Daily Internet plc
LSE : DAIP

August 30, 2011 10:10 ET

Annual Financial Report

                                                                                             Daily Internet plc
                                                                                                               
                                                                                             Annual Report 2011
                                                                                                               
                                                                                        Company Number 06172239
                                                                                                               
                                                                                                               
                                                                                                               
Contents
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------

Introduction & Highlights                                                                                     
                                                                                                               
Chairman's Statement                                                                                          
                                                                                                               
Operational & Financial Review                                                                                
                                                                                                               
Board of Directors and Senior Managers                                                                        
                                                                                                               
Report of the Directors                                                                                       
                                                                                                               
Directors' Remuneration Report                                                                                
                                                                                                               
Statement of the Directors' Responsibilities                                                                 
                                                                                                               
Report of the Independent Auditors                                                                           
                                                                                                               
Consolidated Profit and Loss Account                                                                         
                                                                                                               
Consolidated Balance Sheet                                                                                   
                                                                                                               
Company Balance Sheet                                                                                        
                                                                                                               
Consolidated Cash Flow Statement                                                                             
                                                                                                               
Notes to the Accounts                                                                                        
                                                                                                               
Corporate Information                                                                                        
                                                                                                               
Notice of Meeting                                                                                            

                                                       
Introduction and Highlights
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------

Strategy

    -   To  become  one of the leading providers of Internet hosting solutions to small and  medium  sized
        businesses (SMEs) by focusing on delivering scalable market leading hosting products at competitive pricing
        
    -   To continue to extend our range of products and services to provide our customers with a one-stop shop
        for all their Internet requirements
        
    -    To maintain and expand our highly automated system to minimise overheads and maximise efficiency
        
    -    To continue to provide a high level of customer service to meet the exacting standards of our business
         customers, in order to promote repeat purchase, recommendation by existing customers and maintenance of low
         churn rates
        
Highlights

                                                                                       2011             2010
      ------------------------------------------------------------------------------------------------------
      Turnover                                                                   £1,267,978       £1,005,656
                                                                                
      Earnings before interest, taxation, depreciation, amortisation  and
      FRS 20 share based payments                                               £ (208,283)      £ (382,441)
                                                                                     
      Number of customers                                                            53,213           45,106
                                                                                    
      Number of Active domains                                                      131,765          111,280
                                                                                     
      Number of Active hosting services                                              18,708           16,560
      ------------------------------------------------------------------------------------------------------


To view the graph associated with this announcement, please open the following link in a new window: 

http://media3.marketwire.com/docs/Daily1.jpg

        
    -       Revenue up by 26% reflecting good organic growth
        
    -       Number of active domains up by 18.4%
        
    -       Number of active hosting services up by 13.0%
    
    -       Expanded our Virtual Private Servers offering by launching Parallels Virtuozzo in August 2010
        
    -       Expanded our Email Services by launching Hosted Exchange in Feb 2011
        
        
        
Chairman's Statement
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------


I am delighted to present the 31 March 2011 financial results for Daily Internet plc.

Performance Summary

Daily Internet plc continued to make strong progress during this financial year, in spite of the challenging
economic climate within the UK in recent years and our relative youth as a company.

Our focus throughout the year has been to build on our previous successes through development of our product
range, upgrading our key Virtual Private Server and SSL Certificate ranges and bringing new domain management
and email services online to ensure we continue to offer best of breed to the business and consumer hosting
markets.

This approach has contributed towards positive growth for the business, resulting in significant increases in
both service numbers and customer numbers. We have continued to expand our already strong recurring revenue
base and we anticipate achieving cash flow breakeven at the operating level subject to market status quo being
maintained over the coming year.

We have also worked to drive increased sales and to continue to improve retention through a diverse series of
measures which include developing additional marketing channels and applying website updates with a view to
improving the customer experience and ease of purchase.

Outlook

Looking to the future, we will continue to extend our market reach by increasing the value of our brand through
active channel development. We will also continually review the hosting market for synergistic acquisition
targets that will enable us to grow both our consumer and small business markets and that will enable us to
quickly extend our range of products to high end managed server solutions.

We will continue our programme of development with the expansion of our product range, thereby consolidating
our position as an increasingly respected and well-recommended hosting provider within the consumer and
business markets.

Our commitment to delivering exceptional, approachable customer service in order to strengthen customer
loyalty, and thus repeat business, together with an increase in customer acquisition through all-important word-
of-mouth, remains a key strategy.

Our management team is highly experienced within the web hosting arena and is extremely passionate about using
its skills, vision and experience to achieve our stated aim of becoming one of the leading providers of
internet hosting solutions to small and medium sized businesses within the UK.

On their behalf, I would like to take this opportunity to extend my thanks to the shareholders and to all the
staff at Daily Internet plc for their continued support towards achieving this vision. We look forward to
continued growth during the coming financial year.



Michael Edelson
Chairman
31 August 2011

Operational and Financial Review
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------

Profit and Loss

2011  has been another year of continued revenue growth and reductions in operating loss. Revenue for the group
reached  £1.3  million  for  the year to 31 March 2011 an increase of 26% compared to  the  previous  year  and
operating loss before amortisation and depreciation reduced to £212,000 a reduction of 46%.

Daily  Internet offers hosting services paid for on a subscription basis, either monthly or yearly.  Where  the
subscription  is  paid  for on an annual basis revenue attributable to future periods is deferred.  During  the
current  year  there has been a further 8% shift in preferred payment method to monthly, whilst this  does  not
directly  impact  revenues,  cash  flows are reduced. The Group's sales  receipts  for  the  year  amounted  to
£1,287,000  compared to £1,026,000 for the previous year; an increase of 25%. The amount of  revenue  which  is
deferred to future periods as at 31 March 2011 is £242,000.

Marketing  along  with  staff  costs represents the majority of our operating expenses.  During  2011  we  have
continued  to  improve  marketing efficiencies by improving our brand recognition  and  increasing  our  market
reputation.  'Word  of  mouth'  business is now a key driver for new sales and customer  acquisition,  as  such
marketing  spend  for  the  year amounted to £245,000 a reduction of 12% and new  sales  revenues  amounted  to
£452,000 an increase of 25%.

Focus  on  excellent  customer  service and continued systems improvements have driven  increased  revenue  per
operational head and hopes to ensure that in the coming year we can continue to drive additional new sales  and
maintain our renewal base without incurring additional staff costs.

Other operating costs have been closely controlled during the year resulting in savings against the operating
budget with an increase of only 1.1% on the previous year.


To view the graphs associated with this announcement, please open the following link in a new window:

http://media3.marketwire.com/docs/Daily2.jpg



Balance sheet and Treasury

The  Group has continued to invest in its infrastructure during the year to 31 March 2011, having spent £25,000
(2010:£135,000) on the maintenance and expansion of existing platforms. The total investment at 31  March  2011
in the Groups tangible and intangible fixed assets amounts to £689,000 (2010:£664,000), the fair value of these
assets being reported at £136,000 (2010:£186,000).

Net cash outflow from operating activities during the year reduced to £189,000 (2010:£391,000). Cash at bank at
31  March 2011 was ahead of plan at £99,000 (2010:£81,000). A facility of £380,000 which is available until  31
August 2012, has been arranged for working capital requirements, of which £275,000 has been utilised during the
year  to  31  March  2011. The Directors are confident that this amount is sufficient to  allow  the  Group  to
continue  to  develop  new  products and achieve a breakeven position in the current  financial  year.  Further
fundraising would be required should an acquisition target become available.

Creditors falling due within one year are reported at £545,000 (2010:£535,000). This figure includes an  amount
of £242,000 (2010:£220,000) for deferred revenue which will be released to profit in future years.

Creditors  falling  due  after one year are reported at £554,000 (2010:£283,000). This includes  an  amount  of
£269,000 (2010:£269,000) for the fair value of convertible loan notes which were issued on 9 January 2008.





                                                                                                    Julie Joyce
                                                                                                               
                                                                                               Finance Director
                                                                                                               
                                                                                                 31 August 2011

Board of Directors and Senior Managers
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------

Board

John Michael Edelson
Chairman

Michael Edelson brings a wealth of experience as a Board Director to Daily Internet plc.
He is executive chairman of London & City Credit Corporation Limited. Historically, he has been a director of a
number of companies admitted to trading on AIM, including ASOS plc, Crawshaw Group plc (formerly known as Felix
Group  plc),  Prestbury  Group plc, Chelford Group plc, Knutsford Group plc, Mercury Recycling  Group  plc  and
Singer and Friedlander AIM3 VCT plc and has been on the board of Manchester United Football Club Limited  since
1982.

