, £42,000 and £70,000 respectively. Piers Pottinger and Mark Smith are members of the Group’s defined
contribution scheme. 
26 | 27
162315 new chime pg18-96  5/5/06  20:52  Page 27 Directors’ share options
The following unexercised options over shares were held by directors:
Executive Share Option Scheme
1 January 31 December Date from
2005 (or on 2005 (or on Exercise which Expiry
Directors appointment) Granted Exercised Lapsed resignation) price exercisable date
Lord Bell
1
1,000,000––– 1,000,000 48p Nov 2002 Nov 2007
Lord Bell 100,000––– 100,000 209p Nov 2003 Nov 2010
Lord Bell 500,000––– 500,000 15.5p Apr 2006 Apr 2013
Lord Bell 350,000––– 350,000 39.5p Apr 2007 Apr 2014
Piers Pottinger 100,000––– 100,000 209p Nov 2003 Nov 2010
Piers Pottinger 500,000––– 500,000 32.5p Dec 2006 Dec 2013
Mark Smith 100,000––– 100,000 209p Nov 2003 Nov 2010
Mark Smith 250,000––– 250,000 15.5p Apr 2006 Apr 2013
Mark Smith 250,000––– 250,000 39.5p Apr 2007 Apr 2014
Alan Chamberlain
(resigned 9 March 2006) 50,000––– 50,000 175p May 2003 May 2010
Chris Satterthwaite 33,333––– 33,333 90p Oct 2002 Oct 2009
Chris Satterthwaite 1,500,000––– 1,500,000 15.5p Apr 2006 Apr 2013
1
Special executive options
Savings-Related Share Option Scheme
1 January 31 December Date from
2005 (or on 2005 (or on Exercise which Expiry
Directors appointment) Granted Exercised resignation) price exercisable date
Mark Smith 20,437 – – 20,437 32p July 2009 Dec 2009
Chris Satterthwaite 20,437 – – 20,437 32p July 2009 Dec 2009
The market price of the shares at 31 December 2005 was 28.25p and the range during 2005 was 36.25p to 23.25p.
There have been no variations to the terms and conditions or performance criteria for share options during the financial year.
Details of the performance criteria attached to the above options are disclosed as part of the unaudited information on
pages 25 and 26.
Chime Communications plc Report of the Board to the shareholders on directors’ remuneration (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 28 Directors’ interests in the shares of Chime Communications plc
The directors of the Company, all of whom were directors for the whole year, unless otherwise indicated, and their interests in
the Company at 31 December 2005, or on date of resignation, and at 1 January 2005 or date of appointment were:
Beneficial holdings Share options 
1 January 31 December 1 January 31 December
2005 2005 2005 2005
(or date of (or date of (or date of (or date of
appointment) resignation) appointment) resignation)
Ordinary Shares Ordinary Shares Ordinary Shares Ordinary Shares
of 5p each of 5p each of 5p each of 5p each
Lord Bell 1,487,866 1,487,866 1,950,000 1,950,000
Piers Pottinger 2,380,800 2,005,800 600,000 600,000
Mark Smith 274,170 274,170 620,437 620,437
Chris Satterthwaite 36,514 36,514 1,553,770 1,553,770
Dave Allen – – – –
Catherine Biner Bradley 18,514 18,514 – –
Alan Chamberlain (resigned 9 March 2006) 3,352 3,352 50,000 50,000
Lord Hannay 32,142 32,142 – –
Julian Seymour – – – –
Dame Susan Tinson 4,500 4,500 – –
Paul Richardson –––––
Lord Bell also held a non-beneficial interest in 849,501 ordinary shares at 1 January 2005 and 31 December 2005.
Chris Satterthwaite also held a non-beneficial interest in 594 ordinary shares at 1 January 2005 and 31 December 2005.
Approval
This report was approved 
by the Board of directors 
and signed on its behalf by 
Robert Davison, Secretary 
8 March 2006
28 | 29
162315 new chime pg18-96  5/5/06  20:52  Page 29 The directors present their annual report and the audited
financial statements for the year ended 31 December 2005.
Review of the business
Chime Communications plc is the parent company of a
group of companies principally engaged in providing public
relations, advertising, market research, direct marketing,
design and event management consultancy and it is the
intention of the directors that it should continue to be so.
A review of the business is given in the Chairman’s
Statement.
Results and dividends
The Group’s income statement is set out on page 35 and
shows a profit for the year to 31 December 2005 of
£7,325,000 (2004 – £6,424,000) after charging
restructuring costs of £1,286,000 (2004 – £nil). The
directors recommend the payment of a final dividend of
0.32p per ordinary share to be paid on 22 June 2006 to the
ordinary shareholders on the register on 26 May 2006
which together with the interim dividend paid on
10 November 2005 makes a total of 0.48p per share for the
year (2004 – 0.30p).
Directors and their interests
The directors’ interests in the shares of Chime
Communications plc are disclosed as part of the Report of
the Board to the Shareholders on Directors’ Remuneration
on page 25. Details relating to directors’ share options are
also given as part of the Report of the Board to the
Shareholders on Directors’ Remuneration. There has been
no change in the interests of the directors between
31 December 2005 and 8 March 2006.
At the forthcoming Annual General Meeting, five directors
are due to retire by rotation and offer themselves for
re-election. Lord Bell and Chris Satterthwaite, who have
rolling contracts with a notice period of one year; and Paul
Richardson, who is WPP plc’s representative on the Board
under the subscription agreement of 1997.
Lord Hannay and Julian Seymour will also retire and offer
themselves for re-election at the Annual General Meeting
as they have been Non-Executive Directors for more
than 9 years.
Other than described in the Report of the Board to the
Shareholders on Directors’ Remuneration no director of the
Company has, or had during the year, any interests in the
shares of other group companies or in any transactions
which were unusual in their nature or were significant to
the Company’s business.
Donations
During the year the Group donated £49,693 (2004 –
£11,173) to charities serving communities in which they
operate. There were no political donations made during
the current or preceding year.
Employee involvement
The Group operates a policy of informing all employees
on a regular basis of the Group’s financial performance.
In addition, the Group’s Savings-Related Share Option
Scheme, Performance Related Pay and bonus schemes
encourages employees at all levels to contribute to the
achievement of the Group’s short and long term goals.
Employment of disabled persons
The Group gives full and fair consideration to all applications
for employment made by disabled persons, having regard
to their particular aptitudes and abilities. Opportunities for
training, career development and promotion do not
disadvantage these employees.
Acquisition of the company’s own shares
At the end of the year, the directors had authority, under the
shareholders’ resolution on 8 June 2005, to purchase
through the market 20,623,670 of the company’s own
ordinary shares at prices not less than 5p per ordinary share
and not more than five per cent above the average of the
middle market quotations as derived from the London
Stock Exchange Daily Official List. This authority will last
until the conclusion of the next Annual General Meeting.
Chime Communications plc
Annual Report & Accounts 2005
Directors’ report
162315 new chime pg18-96  5/5/06  20:52  Page 30 30 | 31
Substantial interests
At 8 March 2006 the following interests, other than those of
the directors set out above, in 3% or more of the issued
ordinary share capital had been notified to the Company:
Number of % of ordinary
ordinary shares share capital
WPP Group Plc 55,183,593 21.80
Aberforth Partners 20,683,520 8.17
Gartmore Investment
Management plc 17,774,058 7.02
Fidelity Investments 15,385,714 6.08
Henderson Global Investors 13,423,496 5.30
Cazenove Investment
Management Ltd 10,057,951 3.97
Herald Investment Management Ltd 7,941,668 3.14
Aegon Asset Management 7,826,698 3.09
Creditor payment terms
The Group’s policy on suppliers is that they will be paid in
accordance with agreed terms and conditions of trade on a
regular basis.
The number of days outstanding between receipt of
invoices and date of payment, calculated by reference to
the amount owed to trade creditors at the year-end as a
proportion of the amounts invoiced by suppliers during the
year, was 47 days in aggregate for the Group (2004 – 51).
The Company did not have any trade creditors at
31 December 2004 or 2005.
Auditors
A resolution to re-appoint Deloitte & Touche LLP will be
proposed at the forthcoming Annual General Meeting.
Approved by the Board of Directors
and signed on behalf of the Board
Robert Davison, Secretary 
8 March 2006
162315 new chime pg18-96  5/5/06  20:52  Page 31 The directors are responsible for preparing the Report and
the financial statements. The directors are required to
prepare financial statements for the Group in accordance
with International Financial Reporting Standards (IFRS), the
Companies Act 1985 and Article 4 of the IAS Regulation.
They have chosen to continue to prepare the accounts of
the Company in accordance with United Kingdom Generally
Accepted Accounting Practice.
International Accounting Standard 1 requires that financial
statements present fairly for each financial year the
company’s financial position, financial performance and cash
flows. This requires the faithful representation of the effects
of transactions, other events and conditions in accordance
with the definitions and recognition criteria for assets,
liabilities, income and expenses set out in the International
Accounting Standards Board’s ‘Framework for the
Preparation and Presentation of Financial Statements’. In
virtually all circumstances, a fair presentation will be achieved
by compliance with all applicable International Financial
Reporting Standards. Directors are also required to:
• properly select and apply accounting policies
• present information, including accounting policies, in
a manner that provides relevant, reliable, comparable
and understandable information
• provide additional disclosures when compliance with
the specific requirements in IFRS is insufficient to
enable users to understand the impact of particular
transactions, other events and conditions on the
entity’s financial position and financial performance
• state whether applicable accounting standards have
been followed
In the case of UK GAAP company accounts, the directors
are required to prepare financial statements for each
financial year which give a true and fair view of the state of
affairs of the company and of the profit or loss of the
company for that period and to make judgements and
estimates that are reasonable and prudent.
The directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any
time the financial position of the company, for safeguarding
the assets, for taking reasonable steps for the prevention
and detection of fraud and other irregularities and for the
preparation of a directors’ report and directors’
remuneration report and Chairman’s statement which
comply with the requirements of the Companies Act 1985.
The directors are responsible for the maintenance and
integrity of the company website. Legislation in the
United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
Chime Communications plc
Annual Report & Accounts 2005
Statement of directors’ responsibilities
162315 new chime pg18-96  5/5/06  20:52  Page 32 32 | 33
Independent auditors’ report to the members of Chime Communications plc
We have audited the Group financial statements (the
“financial statements”) of Chime Communications Plc for
the year ended 31 December 2005 which comprise the
consolidated income statement, the consolidated balance
sheet, the consolidated cash flow statement, the
consolidated statement of recognised income and
expenses and the related notes 1 to 49. These Group
financial statements have been prepared under the
accounting policies set out therein. We have also audited
the information in the directors’ remuneration report that is
described as having been audited.
We have reported separately on the individual company
financial statements of Chime Communications plc for the
year ended 31 December 2005.
This report is made solely to the company’s members, as a
body, in accordance with section 235 of the Companies Act
1985. Our audit work has been undertaken so that we
might state to the company’s members those matters we
are required to state to them in an auditors’ report and for
no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than
the company and the company’s members as a body, for
our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the annual
report, the directors’ remuneration report and the Group
financial statements in accordance with applicable law and
International Financial Reporting Standards (IFRSs) as
adopted for use in the European Union are set out in the
statement of directors’ responsibilities.
Our responsibility is to audit the Group financial statements
and the part of the directors’ remuneration report described
as having been audited in accordance with relevant United
Kingdom legal and regulatory requirements and
International Standards on Auditing (UK and Ireland). 
We report to you our opinion as to whether the Group
financial statements give a true and fair view in accordance
with the relevant financial reporting framework and whether
the Group financial statements and the part of the directors’
remuneration report described as having been audited have
been properly prepared in accordance with the Companies
Act 1985 and Article 4 of the IAS Regulation. We report to
you if, in our opinion, the directors’ report is not consistent
with the Group financial statements. We also report to you if
we have not received all the information and explanations
we require for our audit, or if information specified by law
regarding directors’ transactions with the company and
other members of the Group is not disclosed.
We also report to you if, in our opinion, the company has
not complied with any of the four directors’ remuneration
disclosure requirements specified for our review by the
Listing Rules of the Financial Services Authority. These
comprise the amount of each element in the remuneration
package and information on share options, details of long
term incentive schemes, and money purchase and defined
benefit schemes. We give a statement, to the extent
possible, of details of any non-compliance.
We review whether the corporate governance statement
reflects the company’s compliance with the nine provisions
of the 2003 FRC Combined Code specified for our review
by the Listing Rules of the Financial Services Authority, and
we report if it does not. We are not required to consider
whether the board’s statement on internal control covers all
risks and controls, or form an opinion on the effectiveness
of the Group’s corporate governance procedures or its risk
and control procedures.
We read the directors’ report and the other information
contained in the annual report for the above year as
described in the contents section including the unaudited
part of the directors’ remuneration report and we consider
the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the
Group financial statements. 
Basis of audit opinion
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) issued by the
Auditing Practices Board. An audit includes examination, on
a test basis, of evidence relevant to the amounts and
disclosures in the Group financial statements and the part of
the directors’ remuneration report described as having been
audited. It also includes an assessment of the significant
estimates and judgements made by the directors in the
preparation of the Group financial statements, and of
whether the accounting policies are appropriate to the
company’s circumstances, consistently applied and
adequately disclosed.
We planned and performed our audit so as to obtain all the
information and explanations which we considered
necessary in order to provide us with sufficient evidence to
give reasonable assurance that the Group financial
statements and the part of the directors’ remuneration
report described as having been audited are free from
material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated
the overall adequacy of the presentation of information in
the Group financial statements and the part of the directors’
remuneration report described as having been audited.
162315 new chime pg18-96  5/5/06  20:52  Page 33 Opinion
In our opinion:
• the Group financial statements give a true and fair view,
in accordance with IFRSs as adopted for use in the
European Union, of the state of the Group’s affairs as at
31 December 2005 and of its profit for the year then
ended; and
• the Group financial statements and the part of the
directors’ remuneration report described as having
been audited have been properly prepared in
accordance with the Companies Act 1985 and
Article 4 of the IAS Regulation.
