Daily Internet plc
LSE : DAIP

August 31, 2012 10:55 ET

Annual Financial Report

          
                                                                                             Daily Internet plc
                                                                                             Annual Report 2012
                                                                                                               
                                                                                                               
                                                                                                               
                                                                                                               
                                                                                                               
                                                                                        Company Number 06172239

Contents
---------------------------------------------------------------------------------------------------------------
Introduction & Highlights                                                                                     2
Chairman's Statement                                                                                          3
Operational & Financial Review                                                                                4
Board of Directors and Senior Managers                                                                        6
Report of the Directors                                                                                       7
Directors' Remuneration Report                                                                                9
Statement of the Directors' Responsibilities                                                                 11
Report of the Independent Auditors                                                                           12
Consolidated Profit and Loss Account                                                                         14
Consolidated Balance Sheet                                                                                   15
Company Balance Sheet                                                                                        16
Consolidated Cash Flow Statement                                                                             17
Notes to the Accounts                                                                                        18
Corporate Information                                                                                        30
Notice of Meeting                                                                                            31
                                                                                                               

                                                       
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 high
        renewal rates
        
Highlights
                                                                                       2012             2011
    ---------------------------------------------------------------------------------------------------------
                                                                                       
      Turnover                                                                  £ 1,451,246       £1,267,978

      Earnings before interest, taxation, depreciation, amortisation  and
      FRS 20 share based payments                                               £ (140,458)      £ (208,283)

      Number of customers                                                           61,036           53,213

      Number of Active domains                                                     154,072          131,765

      Number of Active hosting services                                             20,581           18,708

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

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

http://media3.marketwire.com/docs/TotalServiceNumbers.jpg     
  
        
    -   Revenue up by 14.5% reflecting good organic growth
        
    -   Number of active domains up by 16.9%

    -   Number of active hosting services up by 10.0%
        
    -   £124,000 investment in infrastructure
        
    -   £51,000 investment in additional staff to enable expansion into the next phase of development
    
    
    
    
Chairman's Statement
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
I am delighted to present the 31 March 2012 financial results for Daily Internet plc.

Performance Summary

Daily  continued  to  make good progress during the financial year, and as promised in last  year's  Chairman's
Statement achieved cash flow break even at the operating level in 2012.

The  Daily  brand continues to be well regarded in the marketplace as demonstrated by continued organic  growth
against  a backdrop of a flat UK economy. Our continually improving renewal rates are evidence of  our  ability
to deliver excellent customer service and value.

Daily  has now developed a complete portfolio of hosting products, email and domain name registration  services
to provide both the small business user and consumer with all their hosting requirements. Our customer base has
continued to grow and from this we have built a recurring revenue base that will provide funding to develop and
maintain the current product set for the foreseeable future.

That effectively was the end of Phase One in our corporate strategy.

Outlook

As  companies, large and small, continue to seek improvements in profitability, outsourcing of hosting  remains
paramount  in  a business strategy is an important avenue to deliver savings. With this in mind  and  with  the
increasing  public  awareness of Cloud hosting and the savings this can deliver to businesses,  Daily's  Second
Phase,  which  has  already begun, aims to extend its reach into this market and further  develop  its  Managed
Hosting  Solutions  to  excel  at and to become a complete one stop outsourcing  partner.  Such  solutions  are
expected to bring higher revenue per customer and boost our gross margin.

The management team at Daily will continue to work hard with enthusiasm and energy seeking out new technologies
to  further  capture market share, increase revenue and consolidate our position; at the same time endeavouring
to seek out accretive acquisitions to enable us to extend our reach into new markets with new brands.

Placing

The Company has today announced the proposed placing of up to £600,000 of new Ordinary Shares at £0.02 (2
pence) per share. Of this, £500,000 has been irrevocably applied for conditional upon obtaining approval from
shareholders to allot the Placing Shares on a non pre-emptive basis pursuant to the offer. The Company has
already received irrevocable commitments from over 55% of shareholders to vote in favour of this proposal.

The Board has considered this carefully and believes that raising this limited amount of funds for the next
stage of growth is in the Company's best interests. The Board is mindful of the dilutive effect the Placing
could have on existing shareholders. We greatly appreciate the support from shareholders from inception, so, in
addition, is offering Shareholders the opportunity to subscribe for new Ordinary Shares pursuant to the Placing
should they so wish.

Conclusion

I  take this opportunity to thank all our shareholders for their continued support and to Daily staff for their
passion, dedication and commitment to the company and our customers.

And  finally, you will recall that at our AGM on 23 Sept 2008 it was unanimously agreed that all correspondence
from  the Board in future should be sent electronically.  It is intended that this is the last printed document
that  will  be sent to you and all future correspondence with shareholders will be by email.  Could I therefore
ask  you,  to  ensure  that our records are correct, to send by email your name and current  email  address  to
bridget.xiros@daily.co.uk.  Thank you.

