Interim Results

Intec Telecom Systems PLC
10 May 2001

                             Intec Telecom Systems PLC

                     Unaudited results for the six months ended
                                  31 March 2001

               Turnover increases 89%; 22 new contracts; strong pipeline

Intec Telecom Systems PLC ('Intec' or 'the Company'), a leading provider of
telecoms Operations Support Systems ('OSS'), today announces its unaudited
results for the six months ended 31 March 2001.

                                  HIGHLIGHTS

  * Half year turnover increases 89% to £14.4 million (H1 2000: £7.6
    million) including strong contributions of £5.9 million from US
    acquisitions
  * Quarterly sequential EBITDA improves from a loss of £1.4 million in Q1
    to £1.3 million profit for the three months to 31 March ('Q2')
  * Continued strength of pipeline development and ongoing demand for
    solutions
  * Continued investment in business expansion and product development to
    meet market demand and 'next-generation' technology requirements
  * 22 new contract wins, including customers in US, Italy, Taiwan, Spain,
    Switzerland, Jamaica, Germany and UK
  * Recurring revenues up by 159% over the corresponding period from
    substantially increased customer base
  * Integration of Computer Generation, CHA Systems and i2i acquisitions
    ahead of schedule
  * Debtor days substantially reduced by good cash collection in Q2
  * Intec in strong cash position (£23.6 million in cash and cash
    investments as 31 March 2001)

'Our interim results reflect Intec's continuing strong fundamentals in a
market that has been exceptionally volatile in recent months,' said Mike
Frayne, Executive Chairman of Intec. 'In a competitive telecoms market, our
ability to deliver a real return on investment to customers is compelling. The
Board therefore believes that we are well positioned to meet increasing market
demand and to succeed against our business objectives.'

'Excellent progress has been made with the integration of our US acquisitions,
which have greatly broadened our product portfolio. Our new mediation
products, combined with ongoing investment in business development,
substantially increase our capability to address next-generation network
opportunities,' added Chief Executive Kevin Adams. '22 new contract wins,
across all markets and products, also underline the fundamental strength of
the business.'

For further information:

Kevin Adams, CEO, Intec Telecom Systems PLC
[phone]
[e-mail]

Andrew Rodaway, Intec Telecom Systems PLC
[phone]
[e-mail]

Cubitt Consulting
Fergus Wylie/Serra Balls
[phone]
[e-mail]


                          Chairman's and CEO's Statement

                 Intec Telecom Systems PLC - 1st Half Results 2001

Overview

In the period under review, the company has shown organic revenue growth
compared to the corresponding prior period. In addition, our recent
acquisitions have made strong contributions to both turnover and earnings.
Intec's products allow telecoms companies to deliver improved operating
efficiency and, in a competitive telecoms market, this is an attractive
proposition. This is reflected in our growing pipeline of prospects, which has
increased significantly since the start of the financial year.

Intec is well positioned to exploit this pipeline as a consequence of its good
fundamentals. These include a portfolio of revenue assurance products that
meet a clear need in the market, maintaining a high bid conversion ratio that
proves we are competitively well positioned, and a huge addressable market
with low levels of penetration. Intec is a market leader in both its main
product lines and has the technology, staff and infrastructure with which to
benefit from these factors.

Intec has continued to execute its business plan of controlled investment and
expansion of both markets and product lines.  Our expansion policy into new
geographic and product areas is progressing well, with the acquisitions of
Computer Generation, i2i and CHA Systems being concluded during the period. We
also brought an important new product, Maxi-routE, to market and we have won
the first committed customers for this Least Cost Routing application.  As
highlighted in our trading statement of 29 March 2001, the revenue growth rate
has been impacted by longer sales cycles. Despite this, the Group has
continued to win important PTT, mobile, fixed-line, CLEC and broadband IP
customers worldwide.  All operating regions have made valuable contributions,
and we have continued to expand our business, opening new sales offices in
Taiwan and Mexico to exploit new territory opportunities, and increasing our
sales and marketing efforts in many regions, particularly the US.

Operational Highlights

The six months under review were a period of particularly intense corporate
activity for the Company. During the period the three acquisitions of Computer
Generation, CHA Systems and i2i have been completed and integration is
progressing very satisfactorily. We also won 22 new contracts in the period,
with customers in the US, Italy, Taiwan, Spain, Switzerland, Jamaica, Germany,
Brunei, the Netherlands and the UK. Additionally, we have continued to invest
in product development to keep our product lines at the forefront of the
market.