As explained in Note 1 of the financial statements, the
Group, in addition to complying with its legal obligation to
comply with IFRSs as adopted for use in the European
Union, has also complied with the IFRSs as issued by the
International Accounting Standards Board. Accordingly, in
our opinion the financial statements give a true and fair
view, in accordance with IFRSs, of the state of the Group’s
affairs as at 31 December 2005 and of its profit for the year
then ended.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
London
8 March 2006
Chime Communications plc Independent auditors’ report to the members of Chime Communications plc (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 34 2005 2004
Restated*
Note £’000 £’000
Continuing operations
Turnover 2,3 116,403 92,186
Cost of sales (53,371) (40,110)
Operating income 63,032 52,076
Operating expenses (53,410) (44,948)
9,622 7,128
Share of results of associates (111) 55
Share of results of equity accounted joint ventures – 120
Restructuring costs 5 (1,286) –
Operating profit 6 8,225 7,303
Profit on disposal of fixed asset investment 7 – 164
Investment income 9 152 125
Finance costs 10 (830) (1,081)
Finance cost of deferred consideration 10 (222) (87)
Profit before tax 7,325 6,424
Tax 11 (1,608) (2,051)
Profit for the year from continuing operations 5,717 4,373
Discontinued operations
Loss for the year from discontinued operations 12 (660) (73)
Profit for the year from sale of associate 13 2,662 –
Profit for the year 7,719 4,300
Attributable to:
Equity holders of the parent 7,536 4,123
Minority interest 183 177
7,719 4,300
Earnings per share
From continuing operations
Basic 15 2.5p 2.2p
Diluted 15 2.5p 2.1p
From continuing and discontinued operations
Basic 15 3.4p 2.2p
Diluted 15 3.3p 2.1p
*Restated under IFRS (see note 49)
Consolidated income statement
Year ended 31 December 2005
34 | 35 Chime Communications plc
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 35 Chime Communications plc
Annual Report & Accounts 2005
2005 2004
Restated*
£’000 £’000
Exchange differences on translation of foreign operations (137) (2)
Net loss recognised directly in equity (137) (2)
Profit for the year 7,719 4,300
Total recognised income and expense for the year 7,582 4,298
Attributable to:
Equity holders of the parent 7,399 4,121
Minority interests 183 177
7,582 4,298
*Restated under IFRS (see note 49)
Consolidated statement of recognised income and expense
Year ended 31 December 2005
162315 new chime pg18-96  5/5/06  20:52  Page 36 2005 2004
Restated*
Note £’000 £’000
Non-current assets
Goodwill 16 68,606 45,099
Other intangible assets 17 140 264
Property, plant and equipment 18 2,305 2,079
Investments in associates 20 891 807
Investments in equity accounted joint ventures 21 – 15
Available-for-sale investments 22 – 3
Due from deferred consideration 23 950 –
Deferred tax asset 24 1,338 784
74,230 49,051
Current assets
Work in progress 25 565 426
Trade and other receivables 26 27,098 18,714
Cash and cash equivalents 6,997 6,056
34,660 25,196
Total assets 108,890 74,247
Current liabilities
Trade and other payables 27 (34,964) (23,422)
Current tax liabilities (1,865) (2,470)
Obligations under finance leases 28 (142) (100)
Bank overdrafts 29 – (1,500)
Short-term provisions 30 (690) (996)
(37,661) (28,488)
Net current liabilities (3,001) (3,292)
Non-current liabilities
Bank loans 29 (8,485) (8,895)
Long-term provisions 30 (8,880) (2,025)
Obligations under finance leases 28 (129) (136)
(17,494) (11,056)
Total liabilities (55,155) (39,544)
Net assets 53,735 34,703
Equity
Share capital 31 12,654 10,312
Share premium account 32 26,475 16,548
Own shares 33 (6,961) (6,969)
Equity reserves 34 32,817 32,582
Translation reserve 35 (139) (2)
Accumulated losses 36 (11,375) (18,027)
Equity attributable to equity holders of the parent 37 53,471 34,444
Minority interest 264 259
Total equity 53,735 34,703
The financial statements were approved by the board of directors and authorised for issue on 8 March 2006. They were
signed on its behalf by:
Mark Smith, Director
*Restated under IFRS (see note 49)
Consolidated balance sheet
31 December 2005
36 | 37 Chime Communications plc
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 37 Chime Communications plc
Annual Report & Accounts 2005
2005 2004
Restated*
Note £’000 £’000
Net cash from operating activities 38 8,239 6,140
Investing activities
Interest received 147 353
Dividends received from associates 5 5
Proceeds on disposal of property, plant and equipment 218 188
Purchases of property, plant and equipment (1,090) (706)
Purchases of other intangible assets (5) (15)
Proceeds from disposal of an investment 266 –
Acquisition of investment in an associate (72) (40)
Disposal of investment in an associate 40 (50) –
Loans granted to associates (411) (5)
Loans granted to joint ventures – (69)
Acquisition of subsidiary 41 (7,191) (950)
Disposal of subsidiary 39 (98) –
Net cash used in investing activities (8,281) (1,239)
Financing activities
Dividend paid (1,009) –
Dividends paid to minorities (122) (56)
Repayments of borrowings (410) (10,911)
Repayments of loan notes (527) (1,239)
Repayments of obligations under finance leases (143) (83)
Proceeds on issue of ordinary share capital 4,692 18,375
Proceeds from sale of own shares 2 2
Expenses of capital reduction – (90)
Net cash from financing activities 2,483 5,998
Net increase in cash and cash equivalents 2,441 10,899
Net (overdraft)/funds at beginning of year 4,556 (6,343)
Cash and cash equivalents at end of year 6,997 4,556
*Restated under IFRS (see note 49)
Consolidated cash flow statement
31 December 2005
162315 new chime pg18-96  5/5/06  20:52  Page 38 1. General information
Chime Communications plc is a company incorporated in the United Kingdom under the Companies Act 1985. The address of
the registered office is No. 14 Curzon Street, London, W1J 5HN, United Kingdom. The nature of the Group’s operations consist
principally of public relations, advertising, 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 Group operates. Foreign operations are included in accordance with the policies set out in note 2.
2. Significant accounting policies
Statement of Compliance
The consolidated financial statements have been prepared in accordance with IFRS and interpretations for use in the
European Union and issued by the International Accounting Standards Board.
Basis of accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) for the
first time. The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRSs are given in note 49. The
financial statements have also been 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 in accordance with the accounting policies set out below. The principal accounting policies adopted are
set out below.
In preparing the Group’s IFRS balance sheet at 31 December 2005, the following exemptions from full retrospective
application of IFRS accounting policies have been adopted:
(i) Business combinations – in accordance with IFRS 1, the Group has chosen not to restate business combinations that
took place before the date of transition (1 January 2004).
(ii) Translation of foreign subsidiaries – in accordance with IFRS 1, the Group has chosen to reduce all translation reserves
arising prior to transition into IFRS to a nil balance.
(iii) Share based payments – in accordance with IFRS 2 Share-based payments granted before 7 November 2002 or that
had vested by the transition date have not been restated.
Basis of consolidation
The 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 an investee 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. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised
as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount
on acquisition) is credited to the income statement in the period of 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 of acquisition 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 used by the Group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Notes to the consolidated accounts
Year ended 31 December 2005
38 | 39 Chime Communications plc
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 39 2. Significant accounting policies (continued)
Investments in associates
An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint control,
through participation in 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 when classified as held for sale. Investments in associates are carried in the balance sheet at cost carried
in the balance sheet at cost as adjusted by post-acquisition changes in the Group’s share of the net assets of the associate,
less any impairment in the value of individual investments. Losses of the associates in excess of the Group’s interest in those
associates are not recognised.
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 of acquisition is recognised as goodwill and is included in the carrying value of the investment. Any deficiency of the
cost of acquisition below the Group’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 the income 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 interest in the relevant associate.
Investments in joint ventures
A joint venture is an entity in which the Group holds an interest on a long-term basis and which is jointly controlled by the
Group and one or more other venturers under a contractual arrangement.
The results, assets, and liabilities of joint ventures are incorporated in these financial statements using the equity method of
accounting. Investments in joint ventures are carried in the balance sheet at cost as adjusted by post-acquisition changes in
the Group’s share of the net assets of the joint venture, less any impairment in the value of individual investments. Losses of
the joint venture in excess of the Group’s interest in those joint ventures are not recognised.
Any excess of the cost of acquisition over the Group’s share of the fair values of the identifiable net assets of the joint venture
at the date of acquisition is recognised as goodwill and is included in the carrying value of the joint venture. Any deficiency of
the cost of acquisition below the Group’s share of the fair values of the identifiable net assets of the joint venture at the date
of acquisition (i.e. discount on acquisition) is credited in the income statement in the period of acquisition.
Where a Group company transacts with a joint venture of the Group, unrealised profits and losses are eliminated to the
extent of the Group’s interest in the relevant joint venture.
Goodwill
Goodwill 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 not subsequently reversed.
On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
Goodwill arising on acquisitions before the date of transition to IFRSs has been retained at the previous UK GAAP amounts
subject to being tested for impairment at that date. Goodwill written off to reserves under UK GAAP prior to 1998 has not
been reinstated and is not included in determining any subsequent profit or loss on disposal. 
Goodwill impairment is assessed by comparing the carrying value of goodwill to the net present value of future cash flows
derived from the underlying assets considering forecast cash flows over an initial projection period of up to three years for
each cash-generating unit. After this period, growth rates of nominal GDP are generally assumed for each cash-generating
unit. In certain instances, accelerated growth rates higher than the nominal GDP may be used for the initial projection period
if management believes the higher rate is more appropriate to reflect the economic cycles that occur within the market which
the cash-generating unit operates.
The weighted average cost of capital used by the Group to discount the future cash flows to their present value is 7.9%.
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 40 2. Significant accounting policies (continued)
For two acquisitions with a combined value of £4.8 million (out of a total goodwill value of £68.6 million) we have used
accelerated growth rates.
Future anticipated payments to vendors in respect of earnouts are based on the directors’ best estimates of future obligations,
which are dependent on future performance of the interests acquired and assume the operating companies improve profits in
line with directors’ estimates and are included in liabilities greater or less than one year as appropriate. When earnouts are to
be settled in cash consideration, the fair value of the consideration is obtained by discounting to present value the amounts
expected to be payable in the future. The resulting interest charge is included within finance costs.
Turnover recognition
Turnover is measured at the fair value of the consideration received or receivable and comprises the gross amounts billed
to clients in respect of fees earned, expenses recharged and commission-based income. Operating income comprises
commission and fees earned in respect of turnover. Cost of sales include fees paid to external suppliers where they are
retained to perform part or all of a specific project for a client, and the resulting expenditure is directly attributable to the
revenue earned. Turnover and Operating income are stated exclusive of VAT, sales taxes and trade discounts.
– Public Relations
Operating income is typically derived from retainer fees and services performed subject to specific agreement.
Operating income is recognised when the service is performed in accordance with the contractual arrangement.
Operating income is recognised on long-term contracts, if the outcome can be assessed with reasonable certainty,
by including in the income statement revenue and related costs as contract activity progresses.
– Advertising and Marketing Services and Research
Operating income is recognised on each contract in proportion to the level of services performed. Costs, including
an appropriate proportion of overheads relating to contracts in progress at the balance sheet date, are carried forward
in work in progress. Losses are recognised as soon as they are foreseen.
Leasing
Leases 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 the inception of the leases or, if lower, the present value of minimum lease payments. The excess of
the lease payments over the recorded lease obligations is treated as finance charges which are amortised over each lease
term to give a constant rate of charge on the remaining balance of the 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 the period to the next review.
Foreign currencies 
Transactions in UK companies denominated in currencies other than pounds sterling are recorded at the rates of exchange
prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated
in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on
retranslation are included in the income statement for the period.
On consolidation, the assets and liabilities of the Group’s overseas operations are translated at the exchange rates prevailing
on the balance sheet date. Income and expenses are translated at the average exchange rates for the period unless exchange
rates fluctuate significantly. Exchange differences arising, if any, are classified as equity and transferred to the Group’s
translation reserve. Such translation reserve differences are recognised as income or as expenses in the period in which the
operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate. 
40 | 41
162315 new chime pg18-96  5/5/06  20:52  Page 41 2. Significant accounting policies (continued)
Finance costs
Finance costs which include interest, bank charges and the unwinding of the discount on deferred consideration, are
recognised as profit or loss in the period in which they are incurred.
Operating profit
Profit from operations is stated after charging restructuring costs and after the share of post tax results of associates and
equity accounted joint ventures but before investment income and finance costs.
Retirement benefit costs 
The pension cost is the amount of contributions payable by the Group to the defined contribution pension scheme and to
personal pension schemes of certain employees during the accounting period. These are charged as an expense as they
fall due.
Taxation
The 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 it excludes 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 financial statements and the corresponding tax bases used in the computation of taxable profit, and is
accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets
and 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 joint ventures, except where the Group is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse 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 that sufficient 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 is charged or credited in the income statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity.
Property, plant and equipment
Property, plant and equipment are stated at cost net of depreciation and any provision for impairment. Depreciation is
provided in equal instalments over the estimated useful economic lives of assets, using the following rates:
Short-term leasehold improvements – 20%
Motor vehicles – 16
2
⁄ 3%
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 of the 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 the asset and is recognised in the income statement.
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 42 2. Significant accounting policies (continued)
Other intangible assets
Acquired computer software is capitalised based on the cost incurred to acquire and bring to use the specific software.
Software is stated at cost net of amortisation and any provision for impairment. The costs are amortised over their estimated
useful lives (four years).
Impairment of property, plant and equipment and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order 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 life is 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 are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset for which estimates of future cashflows 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 its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years.