Michael Edelson
Chairman
23 August 2012

Operational and Financial Review
---------------------------------------------------------------------------------------------------------------
Profit and Loss

2011/12  has been another year of continued  revenue growth and reductions in operating loss. Revenue for the  
Group reached nearly £1.5 million for the  year to 31 March 2012, an increase of 14% compared to the previous    
year   and   operating    loss    before amortisation, depreciation and costs associated with Daily's  second 
phase reduced to £88,000 a reduction of 58%.

Daily offers hosting services paid for on a variable subscription basis. Where the subscription  is  paid for on 
an annual basis, sales attributable to future periods  are deferred. As such, revenue reported  in the  accounts 
is different to actual cash  received. The  Group's cash receipts for the year amounted  to £1,503,000  compared 
to £1,287,000 for the  previous year;  an  increase  of  17%.  The  amount  of  cash received  which has been 
deferred to future  periods at 31 March 2012 is £283,000.

Marketing  along  with  staff costs  represents  the majority of our operating expenses. During  2012  we have 
continued to improve marketing efficiencies  by using  social  media channels, 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 reduced by 9% to  £224,000  and customer  signups increased 
by 14%  to  a  total  of 60,300 by the end of March 2012.

Focus  on  excellent customer service and  continued systems  improvements have driven increased  revenue per  
operational head. In the coming year we aim  to continue  to drive additional new sales  within  our current  
product set and maintain our  renewal  base without incurring additional staff costs.

EBITDA* for the year to 31 March 2012 is reported in the   financial  statements  at  £139,000.  Included within  
this figure are additional costs of  £51,000 which   are   mainly  attributable   to   additional headcount and 
have been incurred during the year  to facilitate  the  Group in bringing to  market  Cloud hosting  solutions  
and  managed  services  (Daily's Phase  2).  The  underlying EBITDA  on  our  current product  set  for  comparison 
to previous  years  is £88,000.

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

http://media3.marketwire.com/docs/Graphs2.jpg


*EBITDA   -   Earnings   before  interest,   taxation, depreciation and amortisation

Balance sheet and Treasury

The Group has continued to invest in its infrastructure during the year to 31 March 2012, having spent £124,000
during the year, with a further spend of £43,000 in April 2012, (2011:£25,000) on the maintenance and expansion
of its core products. The total investment at 31 March 2012 in the Group's tangible and intangible fixed assets
amounts  to  £811,000  (2011:£689,000),  these are written down over time  in  accordance  with  the  Company's
depreciation policy and the fair value of these assets is reported at £192,000 (2011:£136,000).

Net  cash outflow from operating activities during the year reduced to £9,000 (2011:£189,000). Cash at bank  at
31 March 2012 was ahead of plan at £108,000 (2011:£99,000). A facility of £480,000, which is available until 30
November 2013, has been arranged for working capital requirements, of which £130,000 was drawn down during  the
year,  with  £405,000  utilised  in total to 31 March 2012. The Directors are confident  that  this  amount  is
sufficient  to  allow  the Group to continue its organic growth and to achieve an overall  cash-flow  breakeven
position  in the current financial year. The proposed share placing will help to accelerate Daily's next  phase
of development into Managed Services and Cloud Hosting Solutions. Further fundraising may be required should an
acquisition target become available.

Creditors falling due within one year are reported at £709,000 (2011:£545,000). This figure includes an  amount
of £283,000 (2010:£242,000) for deferred revenue which will be released to profit in future years.
Creditors  falling  due  after one year are reported at £708,000 (2011:£554,000). This includes  an  amount  of
£269,000 (2011:£269,000) for the fair value of convertible loan notes which were renewed on 9 January 2012.


                                                                                                    Julie Joyce
                                                                                               Finance Director
                                                                                                 23 August 2012
                                                                                              
                                                                                                               

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

John Michael Edelson - Non-Executive 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 and has been on the board of  Manchester
United Football Club Limited since 1982. 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.

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 also include being the non-executive chairmanships of both  EXC  plc  and
Fastnet Oil & Gas plc, both being companies admitted to trading on AIM.

Abby Hardoon - Managing Director

Mr  Hardoon,  the founding shareholder of Daily Internet plc 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 degree in Electronic Engineering.
For  the  past  20  years  he has worked in property management. In 2001 he set up RK  Management,  a  property
management  company  handling a commercial portfolio in excess of £35 million.  In  2011  he  set  up  Sterling
Property  Management, a residential block property management company which manages several prestigious  blocks
in Central and West London.

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 2012.

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
-       Dependency on key suppliers   
-       Customer retention  
-       Best use of marketing spend to maximise growth and profitability
-       Optimisation of human resource skills  and retention of key members of staff 

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 2012.

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
  
Significant Shareholdings

As  of  2 August 2012 the Company has been notified of the following significant shareholdings:

                                                  %
---------------------------------------------------
Abby Hardoon                                   32.1
Pentagon Sterling Satellite Fund Limited        7.2
Loeb Aron & Company Ltd and connected persons   7.1
---------------------------------------------------

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.