The complementary nature of our billing and mediation products enables
cross-selling opportunities, and we are starting to see revenues flow from
this. For example, in the UK we have installed our convergent mediation
system, Inter-mediatE, alongside the existing use of InterconnecT at one of
the UK's most prominent GSM operators. Both installations replace in-house
developed systems, indicating a growing trend in operators to accept
third-party solutions for the critical areas of mediation and intercarrier
billing. Complex next-generation mobile communications services like GPRS and
UMTS are driving this replacement process, and we anticipate that revenues
derived from the next-generation market will grow significantly in the coming
year.

In our original interconnect business 11 contract wins around the world
indicate that this is a strong and growing market, with operators keen to
maximise revenues and minimise costs from interconnect traffic. PTT-level, GSM
and CLEC wins in Western, Southern and Eastern Europe, the Caribbean, the
Middle-east, the US and the Asia-Pacific region continue to underline Intec as
a leading provider in the world of domestic, international and US CABS
intercarrier settlements.

In the US, we won new installations for InterconnecT CABS in a market that is
highly cost-sensitive, indicating that accurate revenue assurance processes
are moving higher on the agenda for many operators. We focus on larger,
well-funded facilities-owning CLECS in the US, a group which is better able to
prosper in the current market conditions. Notable among these was Dallas-based
VarTec, historically a long distance provider that is moving strongly into the
local service market with a range of innovative and aggressively priced
services.

Intec is making significant inroads into next generation providers with
important deals signed at broadband IP companies like Cbeyond Communications
and HanseNet. Cbeyond Communications, a well-funded leader in the emerging
local voice and broadband services market, offers an integrated communications
services package to the huge US small business market. CBeyond delivers its
services as applications over a single IP network using new packet-based
technology from Cisco Systems, an Intec business partner.  By embracing
next-generation technologies, Cbeyond is able to deliver high-quality
competitive telephony, high-speed Internet services and IP-based applications
with seamless integration and delivery at reduced costs to this growing and
under-served small business segment. Intec's Inter-mediatE plays a crucial
role in this service, by allowing Cbeyond to mediate several different kinds
of traffic (voice, IP, Voice-over-IP, web, etc.) in one system with great
flexibility.

HanseNet, the second largest regional carrier in Germany, has installed
Inter-mediatE to collect and process voice and IP data from its high-capacity,
640 km fibre optic metropolitan network. The ability of Inter-mediatE to be
rapidly reconfigured to support new offerings was an important advantage for
HanseNet, allowing it to quickly roll out new services for businesses and
consumers.

Acquisition update

During the six months under review, Intec completed two acquisitions in the
United States, Computer Generation Inc. ('CompGen'), and CHA Systems and a
further company, i2i in Malaysia. These acquisitions have increased our
geographical coverage, particularly in the US and in strategic markets such as
Asia-Pacific and Latin America. They have broadened our product offering,
enabling participation in the increasingly important convergent mediation
market, increased cross-selling opportunities, expanded our tier one customer
base and significantly improved our research and development capabilities.

The Board is pleased to report that progress with integrating and developing
these organisations is on or ahead of schedule, with no significant
outstanding issues. In the mediation division, formerly CompGen, Intec has
substantially boosted the sales and marketing capability with a number of
experienced staff joining the business under the leadership of Gary Bunney,
previously the Director of ICL's telecoms division. The division and its
products (Inter-mediatE) have been rebranded and re-launched in the American
and international markets, making a good contribution to both turnover and
earnings in the second quarter. Atlanta has been made Intec's Centre of
Excellence for the Americas market, working closely with offices in Dallas,
Texas and Sao Paulo, Brazil to support customers across all product lines. We
also ran our first Inter-mediatE User Conference in April, building on
successful European events with InterconnecT.

Integration of the sales and marketing efforts for the CABS products (formerly
CHA Systems) and mediation is largely complete, and the products have been
rebranded and re-launched as InterconnecT CABS. The division's substantial
services and ASP capability is also being actively promoted, and Intec is
benefiting corporately from the relocation of some internal IT requirements to
the Dallas datacentre.

The operations of i2i have been successfully merged with the existing Intec
business in Kuala Lumpur, Malaysia, creating a Centre of Excellence with a
full range of sales and support skills to serve the Asia/Australia market. The
product development skills and technology base acquired with i2i are now
contributing strongly to future product developments, as Intec looks to the
needs of next generation networks.

