Dear Shareholder
We are writing to advise you of the current financial situation of the Company and the Board's proposals for its future strategy.
CONFERACCOM LIMITED IN ADMINISTRATION
Shareholders will be aware that our subsidiary, Conferaccom Limited, was placed into Administration in May and we closed down our Corporate Hospitality Services business in June. This has resulted in a significant reduction in our fixed costs. Our remaining Real Affinity Agency business is our sole operating company and whilst indicative offers were received for this business they did not adequately reflect the Board's valuation of the business. Our Agency business is a well - established business with experienced staff providing high quality services to blue chip customers. This business has now been taken off the market and continues to trade in line with our expectations.
At the date of the Administrative Order of Conferaccom Limited, there were outstanding loans between Real Affinity and Conferaccom and whilst the impact of these loans was being investigated your Board requested a suspension of our AIM listing. Discussions, on the intercompany indebtedness, are still ongoing with the Administrator, with a view to reaching an agreement to settle these liabilities on a basis in line with Real Affinity's forward cash flow. It is hoped to conclude such in the near future, when ordinarily we would request a re-listing of our shares on AIM.
DELISTING FROM AIM
However, during this period of suspension, our Nominated Advisers resigned and their resignation coincided with the Board's deliberations concerning a potential significant acquisition which would have resulted in the future direction of Real Affinity not being solely focussed on marketing services. However, the professional costs and fees associated with this proposed transaction were out of all proportion to the size of the transaction, in part due to the regulatory and other requirements of AIM. As such, the Board have concluded that there was little benefit, and indeed, some distinct disadvantages of returning to AIM and we have therefore not sought a replacement Nomad. Accordingly, the Company was de-listed from AIM on 18 August 2008.
As an unlisted plc, the Board are able to undertake a reorganisation and secure this acquisition without the costs associated with AIM and we hope to be notifying shareholders of a General Meeting to approve these proposals in due course. We anticipate this will coincide with the announcement of our financial results for the year ended 31 March 2007.
PROPOSED ADMISSION TO PLUS-QUOTED
Preliminary discussions have been held with a firm of corporate advisers concerning the Admission of Real Affinity to Plus, an alternative listed securities market, to provide a continuing market for our shares. We will keep shareholders informed on the progress of these discussions.
FUTURE
The Company continues to have the support of RedKite Group and I shall write again to shareholders with further details of our strategy and the proposed acquisitions in due course.
Real Affinity plc has had some difficult trading times and the Board are very grateful for the loyalty and support of our staff, suppliers and shareholders. The Board is confident that the steps already taken, and the plans yet to be approved, will provide shareholders with confidence for the future growth in our Company.
N Brent Fitzpatrick
Acting Chairman
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