CHR Chelford

RNS Number:9161C
Chelford Group PLC
14 September 2004


FOR IMMEDIATE RELEASE                                         14 September 2004

                               Chelford Group plc

            PROPOSED SHARE CONSOLIDATION AND SHARE CAPITAL REDUCTION

Chelford Group plc ("Chelford" or "the Company") today announces proposals to 
consolidate the existing ordinary shares of 1p each ("Existing Ordinary Shares")
and to reduce the Company's share capital, conditional on the approval of 
Shareholders at an Extraordinary General Meeting to be held on 28 October 2004. 
Further details of the proposals are contained in a circular being posted to 
Shareholders today.


Share consolidation

The Directors are proposing to consolidate the Existing Ordinary Shares of the
Company on the basis of 1 new ordinary share of 100p each ("New Ordinary Share")
for every 100 Existing Ordinary Shares. The Share Consolidation will be effected
by reference to Shareholders and their holdings of Existing Ordinary Shares on
the register as at the close of business on 28 October 2004 and is conditional
on permission being granted for the New Ordinary Shares to be traded on AIM.

The Directors believe that the Share Consolidation should enhance the status of
the Company's shares. In addition, the Directors believe the spread between the
bid and offer price of the Company's shares may be reduced to the benefit of
Shareholders.

Other than the change in nominal value, the New Ordinary Shares will have the
same rights as the Existing Ordinary Shares including voting, dividend and other
rights. As a result of the Share Consolidation, the exercise price and number of
shares in respect of which options may be exercised under the Company's share
option schemes would be adjusted in accordance with the rules of the relevant
schemes.

Subject to the resolution contained in the Notice of Extraordinary General 
Meeting being passed, it is expected that dealings in and settlement in CREST of
the Existing Ordinary Shares will continue until the close of business on 28 
October 2004 when, in the case of Existing Ordinary Shares held in certificated 
form, the register will be closed for transfers. The registration of 
uncertificated holdings in respect of Existing Ordinary Shares will be disabled 
on admission of the New Ordinary Shares to AIM ("Admission"). It is expected 
that admission of the New Ordinary Shares to AIM will become effective and that 
dealings in the New Ordinary Shares on AIM will commence on 29 October 2004.

It is intended that new share certificates will be sent to Shareholders, who 
hold their shares in certificated form, on completion of the Share 
Consolidation. These new share certificates will set out the number of New 
Ordinary Shares owned by a Shareholder on completion of the Share Consolidation 
and will replace a Shareholders' existing share certificate which will no longer 
be of value from Admission and should be destroyed upon receipt of the 
certificate in respect of the New Ordinary Shares. Definitive certificates for 
the New Ordinary Shares to be issued in certificated form are expected to be 
dispatched by post on 5 November 2004. Temporary documents of title will not be 
issued. Pending despatch of definitive share certificates, transfers of New 
Ordinary Shares held in certificated form will be certified against the register 
held by Capita Registrars. Shareholders who hold their Existing Ordinary Shares 
in uncertificated form are expected to have their CREST accounts credited with 
the New Ordinary Shares on 29 October 2004.


Share capital reduction

The Company is currently prohibited under the Companies Act from paying 
dividends due to the accumulated deficit on its profit and loss account reserve 
which means the Company does not have distributable reserves. The Board believes 
that it is now appropriate for the Board to take the measures necessary to allow 
the Company to pay dividends to Shareholders when it is prudent to do so.

It is therefore proposed that the Company should undertake a capital reduction
exercise to reduce the Company's share premium account. The interim accounts of
the Company for the 6 months ended 30 June 2004 show a deficit on the profit and
loss accounts of #8,267,000. This is largely due to the write-off of goodwill on
the acquisition of SSI Holdings Limited, and to trading losses incurred in the
last few years.

As at 30 June 2004, the Company had a balance on its share premium account of
#10,879,000 which has arisen as a result of the issue by the Company of its
shares at prices in excess of their nominal value. The Companies Act 1985
permits the Company to reduce its share premium account in appropriate
circumstances provided that the Company resolves by special resolution to do so
and the approval of the High Court is given. In order to eliminate the deficit
on the profit and loss account, it is proposed to put forward a reduction of the
share premium account from #10,879,000 to #2,612,000. The sum of #8,267,000
arising in the books of the Company as a result of the reduction would then be
transferred, subject to the approval of the Court, to the profit and loss
account of the Company.

If the proposal is approved by shareholders, the Company will seek the
confirmation of the High Court. Prior to sanctioning the proposed reduction, the
court will need to be satisfied that the interests of the Company's creditors
will not be prejudiced by the proposal. The Company will put into effect such
protection, if any, as the court requires in order to safeguard the interests of
its creditors. At present, it is anticipated this will take the form of an
undertaking to the court not to treat the sum of #8,267,000 as capable of
distribution until all creditors of the Company at the time of the reduction
becoming effective have either been paid off or have consented to the reduction.
The reduction of share premium account will not become effective until such time
as the order of the court is registered by the Registrar of Companies. It is
currently anticipated that the court will hear the Company's application on 24
November 2004 which will, if approved, become effective within a few days
thereafter.


Extraordinary General Meeting

Notice of an Extraordinary General Meeting to be held on 28 October 2004 at 12
noon at the Company's offices in Basingstoke has been sent to shareholders
today.


Recommendation

The Directors of the Company believe the proposals to be in the best interests
of the Company and its shareholders as a whole, and recommend shareholders to
vote in favour of the resolutions as they intend to do in respect of their own
beneficial holdings of 209,627,285 shares representing 31.65% of the issued
share capital of the Company.



For further information, please contact:

Trevor Lewis, Chief Executive                                     01256-685400
Steve Liebmann, Bankside                         020-7444-4163 or 07802-888159



                      This information is provided by RNS
            The company news service from the London Stock Exchange

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