Furthermore, Mr. Edelson was Non-Executive Chairman of Bramhall plc (subsequently named Host Europe plc), which
acquired  Magic  Moments Design Limited in September 1999, a company of which Abby Hardoon was an  instrumental
founder. Mr. Edelson remained a non-executive Chairman of Host Europe plc until early 2001.

Mr. Edelson's current directorships include being the non-executive chairman of both EXC plc and Sterling Green
Group plc, both being companies admitted to trading on AIM.


Abby Hardoon
Managing Director

Mr  Hardoon  is  a  Business Administration graduate from George Washington University. He  was  a  founder  of
NETDesign Limited and Magic Moments Internet plc. Following the admission of Magic Moments to trading on AIM in
September 1999 he served as Chief Executive Officer. Magic Moments was then renamed Host Europe plc and,  under
Mr Hardoon's leadership, acquired two other Hosting companies, WebFusion Internet Solutions Limited and One2One
Limited. Mr Hardoon successfully grew the combined business into profitability until it was sold in April  2004
to PIPEX Communications plc for over £30 million.


Julie Joyce
Finance Director

Mrs.  Joyce  is  a  Fellow of the Chartered Association of Certified Accountants. She was employed  as  Finance
Manager  of  WebFusion Internet Solutions Limited, an Internet Hosting company which was sold to Magic  Moments
Internet plc in May 2000. She became Group Financial Controller for Host Europe plc and its group companies and
continued  in  this role for the SME hosting division of PIPEX Communications plc after the sale  to  PIPEX  in
April  2004.  She also has extensive auditing and private practice experience, having spent ten years  in  this
sector prior to her move into commerce and industry.


Robert Khalastchy
Non-Executive Director

Mr  Khalastchy  is a graduate from the University of Sussex where he received a Bachelors degree in  Electronic
Engineering. For the past 15 years he has worked in commercial property management. For the last 6 years he has
been a director of RK Management Limited, a property management company managing commercial property portfolios
worth in excess of £35 million.


Senior Managers

Alison Curry-Taylor
Operations Director

Mrs Curry-Taylor worked with WebFusion Internet Solutions Limited since its formation and continued to work for
Host  Europe plc post-acquisition. During her tenure with both companies, she successfully directed the  growth
of the SME hosting business unit and was responsible for delivering several key projects and products.

Simon Amor
Research & Development Director

Mr Amor worked with WebFusion Internet Solutions Limited and Host Europe plc for nearly 6 years. He was pivotal
in  the development of the major systems deployed by Host Europe plc. In addition to his technical contribution
to Host Europe he also successfully managed the Research and Development team.


Report of the Directors
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------

The Directors present their Annual Report and Audited Financial Statements for the year ended 31 March 2011.

Principal Activities

The principal activities of the group during the year were the provision of web hosting, e-mail and domain name
registration services.

Business Review and Future Developments

A  review of the group's operations and performance during the financial year, setting out the position at  the
year  end,  significant  changes  in the year and providing an indication of the  outlook  for  the  future  is
contained in the Chairman's Report on page 3 and the Operational and Financial Review on pages 4 to 5.

Principal risks and uncertainty

In  line  with the nature, size and complexity of the business the senior management team work very closely  to
identify  and  evaluate  areas of risk, and to develop and monitor action plans  to  deal  with  any  potential
threats. All outcomes are reported to the Board and support is given as necessary to ensure actions are carried
out.

Identifiable areas of risk include:

-  Moving the group to a cash flow generative position
-  Market pressures on product pricing
-  Maintaining a healthy cash balance to allow future investment in products
-  Improving average revenue per customer by developing and sourcing new products
-  Best use of marketing spend to maximise growth and profitability
-  Optimisation of human resource skills

Results and Dividends

The  consolidated Profit and Loss account for the year is set out on page 14. The Directors do not propose  the
payment of a Dividend for the year ended 31 March 2011.

Directors

The Directors of the Company who held office during the year are as follows:

-  Michael Edelson - Chairman
-  Abby Hardoon - Managing Director
-  Julie Joyce -  Finance Director
-  Robert Khalastchy - Non-Executive Director

The  interest  of  current  Directors in shares and options are detailed in  the  Board  Report  on  Directors'
Remuneration on page 9 .

Significant Shareholdings

As of 28 July 2011 the Company has been notified of the following significant shareholdings:

                                           %
--------------------------------------------
Abby Hardoon                            33.1
Pentagon Sterling Satellite Fund         
Limited                                  7.4
--------------------------------------------

Employees

It  is the policy of the group that there should be no unfair discrimination in recruiting and promoting staff,
including  applicants who are disabled. The Directors are committed to maintaining and developing communication
and  consultation processes with employees, who in turn are encouraged to develop an awareness  of  the  issues
affecting  the  group. The Directors place considerable emphasis on employees sharing in  the  success  of  the
group.  This is achieved through the participation in share option schemes. Due to the nature and size  of  the
business,  employees are constantly encouraged to communicate with the Company's senior management  to  discuss
business issues and potential improvements.

Supplier Payment Policy

It  is  the  Company's policy to settle debts with its suppliers, in the absence of any dispute, in  accordance
with  the  terms and conditions agreed with each supplier. The number of supplier days outstanding at 31  March
2011 based on the amounts invoiced by suppliers during the financial year was 45 days (2010:48 days).

Disclosure of information to auditors

The  Directors who held office at the date of approval of this Directors' report confirm that, so far  as  they
are  each  aware, there is no relevant audit information of which the Company's auditors are unaware; and  each
Director  has  taken  all  the steps that he ought to have taken as a director to make  himself  aware  of  any
relevant audit information and to establish that the Company's auditors are aware of that information.

Political and charitable donations

The  company  made  no  political or charitable donations during the year but supports  charities  through  the
provision of discounted services.

Going Concern

The  Directors have reasonable expectation that the group has adequate resources to continue to operate for the
foreseeable future. For this reason they adopt the going concern basis for preparing the financial statements.


Annual General Meeting

The Annual General Meeting will be held on 23 September 2011 at 10.00 am at The Company's registered office  at
Number 14 Riverview Vale Road, Heaton Mersey, Stockport, Cheshire, SK4 3GN.

The  full wording of the resolutions to be tabled at the forthcoming Annual General Meeting is set out  in  the
notice of the meeting on pages 33 to 34.

Auditors

In  accordance  with section 489 of the Companies Act 2006, a resolution proposing that Hazlems Fenton  LLP  be
reappointed as auditors of the company will be put to the Annual General Meeting.

By order of the board

Julie Joyce

Finance Director

31 August 2011

                                                       
                                                       
Directors' Remuneration Report
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------

Introduction

Whilst  the  group  is  not  obliged to comply with the Directors' Remuneration Report  Regulations  2007,  the
Directors  have  agreed  to adopt the ethos of those regulations and to disclose information  relating  to  the
current Directors.

The  report  is  not  subject to audit and a resolution to approve it will be proposed at  the  annual  general
meeting.


Remuneration Policy

Daily  Internet  has  a  policy  to attract, motivate and reward individuals of the  highest  calibre  who  are
committed to growing the value of the business and to maximising returns to shareholders.

The policy is as relevant to Executive Directors as it is to employees, as we aim to reward Executive Directors
and senior employees aligned to the performance of the group.

The  remuneration structure for all employees considers remuneration rates of competitors to ensure  continuity
and commitment.


Directors' Service Contracts

Copies of Directors' service contracts will be available at the annual general meeting.


Pension Arrangements

The  group  does  not  operate a final salary pension scheme. Executive Directors who are entitled  to  receive
pension contributions may nominate a defined contribution scheme into which the company makes payments on their
behalf.


