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20 February 2009

Teleunit SpA

('Teleunit' or 'the Group'; stock code: TLU)

Notice of General Meeting

The Company has today sent a circular to Shareholders to seek their approval for cancellation of admission to trading on AIM of the Company's Ordinary Shares.  A copy of the notice is available on the Company's website,  http://ir.teleunit.it.

Background to the proposed Delisting

The Ordinary Shares in the Company were admitted to trading on AIM on 26 May 2004 with the Company having raised money at a Share Price of 20p, giving the Company a market capitalisation of £37.3 million. Since that time the market valuation of the Company has decreased substantially with the mid-market Share Price being 1.125p at the close of business on 19 February 2009, giving the Company a market capitalisation of £1.99 million. 

As reported in trading updates, interim and year-end results, the Group has suffered a series of setbacks which have meant that it has not achieved the targets it set at the time of the IPO: In June 2006 the Group reported its first loss since its incorporation in 1997; In 2007, a corporate and organisational restructuring delayed management's growth targets for the Group's core businesses; the Group incurred significant net losses and asset write-downs following a marked reduction in revenues as a result of a regulation-driven downturn in the VAS market; and protracted litigation with Telecom Italia SpA has over the years been a significant drain on management's time and the Group's financial resources.

Despite these factors, the Group has enjoyed some success, not least by means of the successful start-up and proven growth of its subsidiary Neomobile, which to date continues to trade beyond expectations. In October 2008 a 15.87% stake of Neomobile was successfully sold to a VCC for a cash consideration of €10.0 million, giving Neomobile an implied enterprise value of €63.0 million. Assuming a residual valuation unadjusted for subsequent growth, the Company's total AIM capitalisation today stands at a significant discount to the intrinsic value of its subsidiary. Notwithstanding this and the Group's greatly strengthened balance sheet and cash position following the sale, the Company's Share Price hardly responded.

In light of these factors the Directors have formed the view that the market has lost confidence in the Company and that, looking forward, any recovery which may occur in the Company's financial performance is unlikely to be properly reflected in its Share Price.  Furthermore, there is very little interest in the Company, and an associated absence of demand for the Company's shares. This, together with the Company's very small free float, (82% of the Ordinary Shares, excluding those held in treasury, are held by three investors) makes the Ordinary Shares a highly illiquid stock and the Directors believe that average daily volumes (average of 33,236 shares traded per business day in 2008) are not sufficient to uplift the Share Price. 

The Directors consider it unlikely that the Company will wish or have any need to raise money via a new share issue in the foreseeable future and, even if such were feasible, the Directors consider that such a capital raising is unlikely to be achieved without unacceptably high dilution to existing shareholders. As such the Board does not expect the number of shares in free float to increase significantly. 

In light of this, the Directors consider that the costs associated with maintaining an AIM listing, which are in excess of £60,000 per year, and the related regulatory requirements and management time cost, are no longer justified.  Consequently, the Directors have concluded that it is no longer in the best interests of the Company to maintain  the admission to AIM of the Ordinary Shares.

Strategy following the De-Listing

The Board and Management will continue to pursue their strategy of selective international expansion and support for the Group's most profitable initiatives. This could also include the disposal of certain operating divisions that currently represent a cash drain and have limited future prospects. The Company undertakes to keep shareholders informed of its operations and finances by publishing the notices and results of General Meetings and the Group's consolidated year-end accounts on the Group's website.  

Transactions in Ordinary Shares following delisting

Following the De-Listing there will be no market facility for dealing in Ordinary Shares and no price will be publicly quoted for Ordinary Shares. It is likely that there will be less liquidity in the Ordinary Shares and they will become more difficult to value.

The Board recognises that not all Shareholders will be able and/or willing to continue to own shares in the Company following the De-Listing. Accordingly, the Board has appointed Daniel Stewart, its current Nominated Adviser and broker to provide a broking facility following the De-Listing. Under this facility shareholders or persons wishing to trade shares will be able to leave an indication with Daniel Stewart of their desire to buy or sell shares at a specific  price. Further details of the facility will be set out on the Company's website following the De-Listing.

General Meeting

The General Meeting to approve the De-Listing will be held on 23 March 2009, at 10.00 a.m. (local time), at the Company's Head Office on Via Monteneri, Sant'Andrea delle Fratte, Perugia, Italy. Set out below is a summary of the resolution that will be put to Shareholders:

1. Cancellation of admission to trading on AIM of the Company's Ordinary Shares:

In accordance with Rule 41 of the AIM Rules, it is a requirement that any De-Listing from AIM be approved by not less than 75 per cent. of Shareholders voting in person or by proxy at a general meeting. The De-Listing, if approved, is expected to take effect on 31 March 2009.

Directors' recommendation

The Directors believe that, for the reasons outlined above, the De-Listing is in the best interests of the Company. The Directors therefore recommend that Shareholders vote in favour of the resolution at the General Meeting, as they themselves intend on doing in respect of their direct and indirect holdings of 127,658,134 shares representing 72.3% of the voting issued Ordinary Share capital.

Please note that all defined terms in this announcement are as set out in the circular.

For further information, please contact:

Gianfranco Cimica, Chief Executive Officer, Teleunit SpA	00 39 075 528 3939
Oliver Rigby, Daniel Stewart & Company Plc	020 7776 6550

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