Work in progress
Work in progress is stated at the lower of invoiced cost and net realisable value, net of payments received on account. Cost
represents work supplied from outside the Group awaiting billing to clients at the year-end.
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Cash and cash equivalents
Cash comprises cash, overdrafts and cash held on short-term deposit (up to three months). Cash equivalents are cash
deposits held on three months deposit at the Royal Bank of Scotland plc. The deposits guarantee the loan note creditors.
Interest accruing on the deposits are payable to the holders of the loan notes less any costs arising.
Trade receivables
Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for
estimated irrecoverable amounts. 
Investments
Investments are recognised and derecognised on a trade date where a purchase or sale of an investment is under contract
whose terms require the delivery of the investment within the timeframe established by the market concerned, and are
initially measured at cost, including transaction costs.
Investments are classified as available for sale, and are measured at subsequent reporting dates at fair value. Gains and losses
arising from changes in fair value are recognised directly in equity, until the security is disposed of or is determined to be impaired,
at which time the cumulative gain or loss previously recognised in equity is included in the net profit or loss for the period.
Bank Borrowings
Interest bearing bank loans and overdrafts are recorded at the fair value of proceeds received, net of direct issue costs.
42 | 43
162315 new chime pg18-96  5/5/06  20:52  Page 43 2. Significant accounting policies (continued)
Trade payables
Trade payables are not interest-bearing and are stated at their nominal value.
Equity instruments
Equity instruments issued by the Company are recorded at the fair value of proceeds received, net of direct issue costs.
Share-based payments
The Group has applied the requirements of IFRS 2 Share-based Payments. In accordance with the transitional provisions,
IFRS 2 has been applied to all grants of equity instruments after 7 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 value at the date of grant. The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will
eventually vest and adjusted for the effect of non-market based vesting 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 is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted,
based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural
considerations.
A liability equal to the portion of the goods or services received is recognised at the current fair value determined at each
balance sheet date for cash-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 records an expense, based on its estimate of the 20% discount related to shares expected to vest on a
straight-line basis over the vesting period.
3. Turnover
An analysis of the Group’s turnover is as follows:
2004
2005 Restated*
£’000 £’000
Continuing operations
Public relations 70,825 55,375
Advertising and marketing service 39,006 32,480
Research 6,572 4,331
Group turnover 116,403 92,186
Discontinued operation (note 12) 2,846 3,343
119,249 95,529
*Restated under IFRS (see note 49)
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 44 4. Business and geographical segments
Business segments
For management purposes, the Group is currently organised into three operating divisions – Public Relations, Advertising and
Marketing Services and Research. These divisions are the basis on which the Group reports its primary segment information.
Principal activities are as follows:
– Public Relations
The public relations division comprises some of the leading names in the industry, including Bell Pottinger, Good
Relations, QBO Bell Pottinger, Harvard and Insight, which together advise the owners and promoters of more than
300 major UK and international brands. The public relations division is ranked first in the PR Week public relations
consultancy league table for 2004. 
– Advertising and Marketing Services (‘AMS’)
The AMS division possesses specialist skills in marketing services – advertising, sales promotion, direct marketing,
design, media planning and buying, digital online content creation and specialises in the niche markets of property,
financial services and healthcare.
– Research
The research division is made up of Opinion Leader Research and The SMART Company.Net. Opinion Leader Research
is one of the UK’s leading research consultancies and The Smart Company is a consultancy, which specialises in
corporate social responsibility and related public policy issues.
During the year, 76% of the business of the Group’s customer publishing agency, Rare Publishing, was disposed. The
operation was disposed of with effect from 31 December 2005 (see note 12 and note 39).
44 | 45
162315 new chime pg18-96  5/5/06  20:52  Page 45 4. Business and geographical segments (continued)
Segment information about these businesses is presented below.
Advertising Elimination of
and results of
Public Marketing discontinued
Relations Services Research operations Elimination Consolidated
2005 £’000 £’000 £’000 £’000 £’000 £’000
Turnover
External sales 70,825 41,852 6,572 (2,846) – 116,403
Inter-segment sales 6,078 3,376 119 – (9,573) –
Total revenue 76,903 45,228 6,691 (2,846) (9,573) 116,403
Inter-segment sales are charged at prevailing market prices that would also be available to unrelated third parties.
Segment result
Operating income 40,051 19,726 4,345 (1,090) – 63,032
Operating profit 6,833 1,662 864 758 – 10,117
Unallocated corporate expenses (495)
Share of results of associates (111)
Restructuring costs (1,286)
Operating profit 8,225
Investment income 152
Finance costs (830)
Finance costs of deferred consideration (222)
Profit before tax 7,325
Tax (1,608)
Profit for the year from continuing operations 5,717
Loss from discontinued operations (660)
Profit for the year from sale of associate 2,662
Profit for the period 7,719
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 46 4. Business and geographical segments (continued)
Advertising
and
Public Marketing
Relations Services Research Eliminations Consolidated
2005 £’000 £’000 £’000 £’000 £’000
Other segment information
Capital additions 770 429 66 – 1,273
Depreciation and amortisation 926 530 17 – 1,473
Balance sheet
Assets
Segment assets 43,395 43,364 8,859 95,618
Investments in associates 891
Unallocated corporate assets 12,381
Consolidated total assets 108,890
Liabilities
Segment liabilities (21,851) (12,039) (1,663) (35,553)
Unallocated corporate liabilities (19,602)
Consolidated total liabilities (55,155)
Discontinued operations
Discontinued operations had the following effect on the segment results of Advertising and Marketing Services, analysed into
continuing and discontinued components.
Advertising
and
Marketing
Discontinued Continuing Services
£’000 £’000 £’000
Turnover
External sales 2,846 39,006 41,852
Inter-segment sales – 3,376 3,376
Total turnover 2,846 42,382 45,228
Result
Operating profit (758) 2,420 1,662
The segment results from discontinued operations stated above is equal to the loss before tax from discontinued operations
in note 12, which provides a reconciliation to the net loss from discontinued operations.
46 | 47
162315 new chime pg18-96  5/5/06  20:52  Page 47 4. Business and geographical segments (continued)
Advertising Elimination of
and results of
Public Marketing discontinued
Relations Services Research operations Elimination Consolidated
2004 (Restated*) £’000 £’000 £’000 £’000 £’000 £’000
Turnover
External sales 55,375 35,823 4,331 (3,343) – 92,186
Inter-segment sales 5,731 4,199 145 – (10,075) –
Total revenue 61,106 40,022 4,476 (3,343) (10,075) 92,186
Inter-segment sales are charged at prevailing market prices that would also be available to unrelated third parties.
Segment result
Operating income 36,203 14,300 3,320 (1,747) – 52,076
Operating profit 5,494 1,266 689 73 – 7,522
Unallocated corporate expenses (394)
Share of results of associates 55
Share of results of equity accounted joint ventures 120
Operating profit 7,303
Profit on disposal of fixed asset investment 164
Investment income 125
Finance costs (1,081)
Finance costs of deferred consideration (87)
Profit before tax 6,424
Tax (2,051)
Profit for the period from continuing operations 4,373
Loss from discontinued operations (73)
Profit for the period 4,300
*Restated under IFRS (see note 49)
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 48 4. Business and geographical segments (continued)
Advertising
and
Public Marketing
Relations Services Research Eliminations Consolidated
2004 (Restated*) £’000 £’000 £’000 £’000 £’000
Other segment information
Capital additions 624 265 26 – 915
Depreciation and amortisation 1,027 236 8 – 1,271
Balance sheet
Assets
Segment assets 44,556 14,693 9,166 68,415
Investments in associates 807
Investments in joint ventures 15
Unallocated corporate assets 5,010
Consolidated total assets 74,247
Liabilities
Segment liabilities (15,963) (6,641) (1,124) (23,728)
Unallocated corporate liabilities (15,816)
Consolidated total liabilities (39,544)
Discontinued operations
Discontinued operations had the following effect on the segment results of Advertising and Marketing Services, analysed into
continuing and discontinued components.
Advertising
and
Marketing
Discontinued Continuing Services
2004 (Restated*) £’000 £’000 £’000
Turnover
External sales 3,343 32,480 35,823
Inter-segment sales – 4,199 4,199
Total turnover 3,343 36,679 40,022
Result
Operating profit (73) 1,339 1,266
The segment result from discontinued operations stated above is equal to the loss before tax from discontinued operations
disclosed in note 12, which provides reconciliation to the net loss from discontinued operations.
*Restated under IFRS (see note 49)
48 | 49
162315 new chime pg18-96  5/5/06  20:52  Page 49 4. Business and geographical segments (continued)
Geographical segments:
The Group’s operations are located in the United Kingdom, Germany and USA. The Group’s Advertising and Marketing
Services and Research divisions are located solely in the United Kingdom. Public Relations is carried out in the United
Kingdom, Germany and USA.
The following table provides an analysis of the Group’s turnover by geographical market, based on the billing location of the
client:
Turnover by geographical market
2004
2005 Restated*
£’000 £’000
United Kingdom 73,894 72,740
Europe, Middle East and Africa 37,052 16,585
USA and rest of the world 5,457 2,861
116,403 92,186
Turnover from the Group’s discontinued operations was derived from the United Kingdom: £2,846,000 (2004 – £3,343,000).
The following is an analysis of the carrying amount of segment assets, and additions to tangible assets and intangible assets,
analysed by the geographical area in which the assets are located:
Carrying amount of Capital additions
segment assets
2004 2004
2005 Restated* 2005 Restated*
£’000 £’000 £’000 £’000
United Kingdom 103,372 68,788 1,205 871
Europe, Middle East and Africa 5,082 5,199 54 40
USA and rest of the world 436 260 14 4
108,890 74,247 1,273 915
5. Restructuring costs
During the year the Group incurred restructuring costs totalling £1,286,000. The restructuring costs relate to redundancies
£348,000, other property related costs of £601,000 and other costs of £337,000. There were no restructuring costs in 2004.
*Restated under IFRS (see note 49) and to restate discontinued operations (see note 12)
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 50 6. Operating profit
Profit from continuing operations has been arrived at after charging/(crediting):
2004
2005 Restated*
£’000 £’000
Depreciation of owned property, plant and equipment 1,261 1,100
Depreciation of assets held under finance leases 82 42
Amortisation of other intangible assets – computer software 130 129
Rentals under operating leases – property 4,055 4,171
Rentals under operating leases – other – 11
Profit on disposal of property, plant and equipment (33) (63)
Staff costs (see note 8) 40,169 34,920
Net foreign exchange losses 20 16
Auditors’ remuneration for audit services (see below) 225 149
Amounts payable to Deloitte & Touche LLP and their associates by the company and its UK subsidiary undertakings in
respect of non-audit services were £342,000 (2004 – £200,000) of which £59,000 (2004 – £52,000) has been charged to
the income statement.
A more detailed analysis of auditors’ remuneration is provided below.
2005 2005 2004 2004
£’000 % £’000 %
External audit services 225 40 149 43
Tax services:
Compliance services 59 10 52 15
Advisory services 113 20 23 6
Other services not covered above 170 30 125 36
567 100 349 100
The other services supplied by the auditors can be analysed as follows: Due diligence – £15,000 and fees in relation to their
role as Reporting Accountants – £155,000. The fees for due diligence, Reporting Accountant’s work and the majority of tax
advisory services have been capitalised as part of the costs of acquisition of VCCP Limited and De Facto Communications
Limited.
7. Profit on disposal of fixed asset investment
On 29 December 2004 the Group received verbal notice of Yougov’s intention to buy back shares and accordingly the Group
disposed of its shareholding in Yougov Ltd for £170,000. The disposal resulted in a net profit of £164,000 which is shown as
profit on disposal of a Fixed Asset Investment in the income statement. Costs arising on disposal were £6,000. Cash was
received for this in 2005. 
*Restated under IFRS (see note 49)
50 | 51
162315 new chime pg18-96  5/5/06  20:52  Page 51 8. Staff costs
The average monthly number of employees (including executive directors) was:
2005 2004
Number Number
Public Relations 356 372
Advertising and Marketing Services 258 188
Research 42 34
656 594
2004
2005 Restated*
£’000 £’000
Their aggregate remuneration comprised:
Wages and salaries 34,217 29,799
Social security costs 4,055 3,560
Pension costs – defined contribution plans (see note 45) 1,662 1,399
Costs of share options granted to directors and employees 235 162
40,169 34,920
9. Investment income
2005 2004
£’000 £’000
Interest on bank deposits 147 125
Dividend received from associate 5 –
152 125
10. Finance costs
2005 2004
£’000 £’000
Interest on bank overdrafts and loans (811) (1,070)
Interest on non-cash backed loan notes (2) –
Interest on obligations under finance leases (17) (11)
(830) (1,081)
Finance cost of deferred consideration (222) (87)
(1,052) (1,168)
*Restated under IFRS (see note 49)
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 52 11. Tax
2005 2004
£’000 £’000
Current tax:
UK corporation tax at 30% 1,804 1,897
Adjustment in respect of prior years (986) (194)
818 1,703
Foreign tax 49 108
Adjustment in respect of prior years 6 –
873 1,811
Deferred tax:
Current year originating temporary differences 688 279
Adjustment in respect of prior years 47 (39)
Tax charge for the year 1,608 2,051
Corporation tax is calculated at 30% of the estimated assessable profit for the year.