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

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 average number of supplier days  outstanding  at 
31 March 2012 based  on  the amounts  invoiced by suppliers during the financial year was 51 days (2011:45 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  27 September   2012  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 31 to 33.

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

23 August 2012





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.

Remuneration Policy

Daily Internet plc has a policy to attract, motivate and reward individuals of the highest calibre who  are
committed to growing the value of the Group's 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 for inspection 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:

                                             2012                                       2011
                           ------------------------------------------------------------------------------------
                                 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                        3               2              5           10               2           12
Julie Joyce                        74               2             76           75               2           77
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          Percentage
ordinary share capital of the Company as shown below:                  Ordinary Shares            Interest
---------------------------------------------------------------------------------------------------------------
Michael Edelson                                                              2,714,285                4.3%
Abby Hardoon                                                                20,233,627               32.3%
Julie Joyce                                                                    150,000                0.2%

Robert Khalastchy                                                              253,846                0.4%
---------------------------------------------------------------------------------------------------------------


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
                                                                                         Date         Date
Employee          0.7p**         5p*        10p*        15p*        20p*       Total               
---------------------------------------------------------------------------------------------------------------
Michael          714,286           -           -           -           -     714,286    23.03.07     30.07.17
Edelson
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                 -      15,000       5,000     100,000     100,000     220,000    24.08.07     24.08.17
Khalastchy
---------------------------------------------------------------------------------------------------------------
*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
Michael Edelson                         5p                100,000              09.01.12               08.01.22
---------------------------------------------------------------------------------------------------------------

Mr  Hardoon's  warrants  can  be exercised at any time up to the expiry date.  Mr  Edelson's  warrants  are
exercisable at any time before 8 January 2022, provided that the Company may require the exercise of  these
Warrants if its shares are traded at a price in excess of 8p per share for a period of 60 business days and
an     aggregate     value    of    bargains    exceeding    £60,000    occurs    over     that     period.

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 UK Accounting Standards have been followed, subject to any  material
          departures, disclosed and explained in the financial statements; and
    -     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 Auditor's Report to the Members of Daily Internet plc
---------------------------------------------------------------------------------------------------------------

We  have audited the financial statements of Daily Internet Plc for the year ended 31 March 2012 set out on
pages  14 to  29 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 auditor

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  Group and parent'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 2012 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.

Stephen Fenton 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                                                                 
                                                                        
23 August 2012                                                          




Consolidated Profit and Loss Account
for the Year Ended 31 March 2012
---------------------------------------------------------------------------------------------------------------


                                                                                       2012         2011
                                                                                      Group        Group
                                                                                                        
                                                                        Notes         £,000        £,000
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------


Revenue                                                                     2         1,451        1,268
                                                                                                        
Cost of sales                                                                         (695)        (608)
                                                                                                        
---------------------------------------------------------------------------------------------------------------

Gross profit                                                                            756          660
                                                                                                        
---------------------------------------------------------------------------------------------------------------
Operating  expenses before amortisation, depreciation  and  share                                 
based payments                                                                          895          868
Goodwill amortisation                                                                   170          170
Depreciation and other amortisation                                                      68           74
Share based payments                                                                      -            4
---------------------------------------------------------------------------------------------------------------

Administrative expenses                                                             (1,133)      (1,116)
---------------------------------------------------------------------------------------------------------------

                                                                                                       
Operating loss                                                              3         (377)        (456)
---------------------------------------------------------------------------------------------------------------
                                                                                                        
                                                                                                        
Interest receivable and similar income                                                    -            -
                                                                                                        
Interest payable and similar charges                                        6          (63)         (39)
---------------------------------------------------------------------------------------------------------------

Loss before taxation                                                                  (440)        (495)
                                                                                                        
Taxation                                                                    7             -            -
---------------------------------------------------------------------------------------------------------------
                                                                                                        
                                                                                                        
Retained loss for the year                                                            (440)        (495)
                                                                                                        
---------------------------------------------------------------------------------------------------------------

Basic and fully diluted loss per share                                     24         £0.01        £0.01
---------------------------------------------------------------------------------------------------------------

                                                     
                                                     
Consolidated Balance Sheet as at 31 March 2012
---------------------------------------------------------------------------------------------------------------
                                                                                         
                                                                          2012                   2011
                                                                                                   
                                                          Notes        £,000     £,000        £,000      £,000
---------------------------------------------------------------------------------------------------------------
Fixed assets                                                                                          
Goodwill                                                      8                    189                     359
Intangible assets                                             8                      9                      28
Tangible assets                                               9                    183                     108
---------------------------------------------------------------------------------------------------------------

                                                                                   381                     495
Current assets                                                                                        
Debtors                                                      11           47                     27   
Cash at bank and in hand                                     23          108                     99   
---------------------------------------------------------------------------------------------------------------

                                                                         155                    126   
Creditors: amounts falling due within one year               12         (709)                  (545)   
---------------------------------------------------------------------------------------------------------------

Net current assets (liabilities)                                                 (554)                   (419)

