CONEXION MEDIA GROUP PLC Chairman’s Statement

In line with our expectations, we have seen a challenging first half of 2011 as our traditional music publishing revenues are showing a downward trend when compared with the same period of 2010, at £1.07m. Gross profit is 18% down over the same period at £524k. It is fair to point out that we signed many new deals last year that will not generate revenues until the second half of 2011. In terms of our performance it is noted that many of our new sources of revenue are distributed toward the end of each year and we expect an improved position for the full year.

Secondary rights are a major emerging sector and opportunity for Conexion, and we are focused on exploiting this area alongside our traditional music administration business.

Whilst cash operating costs were down over the period, our total operating costs were 5% up on the first half of 2010 at £799k. Operating costs in the first half of 2010 were reduced by £159k, as a result of an adjustment for negative goodwill arising on the acquisition of the assets of Kid Gloves Music Group. In addition the first half of 2011 included a non-cash charge of £54k on translation of trading balances with our overseas subsidiaries, as a result of movements in exchange rates.

Our operating loss before amortisation and depreciation is £275k (June 2010-£125k) and our total loss for the period is £577k (June

2010–402k).

The board is pleased and satisfied that management’s long term strategy to expand the secondary rights administration activity alongside its music publishing business appears to be bearing fruit. Secondary rights management is a growth area and new contracts signed already this year have included MRG Entertainment, Janson Media and Epitome Pictures. However, the nature of these rights is that the revenue takes longer to materialise due to the more intensive administration process.

Guy Fletcher

30th September 2011

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CONEXION MEDIA GROUP PLCConsolidated Income Statement

For the six months ended 30th June 2011

Jan-June 2011 Jan-June 2010 Year toDecember2010

unaudited unaudited audited

£ £ £

Revenue 1,065,640 1,437,598 3,090,182

Direct costs (542,078) (801,614) (1,523,005)

Gross Profit 523,562 635,984 1,567,177

Operating costs (799,050) (761,259) (1,604,036)

Operating loss before amortisation and depreciation (275,488) (125,275) (36,859)

Amortisation and depreciation (268,236) (240,955) (497,073)

Operating loss (543,724) (366,230) (533,932)

Finance income 42 118 176

Finance costs (33,766) (35,691) (76,503)

Loss before taxation (577,448) (401,803) (610,259)

Taxation - - -

Loss for the period (577,448) (401,803) (610,259)Attributable to:

Non-controlling interests (23,719) 4,102 (26,133) Owners of the parent company (553,729) (405,905) (584,126)

Earnings/(loss) per share – continuing operations

Basic earnings per share (pence) (0.71) (0.55) (0.75) Diluted earnings per share (pence) (0.71) (0.55) (0.75)

Consolidated Statement of Comprehensive Income

For the six months ended 30th June 2011

Jan-June2011Jan-June2010Year toDecember2010

unaudited unaudited audited

£ £ £

(Loss) for financial year

(577,448)

(401,803)

(610,259)

Currency translation differences

49,198

(128,806)

(95,675)

Total Comprehensive Income

(528,250)

(530,609)

(705,934)

Attributable to:

Non-controlling interests

(23,719)

4,102

(26,133)

Owners of the parent company

(504,531)

(534,711)

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CONEXION MEDIA GROUP PLCConsolidated Statement of Financial Position

As at 30th June 2011

As at30th June2011As at30th June2010As at31st December2010Non-current assets

Intangible assets

unaudited unaudited (restated) audited

£ £ £

Goodwill 1,370,520 1,370,520 1,370,520

Other 3,582,644 4,134,617 3,879,350

Property, plant and equipment 7,660 47,295 14,249

Trade and other receivables 23,645 23,983 23,701

4,984,469 5,576,415 5,287,820Current assets

Trade and other receivables 1,208,923 1,569,086 1,218,061

Cash and short term deposits 76,893 205,357 464,871

1,285,816 1,774,443 1,682,932Current liabilities

Trade and other payables (5,846,915) (6,021,766) (5,958,302) Amounts due to related parties (975,000) (1,100,875) (1,028,875) Bank overdraft and loans (142,778) (180,200) (161,734) Current tax liabilities - - - (6,964,693) (7,302,841) (7,148,911)

Net current liabilities (5,678,877) (5,528,398) (5,465,979)Total assets less current liabilities (694,408) 48,017 (178,159)Non-current liabilities

Amounts due to related parties - - -

Net assets (694,408) 48,017 (178,159)Equity

Called up share capital 783,926 783,926 783,926

Share premium account 8,356,254 8,356,254 8,356,254

Other reserves 2,654 2,654 2,654

Shares to be issued 507,392 681,609 495,392

Retained earnings (10,626,339) (10,112,083) (10,121,807) Equity share owners’ funds (976,113) (287,640) (483,581) Non-controlling interest 281,705 335,657 305,422