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:
2005 2005 2004 2004
£% £%
Profit before tax 7,325 6,424
Tax at the UK corporation tax rate of 30% 2,198 30 1,927 30
Tax effect of expenses that are not deductible in determining taxable profits 386 6 397 6
Income not taxable (60) (1) –
Tax effect of utilisation of tax losses not previously recognised 27 – (64) (1)
Prior year corporation tax adjustment (981) (15) (194) (3)
Prior year deferred tax adjustment 47 1 (39) (1)
Effect of difference tax rates of subsidiaries operating in other jurisdictions (9) – 24 1
Tax expense and effective tax rate for the year 1,608 21 2,051 32
Discontinued operations (227) –
1,381 2,051
52 | 53
162315 new chime pg18-96  5/5/06  20:52  Page 53 12. Discontinued operations
On 13 December 2005, the Group entered into a sale agreement to dispose of 76% of its holding in Rare Publishing, the
Group’s customer publishing agency to PSP Communications Limited. The disposal was effective from 31 December 2005,
on which date control of Rare Publishing passed to the acquirer. 
The results of the discontinued operation which has been included in the consolidated income statement, are as follows:
2005 2004
£’000 £’000
Turnover 2,846 3,343
Expenses (3,604) (3,416)
Net loss before tax (758) (73)
Attributable tax credit 227 –
Loss attributable to discontinued operations (531) (73)
Loss on disposal (129) –
Net loss on disposal of discontinued operations (660) (73)
During the year, the disposal of Rare Publishing resulted in a net cash outflow approximately equal to the net loss before
taxation to the Group’s net operating cashflows. There were no cashflows relating to financing and investing activities on this
discontinued operation.
A loss of £129,000 arose on the disposal of Rare Publishing, being the proceeds of disposal less the carrying amount of the
subsidiary’s net assets and attributable goodwill.
In 2004 the business of the Group’s creative agency, Girardot, ceased to trade. The results of this discontinued operation are
included in the comparative figures above and amount to a loss on disposal of £18,000. The comparative figures as
presented above, and as disclosed in our Interim statement, have been restated in respect of the disposal of Rare Publishing
during the year, in accordance with IFRS 5. This has had no impact on the result for the period but has led to a decrease in
turnover of £3,256,000, operating income of £1,753,000 and an increase in operating profit of £55,000. 
In 2005 a tax credit was taken on the loss of £758,000 at 30%.
The effect of discontinued operations on segment results is disclosed in note 4.
13. Profit on sale of associate
On 31 December 2005, the Group disposed of the remaining 51% of its associate HHCL United Limited (formerly
HHCL/Red Cell Advertising Limited) to WPP Group (UK) Limited. A profit of £2,662,000 arose on disposal, being the
proceeds of disposal less the costs of disposal.
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 54 14. Dividends
2004
2005 Restated*
£’000 £’000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2004 of 0.30p (2003 – £nil) per share 614 –
Interim dividend for the year ended 31 December 2005 of 0.16p (2004 – £nil) per share 395 –
1,009 –
Proposed final dividend for the year ended 31 December 2005 of 0.32p (2004 – 0.30p) per share. 793 614
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included
as a liability in these financial statements.
Under an arrangement dated 3 April 1996, The Chime Communications Employee Trust which holds 5,265,003 ordinary
shares representing 2.08% of the company’s called-up share capital, has agreed to waive all dividends.
*Restated under IFRS (see note 49)
15. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
From continuing and discontinued operations
2004
2005 Restated*
Basic 3.4p 2.2p
Diluted 3.3p 2.1p
£’000 £’000
Earnings for the purposes of basic earnings per share being net profit attributable to equity 
holders of the parent 7,536 4,123
Number Number
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share 222,362,754 189,947,802
Effect of dilutive potential ordinary shares:
Share options 1,895,423 2,590,300
Warrants 1,075,622 2,348,000
Weighted average number of ordinary shares for the purposes of diluted earnings per share 225,333,799 194,886,102
54 | 55
162315 new chime pg18-96  5/5/06  20:52  Page 55 15. Earnings per share (continued)
From continuing operations
2004
2005 Restated*
Basic 2.5p 2.2p
Diluted 2.5p 2.1p
£’000 £’000
Net profit attributable to equity holders of the parent 7,536 4,123
Adjustments to exclude loss for the year from discontinued operations 660 73
Adjustment to exclude profit for the year from sale of associate (2,662) –
Earnings from continuing operations for the purpose of basic earnings per share excluding 
discontinued operations 5,534 4,196
The denominators used are the same as those detailed above for both basic and diluted earnings per share from continuing
and discontinued operations.
Headline from continuing operations
2004
2005 Restated*
Headline basic 2.9p 2.2p
Headline diluted 2.9p 2.1p
£’000 £’000
Net profit attributable to equity holders of the parent 7,536 4,123
Adjustments to exclude loss for the year from discontinued operations 660 73
Adjustment to exclude profit for the year from sale of associate (2,662) –
Adjustment to exclude restructuring costs net of tax 900 –
Earnings from continuing operations for the purpose of headline basic earnings per share excluding
discontinued operations 6,434 4,196
The denominators used are the same as those detailed above for both basic and diluted earnings per share from continuing
and discontinued operations.
From discontinued operations
2005 2004
Basic 0.9p –
Diluted 0.9p –
The denominators used are the same as those detailed above for both basic and diluted earnings per share from continuing
and discontinued operations.
*Restated under IFRS (see note 49)
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 56 16. Goodwill
2005
£’000
Cost
Carrying amount at 1 January 2004 (as restated*) 44,950
Exchange differences (5)
Recognised on acquisition of a subsidiary 479
Other changes in respect of prior year acquisitions (325)
At 1 January 2005 45,099
Exchange differences (140)
Recognised on acquisition of a subsidiary (see note 41) 25,059
Recognised on acquisition of trade and assets 143
Derecognised on disposal of a subsidiary (see note 39) (511)
Other changes in respect of prior year acquisitions (1,044)
At 31 December 2005 68,606
The adjustment arising on prior year acquisitions relates to the contingent consideration being (over)/under-provided
as follows:
2005
£’000
Mansfield Lang Limited (42)
TTA Public Relations Limited 107
The Smart Company.Net Limited (714)
MMK Markt & Medien-Kommunication GmbH (395)
(1,044)
Goodwill is comprised of the following substantial holdings:
2005
£’000
VCCP Limited 22,819
QBO Bell Pottinger Limited 8,487
Harvard Public Relations Limited 7,734
Opinion Leader Research Limited/The Smart Company.Net Limited 6,511
45,551
Other acquired goodwill on the acquisition of 16 companies 23,055
68,606
*Restated under IFRS (see note 49)
56 | 57
162315 new chime pg18-96  5/5/06  20:52  Page 57 17. Other intangible assets
Computer Software
2004
2005 Restated*
£’000 £’000
Cost
At 1 January 695 681
Additions 6 14
Disposals (26) –
At 31 December 675 695
Accumulated amortisation
At 1 January 431 302
Charge for the year 130 129
Disposals (26) –
At 31 December 535 431
Carrying amount at 31 December 140 264
*Restated under IFRS (see note 49)
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 58 18. Property, plant and equipment
Short-term Fixtures, 
leasehold Motor fittings and
improvements vehicles computers Total
£’000 £’000 £’000 £’000
Cost
At 1 January 2004 (as restated*) 3,639 1,844 7,124 12,607
Additions 228 243 430 901
Acquisition of subsidiary – 13 22 35
Exchange differences – – (21) (21)
Disposals – (770) (723) (1,493)
At 1 January 2005 3,867 1,330 6,832 12,029
Additions 291 134 843 1,268
Acquisition of subsidiary 21 – 494 515
Disposal of subsidiary – – (29) (29)
Exchange differences – (1) 9 8
Disposals (1,058) (631) (2,611) (4,300)
At 31 December 2005 3,121 832 5,538 9,491
Accumulated depreciation
At 1 January 2004 2,399 1,172 6,585 10,156
Charge for the year 637 222 283 1,142
Fair value adjustment – – 40 40
Exchange differences – – (21) (21)
Eliminated on disposal – (650) (717) (1,367)
At 1 January 2005 3,036 744 6,170 9,950
Charge for the year 702 161 480 1,343
Disposal of subsidiary – – (3) (3)
Fair value adjustment – – – –
Exchange differences – (1) 12 11
Eliminated on disposal (1,052) (470) (2,593) (4,115)
At 31 December 2005 2,686 434 4,066 7,186
Carrying amount at 31 December 2005 435 398 1,472 2,305
Carrying amount at 31 December 2004 831 586 662 2,079
The carrying amount of the Group’s motor vehicles includes an amount of £316,000 in respect of assets held under finance
leases. The carrying amount of the Group’s motor fixtures, fittings and computers includes an amount of £61,000 in respect
of assets held under finance leases. As stated in note 28, the Group’s obligations under finance leases are secured by the
lessor’s charges over the leased assets.
*Restated under IFRS (see note 49)
58 | 59
162315 new chime pg18-96  5/5/06  20:52  Page 59 19. Subsidiaries, associates and joint ventures
The Group’s principal trading subsidiaries, associated undertakings and joint venture undertakings, which are all incorporated
in Great Britain (except where noted) are listed below:
Proportion
of ordinary shares 
Company Nature of business held and voting rights
Subsidiaries
Baxter Hulme PR and Marketing Limited § Public Relations 100%
Bell Pottinger Communications Limited Public Relations 100%
Bell Pottinger Corporate and Financial Limited Financial Public Relations 100%
Bell Pottinger Public Affairs Limited Political Public Relations 100%
Bell Pottinger USA Inc * Public Relations 100%
De Facto Communications Limited § Healthcare Public Relations 100%
Gasoline Limited Consumer Marketings 55%
Good Relations Limited Public Relations 100%
Harvard Public Relations GmbH † Public Relations 100%
Harvard Public Relations Limited § Public Relations 100%
Heresy Limited § Direct Marketing 100%
Heresy IMS Group plc § Advertising, Marketing and Design 100%
Insight Marketing & Communications Limited § Public Relations 100%
MMK Markt & Medien-Kommunication GmbH † Public Relations 100%
Opinion Leader Research Limited Market Research 100%
Pure Media Group Limited Media Buying 100%
QBO Bell Pottinger Limited Consumer Public Relations & Sports Marketing 100%
Resonate Communications Limited Consumer Public Relations 100%
Stephens Francis Whitson Limited Direct Marketing 51%
Teamspirit Limited † Financial Services Advertising and Marketing 100%
Traffic Werbeagentur GmbH † Public Relations 100%
The Smart Company.Net Limited § Corporate & Social Responsibility Consultancy 100%
TTA Public Relations Limited Property Marketing 70%
VCCP Limited § Advertising and Marketing 100%
Associates
Meropa Communications (Pty) Limited ‡§ Public Relations 20%
Killa Communications Limited Public Relations & Environment Marketing 25%
Youthtrends Limited § Events and Market Research 35%
J & J Media Limited § Celebrity Media 30%
Rare Publishing Limited Customer Publishing 24%
Colour TV Limited Television Production 45%
‡  Incorporated in South Africa
† Incorporated in Germany
*  Incorporated in America
§ Direct subsidiary/associate of Chime Communications plc
These companies operate principally in their country of incorporation.
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 60 20. Investments in associates
2004
2005 Restated*
£’000 £’000
Carrying value of investments and loans to associates 987 790
Share of (loss)/profit (96) 17
891 807
2005 2004
Aggregate amounts relating to associates £’000 £’000
Total assets 1,281 8,705
Total liabilities (1,631) (8,518)
Net assets (350) 187
Turnover 2,395 23,447
(Loss)/profit for the year (264) 548
Included in the above liabilities owed by the associates are loans to the Group of £704,772 (2004 – £589,000).
A list of the significant investments in associates, including the name, country of incorporation, proportion of ownership
interest is given in note 19.
On 31 December 2005 the company disposed of its 51% share in HHCL United (formerly HHCL/Red Cell Advertising) as
disclosed in note 40.
21. Investments in equity accounted joint ventures
On 6 October 2005 the Group disposed of its investment in Flipside Television Limited to Colour TV Limited. Flipside
Television Limited had previously been accounted for as a joint venture. The disposal was for the consideration of £1.
Flipside Television Limited still has loans outstanding to the Group of £214,000 as at 31 December 2005 (2004 – £214,000).
2005 2004
£’000 £’000
Carrying value at 1 January 15 –
Transferred from debtors – 379
Transfer from provision for liabilities and charges – (319)
Loans to associates – 69
Amounts of loans written off – (234)
Share of post acquisition losses net of dividend received – 120
Disposal of investment in joint venture (15) –
Carrying value at 31 December – 15
2005 2004
Aggregate amounts relating to joint ventures £’000 £’000
Total assets – 190
Total liabilities – (659)
Net liabilities – (469)
Turnover – 396
Profit for the year – 282
*Restated under IFRS (see note 49)
60 | 61
162315 new chime pg18-96  5/5/06  20:52  Page 61 22. Available-for-sale investments
2005 2004
£’000 £’000
Listed trading investments
Fair value – 3
The investments were disposed of during 2005 for market value.
23. Due from deferred consideration
Amounts shown are due from the disposal of Rare Publishing Limited, being the full amount of potential deferred
consideration, and Smithfield Financial Limited being the potential deferred consideration due after one year.
24. Deferred tax
2005 2004
£’000 £’000
Deferred tax asset movement
At 1 January 2004 784 1,024
Acquisition of subsidiaries 1,158 –
Charge to equity 131 –
Charge to the income statement (735) (240)
At 31 December 2004 1,338 784
Analysis of deferred tax asset
Capital allowances in excess of depreciation 650 699
Short term temporary differences 550 85
Losses 138 –
1,338 784
Losses of £5.1 million (2004 – £2.9 million) have not been recognised in deferred taxation due to insufficient certainty that
there will be appropriate profits available in the future to utilise them.
25. Work in progress
2005 2004
£’000 £’000
Amounts recoverable on customer contracts 565 426
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 62 26. Trade and other receivables
2004
2005 Restated*
£’000 £’000
Amounts receivable from provision of services 19,677 14,339
Amounts due from disposal of businesses 2,900 1,168
Other debtors 953 491
Prepayments and accrued income 3,568 2,716
27,098 18,714
The average credit period taken on provision of services is 58 days (2004 – 54 days). An allowance has been made for
estimated irrecoverable amounts from the provision of services of £494,000. This allowance has been determined by
considering specific doubtful balances and by reference to past default experience.