---------------------------------------------------------------------------------------------------------------
                                                                                                      
Total assets less current liabilities                                            (173)                      76
                                                                                                      
Creditors: amounts falling due after one year                13                  (708)                   (554)

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

Net assets                                                                       (881)                   (478)
                                                                                                      
---------------------------------------------------------------------------------------------------------------

                                                                                                      
Capital and reserves                                                                                  
Called up share capital                                      16                    313                     305
Share premium account                                        17                  2,629                   2,600
Other reserves                                               17                    242                     242
Profit and loss account                                      17                (4,065)                 (3,625)
---------------------------------------------------------------------------------------------------------------

Shareholders' funds                                                              (881)                   (478)
                                                                                                      
---------------------------------------------------------------------------------------------------------------

                                                                                                      
Approved by the Board and authorised for issue on 23 August 2012
                                                                                                      



J. Joyce                                                                                              
Director                                                                                              

Registered number 06172239

Company Balance Sheet as at 31 March 2012
---------------------------------------------------------------------------------------------------------------
                                                                            2012                  2011
                                                                                                    
                                                             Notes     £,000        £,000    £,000      £,000
---------------------------------------------------------------------------------------------------------------

Fixed assets                                                                                         
                                                                                                     
Investments                                                     10                  1,722               1,722
---------------------------------------------------------------------------------------------------------------

                                                                                    1,722               1,722
Current assets                                                                                       
Debtors                                                         11     2,347                 2,280   
Cash at bank and in hand                                                   1                     4   
---------------------------------------------------------------------------------------------------------------

                                                                       2,348                 2,284   

Creditors: amounts falling due within one year                  12       (16)                  (19)   
---------------------------------------------------------------------------------------------------------------
                                                                                                     

Net current assets (liabilities)                                                    2,332               2,265
                                                                                                     
---------------------------------------------------------------------------------------------------------------
                                                                                                     
Total assets less current liabilities                                               4,054               3,987
                                                                                                     
Creditors: amounts falling due after one year                   13                 (1,534)             (1,404)
---------------------------------------------------------------------------------------------------------------

Net assets                                                                          2,520               2,583

---------------------------------------------------------------------------------------------------------------
                                                                                                     
                                                                                                     
Capital and reserves                                                                                 
Called up share capital                                         16                    313                 305
Share premium account                                           17                  2,629               2,600
Other reserves                                                  17                    102                 102
Profit and loss account                                         17                   (524)               (424)
---------------------------------------------------------------------------------------------------------------
                                                                                                     
Shareholders' funds                                                                 2,520               2,583
                                                                                                     
---------------------------------------------------------------------------------------------------------------

Approved by the Board and authorised for issue on 23 August 2012
                                                                                                     



J. Joyce                                                                                             
Director                                                                                             

Registered number 06172239

Consolidated Cash Flow Statement
for the Year Ended 31 March 2012
---------------------------------------------------------------------------------------------------------------

                                                                                          2012        2011
                                                                            Notes        £,000       £,000
---------------------------------------------------------------------------------------------------------------
Operating loss                                                                            (377)       (456)
Goodwill amortisation                                                                      170         170
Depreciation and other amortisation                                                         68          74
Share based payments                                                                         -           4
Decrease (increase) in debtors                                                             (20)           9
(Decrease) Increase in creditors                                                           150          10
---------------------------------------------------------------------------------------------------------------
                                                                                                          
Net cash outflow from operating activities                                                  (9)       (189)
---------------------------------------------------------------------------------------------------------------
                                                                                                          
Returns on investments and servicing of finance                                                           
                                                                                                          
Interest element of finance lease payments                                                  (3)         (1)
Interest paid                                                                              (36)        (14)
Loan Note interest paid                                                                    (24)        (24)
                                                                                                          
Net cash outflow from investments and servicing of finance                                 (63)        (39)
---------------------------------------------------------------------------------------------------------------
                                                                                                         
Capital expenditure                                                                                       
                                                                                                          
Payments to acquire tangible assets                                             8         (124)        (25)
                                                                                                          

Net cash outflow from capital expenditure                                                 (124)        (25)
---------------------------------------------------------------------------------------------------------------
                                                                                                          
Net cash outflow before management of                                                                     
  liquid resources and financing                                                          (196)       (253)
---------------------------------------------------------------------------------------------------------------
                                                                                                          
Financing                                                                                                 
                                                                                                          
Issue of ordinary share capital (net of expenses)                                           37           -
Drawdown of loan facility                                                                  130         275
Drawdown of new finance leases                                                              51           -
Capital element of finance lease repayments                                                (13)         (4)
---------------------------------------------------------------------------------------------------------------
                                                                                                           
Net cash (inflow) outflow from financing                                                   205         271
---------------------------------------------------------------------------------------------------------------
                                                                                                          
Increase (Decrease in) cash in the period                                                    9          18

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


Notes to the Consolidated Financial Statements
for the year ended 31 March 2012
---------------------------------------------------------------------------------------------------------------
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 cash flow projections
    show  that  the  loan facility with Abby Hardoon, a director and major shareholder, John  Thompson  and
    Hawkstone  Capital  Limited is sufficient to allow the Group to continue to develop  new  products  and
    achieve a breakeven position. The proposed shared placing of up to £600,000 of which £500,000 has  been
    irrevocably applied for will also ensure the continued development of new products into new markets.
    
