The Company announces that it has today posted a circular to shareholders setting out the details of a recommended proposed cancellation of the Company’s share premium account.

The full text of the Chairman’s letter contained within the circular is set out below. Definitions in the announcement shall bear the same meaning as those contained in the circular to Shareholders.

Dear Shareholder
Cancellation of share premium account


I am writing to you today with details of your Board’s proposal to seek Shareholder approval to a cancellation of the Company’s share premium account (the “Cancellation”) at an Extraordinary General Meeting. This will eliminate or substantially reduce the deficit on the Company’s profit and loss account. Subject to the Court’s requirements for the protection of the interests of the Company’s creditors, any surplus arising on the proposed Cancellation will be credited to the Company’s profit and loss account. The Cancellation will enable the Company to distribute profits generated after the proposed Cancellation takes effect (and any surplus reserve arising on the Cancellation which is not required by the Court to be non-distributable) by way of dividend should the Board consider it appropriate to do so in the future.

Background to the proposal

The Act prevents a company from purchasing its own shares or paying dividends where the company does not have sufficient distributable profits to do so.

The audited balance sheet of the Company reveals a retained loss of £6,134,827 as at 30 June 2006, arising from an inter company bad debt provision taken on the operating subsidiary losses incurred during the Group’s 7 year life. However £5 million of these Group losses were incurred in periods prior to June 2002, when the company’s principal activities related to the operation of an Internet based business directory. Your Board considers these losses to be permanent in nature and that the deficit does not reflect the reality of the Group’s current trading position. The deficit has the potential to impact upon the ability of the Group to expand and strengthen its business going forward. As at 31 December 2006, the accumulated deficit had been reduced to £5,855,830. Whilst the Group continues to trade profitably, without the proposed Cancellation it is anticipated that it would take a considerable period of time before the Company was in a position to declare and pay dividends.

Share Premium Account

When a company issues shares at a value that represents a premium over their nominal value, it is required to transfer the premium to a share premium account. The amount standing to the credit of a share premium account may only be used for certain purposes.

In order to eliminate the deficit in the Company’s profit and loss account the Board has decided to seek Shareholders’ authority to cancel the whole of the Company’s share premium account, which stood at £6,045,563 as at 30 June 2006. The reserve arising on the Cancellation can be utilised in reducing or eliminating (depending on the Company’s trading) the accumulated deficit on the Company’s profit and loss account as at the date the proposed Cancellation takes effect. Subject to protecting the interests of the Company’s creditors, any surplus arising may be utilised in creating distributable reserves. The Board will recommend the payment of dividends in the future as and when they consider such dividends to be appropriate.

The most recent reported results show a significant improvement with the Group realising a net profit for the last eighteen months. However, whilst the balance on the Company’s profit and loss account remains in deficit, the Company is prohibited by the Act from paying dividends. The proposed Cancellation will eliminate the entire deficit on the profit and loss account.

It is anticipated that the Court Order confirming the Cancellation (if approved by the Court) will be made on 18 July 2007.

The Cancellation will only take effect on the date that an office copy of the Court Order is duly registered by the Registrar of Companies (the “Effective Date”). It is expected that the Court Order will have been registered by 28 July 2007.

In order to obtain the Court’s approval to the reduction, the Court will require protection for the creditors of the Company whose debts and claims remain outstanding at the Effective Date. The Company proposes to seek the consent of certain of its long term creditors to the Cancellation.

Appropriate arrangements will be made, with the approval of the Court, for the protection of any creditors of the Company who have not consented to the reduction. The terms of such protection are for the Court to determine and the Company will give to the Court such undertakings as it is advised are appropriate.

Procedure for Reduction

The Cancellation requires the sanction of a special resolution of the Shareholders and the approval of the High Court.

Following the passing of the special resolution by Shareholders at the EGM an application will be made to the High Court to confirm the Cancellation.

Effects of the cancellation of the Share Premium Account

The Cancellation will leave the Company’s total capital, reserves and net assets unchanged and the underlying value of the Company and the net asset value of your shares will be unaffected. The respective positions of the capital of the Company as affected by the proposed cancellation of the Share Premium Account (excluding the effect of any liabilities or after tax profits after 30 June 2006) and subject to any creditor protection required, are illustrated below as at 30 June 2006:

Called up Share Capital297,908297,908
Share Premium Account6,045,563
Profit and Loss Account(6,134,827)(89,264)
Total Capital and Reserves208,644208,644

Extraordinary General Meeting

Notice of an Extraordinary General Meeting to be held on 21 June 2007, at which a special resolution to approve the Cancellation will be proposed, is set out at the end of this document.

Action to be taken

You will find herewith a Form of Proxy for use at the Extraordinary General Meeting. Whether or not you intend to be present at the meeting, you are requested to complete the Form of Proxy and return it in accordance with the instructions printed thereon so that it is received as soon as possible and in any event not later than 48 hours before the time fixed for the meeting. Completion and return of a Form of Proxy will not prevent you from attending the meeting and voting should you wish to do so.

Directors’ recommendation and intentions

The Directors believe that the proposal described in this document is in the best interests of the Shareholders as a whole. Accordingly, the Directors unanimously recommend you to vote in favour of the resolution to be proposed at the Company’s Extraordinary General Meeting, which will authorise the cancellation of the Company’s share premium account, as they intend to do in respect of their aggregate beneficial holdings of 4,951,994 Shares representing 16.6 per cent. of the issued ordinary share capital of the Company.

Yours faithfully,
Philip Dayer

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