In our Prospectus for the acquisition of CompGen, we highlighted four
milestones for the enlarged group: the development of Version 7 of
InterconnecT,  the merging of features in the products acquired from i2i into
InterconnecT, to grow our installed base to 85-90 by this time, and to develop
the sales and marketing capability in CompGen. We are pleased to report that
these milestones have already been achieved or, in the case of product
development, are on schedule for the anticipated release dates.

Corporate and Product Developments

Intec continues to invest in new people and new offices. Continued worldwide
demand for revenue assurance products, deregulation trends in new territories,
and rising momentum in next generation networks means that we must invest to
position ourselves to take this business. Intec staff numbers at 30 September
2000 were 239, with the majority for the first time based outside the UK. This
number grew in the current period by 110 on the acquisition of CompGen, by 32
on the acquisition of CHA Systems, and 22 on the acquisition of i2i. With
other new hires, numbers at 31 March 2001 stood at 439 people.

During the period, Intec opened new offices in Mexico and Taiwan, as well as
adding US locations in Atlanta, Dallas and Jackson with acquisitions, taking
our number of offices to 20. Intec has now delivered on its global policy for
sales, marketing and customer support with the formal opening of three Centres
of Excellence (Woking, Atlanta, and Kuala Lumpur). Each Centre has a full
range of capabilities, from development to sales to support, in local
timezones and local languages, for customers that fall into its area of
operations. This investment is necessary and commercially justified as Intec
expands both its customer base (which now covers over 35 countries) and
product lines (intercarrier billing, convergent mediation and associated
areas).

In the product area, a notable event was the introduction of Maxi-routE, a new
product developed within the company to address the problem of 'Least Cost
Routing'. Maxi-routE enables carriers to use billing data to identify the most
economically effective route for traffic sent to business partners, while
maintaining defined service quality levels. The first sales of Maxi-routE,
which is complementary to our existing billing products, have already been
committed.

Development work continues on existing core products (InterconnecT and
Inter-mediatE) to ensure that they continue to be market leaders and to meet
customer requirements for current and next-generation networks. A number of
additional products complementary to these are also in development, for
release in the near future. Following the recent acquisitions, Intec has
extended its comprehensive internal Roadmap for future development to include
these products. We believe our strategy will allow us to continue delivering
software of the highest quality and performance, and the functionality to meet
all forseeable customer requirements in fixed, mobile, IP and next-generation
networks.

Financial Review for six months to 31 March 2001

Revenue for the six months to 31 March amounted to £14.4 million, an increase
of 89% over the corresponding prior period. The majority of revenue at £9.4
million came from the intercarrier billing business (consisting of £8.3
million from InterconnecT sales and a £1.1 million revenue from the final two
months of the period from the US CABS products.) Actual InterconnecT revenue
of £8.3 million is an increase of 9% over the corresponding prior period,
despite the slower revenue growth from the extended sales cycles currently
being experienced.  Mediation products (Inter-mediatE) added revenue for just
over three months of £5.0 million. It should be noted that the distinction
between mediation and billing sales can be difficult to make, as a result of
increasing joint-product bids, and the tendency for all geographic regions to
have cross-selling opportunities for new products.

Revenues were generated from all business operations, with contributions from
acquisitions primarily only in the latter half of the period: license sales
(InterconnecT, Inter-mediatE and InterconnecT CABS) were up 65% at £
5.4million, and made up 38% of the total compared to 43% for the corresponding
prior period. Recurring revenues, including both annual support revenues and
licence volume upgrades, were up 159% at £5.7 million and made up 40% of the
total compared to 29% for the corresponding prior period. This substantial
increase mainly reflects the larger customer base. Revenues from
implementation, training, consulting and other activities were up 65% at £
3.3million and made up 22% of the total compared to 27% of the corresponding
prior period.

The profit before interest, tax, depreciation, and amortisation ('EBITDA') of
£1.3 million in Q2 has allowed us to report a small EBITDA loss of £0.1
million for the six months ended 31 March 2001, when set against the £1.4
million EBITDA loss reported for the three months ended 31 December 2000 (Q1).

All research & development expenditure is now disclosed as a separate element
of administrative expenses and now also includes salary costs for employees
contributing to product development that were previously included within other
departments. This realignment forms part of the integration process, improving
visibility and accountability for research and development activities. As
development expenditure was previously included within Cost of Sales, the
effect of the reclassification on the year ended 30 September 2000 is to
increase previously reported gross margin of 58% to 68%. We are of the opinion
that the revised presentation of the profit and loss is more in line with
other software companies and provides a clearer presentation of the group's
activities.