The directors consider that the carrying amount of trade and other receivables approximates their fair value.
27. Trade and other payables
2004
2005 Restated*
£’000 £’000
Trade creditors 9,063 5,974
Other taxation and social security 2,616 1,924
Accruals and deferred income 21,204 13,047
Other creditors 827 729
Loan notes 1,254 1,748
34,964 23,422
The average credit period taken for trade purchases is 47 days. The directors consider that the carrying amount of trade
payables 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 accruing on the deposit is payable to the holders of the loan notes less any costs arising.
Loan notes totalling £1,254,000 are outstanding as part of the initial and contingent consideration on the acquisition of
HHCL Group Limited and the initial and contingent consideration on the acquisition of Roose Holdings Limited and The
Smart Company.Net Limited.
Loan notes totalling £5.5 million were issued to senior employees of HHCL Group Limited in two instalments, the balance
outstanding at 31 December 2005 being £1.1 million (2004 – £1.1 million). The loan notes are repayable on giving 90 days’
notice by 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
contingent consideration. The loan notes are repayable at anytime after one year from the date of issue. The balance
outstanding at 31 December 2005 is £0.1 million (2004 – £0.4 million). 
Loan notes totalling £0.1 million were issued to the original shareholders of The Smart Company.Net Limited for the
contingent consideration. The loan notes are repayable at any time after six months from the date of issue. The loan
notes are not guaranteed by Royal Bank of Scotland plc. The balance outstanding at 31 December 2005 is £0.1 million
(2004 – £0.0 million).
Interest receivable on loan notes is in the range of 3.85% to 4.63%.
The loan notes are guaranteed by Royal Bank of Scotland plc, unless otherwise stated, who hold a deposit of £1.2 million
against them.
*Restated under IFRS (see note 49)
62 | 63
162315 new chime pg18-96  5/5/06  20:52  Page 63 28. Obligations under finance leases
Minimum Present Minimum Present
lease value of lease lease value of lease
payments payments payments payments
2005 2005 2004 2004
£’000 £’000 £’000 £’000
Amounts payable under finance leases
Within one year 154 142 109 100
Between one and two years 104 99 105 99
Between two and three years 29 30 39 37
287 271 253 236
Less: future finance charges (16) – (17) –
271 271 236 236
Less: Amount due for settlement within 12 months (shown under current liabilities) (142) (100)
Amount due for settlement after 12 months 129 136
It 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.
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 64 29. Bank overdrafts and loans
2005 2004
£’000 £’000
Bank overdrafts – 1,500
Bank loans 8,485 8,895
8,485 10,395
The borrowings are repayable as follows:
On demand or within one year – 1,500
In the second year 8,485 8,895
8,485 10,395
Less: Amount due for settlement within 12 months (shown under current liabilities) –
(1,500)
Amount due for settlement after 12 months 8,485 8,895
All 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 an overdraft facility of £2 million which is renewable on 6th February 2006. The overdraft facility is
repayable on demand.
(ii) The Group has a committed facility of £14 million from March 2005 and £10 million from March 2006 until 1 July 2007.
(iii) The bank loan and overdrafts bear interest at 1% above LIBOR.
A cross-guarantee exists between each of the subsidiaries and the parent company. Royal Bank of Scotland holds
debentures over the assets of the company and its subsidiaries in respect of the bank loans.
At 31 December 2005, the Group had available £5.5 million (2004 – £9 million) of undrawn committed borrowing facilities
in respect of which all 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 2005 there was no material difference between the fair value of financial assets and financial liabilities and
their book value.
64 | 65
162315 new chime pg18-96  5/5/06  20:52  Page 65 30. Provisions
Deferred/ Deferred/
Contingent Contingent
consideration consideration Vacant
– shares – cash property Total
£’000 £’000 £’000 £’000
At 1 January 2005 (as restated*) 783 1,485 753 3,021
On acquisition of subsidiaries 4,082 3,985 – 8,067
Deferred no longer payable (288) (883) – (1,171)
Adjustment to prior year acquisitions –68 – 68
Discounting charge to the income statement 104 118 – 222
Charged to the income statement – – 343 343
Payments made (329) (298) (353) (980)
At 31 December 2005 4,352 4,475 743 9,570
Included in current liabilities 210 207 273 690
Included in non-current liabilities 4,142 4,268 470 8,880
4,352 4,475 743 9,570
The vacant property provision remaining at 31 December 2005 relates to two buildings, one near Heathrow and one in
Chelsea. 
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
successfully sublet 7,000 sq ft, the remaining 5,000 sq ft will be reoccupied by Group companies during 2006. The rental
income achieved on the sub let space is lower than that rent currently being paid under the lease. A further provision of
£118,000 was made in 2005 for this property.
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 per annum with an upward rent review due in June 2010. The Group is currently in negotiations with
potential tenants to sublet the building. The rent achieved is expected to be no less than that being paid under the lease. A
provision of £225,000 was made in 2005. The provisions are an estimate of the difference between the anticipated income
and costs through to the end of the lease, considering expected movements on the rental market and rent reviews under the
current subleases.
Contingent consideration relates to acquisitions made in current and previous years. The amounts payable are dependent on
the future profits of the companies acquired. Further details of the deferred considerations arising from current year
acquisitions are shown in note 41.
The contingent consideration shares comprises shares to be issued in respect of acquisitions and has been shown as a
liability in accordance with IAS 32 Financial Instruments: Presentation and Disclosure.
*Restated under IFRS (see note 49)
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 66 31. Share capital
2005 Nominal Value 2004 Nominal Value
Number £’000 Number £’000
Authorised: at 1 January and 31 December ordinary at 5p each 764,071,396 38,204 764,071,396 38,204
Called up, allotted and fully paid at 1 January 206,236,705 10,312 159,607,087 7,980
Issues relating to contingent consideration on
The Smart Company.Net Limited 183,026 9 ––
Issues relating to the acquisition of VCCP Limited 25,438,596 1,272 ––
Placing and open offer 20,388,181 1,019 45,602,024 2,280
Issues relating to contingent consideration on
Mansfield Lang Direct Media Limited –– 254,626 13
Issues relating to contingent consideration on
TTA Public Relations Limited 834,061 42 415,825 21
Issues relating to contingent consideration on
Traffic Werbeagentur GmbH –– 357,143 18
Called up, allotted and fully paid at 31 December 253,080,569 12,654 206,236,705 10,312
The Company has one class of ordinary shares which carry no right to fixed income.
On 1 May 2005, 183,026 shares were issued in respect of contingent consideration for The Smart Company.Net Limited.
The fair value of these shares was £0.304. 
On 19 July 2005, 20,388,181 shares were issued in respect of a placing and open offer. The fair value of these shares was
£0.26. Costs relating to this were £611,000.
On 19 July 2005, 25,438,596 shares were issued in respect of the acquisition of VCCP Limited. The fair value of these
shares was £0.285. 
On 1 May 2005, 834,061 shares were issued in respect of contingent consideration for TTA Public Relations Limited. The fair
value of these shares was £0.328.
On 30 September 2003, the Company issued warrants to the Royal Bank of Scotland (the “Bank”) over 7,949,108 ordinary
shares at a strike price of 25p. The warrants were issued following an agreement made between the Company and the
Royal Bank of Scotland on 14 March 2003 pursuant to which the Company agreed to issue to a subsidiary of the Bank
warrants to subscribe for up to 5 per cent of the fully diluted share capital of the Company. The warrants are exercisable at
any time prior to the third anniversary of the date of issue. Subsequent to the placing of an open offer in February 2004, the
number of ordinary shares was amended to 8,280,320 at a strike price of 24p.
66 | 67
162315 new chime pg18-96  5/5/06  20:52  Page 67 32. Share premium account
Share
premium
£’000
Balance at 1 January 2005 16,548
Premium arising on issue of equity shares 10,538
Expenses of issue of equity shares (611)
Balance at 31 December 2005 26,475
33. Own shares
Own
shares
£’000
Balance at 1 January 2005 (6,969)
Disposed of on exercise of options 8
Balance at 31 December 2005 (6,961)
The own shares reserve represents the cost of shares in Chime Communications plc purchased in the market and held by
the The Chime Communications Employee Trust to satisfy options under the Group’s share options schemes (see note 44).
The Chime Communications Employee Trust (“The Trust”) was established in 1997 in Jersey. The trustee is Mourant & Co.
Trustees Limited. The beneficiaries of the Trust are employees and former employees of the Company and the Group
(including any director) and the spouses and children or stepchildren of such employees or former employees. The purpose
of the Trust is to facilitate and encourage the ownership of shares by employees. Distributions from the Trust are agreed by
the trustee on recommendations from the Board of Directors of Chime Communications plc.
The Trust currently holds 5,265,003 ordinary shares which have a nominal value of £263,250 and over which options were
granted in November 1997, May 1998, November 1998, April 1999, November 2000 and April 2003. All costs of the Trust
are borne by Chime Communications plc and expensed through the income statement. The Trust has opted to waive all
dividends. The market value of the shares in the Trust at 31 December 2005 was £1,487,000 (2004 – £1,478,000).
34. Equity reserves
Share
based Capital
payment reduction
reserve reserve Total
£’000 £’000 £’000
Balance at 1 January 2005 (as restated*) 197 32,385 32,582
Credit in relation to share based payments 235 – 235
Balance at 31 December 2005 432 32,385 32,817
Capital reduction reserve relates to the capital reduction undertaken in October 2003. The reserve will not be treated as
realised profits of the Company until any debt or claim outstanding as at 1 July 2003 has been repaid or remedied. If on
1 July 2013 there remains only liabilities outstanding in relation to property leases the amount outstanding to the reserve may
be released and the undertaking discharged or replaced by new share issues.
The share based payments reserve arises from the cost of share based payment transactions with employees, which is
credited to equity in accordance with IFRS 2 Share Based Payments.
*Restated under IFRS (see note 49)
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 68 35. Translation reserves
2005
£’000
Balance at 1 January 2005 (as restated*) (2)
Exchange differences on translation of overseas operations (137)
Balance at 31 December 2005 (139)
36. Accumulated loss
2005
£’000
Balance at 1 January 2005 (as restated*) (18,027)
Net profit for the year attributable to equity holders of the parent 7,536
Deferred tax benefit in respect of share based payments 131
Dividends paid (1,009)
Loss on disposal of own shares held in treasury (6)
(11,375)
37. Reconciliation of equity attributable to equity holders of parent 
2005 2004
£’000 £’000
Balance at 1 January (as restated*) 34,444 11,442
Dividends paid (1,009) –
Disposal of own equity shares held in treasury (6) (3)
Deferred tax benefit in respect of share based payments 131 –
Credit in relation to share based payments 235 162
Own shares disposed of on exercise of options 8 15
Net profit for the year attributable to equity holders of the parent 7,399 4,121
Increase in share capital 12,269 18,707
Balance at 31 December 53,471 34,444
*Restated under IFRS (see note 49)
68 | 69
162315 new chime pg18-96  5/5/06  20:52  Page 69 38. Notes to the cash flow statement
2004
2005 Restated*
£’000 £’000
Operating profit 8,225 7,303
Adjustments for:
Loss from discontinued operation (757) (73)
Share of results of associates and joint ventures 111 (175)
Share based payment expense 235 162
Translation differences 6 22
Depreciation of property, plant and equipment 1,343 1,142
Amortisation of other intangible assets 130 129
Gain on disposal of property, plant and equipment (33) (63)
Decrease in provisions (10) (845)
Operating cash flows before movements in working capital 9,250 7,602
Increase in work in progress (80) 109
Increase in receivables (1,724) (1,195)
Increase in payables 2,929 2,462
Cash generated by operations 10,375 8,978
Income taxes paid (1,291) (1,383)
Interest paid (845) (1,455)
Net cash from operating activities 8,239 6,140
Additions to fixtures and equipment during the year amounting to £57,117 and additions to motor vehicles during the year
amounting to £121,056 were financed by new finance leases (2004 – £262,000). 
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 other short-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 £6,056,000 (2004 – £2,987,000) and
overdrafts of £1,500,000 (2004 – £9,330,000).
*Restated under IFRS (see note 49)
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 70 39. Disposal of subsidiary
As referred to in note 12, on 31 December 2005 the Group disposed of the trade and assets of, and 76% of its interest in
Rare Publishing Limited. The trade and assets of Rare Publishing have previously been shown in Heresy IMS Group plc. Rare
Publishing Limited, previously a dormant company was disposed of as part of the agreement.
The net assets of Rare Publishing at 31 December 2005 were as follows:
31 December
2005
Assets transferred from Heresy IMS Group plc £’000
Property, plant and equipment 26
Investments 1
Intangible assets 24
Trade receivables 27
Bank balances and cash 36
Creditors (119)
(5)
Net assets of Rare Publishing Limited 30
25
Loss on disposal (129)
Goodwill transferred to the income statement in respect of the disposal 378
Total consideration 274
Satisfied by:
Cash (108)
Deferred consideration 382
274
Net cash outflow arising on disposal:
Cash consideration (34)
Cash and cash equivalents disposed of (64)
(98)
Cash consideration includes £74,000 of disposal costs accrued but not paid at 31 December 2005, and is represented by
actual cash payments of £34,000
The deferred consideration will be settled annually in cash by the purchaser on or before 31st March each year dependant
on the profits of the company for the years 2006 to 2008 inclusive. 
The impact of Rare Publishing Limited on the Group’s results in the current and prior periods is disclosed in note 12.
As a result of Rare Publishing becoming an associate £108,000 was reallocated from goodwill to investments, representing
the opening cost of the investment.
70 | 71
162315 new chime pg18-96  5/5/06  20:52  Page 71 40. Disposal of associate
As referred to in note 13, on 31 December 2005, the Group disposed of the remaining 51% of its associate HHCL United
Limited (formerly HHCL/Red Cell Advertising Limited) to WPP Group (UK) Limited. 
