Trading Update

SEATTLE - January 18, 2008 –The Board of Citel announces that, despite substantial growth in sales of its core Portico TVA product, it is now unlikely that the Company will achieve market forecasts for the year ending 31 March 2008.

In the past few months the Company has reduced staffing levels and sought to realign its cost base in light of trading. The Company continues to manage its cost of sales by focusing on selling the Company’s products through commercial sales channels as well as directly to Tier 2/3 telecommunication carriers. Recently the sales strategy has also included IP PBX providers, in order to provide an integrated solution sale from a single vendor, to the enterprise clients. It remains difficult to predict the timing of the benefits of direct selling efforts to large entities, a strategy that has been in place for the past six to nine months.

As at 15 January 2008 Citel had cash of $0.55 million and receivables of $0.81 million. In addition to the cash balance, the Company has an undrawn, receivables-based bank facility and no long term debt. The Company’s current monthly cash burn rate is approximately $0.3 million. Whilst progress has been made the Directors note that additional funding will be required in order to reach cash flow break even.

Citel intends to announce its preliminary results for the year ended 31 March 2008 in July 2008.

About Citel plc

Citel enables SMBs and large enterprises to realize the cost and productivity benefits of IP telephony while at the same time leveraging their existing PBX infrastructure. Businesses with single or distributed locations, and PBX vendors, can now deploy next-generation IP applications and services at their own pace, with little business disruption by installing Citel’s TVA Portico products. Service providers can deploy hosted IP telephony services, without having the client rip-and-replace existing PBX handsets and LAN cabling. End-user training is also eliminated for the desktop client. Citel is a publicly traded company with corporate headquarters in Seattle, with R&D/ Product Development staff in Nottingham, England (UK). For more information, visit www.citel.com.

Enquiries

Citel
Jose David, Interim CEO
+1 206 965 8925

Panmure Gordon
Dominic Morley
Giles Stewart
Andrew Collins
+44 (0)20 7459 3600

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