Total equity (694,408) 48,017 (178,159)

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CONEXION MEDIA GROUP PLCConsolidated Statement of Cash Flows

For the six months ended 30th June 2011

Jan-June2011Jan-June2010Year toDecember2010

Unaudited unaudited

(restated)

audited

Note £ £ £Operating cash flow 1 (312,144) (206,986) 158,746

Net finance costs (33,724) (35,573) (76,327)

Net cash inflow from operating activities (345,868) (242,559) 82,419Investing activities

Purchase of subsidiary undertakings - (150,603) (150,603) Purchase of property, plant and equipment (1,781) (6,630) (3,216)

Purchase of intangible assets - (12,839) (16,139)

Net cash flow from investing activities (1,781) (170,072) (169,958) Financing activities

Increase/(decrease) in bank loan and overdraft (18,956) 180,200 161,734

Repayment of loans (53,875) (72,000) (144,000)

Net cash (outflow)/inflow from financing (72,831) 108,200 17,734

Foreign exchange differences 32,502 (41,408) (16,520)

(Decrease)/Increase in cash and cash equivalents (387,978) (345,839) (86,325)

Cash and cash equivalents at start of period 464,871 551,196 551,196

Cash and cash equivalents at end of period 76,893 205,357 464,871

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CONEXION MEDIA GROUP PLCNotes to the Consolidated Cash Flow Statement

For the six months ended 30th June 2011

1. Reconciliation of profit before finance costs income and taxation to operating cash flowJan-June2011Jan-June2010

(restated)

Year toDecember2010£ £ £

Loss before finance costs and taxation (543,724) (366,230) (533,932) Goodwill write back - (159,152) (159,152)

Depreciation 8,370 34,952 63,221

Amortisation of intangible assets 259,866 206,003 433,852 (Increase)/decrease in trade and other receivables – non-current 56 5,167 5,449 (Increase)/decrease in trade and other receivables – current 9,138 (110,354) 240,671

Increase/(decrease) in trade and other payables (111,387) 191,249 127,786

Share options charge 12,000 70,000 19,149

Exchange difference 53,537 (78,621) (38,298)

Operating cash flow (312,144) (206,986) 158,7462. Reconciliation of net cash flow to movement in net debtJan-June2011Jan-June2010

(restated)

Year toDecember2010

£ £ £ Increase/(decrease) in cash in the period (387,978) (345,839) (86,325) Cash inflow from increase in debt 72,831 (108,200) (17,734) Movement in net debt in the period (315,147) (454,039) (104,059) Net debt at 1st January 2011 (725,738) (621,679) (621,679) Net debt at 30th June 2011 (1,040,885) (1,075,718) (725,738)

3. Analysis of changes in net debtAt 1st January2011Cash flow At 30th June2011£ £ £

Cash at bank and in hand 464,871 (387,978) 76,893

Bank loan and overdrafts (161,734) 18,956 (142,778) Loans (1,028,875) 53,875 (975,000) Total (725,738) (315,147) (1,040,885)

At 1st January2010Cash flow At 30th June2010£ £ £

Cash at bank and in hand 551,196 (345,839) 205,357

Bank loan and overdrafts - (180,200) (180,200) Loans (1,172,875) 72,000 (1,100,875) Total (621,679) (454,039) (1,075,718)

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CONEXION MEDIA GROUP PLC1. Accounting PoliciesBasis of preparation

The Financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted by the European

Union. These statements do not constitute a set of statutory financial statements within the meaning of the Companies Act 2006.

The financial statements have been prepared on the historical cost basis and in accordance with the accounting policies set out in the audited statutory financial statements for the year ended 31 December 2010.

Going concern

The Directors have prepared cash flow forecasts to 30th September 2012 and believe that the Group will be able to meet its working capital requirements. Music Publishing companies have regular sources of income, as collection societies distribute revenues on the same dates each year. There are monthly and quarterly distributions. In addition, the Group has overseas partners known as sub-publishers, from whom the Group receives royalties quarterly and semi-annually depending on the contract. Music publishing companies only incur a cost of sales after the royalties have been received. The Group accounts for royalty income on an accruals basis, and therefore provides for the related royalty payable. The total royalties payable includes a significant amount relating to the royalty payable on the royalty income which has not been received at the balance sheet date, and the royalty due will therefore not be payable until some time after the balance sheet date.

Accounting Estimates and Judgements

The Group makes estimates and judgements concerning the future and the resulting estimates may, by definition, vary from the actual results. The Directors considered the critical accounting estimates and judgements used in the financial statements and concluded that the main areas of judgement are:

• Revenue recognition policies in respect of contracts which straddle the period end;

• Contingent deferred payments in respect of acquisitions;

• Recognition and quantification of share based payments; and

• Valuation of intangible assets.

These estimates are based on historical experience and various other assumptions that management and the Board of Directors believe are reasonable under the circumstance.

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