The associate was not recognised on the balance sheet as at 1 January 2005 as it had net liabilities. The disposal proceeds
of £2,750,000 were received by the Group during the first week of January 2006. Costs arising on the disposal amounted to
£88,000, of these £38,000 were accrued but not paid at 31 December 2005. The net cash outflow arising on the disposal in
2005 amounted to £50,000. Goodwill of £12,669,000 had been written off directly to reserves on acquisition, and
consequently is not included in the calculation of the profit on disposal. 
41. Acquisition of subsidiary
VCCP Limited and Stephens Francis Whitson Limited
On 1 July 2005, the Group acquired the whole issued shared capital of VCCP Limited and 51% of the issued share capital of
Stephens Francis Whitson Limited. The fair value of the consideration given for the acquisition was £22,428,909. An initial
payment of £14,500,000 was satisfied by £7,250,000 in cash on completion, of which £5,300,927 was generated from a
placing and open offer and £7,250,000 provided by the issue to the shareholders in VCCP Limited of 25,438,596 new
ordinary shares of 5 pence each at a premium 23.5p. Costs relating to the acquisition amounted to £698,862, of which
£628,493 had been paid in the year. Costs relating to the placing and open offer amounted to £610,740, of which £608,789
had been paid in the year. The new ordinary shares are subject to a restriction on sale following completion. In addition a
rental deposit of £370,125 will be passed onto the vendors when recovered from the lessor.
Contingent consideration of £15,500,000 is dependent on the profitability of VCCP Limited for the seven years to
31 December 2010. The Group has provided for contingent consideration of £8,000,000 to date, this has been discounted
to a net present value of £6,859,918, with the resulting discounting charge of £1,140,082 to be taken through the income
statement over the earnout period. 
The fair value of the net liabilities acquired was £(390,107), resulting in goodwill of £22,819,016 which has been capitalised
as an intangible fixed asset.
Management carried out a review subsequent to the acquisition of VCCP Limited to assess if there were any intangible
assets acquired as part of the transaction. Management concluded that no value could be ascribed to intangibles assets on
the basis that the company acquired was only formed in 2002 and the nature of the client contracts.
In the post acquisition period, VCCP and SFW Limited contributed £1,259,577 to the profit on ordinary activities before
taxation and £6,615,670 to operating income.
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 72 41. Acquisition of subsidiary (continued)
Book Fair value Fair
value adjustments value
£’000 £’000 £’000
Net assets acquired
Tangible assets 462 – 462
Trade and other receivables 4,938 – 4,938
Cash and cash equivalents 1,916 – 1,916
Trade and other payables (7,762) – (7,762)
(446)
Minority interest 56
(390)
Goodwill 22,819
Total consideration 22,429
Satisfied by:
Cash 7,250
Shares allotted 7,250
Directly attributable costs 699
Rent deposit payable to vendor 370
Deferred consideration 6,860
22,429
Net cash outflow arising on acquisition:
Cash consideration 7,878
Cash and cash equivalents acquired (1,916)
5,962
Goodwill arises from anticipated profitability and future operating synergies from the combination.
72 | 73
162315 new chime pg18-96  5/5/06  20:52  Page 73 41. Acquisition of subsidiary (continued)
De Facto Communications Limited
On 22 April 2005, the Group acquired an additional 19.82% of the share capital of De Facto Communications Limited to
bring its holding to 40%. The fair value of the consideration was £552 and there were no costs relating to the acquisition.
On 20 September 2005, the Group acquired the remaining 60% of the share capital of De Facto Communications Limited
that it did not previously own. The fair value of the consideration given for the acquisition was £1,148,660. An initial payment
of £182,706 was satisfied in cash on completion. Costs relating to the acquisition amounted to £101,973, of which £82,473
had been paid in the year. 
Contingent consideration of £1,816,180 is dependent on the profitability of De Facto Communications Limited for the four
years to 31 December 2008. The Group has provided for contingent consideration of £975,000 to date, this has been
discounted to a net present value of £863,981, with the resulting discounting charge of £111,019 to be taken through the
profit and loss account over the earnout period.
The fair value of the net liabilities acquired was £(485,167), resulting in goodwill of £1,633,827, which has been capitalised as
an intangible fixed asset. Additionally £127,000 has been taken to goodwill from the company’s investments in associates.
In the post acquisition period, De Facto Communications Limited contributed £117,354 to the profit on ordinary activities
before taxation and £585,336 to operating income.
Book Fair value Fair
value adjustments value
£’000 £’000 £’000
Net assets acquired
Tangible assets 50 – 50
Trade and other receivables 689 – 689
Cash and cash equivalents (227) – (227)
Trade and other payables (997) – (997)
(485)
Goodwill 1,761
Transfer from investment in an associate (127)
Total consideration 1,149
Satisfied by:
Cash 183
Directly attributable costs 102
Deferred consideration 864
1,149
Net cash outflow arising on acquisition:
Cash consideration 265
Cash and cash equivalents acquired 227
492
Goodwill arises from anticipated profitability and future operating synergies from the combination.
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 74 41. Acquisition of subsidiary (continued)
Baxter Hulme PR and Marketing Limited
On 22 July 2005, the Group acquired the whole issued shared capital of Baxter Hulme PR and Marketing Limited. The fair
value of the consideration given for the acquisition was £499,998. An initial payment of £153,750 was satisfied by cash on
completion. Costs relating to the acquisition amounted to £55,750, of which £50,750 had been paid in the year. 
Contingent consideration of £846,250 is dependent on the profitability of Baxter Hulme PR and Marketing Limited for the
three years to 31 March 2008. The Group has provided for contingent consideration of £319,750 to date, this has been
discounted to a net present value of £290,498, with the resulting discounting charge of £29,252 to be taken through the
profit and loss account over the earnout period.
The fair value of the net liabilities acquired was £21,840, resulting in goodwill of £478,158 which has been capitalised as an
intangible fixed asset.
In the post acquisition period, Baxter Hulme PR and Marketing Limited contributed £26,703 to the profit on ordinary
activities before taxation and £184,113 to operating income.
Book Fair value Fair
value adjustments value
£’000 £’000 £’000
Net assets acquired
Tangible assets 3– 3
Trade and other receivables 50 – 50
Cash and cash equivalents 76 – 76
Trade and other payables (107) – (107)
22
Goodwill 478
Total consideration 500
Satisfied by:
Cash 154
Directly attributable costs 56
Deferred consideration 290
500
Net cash outflow arising on acquisition:
Cash consideration 204
Cash and cash equivalents acquired (76)
128
Goodwill arises from anticipated profitability and future operating synergies from the combination.
74 | 75
162315 new chime pg18-96  5/5/06  20:52  Page 75 41. Acquisition of subsidiary (continued)
If the acquisition of VCCP Limited, Stephens Francis Whitson Limited, De Facto Communications Limited and Baxter Hulme
PR and Marketing Limited had been completed on the first day of the financial year, Group turnover for the year would have
been £128,778,000 and Group profit attributable to equity holders of the parent would have been £5,901,000.
Other deferred consideration of £612,169 was settled during the year in respect of acquisitions made in previous years by
cash payments of £232,885, £50,494 cash paid relating to non-cash backed loan notes, and £328,790 by the issue of
shares. £215,504 of cash paid in the year relates to costs in respect of prior year acquisitions. The total payment in respect
of the purchase of subsidiary undertakings was therefore £8,847,000. Cash acquired on acquisition amounted to
£1,765,000, therefore the net cash effect in respect of subsidiary undertakings was £7,082,000. In addition £109,000 was
paid in the year in order to acquire the trade of other businesses.
42. Contingent liabilities and commitments
In addition to the potential deferred and contingent consideration as disclosed in note 30 of £8,827,000, at 31 December
2005 there was a maximum financial commitment of £10,956,000 in respect of unprovided capital expenditure. This relates
to the acquisition of The Smart Company.Net Limited in 2001 (£2,089,000), and VCCP Limited (£7,500,000), De Facto
Communications Limited (£841,000) and Baxter Hulme PR and Marketing (£527,000) in 2005. 
The Smart Company.Net Limited – The maximum contingent consideration payable is £4,400,000, however provision has
only been made for £2,311,000 in the accounts to date. The contingent consideration is a multiple of 4.5 times profit before
tax multiplied by 37.5% of the combined profits of The Smart Company.Net limited and Opinion Leader Research Limited for
the five years ending 31 December 2006.
VCCP Limited – The maximum contingent consideration payable is £15,500,000, however provision has only been made for
£8,000,000 (before discounting) in the accounts to date. The contingent consideration is a multiple of 8 times profit before
tax for the following periods: average of the three years 2005 to 2007 inclusive, 2008, 2009 and 2007. 
De Facto Communications Limited – The maximum contingent consideration payable is £1,816,000, however provision has
only been made for £975,000 in the accounts to date (before discounting). The contingent consideration is 60% of the
following: 5 times average profit after tax for 2005 and 2006, and 5 or 6 times average profit after tax for 2007 and 2008, the
higher multiple only being payable if the profit margin for both years exceeds 15%.
Baxter Hulme PR and marketing Limited – The maximum contingent consideration payable is £846,250, however provision
has only been made for £319,750 in the accounts to date (before discounting). The contingent consideration is a multiple of
4.1 times profit before tax for the year to 31 March 2006 and the average profits before tax for the years to 31 March 2007
and 2008.
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 76 43. Operating lease arrangements
The Group as lessee
2005 2004
£’000 £’000
Minimum lease payments under operating leases 
recognised as an expense for the year 38,589 46,082
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under
non-cancellable operating leases, which fall due as follows:
2005 2004
£’000 £’000
Within one year 182 22
In the second to fifth years inclusive 2,461 551
After five years 35,946 45,509
38,589 46,082
Operating lease payments represent rentals payable by the Group for its office properties and for certain office equipment. 
The Group as lessor
At the balance sheet date, the Group had contracted with tenants for the following future minimum lease payments:
2005 2004
£’000 £’000
Within one year 164 148
In the second to fifth years inclusive 537 1,022
After five years – 540
Property rental income earned during the year was £764,000 (2004 – £738,000).
76 | 77
162315 new chime pg18-96  5/5/06  20:52  Page 77 44. Share based payments
Equity-settled share option plan
The Group operates two plans, an executive share option scheme and an employee savings related scheme. The exercise
price of the options granted under the above scheme is equal to the market value of the company’s shares at the time when
the options are granted. The vesting period is generally three years but if they are special options they are five years. If the
options remain unexercised after a period of 10 years from the date of grant, the options expire. Furthermore, options are
forfeited if the employee leaves the Group before the options vest. All executive options granted from November 1997 (other
than special executive options) are subject to the Group achieving during the period of grant, an average total shareholder
return on the shares for the preceding three years which exceeds the average FTSE 100 total shareholder return for the
same period and a percentage growth in earnings per share which is at least equal to the percentage growth in the Retail
Price Index plus 6% over three years. Executive share options granted before November 1997 have no performance criteria.
Lord Bell has special executive options over 1,000,000 ordinary shares. These special options will not ordinarily be
exercisable less than five years from the date of grant and are subject to a performance target of growth in diluted earnings
per ordinary share being achieved such as would place the Group in the upper quartile of the FTSE 100 companies compiled
by reference to growth in diluted earnings per share over the same period.
2005 Weighted average 2004 Weighted average
exercise price exercise price
Options (in £) Options (in £)
Outstanding at beginning of year 16,120,062 £0.474 13,338,564 £0.678
Granted during the year 2,339,187 £0.275 5,963,224 £0.347
Lapsed during the year (1,609,629) £0.651 (3,170,726) £1.093
Exercised during the year (15,000) £0.155 (11,000) £0.155
Outstanding at the end of the year 16,834,620 £0.430 16,120,062 £0.474
Exercisable at the end of the year 489,008 578,016
The weighted average share price at the date of exercise for share options exercised during the year was £0.3025 (2004 –
£0.29). The options outstanding at 31 December 2005 had a weighted average exercise price of £0.43 (2004 – £0.474), and
a weighted average remaining contractual life of 2,482 days (2004 – 2,687 days). In 2005 options were granted on 19 April
2005, 13 May 2005 and 25 October 2005, the aggregate of the estimated fair values of the options granted on those dates
is £123,240. In 2004 options were granted on 8 April 2004, 4 May 2004 and 19 October 2004, the aggregate of the
estimated fair values of the options granted on those dates is £393,139.
*Restated under IFRS (see note 49)
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 78 44. Share based payments (continued)
The fair value was calculated using the Monte Carlo model.
In valuing the options, the following assumptions were used:
2004
2005 Restated*
£’000 £’000
Weighted average share price £0.273 £0.272
Weighted average exercise price £0.272 £0.271
Expected volatility 35% 35%
Expected life – executive scheme 3 years 3 years
Expected life – savings related scheme 5 years 5 years
Risk-free rate 4.06% 3.95%
Dividend yield 1.89% 1.89%
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous two
years. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of
non-transferability, exercise restrictions, and behavioural considerations.
The Group recognised total expenses of £235,000 and £162,000 related to equity-settled share-based payment
transactions in 2005 and 2004 respectively.
45. Retirement benefit schemes
The Group operates a defined contribution pension scheme for the benefit of the majority of employees. This is an
independently administered fund, the assets of which are held separately from those of the Company. The amounts charged
in this year and the prior year are disclosed in note 8. 
46. Events after the balance sheet date
On 27 January 2006 the Group acquired 55% of Ledbury Research which provides research and advice to brands who
market to high net worth consumers. The initial market investment was £120,000 with further consideration of up to 160,000
new Chime shares dependent on the two vendors remaining with the Group, and the pre tax profit performance over the
next four years.