    Basis of consolidation
    The  consolidated accounts include the accounts of the Company and its subsidiary undertakings made  up
    to 31 March 2012. 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:
                                                               2012         2012           2011          2011
                                                              £'000            %          £'000             %
      -------------------------------------------------------------------------------------------------------- 
      Revenue by Service                                                                          
      Domain Names                                              720        49.6%            650         51.3%
      Hosting                                                   659        45.4%            548         43.2%
      Other                                                      72         5.0%             70          5.5%
      --------------------------------------------------------------------------------------------------------
                                                               1451                        1268   
      --------------------------------------------------------------------------------------------------------
                                                                                                  
      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                                                       1378        95.0%           1213         95.7%
      Europe                                                     27         1.9%             26          2.1%
      Rest of World                                              46         3.2%             29          2.3%
      --------------------------------------------------------------------------------------------------------
                                                               1451                        1268   
      --------------------------------------------------------------------------------------------------------

3   Loss on ordinary activities before taxation
    
                                                                                           2012         2011
                                                                                          £,000        £,000
   -----------------------------------------------------------------------------------------------------------
    Auditors' remuneration:                                                                       
          Group:         Audit                                                               15           20
          Company:       Audit                                                                4            4
    Depreciation of tangible fixed assets:                                                        
          Owned                                                                              40           37
          Held under finance leases                                                           9           13
    Amortisation of intangible fixed assets                                                  19           24
    Goodwill amortisation                                                                   170          170
    Share based payments                                                                      -            4
    Finance charge - finance lease                                                            3            1
    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:
                                                                                              2012       2011
   ------------------------------------------------------------------------------------------------------------
    Research and Development                                                                     4          4
    Technical Support                                                                            5          5
    Executive and Administration                                                                 5          4
   ------------------------------------------------------------------------------------------------------------
                                                                                                14         13
   ------------------------------------------------------------------------------------------------------------
                                                                                                        
    The aggregate payroll costs including executive Directors were as follows:
                                                                                              2012       2011
                                                                                             £,000      £,000
   ------------------------------------------------------------------------------------------------------------
    Wages and salaries                                                                         415        388
    Social security costs                                                                       42         42
    Benefits in kind                                                                             6          6
    Staff option costs                                                                           -          4
   ------------------------------------------------------------------------------------------------------------
                                                                                               463        440
   ------------------------------------------------------------------------------------------------------------
    The emoluments paid to the highest paid Director during the year were £76,000. 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  2012  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         2011                      lapsed         2012
                                                                                         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        4.58p

Share Warrants
      
    At 31 March 2012 there were 11,869,500 outstanding warrants to subscribe for the ordinary share
    capital of the Company as follows:
        
                                                               No. of Warrants and Exercise price   
   ------------------------------------------------------------------------------------------------------------
    Grant date        Expiry Date                        5p             10p              15p         Total
   ------------------------------------------------------------------------------------------------------------
    09.01.08          08.01.13                            -               -        2,800,000     2,800,000
    11.03.08          10.03.15                            -      3,469,500*                -     3,469,500
    09.01.12          08.01.22                    5,600,000               -                -     5,600,000
   ------------------------------------------------------------------------------------------------------------

   The  shares will have the same dividend and voting rights as the existing ordinary shares  in  issue.
   The fair value of 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
                                                                                    2012              2011
                                                                                   £,000             £,000
   ------------------------------------------------------------------------------------------------------------
    Interest payable on finance leases                                                 3                 1
    Interest payable on loan notes                                                    24                24
    Other Interest payable                                                            36                14
   ------------------------------------------------------------------------------------------------------------   
                                                                                      63                39
   ------------------------------------------------------------------------------------------------------------


7   Taxation
                                                                                          2012          2011
                                                                                         £,000         £,000
   ------------------------------------------------------------------------------------------------------------
    Current tax charge                                                                       -             -
   ------------------------------------------------------------------------------------------------------------   
    Deferred tax                                                                                
    Timing differences                                                                       -             -
   ------------------------------------------------------------------------------------------------------------   
    Factors affecting the tax charge for the year                                               
    Loss on ordinary activities before taxation                                           (440)         (495)
   ------------------------------------------------------------------------------------------------------------    
    Loss  on ordinary activities before taxation multiplied by the Standard  rate         (114)         (139)
    of UK corporation tax of 26% (2011:28%)
    Effects of:                                                                                 
    Other adjustments                                                                      114           139
   ------------------------------------------------------------------------------------------------------------    
    Current tax charge                                                                       -             -
   ------------------------------------------------------------------------------------------------------------ 
  
