Highlights for 2008

• Operating costs reduced from £2.44m to £1.86m.
• EBITDA loss reduced from £1.0m to £651k.
• Bank loans and overdraft eliminated.

A full breakdown of the twelve months shown in the financial statements, notes and narratives which follow.

Chairman's Statement

Since the last Chairman's statement in September 2008 we have witnessed the onset of a transformation of your company. In June 2008 Justin Sherry was promoted to CEO and in March 2009 the company changed its name to Conexion Media Group Pic ("CXM"). This transformation commenced against a backdrop of turmoil in the financial markets and few have been immune to its effects. CXM is indeed fortunate that it eliminated its exposure to the banks in September 2008 by paying off all outstanding bank loans and overdraft facilities on a group-wide basis. Towards the end of 2008 CXM announced that convertible loans of £1.25m were received from an existing shareholder. Naturally this provided investment capital which enabled CXM to announce a string of new deals in 2009. This process is very much awork in progress and we hope to be in the position to announce further deals in the coming months.

By rebranding CXM the Group aims to broaden the rights it has traditionally administrated whilst fully utilising the current royalty and administration platform to provide television and film content owners a 'one stop shop' for maximising financial return from their retained rights.

Turnover fell by £635k (14%) to £4.0m and gross profit fell by £230k (16%) as certain client contracts expired in the year. However the new deals we have signed will start to deliver income in 2009. The good news was that the new management has taken a hard line on overheads and a reduction of £582k (24%) produced an EDITDA loss reduced from £1mto £651 k. This included a non cash charge of £271 k for share options. In 2009 almost all of the costs of the Hong Kong offices disappear from our P&L plus there will be further cost savings in the UK and USA. On this basis the Group is much closer to breakeven than it appears, the Group having expensed £353k in the P&L for HK in 2008.

Despite the current recession and economic climate, we are optimistic for the forthcoming year. Justin Sherry has undertaken a comprehensive review of CXM's operations which has culminated in substantial cost reduction and a leaner and more efficient business. Justin has materially changed the direction of the Group and we are ahead of the game in multiple rights collection. Many of our competitors are struggling. This has generated an opportunistic market for growth with the added benefit that fewer parties are proactive in this arena.

The UK Performing Right Society (PRS) announced a 12.6% increase in revenues for 2008 which underwrites that the music publishing sector (particularly Film and TV) is expanding ahead of predictions. All the major media companies have difficulties with the plummeting returns from their record divisions, an area to which CXM is not exposed. CXM being a publicly traded vehicle with a global reach is a naturally compelling choice for large corporate rights owners that now wish as a cost cutting exercise to outsource their rights administration. This is evident in the signing earlier this year of media giant Hearst, who chose CXM over the plethora of private companies offering similar services.

Your board continues to work hard to grow the business in the broader arena of media rights collection, and we look forward with confidence to the coming year.

Brian Scholfield
Chairman
17th June 2009

(Download full report here [pdf])