Directors' Remuneration

A summary of the total remuneration paid to current Directors is set out below:

                                             2011                                       2010
                              --------------------------------------------------------------------------------
                                 Fees        Benefits                        Fees        Benefits             
                               Salary         in kind          Total       Salary         in kind        Total
                                 £000            £000           £000         £000            £000         £000
--------------------------------------------------------------------------------------------------------------
Michael Edelson                    36               -             36           36               -           36
Abby Hardoon                       10               2             12           42               1           43
Julie Joyce                        75               2             77           79               2           81
Robert Khalastchy                   6               -              6            6               -            6
--------------------------------------------------------------------------------------------------------------



Directors' Interests in Ordinary Shares of Daily Internet plc

The Directors in office at the end of the year had interests in the     Number of Ordinary          Percentage
ordinary share capital of the company as shown below:                               Shares            Interest
                                                                                                              

--------------------------------------------------------------------------------------------------------------
Michael Edelson                                                                  2,714,285               4.44%
                                                                                                              
Abby Hardoon                                                                    20,233,627              33.10%
                                                                                                              
Julie Joyce                                                                        150,000               0.25%
                                                                                                              
Robert Khalastchy                                                                  253,846               0.42%

--------------------------------------------------------------------------------------------------------------

Directors' Interests in Share Options

The Directors had interests in options over ordinary shares of the Company as shown below:

                                No. of Ordinary Shares and Price
                --------------------------------------------------------
                                                                                           Grant       Expiry
Employee          0.7p**         5p*        10p*        15p*        20p*       Total        Date         Date
-------------------------------------------------------------------------------------------------------------
Michael          
Edelson          714,286           -           -           -           -     714,286    23.03.07     30.07.17
Abby Hardoon           -           -           -     250,000     100,000     350,000    24.08.07     24.08.17
Julie Joyce            -      25,000      25,000     200,000     100,000     350,000    24.08.07     24.08.14
Robert                 
Khalastchy             -      15,000       5,000     100,000     100,000     220,000    24.08.07     24.08.17
-------------------------------------------------------------------------------------------------------------
*Options cannot be exercised until their 3rd anniversary and have no performance criteria attached to
them.**Options are exercisable immediately and have no performance criteria attached to them.



Directors' Warrants

The Directors held the following warrants over the ordinary shares of the Company:

Employee                Exercise price           No. of Warrants             Grant Date            Expiry Date
--------------------------------------------------------------------------------------------------------------

Abby Hardoon                       15p                 1,050,000               09.01.08               08.01.13
--------------------------------------------------------------------------------------------------------------

The above warrants can be exercised at any time up to the expiry date.

                                                       
                                                       
Statement of the Directors' Responsibilities in Respect of the Annual Report and the Financial Statements
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------

The  directors  are responsible for preparing the Directors' Report and the financial statements in  accordance
with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law  the
directors  have  elected to prepare the group and the parent company financial statements  in  accordance  with
United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).

Under Company law, the directors must not approve the financial statements unless they are satisfied that  they
give  a  true and fair view of the state of affairs of the group and the company, and of the profit or loss  of
the group for that period.

In preparing these financial statements, the directors are required to:
    -  select suitable accounting policies and then apply them consistently;
    -  make judgments and estimates that are reasonable and prudent;
    -  state whether applicable accounting standards have been followed, subject to any material departures,
       disclosed and explained in the financial statements;
    -  prepare the financial statements on the going concern basis unless it is inappropriate to presume that
       the group and the parent company will continue in business.

The  directors are responsible for keeping adequate accounting records that are sufficient to show and  explain
the  company's  transactions and disclose with reasonable accuracy at any time the financial  position  of  the
company  and  the Group and enable them to ensure that the financial statements comply with the  Companies  Act
2006. They are also responsible for safeguarding the assets of the company and that of the Group and hence  for
taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information
included on the company's website. Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.

Independent Auditors' Report
to the Members of Daily Internet plc
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------

We  have  audited  the  group  and parent company financial statements (the "financial  statements")  of  Daily
Internet Plc for the year ended 31 March 2011 set out on pages 14 to 31. The financial reporting framework that
has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom
Generally Accepted Accounting Practice).

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of  the
Companies  Act  2006. 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 the directors and auditors

As  explained  more  fully in the Directors' Responsibilities Statement set out on page 11, the  directors  are
responsible for the preparation of the financial statements and for being satisfied that they give a  true  and
fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland).  Those standards require us to  comply
with the Auditing Practices Board's Ethical Standards for Auditors.


Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient
to give reasonable assurance that the financial statements are free from material misstatement, whether caused
by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the
company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of
significant accounting estimates made by the directors; and the overall presentation of the financial
statements. In addition, we read all the financial and non-financial information in the Annual Report to
identify material inconsistencies with the audited financial statements.  If we become aware of any apparent
material misstatements or inconsistencies we consider the implications for our report.



Opinion on financial statements

In our opinion the financial statements:
    -   give a true and fair view of the state of the group's and of the parent company's affairs as at
        31 March 2011 and of the group's loss for the year then ended;
    -   have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
        Practice; and
    -   have been prepared in accordance with the requirements of the Companies Act 2006.


Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors' Report for the financial year for which the financial
statements are prepared is consistent with the financial statements.


Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:

-  adequate accounting records have not been kept by the parent company, or returns adequate for our audit
   have not been received from branches not visited by us; or
        
-  the parent company's financial statements are not in agreement with the accounting records and returns;
   or
        
-  certain disclosures of directors' remuneration specified by law are not made; or

-  we have not received all the information and explanations we require for our audit.



Jonathan Barron FCA (Senior Statutory Auditor)
for and on behalf of Hazlems Fenton LLP                                 
                                                                                       
Chartered Accountants
Statutory Auditor                                                       
Chartered Accountants                                                   
Palladium House                                                         
1-4 Argyll Street                                                       
London                                                                  
W1F 7LD                                                                 
                                                                        
31 August 2011                                                          



Consolidated Profit and Loss Account

for the Year Ended 31 March 2011
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------

                                                                                       2011         2010
                                                                                      Group        Group
                                                                                                        
                                                                        Notes         £,000        £,000
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
                                                                                                        
Revenue                                                                     2         1,268        1,006
                                                                                                        
Cost of sales                                                                         (608)        (494)

--------------------------------------------------------------------------------------------------------

Gross profit                                                                            660          512

--------------------------------------------------------------------------------------------------------
Operating expenses before amortisation, depreciation and share                          868          894
based payments
Goodwill amortisation                                                                   170          170
Depreciation and other amortisation                                                      74          153
Share based payments                                                                      4           11
--------------------------------------------------------------------------------------------------------
                                                                                                        
Administrative expenses                                                             (1,116)      (1,228)
--------------------------------------------------------------------------------------------------------
                                                                                                        
                                                                                                        
Operating loss                                                              3         (456)        (716)
--------------------------------------------------------------------------------------------------------
                                                                                                        
                                                                                                        
Interest receivable and similar income                                                    -            1
                                                                                                        
Interest payable and similar charges                                        6          (39)         (32)
--------------------------------------------------------------------------------------------------------
                                                                                                        
Loss before taxation                                                                  (495)        (747)
                                                                                                        
Taxation                                                                    7             -            -
--------------------------------------------------------------------------------------------------------
                                                                                                        
                                                                                                        
Retained loss for the year                                                            (495)        (747)
                                                                                                        
--------------------------------------------------------------------------------------------------------

Basic and fully diluted loss per share                                                £0.01        £0.01
--------------------------------------------------------------------------------------------------------
                                                                                                        
There are no recognised gains or losses in the year apart from the loss for the year.
The Group's results are derived from continuing operations.
                                                       
                                                       
                                                       
                                                       
Consolidated Balance Sheet as at 31 March 2011
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------

                                                                          2011                   2010
                                                                                                   
                                                          Notes        £,000     £,000        £,000     £,000
-------------------------------------------------------------------------------------------------------------
Fixed assets                                                                                          
Goodwill                                                      8                    359                    529
Intangible assets                                             8                     28                     52
Tangible assets                                               9                    108                    133
-------------------------------------------------------------------------------------------------------------
                                                                                   495                    714
Current assets                                                                                        
Debtors                                                      11           27                     36   
Cash at bank and in hand                                                  99                     81   
-------------------------------------------------------------------------------------------------------------
                                                                         126                    117   
Creditors: amounts falling due within one year               12        (545)                  (535)
-------------------------------------------------------------------------------------------------------------
                                                                                                      
Net current assets (liabilities)                                                 (419)                  (418)

-------------------------------------------------------------------------------------------------------------
                                                                                                      
Total assets less current liabilities                                               76                    296
                                                                                                      
Creditors: amounts falling due after one year                13                  (554)                  (283)
-------------------------------------------------------------------------------------------------------------

Net assets                                                                       (478)                     13
                                                                                                      
                                                                                                      
                                                                                                      
Capital and reserves                                                                                  
Called up share capital                                      16                    305                    305
Share premium account                                        17                  2,600                  2,600
Other reserves                                               17                    242                    238
Profit and loss account                                      17                (3,625)                (3,130)
-------------------------------------------------------------------------------------------------------------
                                                                                                      