The gross profit margin for the six months ended 31 March 2001 was 64%
compared to 70% for the corresponding prior period as reclassified above. This
reflects the additional investment in implementation & support staff to
resource geographic expansion in growth regions such as Latin America and
Asia-Pacific.

Overall, the loss before tax of £3.6 million is primarily attributable to
goodwill and depreciation of  £4.2 million. The Goodwill amortisation charges
of £3.7million are in respect of the CompGen, CHA and i2i acquisitions, the
cost of which is being amortised over a period of fifteen years. These have a
significant impact on reported earnings, but do not impact the underlying
ability to generate cashflow from the business.

The operating cash out flow for the three months to 31 December 2000 of £4.048
million has reduced considerably to £0.554 million for the six months to 31
March 2001.  The cash balances were £23.6 million as at 31 March 2001,
compared to £31.2 million as at 30 September 2000. The movement in cash of £
7.6 million has been used to fund acquisitions of £6.6 million, fixed asset
costs of £1.1million, with operating and net interest cash flows contributing
£0.1 million. Stronger cash collections in Q2 have significantly improved
debtors.

Outlook

In the six month period under review, turbulence in the IT and telecoms
sectors has produced a more difficult market to operate in than for some
years. Sharp cutbacks in major telecoms capital expenditure projects, for
example in new network infrastructure, have severely impacted many large
suppliers. This has flowed down to other companies in the industry, even where
they are supplying products that are geared to short-term revenue improvement
capabilities. While we do not believe that such expenditure is being
cancelled, the greater scrutiny of costs taking place in most carriers has
resulted in extended sales cycles for even the most necessary purchases. This
has clearly impacted Intec's current growth rate.

A degree of confidence and stability is returning to the telecoms market.
While tighter trading conditions are likely to prevail for the immediate
future, unless market conditions were to worsen unexpectedly again, there is
reason to assume that steady improvement in business performance can be
expected. Intec provides solutions that are key to the revenue assurance
processes of its customers, and with the current focus on carrier
profitability and debt reduction, such solutions have a strong economic case.
In addition, there is growing momentum in '2.5G/3G' network investment and
rollout, and Intec is well-placed with its current product set to benefit from
this.

It is therefore the Board's view that Intec's strategy of continuing to invest
through this difficult period is correct, and that the company will be
well-placed to continue converting its strong prospect pipeline into sales in
coming quarters. Intec has around 75% visibility of revenues needed to achieve
the market's recently revised targets for the full year. Previous experience
of quarterly sales cycles, and current trading gives the Board reason to be
cautiously optimistic about Intec's performance against these expectations.

Mike Frayne, Executive Chairman     Kevin Adams, Chief Executive Officer


FINANCIAL HIGHLIGHTS for the six months ended 31 March 2001

                                 Unaudited       Unaudited         Audited
                                  6 Months        6 Months            Year
                                     ended           ended           ended
                                  31 March        31 March    30 September
                                      2001            2000            2000
                           Notes     £'000           £'000           £'000

TURNOVER                            14,393           7,595          20,279
                                 
EBITDA before exceptional
flotation costs                      (143)           1,296           4,520

Operating                   (i)    (4,358)           1,096           3,313
(loss)/profit

Adjusted (loss)/
profit before tax          (ii)    (3,648)             994           4,416
                           
(Loss)/earnings per share
       - basic                      (2.38) p          0.61 p          2.17 p
       - diluted (refer note 3)     (2.38) p          0.61 p          2.16 p

Adjusted (loss)/earnings
per share                 (iii)     (0.17) p          0.61 p          2.67 p

Notes to the Financial Highlights

(i)   Group operating (loss)/
       profit                      (4,319)           1,096           3,160
       Share of operating (loss)/
       profit of associate            (39)               -             153
Operating (loss)/profit            (4,358)           1,096           3,313

(ii)  (Loss)/profit on ordinary
       activities before taxation  (3,648)             994           3,837
       Exceptional flotation costs      -                -             579

Adjusted (loss)/profit before tax  (3,648)             994           4,416

(iii)  Adjusted (loss)/earnings
       per share calculation based
       on the following adjusted 
       (loss)/earnings after tax
       (Loss)/earnings after tax   (3,971)             759           2,880
       Amortisation of goodwill 
       and other intangible assets  3,695                2             100
       Exceptional flotation costs      -                -             579
       Tax effect on exceptional
       flotation costs                  -                -             (23)
Adjusted (loss)/earnings after tax   (276)             761           3,536