8   Intangible fixed assets

                                           Research and            Positive                      
    Group                                   development            Goodwill                 Total
                                                  £,000               £,000                 £,000
   ------------------------------------------------------------------------------------------------------------   
    Cost                                                                                         
    At 1 April 2011                                 232                 849                  1081
    Additions                                         -                   -                     -
    Disposals                                         -                   -                     -
   ------------------------------------------------------------------------------------------------------------
    At 31 March 2012                                232                 849                  1081
   ------------------------------------------------------------------------------------------------------------
    Amortisation                                                                                 
    At 1 April 2011                                 204                 490                   694
    On disposals                                      -                   -                     -
    Charge for the year                              19                 170                   189
   ------------------------------------------------------------------------------------------------------------    
    At 31 March 2012                                223                 660                   883
   ------------------------------------------------------------------------------------------------------------   
    Net book value                                                                               
    At 31 March 2012                                  9                 189                   198
    At 31 March 2011                                 28                 359                   387
                 
    The Company held no intangible fixed assets at 31 March 2012 or 31 March 2011.
  
  
9   Tangible fixed assets

                                                                           Furniture                 
                                                       Website                   and                 
     Group                                              design             equipment            Total
                                                         £,000                 £,000            £,000
   ------------------------------------------------------------------------------------------------------------
     Cost                                                                                            
     At 1 April 2011                                       166                   291              457
     Additions                                               -                   124              124
     Disposals                                               -                   (2)              (2)
     At 31 March 2012                                      166                   413              579
     Depreciation                                                                                    
     At 1 April 2011                                       166                   183              349
     On disposals                                            -                   (2)              (2)
     Charge for the year                                     -                    49               49
     At 31 March 2012                                      166                   230              396
     Net book value                                                                                  
     At 31 March 2012                                        -                   183              183
     At 31 March 2011                                        -                   108              108

     Included in the net book value of £183,000 are leased assets of £66,000 (2011:£25,000).
     The depreciation for the year on these assets was £9,000 (2011:£13,000).
     The Company held no tangible fixed assets at 31 March 2012 or 31 March 2011.
 
10   Investments
                                                                       Company                      Company
                                                                          2012                         2011
                                                                         £,000                        £,000
   ------------------------------------------------------------------------------------------------------------     
     Investment in Subsidiaries                                                                            
     At 1 April 2011                                                     1,722                        1,722
     Additions                                                               -                            -
     Disposals                                                               -                            -
   ------------------------------------------------------------------------------------------------------------     
     At 31 March 2012                                                    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
                                                              2012          2012           2011         2011
                                                             £,000         £,000          £,000        £,000
   ------------------------------------------------------------------------------------------------------------ 
     Amounts due within one year:-                                                                          
     Trade debtors                                               -             -              2            -
     Other debtors                                               -             1              -            1
     Prepayments and accrued income                             47            22             25            4
   ------------------------------------------------------------------------------------------------------------
                                                                47            23             27            5
   ------------------------------------------------------------------------------------------------------------
     Amounts due after more than one year:-                                                                 
   ------------------------------------------------------------------------------------------------------------
     Amounts owed by subsidiary undertakings                     -         2,324              -        2,275
   ------------------------------------------------------------------------------------------------------------
                                                                 -         2,324              -        2,275    
   ------------------------------------------------------------------------------------------------------------   
     Total Debtors                                              47         2,347             27        2,280
   ------------------------------------------------------------------------------------------------------------

12   Creditors: amounts falling due within one year
                                                              Group       Company       Group       Company
                                                               2012          2012        2011          2011
                                                              £,000         £,000       £,000         £,000
   ------------------------------------------------------------------------------------------------------------ 
     Trade creditors                                            203             9         147             9
     Other taxes and social security costs                       31             1          30             1
     Other creditors                                            109             -          61             -
     Accruals and deferred income                               344             6         299             9
     Finance lease                                               22             -           8             -
   ------------------------------------------------------------------------------------------------------------
                                                                709            16         545            19
   ------------------------------------------------------------------------------------------------------------
13   Creditors: amounts falling due after one year
                                                            Group       Company        Group       Company
                                                             2012          2012         2011          2011
                                                            £,000         £,000        £,000         £,000
   ------------------------------------------------------------------------------------------------------------     
     Finance lease                                             34             -           10             -
     Other loans                                              405           405          275           275
     Amounts due to subsidiary undertakings                     -           860            -           860
     Convertible loan note                                    269           269          269           269
   ------------------------------------------------------------------------------------------------------------
                                                              708         1,534          554         1,404
   ------------------------------------------------------------------------------------------------------------  
     The maturity of obligations under finance leases are as follows:
     Within one year                                           22             -            8             -
     Within two to three years                                 34             -           10             -
   ------------------------------------------------------------------------------------------------------------
                                                               56             -           18             -
   ------------------------------------------------------------------------------------------------------------
     The maturity of other debt is as follows:
     Within two to three years                                674           674          544           544
     Over five years                                            -           860            -           860
   ------------------------------------------------------------------------------------------------------------     
   