On 1 February 2006 the Group cancelled the warrants over 8,280,320 ordinary shares held by The Royal Bank of Scotland
in return for a payment of £800,000. These warrants were issued in September 2003 as part of our refinancing
arrangements at an exercise price of 24p and entitled The Royal Bank of Scotland to subscribe for the Shares at any time up
to 30 September 2006. 
In March 2006 a new 3 year facility with the Royal Bank of Scotland for £15 million has been agreed until March 2009.
Principal terms and covenants remain as before.
*Restated under IFRS (see note 49)
78 | 79
162315 new chime pg18-96  5/5/06  20:52  Page 79 47. Related party transactions
Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation
and are not disclosed in this note (details of subsidiaries are included in note 19). Transactions between the Group and its
associates are disclosed below. Transactions between the company and its subsidiaries and associates are disclosed in
the company’s separate financial statements.
Trading transactions
During the year, Group companies entered into the following transactions with related parties who are not members of
the Group:
Amounts Amounts Amounts Amounts
Purchase owed by owed to owed by owed to
Sale of of related related Sale of of related related
services services parties parties services services parties parties
2005 2005 2005 2005 2004 2004 2004 2004
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Associates
Colour TV 168 – 185 – ––––
Killa Communications 15 – 1 – 6– 7–
HHCL United –16 – 8 95 28 36 –
J & J Media 34 – 115 – ––––
Meropa – – 333 – – – 320 –
Youthtrends 131 12 118 – –– 5–
You Gov –––– – – 264 –
Joint Venture
Flipside Television –––– 105 – 226 –
Sales of goods to related parties were made on an arm’s length basis.
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No
provisions have been made for doubtful debts in respect of the amounts owed by related parties.
As referred to in note 40, on 31 December 2005, the Group disposed of the remaining 51% of its associate HHCL United
Limited (formerly HHCL/Red Cell Advertising Limited) to WPP Group (UK) Limited. 
Remuneration of key management personnel
The remuneration of the directors, who are the key management personnel of the Group, is set out below in aggregate for
each of the categories specified in IAS 24 Related Party Disclosures. 
2005 2004
£’000 £’000
Short-term employee benefits 2,475 2,237
Share-based payment 45 42
2,520 2,279
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 80 48. Financial Instruments
The Group’s financial instruments comprise cash and various items such as trade debtors and trade creditors that arise
directly from its operations. 
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk and foreign currency risk.
The policy for managing these risks is reviewed and agreed with the Board.
During the period under review, the Group changed its policy regarding the use of financial instruments and started to use
foreign exchange rate swaps to manage its bank borrowings. The Group does not hold or issue derivative financial
instruments for financial trading purposes but derivatives that qualify for hedge accounting are accounted for as trading
instruments. Derivative financial instruments are initially recognised at fair value at the contract date and continue to be
stated at fair value at the balance sheet date with gains and losses on revaluation being recognised immediately to the
income statement. 
Interest rate risk: Cash deposits and loan draw downs are held either at variable rates of interest or at rates of interest fixed
for periods of no longer than three months. 
Liquidity risk: On 27 June 2005, the Group agreed to committed facilities of £16.5 million until March 2006 and £12.5 million
from March 2006 until 1 July 2007. It was further agreed that should the Group dispose of its interest in HHCL United
Limited (formerly HHCL/Red Cell Advertising Limited) during this period then the facility would reduce by £2.5 million. There
is also an uncommitted facility available of £2 million, which is reviewed on a rolling basis. At 31 December 2005 the Group
had net debt £3,011,000.
Foreign currency risk: The Group has one overseas associate, Meropa Communications (Pty) Limited, which trades in South
Africa. At 31 December 2005 the Group had a debtor relating to the partial disposal of its shareholding in Meropa. This is
payable in South African Rand and is valued at £91,785 which is payable within one year. No interest is payable on these
loans. The Group had not entered into forward currency transactions. Fluctuations in the value of the South African Rand
against sterling would give rise to foreign exchange differences which would be taken through the profit and loss account.
The Group has three overseas subsidiaries which trade in Europe and America. At 31 December 2005 the net foreign
currency monetary net assets were £792,000 (2004 – £983,000) in Europe and £320,000 (2004 – £173,000) in America.
The Group uses foreign exchange swaps to manage its bank borrowings. The fair value of the swap entered into at
31 December 2005 is estimated at £2,962,866 (2004 – £nil). There was only one swap open over the year end. This amount
is based on the market 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 these exposures which, setting aside the interrelationships between such rates and their wider impact on
the economy, are not considered to have a significant impact on the Group. 
Fair values of financial assets and financial liabilities: At 31 December 2005 there was no material difference between the fair
value of financial assets and financial liabilities and their book value. 
All monetary assets and liabilities are denominated in the same currency as the functional currency of the operations involved
except where foreign currency borrowings are used to finance, or provide a hedge against, foreign net investments.
80 | 81
162315 new chime pg18-96  5/5/06  20:52  Page 81 49. Explanation of transition to IFRSs
This is the first year that the company has presented its financial statements under IFRS. The following disclosures are
required in the year of transition. The last financial statements under UK GAAP were for the year ended 31 December 2004
and the date of transition to IFRSs was therefore 1 January 2004.
Reconciliation of equity at 1 January 2004 (date of transition to IFRSs)
UK GAAP
as Effect of
previously transition
Note reported to IFRSs IFRSs
Non current assets
1,2 Goodwill 44,985 (35) 44,950
3 Other intangible assets – 378 378
3 Property, plant and equipment 2,830 (378) 2,452
4,5,7 Investments in associates 423 60 483
Investments in equity accounted joint ventures – – –
Available-for-sale investments 3 – 3
Deferred tax asset 1,024 – 1,024
49,265 25 49,290
Current assets
Work in progress 535 – 535
4 Trade and other receivables 17,450 (379) 17,071
Cash and cash equivalents 2,987 – 2,987
20,972 (379) 20,593
Total assets 70,237 (354) 69,883
Current liabilities
Trade and other payables (22,240) – (22,240)
Current tax liabilities (2,040) – (2,040)
Obligations under finance leases (41) – (41)
Bank overdrafts (9,330) – (9,330)
6 Short-term provisions (1,285) (544) (1,829)
(34,936) (544) (35,480)
Net current liabilities (13,964) (923) (14,887)
Non-current liabilities
Bank loans (19,806) – (19,806)
5,6,7 Long-term provisions (3,197) 266 (2,931)
Obligations under finance leases (86) – (86)
(23,089) 266 (22,823)
Total liabilities (58,025) (278) (58,303)
Net assets 12,212 (632) (11,580)
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 82 49. Explanation of transition to IFRSs (continued)
UK GAAP
as Effect of
previously transition
Note reported to IFRSs IFRSs
Equity
Share capital 7,980 – 7,980
Share premium account 173 – 173
Own shares (6,984) – (6,984)
8 Equity reserves 32,385 35 32,420
6 Shares to be issued 1,359 (1,359) –
8 Accumulated losses (22,839) 692 (22,147)
12,074 (632) 11,442
Minority interest 138 – 138
Total equity 12,212 (632) 11,580
Reconciliation of equity at 1 January 2004 (date of transition to IFRS)
1 January
Note 2004
Total equity previously reported under UK GAAP 12,212
1 Goodwill not amortised after date of transition –
2 Translation differences in relation to foreign goodwill 282
3 Reclassification of software to intangibles –
4 Reclassification of short term current assets to non current assets –
5 Reclassification of loss from associates to non current asset where
long term loans exceed losses –
6 Reclassification of shares to be issued from equity to current and
non current liabilities (1,359)
7 Derecognition of profits of associates with net liabilities 445
8 Cost of share based payments –
Total adjustment to equity (632)
Total equity IFRS 11,580
82 | 83
162315 new chime pg18-96  5/5/06  20:52  Page 83 49. Explanation of transition to IFRSs (continued)
Reconciliation of equity at 31 December 2004
UK GAAP
as Effect of
previously transition
Note reported to IFRSs IFRSs
Non current assets
1,2,11 Goodwill 45,110 (11) 45,099
3 Other intangible assets – 264 264
3 Property, plant and equipment 2,343 (264) 2,079
4,5,7 Investments in associates 822 (15) 807
Investments in equity accounted joint ventures 15 – 15
Available-for-sale investments 3 – 3
Deferred tax asset 784 – 784
49,077 (26) 49,051
Current assets
Work in progress 426 – 426
4 Trade and other receivables 18,714 – 18,714
Cash and cash equivalents 6,056 – 6,056
25,196 – 25,196
Total assets 74,273 (26) 74,247
Current liabilities
Trade and other payables (24,025) 603 (23,422)
Current tax liabilities (2,612) 142 (2,470)
Obligations under finance leases (100) – (100)
Bank overdrafts (1,500) – (1,500)
6 Short-term provisions (641) (355) (996)
(28,878) 390 (28,488)
Net current liabilities (3,682) 390 (3,292)
Non-current liabilities
Bank loans (8,895) – (8,895)
5,6,7,11,12 Long-term provisions (1,782) (243) (2,025)
Obligations under finance leases (136) – (136)
(10,813) (243) (11,056)
Total liabilities (39,691) 147 (39,544)
Net assets 34,582 121 34,703
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 84 49. Explanation of transition to IFRSs (continued)
UK GAAP
as Effect of
previously transition
Note reported to IFRSs IFRSs
Equity
Share capital 10,312 – 10,312
Share premium account 16,548 – 16,548
Own shares (6,969) – (6,969)
8 Equity reserves 32,385 197 32,582
6 Shares to be issued 848 (848) –
Translation reserve – (2) (2)
8,12 Accumulated losses (18,801) 774 (18,027)
34,323 121 34,444
Minority interest 259 – 259
Total equity 34,582 121 34,703
Reconciliation of equity at 31 December 2004 (date of last UK GAAP financial statements)
31 December
Note 2004
Total equity previous GAAP 34,582
1 Goodwill not amortised after date of transition 42
2 Goodwill adjustment in relation to acquisition of foreign subsidiaries
277
3 Reclassification of software to intangibles –
4 Reclassification of short term current assets to non current assets –
5 Reclassification of loss from associates to non current asset where
long term loans exceed losses –
6 Reclassification of shares to be issued to current and non current liabilities (848)
7 Derecognition of profits of associates with net liabilities 134
8 Cost of share based payments –
9 Derecognition of final dividend 603
10 Foreign exchange movement on foreign subsidiaries –
11 Adjustment to deferred consideration to net present value –
12 Interest charge on deferred consideration in relation to net present value (87)
Total adjustment to equity 121
Total equity IFRS 34,703
84 | 85
162315 new chime pg18-96  5/5/06  20:52  Page 85 49. Explanation of transition to IFRSs (continued)
Reconciliation of profit or loss for 2004
UK GAAP
as Effect of
previously transition
Note reported to IFRSs IFRSs
5 Turnover 95,701 (259) 95,442
5 Cost of sales (41,767) 86 (41,681)
Operating income 53,934 (173) 53,761
1,2,4,5 Operating expenses (46,737) 49 (46,688)
7,197 (124) 7,073
3 Share of profit in associates 508 (453) 55
Share of results of equity accounted joint ventures 120 – 120
7,825 (577) 7,248
Profit on disposal of fixed asset investment 164 – 164
Investment income 125 – 125
Finance costs (net) (1,081) – (1,081)
6 Finance costs of deferred consideration – (87) (87)
Profit before tax 7,033 (664) 6,369
3 Tax expense (2,193) 142 (2,051)
Net profit/(loss) 4,840 (522) 4,318
Discontinued operations – (18) (18)
Profit/for the period 4,840 (540) 4,300
The comparative figures as presented above, and as disclosed in our Interim statement, have been restated in respect of
the disposal of Rare Publishing during the year, in accordance with IFRS 5. This has had no impact on the result for the
period but has led to a decrease in turnover of £3,256,000, operating income of £1,753,000 and an increase in operating
profit of £55,000. 
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 86 49. Explanation of transition to IFRSs (continued)
Notes to the reconciliation of profit or loss for 2004
UK GAAP
as Effect of
previously transition
Note reported to IFRSs IFRSs
Profit previous GAAP 7,825 7,033 4,840
1 Goodwill not amortised after transition 42 42 42
2 Loss on discontinued operations shown after profit after tax 73 73 –
3 Derecognition of profits of associate with net liabilities (453) (453) (311)
4 Cost of share based payments (162) (162) (162)
5 Change in foreign exchange rate used to convert
foreign subsidiaries (22) (22) (22)
6 Interest charge on deferred consideration in relation to
net present value – (87) (87)
Total adjustment to profit (522) (609) (540)
Profit per IFRS 7,303 6,424 4,300
Explanation of material adjustments to the cash flow statement for 2004
UK GAAP
as Effect of
previously transition
Note reported to IFRSs IFRSs
Cashflow form operating activities 6,140 – 6,140
Cashflow from investing activities (1,239) – (1,239)
4,901 – 4,901
1,2,3,4 Cashflow from financing activities 18,038 (12,040) 5,998
Net increase/decrease in cash and cash equivalents 22,939 (12,040) 10,899
Cash and cash equivalents at the beginning of the period (29,263) 22,920 (6,343)
Cash and cash equivalents at the end of the period (6,324) 10,880 4,556
The effect of transition on the cashflow noted above relates to changes in the composition of cash and cash equivalents as
detailed below.
86 | 87
162315 new chime pg18-96  5/5/06  20:52  Page 87 49. Explanation of transition to IFRSs (continued)
Notes to the reconciliation of cashflow for 2004
As at
31 December
Note 2004
Net debt under UK GAAP (6,324)
1 Loan notes excluded from cash and cash equivalents 1,748
2 Long term loans excluded from cash and cash equivalents 8,895
3 Finance leases excluded from cash and cash equivalents 237
Movement 10,880
Cash and cash equivalents under IFRS 4,556
Cash and cash equivalents consists of:
31 December
2004
Cash at hand and in bank 4,308
Loan note cash deposits 1,748
Bank overdrafts (1,500)
4,556
Chime Communications plc Notes to the consolidated accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 88 88 | 89
Independent Auditors’ Report to the Members of Chime Communications plc
We have audited the individual company financial
statements of Chime Communications Plc for the year
ended 31 December 2005 which comprise the balance
sheet and the related notes 50 to 63. These individual
company financial statements have been prepared under
the accounting policies set out therein. 
