Disposal

RNS Number:5266H
Channelfly plc
14 February 2003



14 February 2003


For Immediate Release



                                Channelfly plc:
                             Disposal of Subsidiary



Channelfly plc ("Channelfly" or "the Group"), the music and media group,
announces the disposal of the entire issued share capital of its wholly owned
subsidiary Power Promotion Limited ("Power") to the current senior management
team of Power, T Marks and K R Neill who together after the completion of the
transaction will own all of the shares in Power.  Power, which is a dance music
promotions company, has as indicated in our recent Report and Financial
Statements, performed less well than anticipated, largely as a result of the
widely recognised downturn in the commercial dance market in the UK.
Consequently the Directors now regard Power as non-core to its future
activities.



The consideration for the disposal is #170,000, made up from a single cash
payment of #120,000 payable at completion of the sale, and an agreement for
services from Power in relation to promotion and marketing of recordings in
which Channelfly or its subsidiaries have an interest.  The maximum value to
Channelfly of such services is #50,000 in aggregate over a period of up to 5
years, although the maximum value of free services in any single year is
#10,000.  The cash proceeds will be used to reduce Group borrowings, which will
help ease the cash constraints on the Group.



In addition the purchasers will be liable to make an additional consideration
payment equal to 25% of any gain achieved by them if they subsequently sell
Power to a third party within 5 years.



In the year ended 31 July 2001, Power made a profit before tax of #215,000 and
had net assets of #215,000.  As indicated in our recent Report and Financial
Statements, Power reported a loss for the year ended 31 July 2002.  The audited
accounts for the year to 31 July 2002 have not yet been filed at Companies
House, but it is expected that they will report a loss before tax of  #152,000
and net assets of #63,000.  The carrying value of Power in the consolidated
group accounts of Channelfly is nil, having been fully written down in previous
accounts.



Channelfly will benefit from exiting from the trading losses of Power as it is
not anticipated that Power will make a net contribution of either profit or
cashflow to the Group during the current year.  The disposal represents a step
towards improving the prospects for the Group but more work needs to be done
before we can complete the recently announced strategic review and as stated
before we will report further to shareholders as soon as this review is
complete.



The Directors of Channelfly, who have consulted with Channelfly's nominated
adviser, have concluded that the terms of the transaction are fair and
reasonable and in the best interests of all shareholders of Channelfly.



Commenting on the disposal, Adam Driscoll, Chief Executive, said:



When we acquired Power our aspirations were to extend our activities into the
dance music sector.  The development of the group since that time has not
included any other significant developments in the dance sector and Power
clearly represents a non-core business.  Having reviewed Power and its
prospects, it is our view that a trade sale is unlikely to be feasible without
substantial restructuring and that Power will otherwise require funding from
Channelfly during the current year and will not contribute any profit or
positive cashflow.



We have therefore taken the difficult decision to agree to sell the business
back to its current management to enable us to concentrate our time and
resources on the on-going development of our core business and allow them to
restructure the Power business in the light of the current state of the dance
music market.



Ends


For further information contact:
Channelfly plc, Adam Driscoll, Chief Executive             Tel: [phone]


                                                           www.channelfly.net





Notes to editors:



Channelfly's principal business units comprise:



The Barfly Club           Music promotions business operating
                          venues in London, Cardiff, Glasgow, York and Liverpool.


The Fly Magazine          National new music magazine with an ABC
                          rating of over 105,000 distributed through music 
                          venues and retail outlets across the UK.


Popex.com                 interactive music website based around fantasy share 
                          trading with an average of over 3 million page 
                          impressions per month and over 80,000 registered users.


Stephen Budd Management   Europe's largest record producer management
                          company.


SuperVision Management    Artist management.


Animal Noise              Recording and promotion of new artists.



Channelfly is also a shareholder in Campus Media plc, the AIM-quoted student
media and marketing group.




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

DISNKQKPQBKDCBD