Shareholders' funds                                                              (478)                     13
-------------------------------------------------------------------------------------------------------------
                                                                                                      
                                                                                                      
Approved by the Board and authorised for issue on 31 August 2011
                                                                                                      
J. Joyce                                                                                              
Director                                                                                              
Registered number 06172239



Company Balance Sheet as at 31 March 2011
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------

                                                                            2011                  2010
                                                                                                    
                                                             Notes     £,000        £,000    £,000      £,000
-------------------------------------------------------------------------------------------------------------
Fixed assets                                                                                         
                                                                                                     
Investments                                                     10                  1,722               1,722
-------------------------------------------------------------------------------------------------------------
                                                                                    1,722               1,722
Current assets                                                                                       
Debtors                                                         11     2,280                 2,064   
Cash at bank and in hand                                                   4                    15
-------------------------------------------------------------------------------------------------------------
                                                                       2,284                 2,079   
Creditors: amounts falling due within one year                  12      (19)                  (12)
-------------------------------------------------------------------------------------------------------------
                                                                                                     
Net current assets (liabilities)                                                    2,265               2,067

-------------------------------------------------------------------------------------------------------------
                                                                                                     
Total assets less current liabilities                                               3,987               3,789
                                                                                                     
Creditors: amounts falling due after one year                   13                (1,404)             (1,111)
-------------------------------------------------------------------------------------------------------------

Net assets                                                                          2,583               2,678

-------------------------------------------------------------------------------------------------------------


Capital and reserves                                                                                 
Called up share capital                                         16                    305                 305
Share premium account                                           17                  2,600               2,600
Other reserves                                                  17                    102                 102
Profit and loss account                                         17                  (424)               (329)
-------------------------------------------------------------------------------------------------------------
                                                                                                     
Shareholders' funds                                                                 2,583               2,678

-------------------------------------------------------------------------------------------------------------
                                                                                                     

Approved by the Board and authorised for issue on 31 August 2011
                                                                                                     
J. Joyce                                                                                             
Director                                                                                             
Registered number 06172239



Consolidated Cash Flow Statement

for the Year Ended 31 March 2011
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------


                                                                                         2011         2010
                                                                            Notes       £,000        £,000
----------------------------------------------------------------------------------------------------------
Operating loss                                                                          (456)        (716)
Goodwill amortisation                                                                     170          170
Depreciation and other amortisation                                                        74          153
Share based payments                                                                        4           11
Decrease (increase) in debtors                                                              9            6
(Decrease) Increase in creditors                                                           10         (15)
----------------------------------------------------------------------------------------------------------
                                                                                                          
Net cash outflow from operating activities                                              (189)        (391)
----------------------------------------------------------------------------------------------------------
                                                                                                          
Returns on investments and servicing of finance                                                           
                                                                                                          
Interest element of finance lease payments                                                (1)          (3)
Interest paid                                                                            (14)          (1)
Loan Note interest paid                                                                  (24)         (28)
Interest received                                                                           -            1
----------------------------------------------------------------------------------------------------------
                                                                                                          
Net cash outflow from investments and servicing of finance                               (39)         (31)
----------------------------------------------------------------------------------------------------------
                                                                                                          
Capital expenditure                                                                                       
                                                                                                          
Payments to acquire tangible assets                                             9        (25)         (90)
Payments to acquire intangible assets                                           8           -         (45)
Net cash acquired on acquisition of subsidiary                                              -            -
----------------------------------------------------------------------------------------------------------
                                                                                                          
Net cash outflow from capital expenditure                                                (25)        (135)
----------------------------------------------------------------------------------------------------------
                                                                                                          
Net cash outflow before management of                                                                     
  liquid resources and financing                                                        (253)        (557)
----------------------------------------------------------------------------------------------------------
                                                                                                          
Financing                                                                                                 
                                                                                                          
Issue of ordinary share capital (net of expenses)                                           -          (7)
Repayment of loan notes                                                        15           -        (110)
Drawdown of loan facility                                                                 275            -
Drawdown of new finance leases                                                              -           24
Capital element of finance lease repayments                                               (4)         (16)
----------------------------------------------------------------------------------------------------------
                                                                                                          
Net cash inflow (outflow) from financing                                                  271        (109)
----------------------------------------------------------------------------------------------------------
                                                                                                          
Increase (Decrease) in cash in the period                                                  18        (666)

----------------------------------------------------------------------------------------------------------
                                                                                                          
                                                       
                                                       




Notes to the Consolidated Financial Statements

for the year ended 31 March 2011
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------


1   Accounting policies
    
    The following accounting policies have been applied consistently in dealing with items which are considered
    material in relation to the financial information presented.
    
    Basis of preparation
    The  accounts have been prepared in accordance with applicable United Kingdom Accounting Standards  (United
    Kingdom Generally Accepted Accounting Practice), which have been applied consistently.
    
    Going Concern
    The  directors  have prepared the financial statements on a going concern basis as they are confident  that
    the  convertible loan notes maturing in 2012 will be extended for a further 12 months. The company has also
    extended its existing loan facility with Abby Hardoon, a director and major shareholder, John Thompson  and
    Hawkstone Capital Limited. The directors are confident that this facility is sufficient to allow the  Group
    to continue to develop new products and achieve a breakeven position.
    
    Basis of consolidation
    The consolidated accounts include the accounts of the Company and its subsidiary undertakings made up to 31
    March  2011.  The  acquisition method of accounting has been adopted. Under this  method,  the  results  of
    subsidiary  undertakings  acquired or disposed of in the year are included in the consolidated  Profit  and
    Loss Account from the date of acquisition or up to the date of disposal. Intra group sales and profits  are
    eliminated fully on consolidation.

    Under  Section 408(4) of the Companies Act 2006 the Company is exempt from the requirement to  present  its
    own Profit and Loss Account.
    
    Goodwill
    The  goodwill is the purchased goodwill on the acquisition of Daily Internet Services Limited and  Lambolle
    Partners  plc  by  Daily Internet plc and is stated at cost.  The goodwill is being written  off  over  its
    estimated economic life of 5 years.
    
    Revenue recognition
    Revenue  from  the  sale of domain name registrations is recognised when the domain name is  registered  or
    renewed.  Revenue  from  value added services is recognised as these services are delivered.  Revenue  from
    hosting services is recognised over the life of each contract.
    
    Foreign currencies
    Transactions  in  foreign currencies are recorded using the rate of exchange ruling  at  the  date  of  the
    transaction.  Monetary assets and liabilities denominated in foreign currencies are  translated  using  the
    rate  of  exchange ruling at the balance sheet date and the gains or losses on translation are included  in
    the profit and loss account.
    
    Financial instruments
    Financial instruments are classified and accounted for, according to the substance of the contractual
    arrangement, as either  financial assets, financial liabilities or equity instruments. An equity instrument
    is any contract that evidences a residual interest in the assets of the company after deducting all of its
    liabilities.
    
    
    
        
    
    
    Tangible fixed assets and depreciation
    Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to
    write off the cost less estimated residual value of each asset over its expected useful life, as follows:
    
        Website design                                         33.3% straight line
    
        Furniture and equipment                       20% - 33.3% reducing balance
    
    Research and Development
    Research  expenditure  is written off to the profit and loss account in the year in which  the  expenditure
    occurs.  Development expenditure is treated in the same way unless the directors are satisfied  as  to  the
    technical, commercial and financial viability of individual projects. In this situation, the expenditure is
    deferred and amortised over the years during which the company is to benefit.
    
    Investments
    Fixed asset investments are stated at cost less provision for diminution in value.
    
    Deferred Taxation
    Deferred Taxation is provided in full in respect of taxation deferred by timing differences between certain
    items for taxation and accounting purposes. The deferred tax balance has not been discounted.
    
    Leases
    Assets  obtained  under hire purchase contracts and finance leases are capitalised as tangible  assets  and
    depreciated  over the shorter of the lease term and their useful lives. Obligations under  such  agreements
    are included in creditors net of the finance charge allocated to future periods. The finance element of the
    rental  payment  is  charged to the profit and loss account so as to produce a constant  periodic  rate  of
    charge on the net obligation outstanding in each period.

    Rentals  payable under operating leases are charged against income on a straight line basis over the  lease
    term.
    
