3rd Quarter&9 Mths Rslts-Pt.2

Intec Telecom Systems PLC 14 August 2001 PART 2 NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION 1. BASIS OF PREPARATION The interim financial information has been prepared in accordance with accounting policies set out in, and consistent with, the Group's 2000 financial statements except that the taxation charge for the period is based on the estimated charge for the year ending 30 September 2001. The interim financial information is neither reviewed nor audited and does not comprise statutory accounts for the purposes of Section 240 of the Companies Act 1985. Except as discussed below, the abridged information for the year ended 30 September 2000 has been extracted from the Group's statutory accounts for that period, which have been filed with the Registrar of Companies. The Auditor's report on the statutory accounts of the Group for that period was unqualified and did not contain a Statement under either Section 237(2) or Section 237(3) of the Companies Act 1985. For the year ended 30 September 2000 development expenditure was shown as a component of cost of sales. All research & development expenditure is now disclosed as a separate element of administrative expenses and includes certain product development related costs, which were previously included in distribution costs. The effect of this classification on the year ended 30 September 2000 is to reduce cost of sales and distribution costs by £2,013,000 and £1,016,000 respectively and increases total administrative expenses by £3,029,000. This increases previously reported gross margin of 58% to 68%. The directors are of the opinion that the revised presentation of the profit and loss account is more in line with other software companies and provides a clearer presentation of the group's activities. The interim financial information was approved by the Board of Directors on 13 August 2001. NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION 2. TURNOVER AND SEGMENTAL ANALYSIS Unaudited Unaudited Audited 9 months 9 months Year ended ended ended 30 June 30 June 30 September 2001 2000 2000 £'000 £'000 £'000 Turnover by activity Licence Sales 9,638 5,779 11,413 Recurring income: ASP Service 1,084 111 138 Volume upgrade licence fees 2,107 1,560 1,934 Support and maintenance fees 7,310 1,685 2,397 Professional services income: Implementation and migrations 3,230 2,505 3,374 Consulting income 1,342 523 1,023 Hardware 369 - - Non-Telecom - custom network 1,665 - - solutions Total Turnover 26,745 12,163 20,279 Turnover by destination United Kingdom 3,801 1,702 2,319 Continental Europe 8,081 5,856 8,731 Eastern Europe 1,041 1,481 3,516 Middle East 53 - - Africa 456 730 1,411 Asia-Pacific 3,495 979 2,384 North America 8,218 - 73 South America 1,600 1,415 1,845 Total Turnover 26,745 12,163 20,279 Turnover by origin United Kingdom 15,174 11,987 19,977 Continental Europe 279 176 288 Asia-Pacific 360 - 14 North America 10,880 - - South America 52 - - 26,745 12,163 20,279 (Loss)/profit before tax by origin United Kingdom (1,073) 1,366 4,541 Continental Europe (234) (167) (276) Asia-Pacific (16,675) (7) (428) North America (121,055) - - South America 96 - - (138,941) 1,192 3,837 Net assets/(liabilities) by origin United Kingdom 31,266 39,781 41,638 Continental Europe (38) (369) (121) Asia -Pacific 6,542 (6) 33 North America 62,470 - - South America 48 - - 100,288 39,406 41,550 NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION 3. (LOSS)/EARNINGS PER ORDINARY SHARE Unaudited Unaudited Audited 9 months 9 months Year ended ended ended 30 June 30 June 30 September 2001 2000 2000 £'000 £'000 £'000 Basic and diluted (139,687) 774 2,880 (loss)/earnings Exceptional flotation costs - 426 556 net of tax Amortisation of intangible 7,273 51 100 assets Impairment of goodwill 133,400 - - Adjusted (loss)/earnings 986 1,251 3,536 Number Number Number Basic weighted average number 172,163,172 128,042,776 132,814,764 of shares Potential ordinary shares - 35,568 303,268 Diluted weighted average 172,163,172 128,078,344 133,118,032 number of shares Pence Pence Pence Diluted (loss)/earnings per (81.14) 0.60 2.16 ordinary share Adjustments for potential - - 0.01 ordinary shares Basic (loss)/earnings per (81.14) 0.60 2.17 ordinary share Exceptional flotation costs - 0.34 0.42 Amortisation of intangible 4.22 0.05 0.08 assets Impairment of goodwill 77.49 - - Adjusted (loss)/earnings per 0.57 0.99 2.67 ordinary share For the 9 months ended 30 June 2001 none of the potential ordinary shares (including company share options) are dilutive and therefore they are excluded from the calculation of diluted loss per share. NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION 4. GOODWILL IMPAIRMENT As a result of general market conditions, the Directors have performed impairment reviews of the goodwill arising on the company's recent acquisitions. This has resulted in a write-down of £117.4 million on the goodwill relating to Compgen and £16 million on the goodwill relating to i2i. Notwithstanding the difficult market conditions the Directors believe that the acquisitions continue to be of strategic importance to the group and will going forward make a significant contribution to Group results. Cost At 1 October 2000 1,963 Additions 211,223 At 30 June 2001 213,186 Accumulated amortisation At 1 October 2000 100 Amortisation charge in the period 7,273 Impairment loss in the period 133,400 At 30 June 2001 140,773 Net book value At 30 June 2001 72,413 At 1 October 2000 1,863 5. DEBTORS Unaudited Unaudited Audited 30 June 30 June 30 September 2001 2000 2000 £'000 £'000 £'000 Debtors Trade debtors 14,058 6,315 10,755 Corporation tax recoverable - 14 - Withholding tax recoverable Due within one year - 166 142 Due after more than one year - - 2 Other debtors 1,956 702 631 Prepayments and accrued income 2,873 1,264 2,264 18,887 8,461 13,794 NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION 6. CREDITORS Unaudited Unaudited Audited 30 June 30 June 30 September 2001 2000 2000 £'000 £'000 £'000 Creditors: falling due within one year Obligations under finance leases 263 116 119 Trade creditors 1,585 2,295 1,381 Amounts owed to former parent - 1,258 - company Corporation tax 32 416 839 Overseas tax 621 - 43 Other creditors including 1,712 521 379 taxation and social security Accruals 2,476 895 3,066 Contingent consideration 1,150 - - 7,839 5,501 5,827 Creditors: falling due after more than one year Obligations under finance lease 74 156 125 Maturity of obligations under finance lease Within one year 263 116 119 More than one year but not more 74 156 125 than two years 337 272 244 7. STATEMENT OF MOVEMENTS ON RESERVES Called Share Other Merger Foreign Profit Total up premium reserve reserve exchange and share account reserve loss capital account £'000 £'000 £'000 £'000 £'000 £'000 £'000 Group As at 30 September 2000 1,485 38,535 - 249 17 1,264 41,550 Issues of ordinary 351 201,753 - - - - 202,104 shares Share issue expenses - (5,222) - - - - (5,222) Fair value of shares to be issued as part of contingent consideration - - 1,628 - - - 1,628 Retained loss for the period - - - - - (139,687) (139,687) Foreign exchange translation - - - - (85) - (85) At 30 June 2001 1,836 235,066 1,628 249 (68) (138,423) 100,288

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