The corporate governance statement and the directors’
remuneration report are included in the Group annual
report of Chime Communications Plc for the year ended
31 December 2005. We have reported separately on the
Group financial statements of Chime Communications Plc
for the year ended 31 December 2005 and on the
information in the directors’ remuneration report that is
described as having been audited. 
This report is made solely to the company’s members, as
a body, in accordance with section 235 of the Companies
Act 1985. Our audit work has been undertaken so that we
might state to the company’s members those matters we
are required to state to them in an auditors’ report and for
no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other
than the company and the company’s members as a body,
for our audit work, for this report, or for the opinions we
have formed.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the annual
report and the individual company financial statements in
accordance with applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted
Accounting Practice) are set out in the statement of
directors’ responsibilities.
Our responsibility is to audit the individual company financial
statements in accordance with relevant United Kingdom
legal and regulatory requirements and International
Standards on Auditing (UK and Ireland). 
We report to you our opinion as to whether the individual
company financial statements give a true and fair view in
accordance with the relevant financial reporting framework
and whether the individual company financial statements
have been properly prepared in accordance with the
Companies Act 1985. We report to you if the company has
not kept proper accounting records, if we have not received
all the information and explanations we require for our audit,
or if information specified by law regarding directors’
remuneration and other transactions is not disclosed.
We read the directors’ report and the other information
contained in the annual report for the above year as
described in the contents section and consider the
implications for our report if we become aware of any
apparent misstatements or material inconsistencies with
the individual company financial statements. 
Basis of audit opinion
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) issued by the
Auditing Practices Board. An audit includes examination,
on a test basis, of evidence relevant to the amounts and
disclosures in the individual company financial statements.
It also includes an assessment of the significant estimates
and judgements made by the directors in the preparation
of the individual company financial statements, and of
whether the accounting policies are appropriate to the
company’s circumstances, consistently applied and
adequately disclosed.
We planned and performed our audit so as to obtain all
the information and explanations which we considered
necessary in order to provide us with sufficient evidence
to give reasonable assurance that the individual company
financial statements are free from material misstatement,
whether caused by fraud or other irregularity or error. In
forming our opinion we also evaluated the overall adequacy
of the presentation of information in the individual company
financial statements.
Opinion
In our opinion:
• the individual company financial statements give a true
and fair view, in accordance with United Kingdom
Generally Accepted Accounting Practice, of the state of
the company’s affairs as at 31 December 2005; 
• the individual company financial statements have been
properly prepared in accordance with the Companies Act
1985
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
London
8 March 2006
162315 new chime pg18-96  5/5/06  20:52  Page 89 2005 2005 2004 2004
Restated* Restated*
Note £’000 £’000 £’000 £’000
Fixed assets
Investment in subsidiaries 53 83,483 63,749
Current assets
Debtors 55 9,329 12,768
Short term investments 56 1,221 1,748
Cash at bank and in hand 7,565 3,620
18,115 18,136
Creditors: amounts falling due within one year 57 (2,517) (4,975)
Net current assets 15,598 13,161
Total assets less current liabilities 99,081 76,910
Creditors: amounts falling due after more than one year 58 (12,783) (10,258)
Net assets 86,298 66,652
Capital and reserves
Share capital 60 12,654 10,312
Share premium account 60 26,475 16,548
Share based payment reserve 61 432 197
Merger reserve 61 3,780 3,780
Shares to be issued 61 4,362 848
Capital reduction reserve 61 32,385 32,385
ESOP reserve 61 (6,961) (6,969)
Retained earnings 61 13,171 9,551
Equity shareholders’ funds 86,298 66,652
The financial statements were approved by the board of directors and authorised for issue on 8 March 2006. They were
signed on its behalf by:
Mark Smith, Director
8 March 2006
*see note 63
Company balance sheet
Year ended 31 December 2005     
Chime Communications plc
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 90 50. Accounting policies
The financial statements are prepared in accordance with applicable United Kingdom law and accounting standards. The
particular accounting policies adopted are described below. They have all been applied consistently throughout the year with
the exception of changes required to apply FRS 20 “Share based payments” and FRS 21 “Events after the balance sheet
date” as disclosed in note 62.
Accounting convention
The financial statements are prepared under the historical cost convention.
Investments
In the Company’s accounts, investments in subsidiary and associate undertakings are stated at cost less provision for any
impairment in value.
Cash flow statement
The company is exempt from the requirement to prepare a cash flow statement under FRS 1 (Revised) ‘Cash flow statements’
standards being a wholly owned subsidiary whose ultimate parent company prepares a consolidated cash flow statement.
Deferred consideration
When earnouts are to be settled in cash or shares with a fixed monetary value, the fair value of the consideration is obtained
by discounting to present value the amounts expected to be payable in the future. The resulting interest charge is included
within finance costs of deferred consideration .
51. Profit of parent company
As permitted by Section 230 of the Companies Act 1985, the profit and loss account of the parent company is not
presented as part of these accounts. The parent company’s profit for the financial year amounted to £3,626,000 (2004 –
£1,763,000).
52. Equity dividends
The equity dividends paid from the company are disclosed in note 14.
53. Investments
Investments
in and loans Equity
Trade to associated interest in
investments undertakings subsidiaries Total
The Company £’000 £’000 £’000 £’000
Cost
At 1 January 2005 95 329 63,325 63,749
Additions – 77 24,078 24,155
Adjustment to prior year acquisitions – – 110 110
Acquisition of trade investment as subsidiary (95) – 95 –
Loans advanced – 181 – 181
Reduction of carrying value – – (1,318) (1,318)
Foreign exchange – – 13 13
Disposals – – (3,407) (3,407)
At 31 December 2005 – 587 82,896 83,483
Notes to the Company accounts
Year ended 31 December 2005
90 | 91
162315 new chime pg18-96  5/5/06  20:52  Page 91 54. Subsidiaries, associates and joint ventures
The Company’s principal trading subsidiaries, associated undertakings and joint venture undertakings, which are all
incorporated in Great Britain (except where noted) are listed in note 19.
55. Debtors
2005 2004
£’000 £’000
Trade debtors – –
Amounts owed by Group undertakings 6,083 12,598
Amounts owed by associate undertakings – –
Other debtors 114 170
Amounts due from disposal of businesses 3,132 –
Deferred tax – –
9,329 12,768
Due within one year 8,947 12,768
Due after more than one year 382 –
9,329 12,768
Amounts due from the disposal of businesses relate to Rare Publishing Limited and HHCL United Limited.
56. Short term investments
2005 2004
£’000 £’000
Loan note cash deposit 1,221 1,748
1,221 1,748
The loan note cash deposit of £1.2 million (2004 – £1.7 million) relates to a cash deposit held on three months notice at
Royal Bank of Scotland plc. The deposit guarantees £1.2 million (2003 – £1.7 million) of the loan note creditors of
£1.2 million (2004 – £1.7 million). Interest accruing on the deposit is payable to the holders of the loan notes less any costs
arising (see note 21).
57. Creditors: amounts falling due within one year
2005 2004
£’000 £’000
Short term bank loan – 1,500
Deferred/contingent consideration 183 300
Loan notes 1,254 1,748
Current taxation 365 1,012
Other taxation and social security costs 4 –
Other creditors 3 170
Accruals and deferred income 708 245
2,517 4,975
Chime Communications plc Notes to the Company accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 92 58. Creditors: amounts falling due after more than one year
2005 2004
£’000 £’000
Deferred/contingent consideration 4,298 1,363
Bank loans 8,485 8,895
12,783 10,258
Due in more than one year but not more than two years 9,122 9,087
Due in more than two years but not more than five years 3,661 1,171
12,783 10,258
No interest attaches to the deferred consideration, which is payable in sterling and euros.
59. Borrowings
2005 2004
£’000 £’000
Bank loans 8,485 10,395
Loan notes 1,254 1,748
9,739 12,143
Due within one year or on demand 1,254 3,248
Due in more than one year but not more than two years 8,485 8,895
Due in more than two years but not more than three years – –
9,739 12,143
Maturity analysis
Bank overdraft/loans 
Within one year or on demand – 1,500
Between one and two years 8,485 8,895
Between two and five years – –
Loan notes
Within one year or on demand 1,254 1,748
9,739 12,143
60. Share capital and share premium account
The movements on these items are disclosed in notes 31 and 32 to the consolidated financial statements.
92 | 93
162315 new chime pg18-96  5/5/06  20:52  Page 93 61. Statements of movements on reserves
Share
based Capital Profit
payments Merger Shares to reduction ESOP and loss
reserve reserve be issued reserve reserve account
£’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 January 2005 197 3,780 848 32,385 (6,969) 9,551
Retained profit for the year ––––– 3,626
Premium on shares issued ––––––
Credit in relation to share based payments 235–––––
Adjustment on prior year acquisitions – (327) – – –
Acquisition of De Facto Communications Limited – 437–––
Acquisition of Baxter Hulme Limited 222–––
Acquisition of VCCP Limited – 3,511–––
Issues as contingent consideration on
The Smart Company.Net Limited – (56) –––
Issues as contingent consideration on
TTA Public Relations Limited – (273) – – –
(Purchase)/Disposal of own equity shares held in treasury ––– 8 (6)
Balance at 31 December 2005 432 3,780 4,362 32,385 (6,961) 13,171
62. Restatement of comparatives
The 2004 comparatives have been restated as follows:
Share based Profit
payments and loss
Creditors reserve account
£’000 £’000 £’000
At 31 December 2004 as previously disclosed 5,578 – 9,145
Credit in relation to share based payments – 197 (197)
Dividend not recognised (603) – 603
Balance at 31 December 2004 as restated 4,975 197 9,551
The impact on the profit and loss account in 2005 arising from the changes in accounting policy would be an additional
charge of £1,244,000.
63. Financial Instruments
The Company’s financial instruments comprise cash and various items that arise directly from its operations. 
The main risks arising from the Company’s financial instruments are interest rate risk, liquidity risk and foreign currency risk.
The policy for managing these risks is reviewed and agreed with the Board and is set out in note 48 above.
Fair values of financial assets and financial liabilities: at 31 December 2005 there was no material difference between the fair
value of financial assets and financial liabilities and their book value. 
All monetary assets and liabilities are denominated in the same currency as the functional currency of the operations involved
except where foreign currency borrowings are used to finance, or provide a hedge against, foreign net investments.
Disclosure of the interest rates applicable on bank loans and loan notes are given in notes 27 and 29.
Chime Communications plc Notes to the Company accounts (continued)
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 94 94 | 95
Professional Advisers
Registered office
14 Curzon Street
London W1J 5HN
Financial calendar
Wednesday 24 May 2006 Ex-dividend Date for 2005 Final Dividend
Friday 26 May 2006 Record Date for 2005 Final Dividend
Wednesday 7 June 2006 AGM – 12 noon at 14 Curzon Street, London W1J 5HN
Thursday 22 June 2006 Payment of 2005 Final Dividend
Tuesday 12 September 2006 Announcement of 2006 interim results
Wednesday 11 October 2006 Ex-dividend Date for 2006 Interim Dividend
Friday 13 October 2006 Record Date for 2006 Interim Dividend
Thursday 9 November 2006 Payment of 2006 Interim Dividend
Financial Advisers and Stockbrokers
Nimus Securities Limited
Cheapside House
138 Cheapside
London EC2V 6LH
Solicitors
Slaughter & May
One Bunhill Row
London EC1Y 8YY
Bankers 
Royal Bank of Scotland
Corporate Banking
280 Bishopsgate
London EC2M 4RB
Auditors 
Deloitte & Touche LLP
Chartered Accountants
London
Registrars
Computershare Investor Services plc
Registrar’s Department
PO Box 82
The Pavilions
Bridgwater Road
Bristol BS99 7NH
162315 new chime pg18-96  5/5/06  20:52  Page 95 Contact details
Chime Communications plc
14 Curzon Street
London W1V 5HN
020 7861 8515
Tim Bell – Chairman
lord.bell@chime.plc.uk
Christopher Satterthwaite – Group Chief Executive
csatterthwaite@chime.plc.uk
Mark Smith – Group Finance Director
msmith@chime.plc.uk
Chime Communications plc
Annual Report & Accounts 2005
162315 new chime pg18-96  5/5/06  20:52  Page 96 Financial Highlights 1
Chairman’s review 2
Chief Executive’s review 6
Business review 10
Finance Director’s review 16
Directors’ biographies 18
Directors’ statement on corporate
governance 20
Directors’ remuneration report 25
Directors’ report 30
Statement of directors’ responsibilities 32
Auditors’ report on the Group 33
Consolidated income statement 35
Consolidated statement of recognised
income and expense 36
Consolidated balance sheet 37
Consolidated cash flow statement 38
Notes to the consolidated accounts 39
Auditors’ report on the Company 89
Company balance sheet 90
Notes to the Company accounts 91
Professional advisers, financial
calendar and contact details 95   
The Chime Group helps clients create, manage,
monitor and market their businesses, brands and
reputations both in the UK and internationally.
Contents
Designed and produced by Rare Corporate Design
www.rarecorporate.co.uk
162315 Chime Cover_spine  5/5/06  20:48  Page 2 Chime Communications plc
14 Curzon Street, London W1J 5HN
Tel: 020 7861 8515
E-mail: enquiries@chime.plc.uk
www.chime.plc.uk
Annual Report & Accounts 2005
“Evolving isn’t just about survival; it’s also about success”
Public Relations      Advertising and Marketing Services      Research
CHIME COMMUNICATIONS PLC ANNUAL REPORT 2005
162315 Chime Cover_spine  5/5/06  20:48  Page 1