    Share based payments
    
    The  fair value of employee options granted is recognised as an expense within the profit and loss  account
    with  a corresponding increase in equity. The fair value is measured at grant date and spread over the year
    during which the employees become unconditionally entitled to the options.
    
    The  fair value of supplier warrants is recognized as an expense within the profit and loss account with  a
    corresponding increase in equity.  The fair value is measured at grant date and charged against profit when
    the services are received.
    
    The  fair  value  of  the options granted is measured using the Black Scholes pricing  model,  taking  into
    account the terms and conditions upon which the options were granted.


2   Analysis of turnover and operating loss
    
    Revenue, all of which arises from the group's principal activity, is generated using a common
    infrastructure and support function, therefore in the opinion of the Directors its activities constitute
    one operating segment which can be analysed into its main components as follows:
    
                                                               2011          2011            2010         2010
                                                              £,000             %           £,000            %
    ----------------------------------------------------------------------------------------------------------
                                                                                                              
    Revenue by Service                                                                             
    Domain Names                                                650         51.3%             518        51.5%
    Hosting                                                     548         43.2%             418        41.6%
    Other                                                        70          5.5%              70         7.0%
    ----------------------------------------------------------------------------------------------------------
                                                              1,268                         1,006  
    ----------------------------------------------------------------------------------------------------------
                                                              
                                                                                                              
    The Group's operating loss, assets and liabilities cannot be accurately allocated to the services shown
    above as these services are operated by a fully integrated and inseparable infrastructure.
                                                                                                   
                                                                                                   
    The group operates out of the UK but sells services to the following geographical locations.   
    By geographical location                                                                                  
    UK                                                        1,213         95.7%             976        97.0%
    Europe                                                       26          2.1%              15         1.5%
    Rest of World                                                29          2.3%              15         1.5%
    ----------------------------------------------------------------------------------------------------------
                                                              1,268                         1.006
    ----------------------------------------------------------------------------------------------------------
      
      


3  Loss on ordinary activities before taxation
    
                                                                                           2011         2010
                                                                                          £,000        £,000
    --------------------------------------------------------------------------------------------------------
    Auditors' remuneration:                                                                       
          Group:         Audit                                                               20           20
                         Fees paid to the auditors in respect of other services               -            -
          Company:       Audit                                                                4            4
                         Fees paid to the auditors in respect of other services               -            -
    Depreciation of tangible fixed assets:                                                        
          Owned                                                                              37           76
          Held under finance leases                                                          13           13
    Amortisation of intangible fixed assets                                                  24           64
    Goodwill amortisation                                                                   170          170
    Share based payments                                                                      4           11
    Finance charge - finance lease                                                            1            3
    Rentals payable under operating leases                                                   28           28
    --------------------------------------------------------------------------------------------------------


4       Staff numbers and costs
      
        The average number of full time persons employed by the group, including executive directors during the
        year was:
                                                                                                  2011       2010
        ---------------------------------------------------------------------------------------------------------
        Research and Development                                                                     4          3
        Technical Support                                                                            5          5
        Executive and Administration                                                                 4          4
        ---------------------------------------------------------------------------------------------------------
                                                                                                    13         12
        ---------------------------------------------------------------------------------------------------------
                                                                                                        
        The aggregate payroll costs including executive directors were as follows:
                                                                                                  2011       2010
                                                                                                 £,000      £,000
        ---------------------------------------------------------------------------------------------------------
        Wages and salaries                                                                         388        395
        Social security costs                                                                       42         39
        Benefits in kind                                                                             6          4
        Staff option costs                                                                           4         11
        ---------------------------------------------------------------------------------------------------------
                                                                                                   440        449
        ---------------------------------------------------------------------------------------------------------
        The emoluments paid to the highest paid director during the year were £77,000. More information regarding
        directors' remuneration and share options can be found in the Directors' Remuneration Report on pages 9
        to 10.
      
      
  5     Share based payments and warrants

        The  Company has adopted an approved employee share option scheme. Under the Scheme the directors  have
        the  discretion to grant options to subscribe for ordinary shares up to a maximum of 10 per cent of the
        Company's  issued  share capital. Options can be granted to any employee of the  Company.  The  options
        cannot be exercised for at least three years from the date of grant. Options must be exercised in their
        entirety  or  not  at all. There is no performance criteria associated with the options.  The  weighted
        average exercise price is 6.9p per share.
    
        At 31 March 2011 rights to options over ordinary shares of the company were outstanding as follows:

                                                                             No. of Ordinary Shares
                                                            ------------------------------------------------------
       Grant date   Exercise period                 Exercise  At 31 March      Granted      Exercised  At 31 March
                                                       price         2010                      lapsed         2011
                                                                                            cancelled
       -----------------------------------------------------------------------------------------------------------
       25-May-07    25 May 2011 to 24 May 2017          2.5p       38,462                                   38,462
       25-May-07    25 May 2011 to 24 May 2017            5p       38,462                                   38,462
       25-May-07    25 May 2011 to 24 May 2017           10p       76,924                                   76,924
       25-May-07    25 May 2011 to 24 May 2017           15p      423,077                                  423,077
       25-May-07    25 May 2011 to 24 May 2017           20p      192,307                                  192,307
       24-Aug-07    24 Aug 2011 to 23 Aug 2017            5p       25,000                                   25,000
       24-Aug-07    24 Aug 2011 to 23 Aug 2017           10p       25,000                                   25,000
       24-Aug-07    24 Aug 2011 to 23 Aug 2017           15p      200,000                                  200,000
       24-Aug-07    24 Aug 2011 to 23 Aug 2017           20p      100,000                                  100,000
       24-Aug-07    24 Aug 2011 to 23 Aug 2014            5p       15,000                                   15,000
       24-Aug-07    24 Aug 2011 to 23 Aug 2014           10p        5,000                                    5,000
       24-Aug-07    24 Aug 2011 to 23 Aug 2014           15p      350,000                                  350,000
       24-Aug-07    24 Aug 2011 to 23 Aug 2014           20p      200,000                                  200,000
       24-Aug-07    31 July 2007 to 30 July 2017        0.7p    2,321,428                                2,321,428
       -----------------------------------------------------------------------------------------------------------
                                                                4,010,660            -              -    4,010,660
       -----------------------------------------------------------------------------------------------------------



The options have been valued, using the Black Scholes method, using the following assumptions:

----------------------------------------------------------------------------------------------------
Number of instruments granted               38,462      38,462       76,924     423,077      192,307
Grant date                               25-May-07   25-May-07    25-May-07   25-May-07    25-May-07
Expiry date                              24-May-17   24-May-17    24-May-17   24-May-17    24-May-17
Contract term (years)                           10          10           10          10           10
Exercise price                                2.5p          5p          10p         15p          20p
Share price at granting                         5p          5p           5p          5p           5p
Annual risk free rate (%)                       5%          5%           5%          5%           5%
Annual expected dividend yield (%)              0%          0%           0%          0%           0%
Volatility (%)                                 50%         50%          50%         50%          50%
Fair value per grant instrument              3.96p       3.36p        2.64p       2.19p        1.88p
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
Number of instruments granted               25,000      25,000      200,000     100,000       15,000
Grant date                               24-Aug-07   24-Aug-07    24-Aug-07   24-Aug-07    24-Aug-07
Expiry date                              23-Aug-17   23-Aug-17    23-Aug-17   23-Aug-17    23-Aug-14
Contract term (years)                           10          10           10          10            7
Exercise price                                  5p         10p          15p         20p           5p
Share price at granting                         5p          5p           5p          5p           5p
Annual risk free rate (%)                       5%          5%           5%          5%           5%
Annual expected dividend yield (%)              0%          0%           0%          0%           0%
Volatility (%)                                 50%         50%          50%         50%          50%
Fair value per grant instrument              3.36p       2.64p        2.19p       1.88p         2.9p
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
Number of instruments granted                            5,000      350,000     200,000    2,321,428
Grant date                                           24-Aug-07    24-Aug-07   24-Aug-07    23-Mar-09
Expiry date                                          23-Aug-14    23-Aug-14   23-Aug-14    30-Jul-17
Contract term (years)                                        7            7           7          8.2
Exercise price                                             10p          15p         20p         0.7p
Share price at granting                                     5p           5p          5p           5p
Annual risk free rate (%)                                   5%           5%          5%           5%
Annual expected dividend yield (%)                          0%           0%          0%           0%
Volatility (%)                                             50%          50%         50%          50%
Fair value per grant instrument                          2.02p        1.54p       1.21p        0.46p
----------------------------------------------------------------------------------------------------

      
      Share Warrants
      
      At 31 March 2011 there were 5,447,000 outstanding warrants to subscribe for the ordinary share capital of
      the company as follows:
      
                                                        No. of Warrants and Exercise price
                                                     ---------------------------------------         
        Grant date            Expiry Date                            10p                 15p            Total
        -----------------------------------------------------------------------------------------------------
        09.01.08              08.01.13                                 -           2,800,000        1,977,500
        11.03.08              10.03.15                         3,469,500                   -        3,469,500
        -----------------------------------------------------------------------------------------------------
      
      The shares will have the same dividend and voting rights as the existing ordinary shares in issue. The
      fair value of the arranger warrants has been calculated at 2.8p based on the following assumptions -
      share price at granting 6p, annual risk free rate 5%, volatility 50%.
        