                                                              674         1,534          544         1,404
   ------------------------------------------------------------------------------------------------------------
        
        
        
14   Operating Leases
     The  Group had commitments to make annual payments under non cancellable operating leases which  expire
     as follows:
                                         Leasehold             Other            Leasehold              Other
                                          Property                               Property
                                              2012              2012                 2011               2011
                                             £,000             £,000                £,000              £,000
    ------------------------------------------------------------------------------------------------------------
     Within two and five years                  28                 -                   28                  -
    ------------------------------------------------------------------------------------------------------------
                                                28                 -                   28                  -
    ------------------------------------------------------------------------------------------------------------
    
  
        
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 were due  to  be
     redeemed  on  9th  January  2012. Following discussions with all  holders  of  2012  Loan  Notes  a
     resolution was passed unanimously at the General Meeting of Noteholders held on 4th January 2012 to
     exchange the 2012 Loan Notes with New Loan Notes expiring in 2015.
     
     The  2015  Loan  Notes offer a rate of interest of 9 per cent and are convertible at  a  conversion
     price of 3p per share.  The Company is able to redeem a minimum of £1,000 nominal value of each New
     Loan  Note  as  cash flow allows by repaying the redeemed nominal value plus six months'  pro  rata
     interest,  subject to the relevant holders being entitled to convert such loan notes into  ordinary
     shares in the capital of the Company at their election at 3p per share.
     
     The  exchange of each 2012 Loan Note for a 2015 Loan Note is accompanied by a Warrant entitling the
     holder to subscribe for 100,000 ordinary shares at a price of 5p per share, exercisable at any time
     before 8 January 2022, provided that the Company may require the exercise of these Warrants if  its
     shares  are  traded at a price in excess of 8p per share for a period of 60 business  days  and  an
     aggregate value of bargains exceeding £60,000 occurs over that period. The value of the convertible
     loan notes recognised in the balance sheet is calculated as follows:
  
                                                                                      2012             2011
                                                                                     £,000            £,000
    ------------------------------------------------------------------------------------------------------------
     Face value                                                                        280              280
     Costs of issue                                                                   (11)              (8)
    ------------------------------------------------------------------------------------------------------------
     Net proceeds                                                                      269              272
     Equity component                                                                    -              (3)
    ------------------------------------------------------------------------------------------------------------
     Liability component at 31 March 2012                                              269              269
    ------------------------------------------------------------------------------------------------------------
                                                 
                                                     
16   Share capital
  
                                                              Group        Company       Group        Company
                                                               2012           2012        2011           2011
                                                              £,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                                                                      
     At  start of year 61,123,550 Ordinary shares of 0.5p                                                    
     each                                                       305            305         305            305      
     Issued during the year 1,500,000 Ordinary shares  of          
     0.5p                                                         8              8           -              -
    ------------------------------------------------------------------------------------------------------------
     At end of year 62,623,550 Ordinary shares of 0.5p          313            313         305            305
    ------------------------------------------------------------------------------------------------------------
                                                                                                 
     During  the  year  the Company issued 1,500,000 ordinary shares in fulfilment of fees due  to  its  PLUS
     Markets Corporate Advisor.
  
17   Statement of movements in reserves
                                                            Share           Other    Profit and         Total
                                                          premium        reserves          loss
                                                          account                       account
                                                            £,000           £,000         £,000         £,000
    ------------------------------------------------------------------------------------------------------------
     Group                                                                                                   
     At 1 April 2011                                        2,600             242       (3,625)         (783)
     Share issues                                              29               -             -            29
    ---------------------------------------------------
     Loss for the year                                          -               -         (440)         (440)
    ------------------------------------------------------------------------------------------------------------
     At 31 March 2012                                       2,629             242       (4,065)       (1,194)
    ------------------------------------------------------------------------------------------------------------
                                                                                                             
                                                                                                                 
     Company                                                                                                 
     At 1 April 2011                                        2,600             102         (424)         2,278
     Share issues                                              29               -             -            29
     Loss for the year                                          -               -         (100)         (100)
    ------------------------------------------------------------------------------------------------------------
     At 31 March 2012                                       2,629             102         (524)         2,207
    ------------------------------------------------------------------------------------------------------------


18   Reconciliation of movements in shareholder funds 
                                                                                    2012               2011
                                                                                   £,000              £,000
    ------------------------------------------------------------------------------------------------------------
     Loss for the financial year                                                   (440)              (495)
     Movement on other reserves                                                        -                  4
     Issue of shares                                                                  37                  -
    ------------------------------------------------------------------------------------------------------------

     Net increase (decrease) in shareholder funds                                  (403)              (491)

     Opening shareholder funds                                                     (478)                 13
    ------------------------------------------------------------------------------------------------------------

     Closing shareholder funds                                                     (881)              (478)
    ------------------------------------------------------------------------------------------------------------

        
19   Contingent liabilities
        
     There are no contingent liabilities at the year end.
  
