Top Ten Holdings Plc

("Top Ten" or the "Company")

Proposed cancellation of trading of securities on AIM

Further to the announcement of 22 April of the Company's intention to seek the cancellation of trading on AIM of its ordinary shares ("Cancellation"), Top Ten has today posted to its shareholders a circular convening a general meeting of the Company at which a resolution will be proposed to effect the Cancellation ("General Meeting").

Background to and reasons for the Cancellation

On 24 November 2008, the Company announced its interim results for the six months to 28 September 2008 which showed an operating profit of £0.07 million (after reorganisation costs of £0.3 million), a pre-tax loss of £1.36 million (after finance costs of £1.43 million) and debt of £28.4 million.  

In November 2008 current trading remained unpredictable in difficult market conditions and it was considered unlikely that the Company would see any marked improvement in trading until the economy picked up and customers had more disposable income. The level of bank debt at £28.4 million was not considered to be sustainable and the Company had breached its loan covenants in June and September 2008 but the Company reported that it was holding constructive discussions with its bankers about how best to address the position. 

Given the above, and as part of the overall restructuring of the Company, the directors of Top Ten ("Directors") have determined that the Cancellation is in the interests of the Company for the following reasons: 

•     As at the close of business on 12 June 2009 the Company had a market capitalisation of approximately £220,000;

•     Trading volumes in the Company's ordinary shares are very low - median daily volume on AIM over the two years to 21 April 2009, the last trading day prior to the announcement of the intention to seek cancellation, was 984 ordinary shares per day (approximately 0.004 per cent. of the current issued share capital). In the same period there were 209 trading days when no ordinary shares were traded on AIM;

•     the costs associated with maintaining trading on AIM (estimated at more than £130,000 per annum) are considered to be too high in relation to the benefits of trading on AIM and the Directors believe that these could be better utilised in running the business; and 

•     the management time, legal and regulatory burden associated with maintaining the Company's trading on AIM is disproportionate to the benefit to the Company.

Current Trading

The audited results for the year to 31 March 2009 are expected to be posted to shareholders in August 2009.

The unaudited management accounts for the year to 31 March 2009 show sales of £22.3 million (2008: £25.8 million); operating loss before non recurring costs of £0.3 million (2008 profit: £1.6 million); an operating loss after non recurring costs of £12.2 million (2008: £6.1 million) and a loss before tax of £15.1 million (2008: £8.9 million).

The Directors believe that further restructuring of the business and the removal of unprofitable sites is necessary in order to reduce costs. In March 2009 the Company announced the closure of its site in Leeds and, in April 2009, the site in Fleetwood.

VAT

On 22 April 2009 as part of the Budget, the Chancellor announced that the Government proposed the abolition of VAT on bingo to bring it into line with the rest of the gaming industry. However, the rate of Bingo Duty was increased to 22 per cent. (compared to 15 per cent. in betting shops) which the Company forecasts will result in approximately £680,000 in additional costs.

The Company had previously made VAT refund claims totalling approximately £8 million which splits into Fruit Machine income (£2.6 million) and Bingo income (£5.4 million). In addition as a result of the judgment in the Conde Nast case, the amount which the Company can claim has been extended and further claims have been made for an additional £5.2 million. The result of a recent VAT tribunal case between HMRC and another bingo operator confirms the Company's position regarding mechanised cash bingo and provides support to the position adopted on participation fees. However HMRC appealed the result of the tribunal and the case was heard in the High Court in March 2009 where the HMRC appeal was rejected. The Company should therefore receive a net payment of £2.7 million within 4 months and is in a stronger position to pursue the other claims.

Dealings Following Cancellation

The principal effects Cancellation would have on shareholders are:

•    there would no longer be a formal market mechanism enabling shareholders to trade their ordinary shares through the market and the CREST facility will be cancelled. Shareholders who currently hold ordinary shares in uncertificated form will receive share certificates in due course following the cancellation taking effect.  While the ordinary shares will remain freely transferable, they may be more difficult to sell compared to shares of companies admitted to trading on a public market.  It may also be more difficult for shareholders to determine the market value of their interests in the Company at any given time;

•    the Company would not be bound to announce material events, nor to announce interim or final results;

•    the Company would no longer be required to comply with any of the corporate governance requirements applicable to companies whose shares are admitted to trading on AIM;

•    the Company will no longer be subject to the Disclosure Rules and Transparency Rules of the Financial Services Authority and, inter alia, will no longer be required to disclose major shareholdings in the Company;

•    the Company will no longer be subject to the AIM Rules and shareholders will therefore no longer be afforded the protections given by the AIM Rules.  Such protections include the requirement to be notified of certain events including, amongst other things, substantial transactions and related party transactions and the requirement to obtain shareholder approval for reverse takeovers (the size of which results in a 100 per cent. threshold being reached under any one of the AIM class tests) and fundamental changes in the Company's business.  The Company will however remain subject to English company law, which mandates shareholder approval for certain matters; and 

•    the Cancellation may have either positive or negative taxation consequences for shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent adviser immediately.

The Directors are aware that shareholders may still wish to acquire or dispose of ordinary shares following Cancellation.  The Directors intend to make available a new matched bargain service.  Under this facility, shareholders or persons wishing to acquire ordinary shares will be able to leave an indication with the matched bargain settlement facility provider that they are prepared to buy or sell at an agreed price.  In the event that the matched bargain settlement facility provider is able to match that order with an opposite sell or buy instruction,  the matched bargain settlement facility provider will contact both parties and then effect the order. Shareholders will need to have their own broker and will need to register with the matched bargain settlement facility provider as a new client.  This can take some time to process and therefore shareholders who consider they are likely to avail themselves of this facility are encouraged to commence it at the earliest opportunity.  The contact details of the matched bargain settlement facility provider, once arranged, will be made available to shareholders on the Company's website at www.toptenbingo.com. Shareholders should note that following the Cancellation the Company will remain subject to the provisions of the City Code, on the basis set out in those provisions.

Expected Timetable Of Events Leading To The Cancellation

Irrevocable Undertakings

The Company has received irrevocable undertakings to vote in favour of the resolution to be proposed at the General Meeting from all of the Directors in relation to their holdings of ordinary shares and the holdings of their families and related companies and trusts for an aggregate 11,047,500 ordinary shares representing approximately 43.3 per cent. of the issued share capital of the Company.

For Further Information

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