6      Interest payable and similar charges
                                                                                       2011              2010
                                                                                      £,000             £,000
       ------------------------------------------------------------------------------------------------------
       Interest payable on finance leases                                                 1                 3
       Interest payable on loan notes                                                    24                28
       Other interest payable                                                            14                 -
       Bank Interest payable                                                              -                 1
       ------------------------------------------------------------------------------------------------------
                                                                                         39                32
       ------------------------------------------------------------------------------------------------------


7      Taxation
                                                                                             2011          2010
                                                                                            £,000         £,000
       --------------------------------------------------------------------------------------------------------
                                                                                                   
       Current tax charge                                                                       -             -
       --------------------------------------------------------------------------------------------------------
                                                                                                   
       Deferred tax                                                                                
       Timing differences                                                                       -             -
       --------------------------------------------------------------------------------------------------------
                                                                                                   
                                                                                                   
       Factors affecting the tax charge for the year                                               
                                                                                                   
       Loss on ordinary activities before taxation                                          (495)         (747)
       --------------------------------------------------------------------------------------------------------
                                                                                                   
                                                                                                   
       Loss on ordinary activities before taxation multiplied by the Standard rate          (129)         (209)
       of UK corporation tax of 26% (2010:28%)
                                                                                                   
       Effects of:                                                                                 
       Other adjustments                                                                      129           209
       --------------------------------------------------------------------------------------------------------
                                                                                                   
       Current tax charge                                                                       -             -
       --------------------------------------------------------------------------------------------------------



  
  8     Intangible fixed assets


                                                      Research                                            
                                                           and             Positive                       
         Group                                     development             Goodwill                  Total
                                                         £,000                £,000                  £,000
         -------------------------------------------------------------------------------------------------
         Cost                                                                                             
         At 1 April 2010                                   232                  849                   1081
         Additions                                           -                    -                      -
         Disposals                                           -                    -                      -
                                                                                                          
         -------------------------------------------------------------------------------------------------
                                                                                                          
         At 31 March 2011                                  232                  849                   1081
                                                                                                          
         -------------------------------------------------------------------------------------------------
                                                                                                          
         Amortisation                                                                                     
         At 1 April 2010                                   180                  320                    500
         On disposals                                        -                    -                      -
         Charge for the year                                24                  170                    194
                                                                                                          
         -------------------------------------------------------------------------------------------------
                                                                                                          
         At 31 March 2011                                  204                  490                    694
                                                                                                          
         -------------------------------------------------------------------------------------------------

         Net book value                                                                                   
                                                                                                          
         At 31 March 2011                                   28                  359                    387

         -------------------------------------------------------------------------------------------------
                                                                                                          
         At 31 March 2010                                   52                  529                    581

         -------------------------------------------------------------------------------------------------
                                                                                                          
         The Company held no intangible fixed assets at 31 March 2011 or 31 March 2010.
 
  


  
  9      Tangible fixed assets

                                                                               Furniture                
                                                           Website                   and                
         Group                                              design             equipment           Total
                                                             £,000                 £,000           £,000
         -----------------------------------------------------------------------------------------------
         Cost                                                                                           
         At 1 April 2010                                       166                   266             432
         Additions                                               -                    25              25
         Disposals                                               -                     -               -

         -----------------------------------------------------------------------------------------------
                                                                                                        
         At 31 March 2011                                      166                   291             457
                                                                                                        
         -----------------------------------------------------------------------------------------------

         Depreciation                                                                                   
         At 1 April 2010                                       166                   133             299
         On disposals                                            -                     -               -
         Charge for the year                                     -                    50              50

         -----------------------------------------------------------------------------------------------
                                                                                                        
         At 31 March 2011                                      166                   183             349

         -----------------------------------------------------------------------------------------------
                                                                                                        
         Net book value                                                                                 
                                                                                                        
         At 31 March 2011                                        -                   108             108

         -----------------------------------------------------------------------------------------------
                                                                                                        
         At 31 March 2010                                        -                   133             133

         -----------------------------------------------------------------------------------------------


         Included in the net book value of £108,000 are leased assets of £25,000 (2010:£47,000).
        
         The depreciation for the year on these assets was £13,000 (2010:£13,000).
        
         The Company held no tangible fixed assets at 31 March 2011 or 31 March 2010.
        


  
  10     Investments
                                                                           Company                      Company
                                                                              2011                         2010
                                                                             £,000                        £,000
         ------------------------------------------------------------------------------------------------------
         Investment in Subsidiaries                                                                            
         At 1 April 2010                                                     1,722                        1,722
         Additions                                                               -                            -
         Disposals                                                               -                            -
         ------------------------------------------------------------------------------------------------------
         At 31 March 2011                                                    1,722                        1,722
         ------------------------------------------------------------------------------------------------------
                                                                                                               
                                                                                     
                                                                                     
         The Company's subsidiary undertakings, all of which are wholly owned and included in the consolidated
         accounts, are:
                                                                                     
         Undertakings                                         Registration           Principal activity
         --------------------------------------------------------------------------------------------------

         Daily Internet Services Limited                      England                Web hosting and domain
                                                                                     name registration
                                                                                     
         Lambolle Partners plc                                England                Investment Company
         --------------------------------------------------------------------------------------------------

  
  11     Debtors
                                                                 Group       Company          Group      Company
                                                                  2011          2011           2010         2010
                                                                 £,000         £,000          £,000        £,000
         -------------------------------------------------------------------------------------------------------
         Amounts due within one year:-                                                                          
         -------------------------------------------------------------------------------------------------------
         Trade debtors                                               2             -              7            -
         Other debtors                                               -             1              -            1
         Prepayments and accrued income                             25             4             29            4
         -------------------------------------------------------------------------------------------------------

                                                                    27             5             36            5
         -------------------------------------------------------------------------------------------------------
                                                                                                     
         Amounts due after more than one year:-                                                                 
         -------------------------------------------------------------------------------------------------------
                                                                                                     
         Amounts owed by subsidiary undertakings                     -         2,275              -        2,059
         -------------------------------------------------------------------------------------------------------
                                                                     -         2,275              -        2,059
         -------------------------------------------------------------------------------------------------------
                                                                                                     
         Total Debtors                                              27         2,280             36        2,064
         -------------------------------------------------------------------------------------------------------


  
  12     Creditors: amounts falling due within one year
  
                                                                  Group       Company       Group       Company
                                                                   2011          2011        2010          2010
                                                                  £,000         £,000       £,000         £,000
         ------------------------------------------------------------------------------------------------------
         Trade creditors                                            147             9         156             8
         Other taxes and social security costs                       30             1          35             1
         Other creditors                                             61             -          65             -
         Accruals and deferred income                               299             9         271             3
         Finance lease                                                8             -           8             -
         ------------------------------------------------------------------------------------------------------

                                                                    545            19         535            12
         ------------------------------------------------------------------------------------------------------
                                                       
                                                       
  13      Creditors: amounts falling due after one year
        
                                                               Group        Company       Group        Company
                                                                2011           2011        2010           2010
                                                               £,000          £,000       £,000          £,000
        ------------------------------------------------------------------------------------------------------
        Finance lease                                             10              -          14              -
        Other loans                                              275            275           -              -
        Amounts due to subsidiary undertakings                     -            860           -            842
        Convertible loan note                                    269            269         269            269
        ------------------------------------------------------------------------------------------------------

                                                                 554          1,404         283          1,111
        ------------------------------------------------------------------------------------------------------
        
        
        The maturity of obligations under finance leases are as follows:
                                                                                                              
        Within one year                                            8              -           8              -
        Within two to three years                                 10              -          14              -
        ------------------------------------------------------------------------------------------------------

                                                                  18              -          22              -
        ------------------------------------------------------------------------------------------------------
                                                                                                        
        The maturity of other debt is as follows:
                                                                                                              
        Within two to three years                                544            544         269            269
        Over five years                                            -            860           -            842
        ------------------------------------------------------------------------------------------------------

                                                                 544          1,404         269          1,111
        ------------------------------------------------------------------------------------------------------
        
        
        
  14    Operating Leases
        
        The group has no commitments to make annual payments under non-cancellable operating leases.
  