20   Related party transactions
        
     During the year the Company paid £45,002 to London and City Corporation for fees and expenses  with
     regard  to  services supplied by Mr. M Edelson. At the year-end, £7,200 was due to Mr.  M  Edelson,
     this amount being included in trade creditors.
        
        
21   Transactions with Directors
        
     The Directors use personal credit cards to pay trade creditors where necessary.
     
     During the year costs incurred of £481,154 were reimbursed to Mr A Hardoon, £97,700 to Mrs J  Joyce
     and  £3,787 to Mrs A Curry-Taylor.  At the year end, £85,206 was due to Mr Hardoon and £23,998  was
     due to Mrs J Joyce, both amounts are 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 2013 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.
        
        
    
22   Analysis of changes in net funds
                                                                                Other                   
                                          31-Mar               Cash          non-cash             31-Mar
                                            2011               flow           changes               2012
                                           £,000              £,000             £,000              £,000
    ------------------------------------------------------------------------------------------------------------
     Net cash:                                                                                          
     Cash at bank and in hand                 99                  9                 -                108
    ------------------------------------------------------------------------------------------------------------
                                                                                                      
     Net funds                                99                  9                 -                108
    ------------------------------------------------------------------------------------------------------------
    
23   Reconciliation of net cash flow to movement in net funds
                                                                             2012                     2011
                                                                            £,000                    £,000
    ------------------------------------------------------------------------------------------------------------
     (Decrease) Increase in cash in the year                                    9                       18
     Opening net funds                                                         99                       81
                                                                                       
     Closing net funds                                                        108                       99
    ------------------------------------------------------------------------------------------------------------
   
        
24   Loss per share
                                                                                    2012              2011
    ------------------------------------------------------------------------------------------------------------
     Loss for the financial year attributable to shareholders                   £440,000          £747,000
     
     Weighted number of equity shares in issue                                61,403,002        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.
        
25   Profit/(Loss) for the financial year

     As  permitted by section 408 Companies Act 2006, the holding Company's profit and loss has not been
     included in the financial statements. The loss for the financial year is made up as follows:-
                                                                              2012                    2011
                                                                             £,000                   £,000
    ------------------------------------------------------------------------------------------------------------
      Holding company's loss for the year                                      100                      95
    ------------------------------------------------------------------------------------------------------------
                                                                               100                      95
    ------------------------------------------------------------------------------------------------------------

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

Company Secretary and Registered Office
Clive Maudsley FCA
Number 14 Riverview Vale Road
Heaton Mersey
Stockport
Cheshire
SK4 3GN

Tel: +44 (0) 207 458 5757
Email: clive.maudsley@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
Kuit Steinart Levy LLP
3 St Mary's Parsonage
Manchester
M3 2RD

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 27 September
2012  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 4 will be proposed as ordinary resolutions and Resolution 5  will
be proposed as a special resolution.

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 2012, together with the Directors' and Auditors' Reports contained therein.
    
    2.  TO reappoint John Michael Edelson as a director who retires by rotation.
    
    3.  TO reappoint Hazlems Fenton LLP Chartered Accountants as auditors of the Company and authorise the
        Directors to fix their remuneration.
    
    4.  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 £31,312 (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 £379,080 (such amount to be reduced by the
                 nominal amount of any equity securities allotted under resolution 6(a) above in excess of
                 £31,312), 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 right 
                    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:

    5.  THAT,  subject  to the passing of resolution 4, 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 5 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 £20,504;
            
            b.   the allotment of Ordinary Shares pursuant to the convertible loan note instrument dated 4 January
                 2012 up to an aggregate nominal value of £50,867 (including interest);

            c.   the allotment of Ordinary Shares pursuant to warrants granted pursuant to a warrant instrument
                 dated 9 January 2008, 21 January 2008 and 4 January 2012 up to an aggregate nominal value of  £59,348;

            d.   the allotment of Ordinary Shares to certain lenders, including Abby Hardoon Adulayavichit, by way
                 of capitalisation of loan facility, as renewed on 10th August 2012 up to an aggregate nominal value of
                 £67,500;

            e.   the allotment of Ordinary Shares pursuant to the private placing at £0.02 (2 pence) a share up to
                 an aggregate nominal value of £150,000;

            f.   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
                 
            g.   the allotment (otherwise than pursuant to resolutions 5(a) to (f) above) of equity securities up
                 to an aggregate nominal amount of £31,312.
        
        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
Clive Maudsley                                                           Stockport
Company Secretary                                                        Cheshire
23 August 2012                                                           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 registered
        office at Number 14 Riverview, Vale Road, Heaton Mersey, Stockport, Cheshire, SK4 3GN, 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 25 September 2012.  Changes to entries on the relevant register of
        securities after 10.00 am on 25 September 2012 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 4 or the disapplication of pre-emption rights authority under resolution 5 other than as
        required pursuant to the authorities set out in paragraphs (a) to (f) of resolution 5.
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/financial-reports.html.



Contact Information

  • Daily Internet plc