        
  15    Financial instruments
  
        The  group's  financial instruments comprise cash and liquid resources, convertible bonds  and  various
        items such as trade debtors and trade creditors that arise directly from its operations.
        
        There  have  been no substantive changes in the Groups objectives, policies and processes for  managing
        those risks or the methods used to measure them from previous periods.
        
        The group's objective is to ensure adequate funding for continued growth and expansion.
        
        Given  the  nature  of  the group's borrowings, interest rate risk is not significant.  The  main  risk
        arising from the group's financial instruments is liquidity risk.  There is no foreign currency risk.
        
        Convertible Loan note
        
        Fifty  six £5,000 Convertible loan notes were issued on 9 January 2008. The notes are convertible  into
        ordinary shares at a conversion price of 12 pence per share.  They may be converted at any time by  the
        holder up to their 4th anniversary. They carry an interest rate of 8.6% per annum.
        
        The value of the convertible loan notes recognised in the balance sheet is calculated as follows:
        
                                                                                       2011             2010
                                                                                      £,000            £,000
         ---------------------------------------------------------------------------------------------------
         Face value                                                                     280              280
         Costs of issue                                                                 (8)              (8)
         ---------------------------------------------------------------------------------------------------
         Net proceeds                                                                   272              272
         Equity component                                                               (3)              (3)
         ---------------------------------------------------------------------------------------------------
         Liability component at 31 March 2011                                           269              269
         ---------------------------------------------------------------------------------------------------
 

  
  16     Share capital
                                                                Group       Company        Group       Company
                                                                 2011          2011         2010          2010
                                                                £,000         £,000        £,000         £,000
         -----------------------------------------------------------------------------------------------------
         Authorised                                                                                           
         150,000,000 Ordinary shares of 0.5p each                 750           750          750           750
         -----------------------------------------------------------------------------------------------------
                                                                  750           750          750           750
         -----------------------------------------------------------------------------------------------------
                                                                                                              
         Allotted, called up and fully paid                                                                   
         61,123,550 Ordinary shares of 0.5p each                  305           305          305           305
         -----------------------------------------------------------------------------------------------------
                                                                  305           305          305           305
         -----------------------------------------------------------------------------------------------------
  
  
  17      Statement of movements in reserves
                                                      Share          Other    Profit and         Total
                                                    premium       reserves          loss
                                                    account                      account
                                                      £,000          £,000         £,000         £,000
------------------------------------------------------------------------------------------------------
Group                                                                                                 
At 1 April 2010                                       2,600            238       (3,130)         (292)
Share based payments                                      -              4             -             4
Loss for the year                                         -              -         (495)         (495)
------------------------------------------------------------------------------------------------------
At 31 March 2011                                      2,600            242       (3,625)         (783)
------------------------------------------------------------------------------------------------------
                                                                                                      
                                                                                                      
Company                                                                                               
At 1 April 2010                                       2,600            102         (329)         2,373
Loss for the year                                         -              -          (95)          (95)
------------------------------------------------------------------------------------------------------
At 31 March 2011                                      2,600            102         (424)         2,278
------------------------------------------------------------------------------------------------------
 

  18    Reconciliation of movements in shareholder funds
                                                                                     2011               2010
                                                                                    £,000              £,000
        ----------------------------------------------------------------------------------------------------
        Loss for the financial year                                                 (495)              (747)
        Movement on other reserves                                                      4                 11
        Issue of shares                                                                 -                (7)
        ----------------------------------------------------------------------------------------------------
        Net increase (decrease) in shareholder funds                                (491)              (743)
        Opening shareholder funds                                                      13                756
        ----------------------------------------------------------------------------------------------------
        Closing shareholder funds                                                   (478)                 13
        ----------------------------------------------------------------------------------------------------

        
  19    Contingent liabilities
        
        
        There are no contingent liabilities at the year end.
        
  
  20    Related party transactions
        
        The directors use personal credit cards to pay trade creditors where necessary.

        During the year costs incurred of £512,693 were reimbursed to Mr A Hardoon, £30,997 to Mrs J Joyce and
        £11,106 to Mrs A Curry-Taylor.  At the year- end, £60,862 was due to Mr Hardoon and is included in
        other creditors.

        During the year, the company paid rent and service charges for its premises amounting to £31,600 to Mr
        Hardoon.

        Included in creditors falling due after one year is £45,000 provided by Mr Hardoon as part of a loan
        facility. The loan is due to be repaid on 31 August 2012 and interest payable is 10%.

        Mr A Hardoon has given personal guarantees to Barclays Bank of up to £70,000 dated 14
        February 2008 and up to £80,000 dated 17 November 2008.
        
      
        
        
        
  21      Analysis of changes in net funds
                                                                              Other                 
                                       31-Mar               Cash           non-cash           31-Mar
                                         2010               flow            changes             2011
                                        £,000              £,000              £,000            £,000
----------------------------------------------------------------------------------------------------
Net cash:                                                                                           
Cash at bank and in hand                   81                 18                  -               99
----------------------------------------------------------------------------------------------------
                                                                                                    
Net funds                                  81                 18                  -               99
----------------------------------------------------------------------------------------------------
        
        


  22    Reconciliation of net cash flow to movement in net funds
                                                                                 2011                 2010
                                                                                £,000                £,000
        --------------------------------------------------------------------------------------------------
        Increase (Decrease) in cash in the year                                    18                (666)
        Opening net funds                                                          81                  747
                                                                                       
        Closing net funds                                                          99                   81
        --------------------------------------------------------------------------------------------------
        
        
  23      Loss per share
  
  
                                                                                  2011                2010
        --------------------------------------------------------------------------------------------------
        Loss for the financial year attributable to shareholders              £495,000            £747,000
        Weighted number of equity shares in issue                           61,123,550          61,123,550

        Basic/diluted loss per share                                             £0.01               £0.01
        --------------------------------------------------------------------------------------------------
      
      
        Since the conversion of potential ordinary shares to ordinary shares would decrease the net loss per
        share, they are not dilutive. Accordingly diluted loss per share is the same as basic loss per share.
   

Corporate Information
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------

Company Secretary and Registered Office

Ian Aspinall

Number 14 Riverview Vale Road
Heaton Mersey
Stockport
Cheshire
SK4 3GN

Tel: +44 (0) 207 458 5757
Email: investor@daily.co.uk

Company Number

06172239

PLUS Market Corporate Advisor

Loeb Aron & Company Ltd.
Georgian House
63 Coleman Street
London
EC2R 5BB


Registrar

Computershare Investor Services plc.
The Pavilions Bridgwater Road
Bristol
BS13 8AE

Lawyers

Cobbetts LLP
58 Mosley Street
Manchester
M2 3HZ


Auditors

Hazlems Fenton LLP
Chartered Accountants
Palladium House
1-4 Argyll Street
London
W1F 7LD


Bankers

Barclays Bank plc.
One Churchill Place
London
E14 5HP


Notice of meeting
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------

Notice is hereby given that the Annual General Meeting of Daily Internet plc will be held on 23 September  2011
at  10.00  am  at the Company's registered office at Number 14 Riverview, Vale Road, Heaton Mersey,  Stockport,
Cheshire, SK4 3GN for the purpose of considering and, if thought fit, passing the resolutions set out below, of
which  Resolutions  1  to 6 will be proposed as ordinary resolutions and Resolution 7 will  be  proposed  as  a
special resolution.

In  addition,  it  should be noted that due to the continuing losses incurred by the Group, the  value  of  the
Company's net assets is now less than half of its called-up share capital. In these circumstances the Directors
are  required  under  section 656 of the Companies Act 2006 to consider at a General  Meeting  of  the  Company
whether any, and if so what, steps should be taken to deal with the situation. In light of the Group's trend of
continued  improvement  and management expectations of future performance, the Directors  do  not  consider  it
necessary  to  have any specific resolutions proposed at the Annual General Meeting but the situation  will  be
considered at the end of the Annual General Meeting.


Ordinary Business

To consider and, if thought fit, pass the following resolutions:

    1.      TO receive, consider and adopt the Annual Report and Financial Statements for the year ended 31 March
            2011, together with the Directors' and Auditors' Reports contained therein.
    
    2.      TO reappoint Abby Hardoon as a director who retires by rotation.
    
    3.      TO reappoint Julie Joyce as a director who retires by rotation.
    
    4.      TO reappoint Robert Khalastchy as a director who retires by rotation.

    5.      TO reappoint Hazlems Fenton LLP Chartered Accountants as auditors of the Company and authorise the
            Directors to fix their remuneration.
    
    6.      THAT  the Directors be generally and unconditionally authorised to allot equity securities (as  defined
            in section 560(1) of the Companies Act 2006 ("the Act")):
            
            a.   up to an aggregate nominal amount of £30,600 (such amount to be reduced by the nominal amount of any
                 Relevant Securities allotted under resolution 6(b) below) in connection with an offer by way of a
                 rights issue:
                       
                       i.  to holders of ordinary shares in proportion (as nearly as may be practicable) to their
                           respective holdings; and
                       
                       ii. to holders of other equity securities as required by the rights of those securities or as
                           the Directors otherwise consider necessary,
                 
                 but  subject  to such exclusions or other arrangements as the Directors may deem necessary  or
                 expedient  in  relation to treasury shares, fractional entitlements, record  dates,  legal  or
                 practical problems in or under the laws of any territory or the requirements of any regulatory
                 body or stock exchange; and
                 
            
            b.   in any other case, up to an aggregate nominal amount of £226,700 (such amount to be reduced by the
                 nominal amount of any equity securities allotted under resolution 6(a) above in excess of £30,600),
        
        
                 provided  that this authority shall, unless renewed, varied or revoked by the Company,  expire
                 15  months from the date this resolution is passed or, if earlier, the date of the next annual
                 general  meeting of the Company save that the Company may, before such expiry, make offers  or
                 agreements  which would or might require Relevant Securities to be allotted and the  Directors
                 may allot Relevant Securities in pursuance of such offer or agreement notwithstanding that the
                 authority conferred by this resolution has expired.
                 
        
        This resolution revokes and replaces all unexercised authorities previously granted to the Directors to
        allot  Relevant Securities but without prejudice to any allotment of shares or grant of rights  already
        made, offered or agreed to be made pursuant to such authorities.
        
            
            For the purposes of the resolution:  'Relevant Securities' means:
            
    
            (a) shares in the Company other than shares allotted pursuant to:  an employee share scheme (as defined by
                section 1166 of the CA 2006); a right to subscribe for shares in the Company where the grant of the
                right itself constituted a Relevant Security; or a right to convert securities into shares in the
                Company where the grant of the right itself constituted a Relevant Security; and
            
            (b) any right to subscribe for or to convert any security into shares in the Company other than rights to
                subscribe for or convert any security into shares allotted pursuant to an employee share scheme (as
                defined by section 1166 of the CA 2006).  References to the allotment of Relevant Securities in the
                resolution include the grant of such rights.

Special business

As special business, to consider and, if thought fit, pass the following resolution:

    7.  THAT, subject to the passing of resolution 6, the Directors be given the general power to allot  equity
    securities  (as defined by section 560 of the Act) for cash, either pursuant to the authority conferred  by
    resolution 6 or by way of a sale of treasury shares, as if section 561(1) of the Act did not apply  to  any
    such allotment, provided that this power shall be limited to:
        
            a. the allotment of ordinary shares of £0.005 (0.5 pence) each ("Ordinary Shares") pursuant to options
               granted to directors, employees and consultants  to the Company up to an aggregate nominal value of
               £20,053.30;
            
            b. the allotment of Ordinary Shares pursuant to warrants issued by the Company pursuant to the loan note
               instruments dated 9 January 2008 and 21 January 2008 up to an aggregate nominal value of £31,347.50;

            c. the allotment of Ordinary Shares pursuant to convertible loan notes issued by the Company pursuant to
               the convertible loan note instrument dated 9 January 2008, as proposed to be amended and varied, up to
               an aggregate nominal value of £50,866.67 (including interest);

            d. the allotment of Ordinary Shares pursuant to warrants to be granted pursuant to a warrant instrument to
               be entered into by the Company in connection with the amendments and variations proposed to be made to
               the convertible loan note instrument referred to in paragraph 7(c), up to an aggregate nominal value of
               £28,000.00;

            e. the allotment of Ordinary Shares to Loeb Aron & Company Ltd by way of capitalisation of fees incurred
               in respect of services provided in connection with the amendments and variations proposed to be made to
               the convertible loan note instrument referred to in paragraph 7(c), up to an aggregate nominal value
               of  £2,500.00;

            f. the allotment of Ordinary Shares to certain lenders, including Abby Hardoon by way of capitalisation
               of loan facility, as renewed on 24 August 2011 up to an aggregate nominal value of  £63,333.34;

            g. the allotment of equity securities in connection with an offer by way of a rights issue:

                       i.  to the holders of ordinary shares in proportion (as nearly as may be practicable) to their
                           respective holdings; and
                       ii. to holders of other equity securities as required by the rights of those securities or as
                           the Directors otherwise consider necessary,
                 
                 
                 but subject to such exclusions or other arrangements as the Directors may deem necessary or
                 expedient in relation to treasury shares, fractional entitlements, record dates, legal or
                 practical problems in or under the laws of any territory or the requirements of any regulatory
                 body or stock exchange; and
                 
            h. the allotment (otherwise than pursuant to resolutions 7(a) to (g) above) of equity securities up to an
               aggregate nominal amount of £30,600.00.
        
        
        The  power granted by this resolution will expire 15 months from the date this resolution is passed or,
        if  earlier,  the  conclusion of the Company's next annual general meeting (unless renewed,  varied  or
        revoked  by  the Company prior to or on such date) save that the Company may, before such  expiry  make
        offers  or  agreements which would or might require equity securities to be allotted after such  expiry
        and  the  Directors  may  allot  equity  securities  in  pursuance  of  any  such  offer  or  agreement
        notwithstanding that the power conferred by this resolution has expired.
        
        This resolution revokes and replaces all unexercised powers previously granted to the Directors to
        allot equity securities as if section 561(1) of the 2006 Act did not apply but without prejudice to any
        allotment of equity securities already made or agreed to be made pursuant to such authorities.
        


By order of the board                                                   Registered Office
                                                                        Number 14 Riverview
                                                                        Vale Road
                                                                        Heaton Mersey
Ian Aspinall                                                            Stockport
Company Secretary                                                       Cheshire
31 August 2011                                                          SK4 3GN


Notes

    1.  Any member entitled to attend and vote at the Annual General Meeting is entitled to appoint one or more
        proxies who need not be a member of the company to attend and to vote instead of the member. Completion and
        return of a form of proxy will not preclude a member from attending and voting at the meeting in person,
        should he subsequently decide to do so.

    2.  In order to be valid, any form of proxy and power of attorney or other authority under which it is
        signed, or a notarially certified or office copy of such power of attorney, must reach the Company's
        Registrars, Computershare Investor Services plc, The Pavilions, Bridgwater Road, Bristol, BS13 8AE not less
        than 48 hours before the time of the meeting or of any adjournment of the meeting.

    3.  Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 the Company specifies that
        to be entitled to attend and vote at the meeting (and for the purposes of the determination by the Company of
        the number of votes they may cast), holders of ordinary shares must be entered on the relevant register of
        securities by 10.00 am on 21 September 2011.  Changes to entries on the relevant register of securities after
        10.00am on 21 September 2011 shall be disregarded in determining the rights of any person to attend and vote
        at the meeting.

    4.  Copies of the service contracts and letters of appointment of each of the Directors of the Company
        together with the Register of Directors' Interests will be available for inspection at the registered office of
        the company during usual business hours on any weekday (Saturday and public holidays excluded) and at the place
        of the Annual General Meeting from at least 15 minutes prior to and until the conclusion of the Annual General
        Meeting.

    5.  The Directors have no present intention of exercising either the allotment authority under resolution 3
        or the disapplication of pre-emption rights authority under resolution 4 other than as required pursuant to the
        authorities set out in paragraphs (a) to (f) of resolution 7.

    6.  The annual report can be downloaded from the investor section of the Daily.co.uk website using the
        following link http://www.daily.co.uk/investors/downloads.html.


Contact Information

  • Daily Internet plc