Key customer data
Period ended:                  31 March 2000   30 September 2000  31 March 2001
Cumulative:
Total contracted customer                                     
base - Billing                            45                  56             64
Total contracted customer
base - IntermediatE                        -                   -              7
Total Contracted Customer
Base                                      45                  56             71

Consolidated profit and loss accounts
                                                     (Restated)       (Restated)
                                     Unaudited       Unaudited         Audited
                                      6 months        6 months            Year
                                         ended           ended           ended
                               Note   31 March        31 March              30
                                                                     September
                                          2001            2000            2000
                                         £'000           £'000           £'000
TURNOVER
Continuing
operations                               8,496           7,595          20,279
Acquisitions                             5,897               -               -
Total turnover                   2      14,393           7,595          20,279

Cost of sales                          (5,246)          (2,308)         (6,514)

GROSS PROFIT                             9,147           5,287          13,765
                                                       
Distribution
costs                                  (3,400)         (1,420)         (3,258)
                                                       
Administrative
expenses
 - Development                                         
expenditure                            (2,399)         (1,575)         (3,029)
 - Amortisation of goodwill                                
and other intangible assets            (3,695)             (2)           (100)
 - Exceptional                               -               -           (579)
flotation costs
 - Other                                               
administrative                         (3,972)        (1,194)         (3,639)
expenses
Total                                 (10,066)        (2,771)         (7,347)
administrative                        
expenses

OPERATING (LOSS)/PROFIT
Continuing                             (2,586)         1,096           3,160
operations 
Acquisitions                           (1,733)             -               -

GROUP OPERATING                        (4,319)         1,096           3,160
(LOSS)/PROFIT                          
Share of operating                        (39)             -             153
(loss)/profit in                          
associate

Interest receivable and                   739              7             642
similar income                       
Interest payable                          (29)          (109)           (118)
and similar                              
charges:

(LOSS)/PROFIT ON
ORDINARY ACTIVITIES BEFORE             (3,648)           994           3,837
TAXATION                               
Tax charge on (loss)/                                    
profit on ordinary                       (323)          (235)           (957)
activities

RETAINED (LOSS)/PROFIT
ON ORDINARY
ACTIVITIES AFTER                                          
TAXATION                               (3,971)           759           2,880

(Loss)/earnings                  3      (2.38)p         0.61 p          2.17 p
per share - basic                       
(Loss)/earnings                  3      (0.17)p         0.61 p          2.67 p
per share -                            
adjusted
(Loss)/earnings                  3      (2.38)p         0.61 p          2.16 p
per share -                           
diluted

Consolidated                          31 March        31 March    30 September
statement of total                                                   
recognised gains                          2001            2000            2000
and losses                               £'000           £'000           £'000
                                         
(Loss)/profit for                                          
the period                             (3,971)             759           2,880
Exchange translation
differences arising
on foreign                                                   
currency net                                86               3              17
investments
Total recognised gains                 (3,885)             762           2,897
and losses during the                  
period


Consolidated Balance Sheets
                                      Unaudited       Unaudited         Audited
                                       31 March        31 March    30 September 
                                           2001            2000            2000
                                          £'000           £'000           £'000
FIXED ASSETS
Intangible assets                       207,624              88           1,863 
Tangible assets                           2,656             782           1,692
Investments                                 656               5             665

                                        210,906             875           4,220
CURRENT ASSETS

Stocks                                       42                -              -
Debtors                                  17,222            7,620         13,794
Investments                              18,619               -          18,970
Cash at bank and in                                         
hand                                      5,151             119          12,495
                                         41,034           7,739          45,259
CREDITORS: amounts falling due          (9,179)         (6,194)         (5,827)
within one year

NET CURRENT ASSETS                       31,855           1,545          39,432

TOTAL ASSETS LESS CURRENT               242,761           2,420          43,652
LIABILITIES

CREDITORS: amounts
falling due after more
than one year                             (180)           (185)           (125)

DEFERRED INCOME                         (6,452)         (2,838)         (1,977)

NET ASSETS/(LIABILITIES)                236,129           (603)          41,550

CAPITAL AND RESERVES
Called up share capital                   1,836               2           1,485
Share premium account                   235,020               -          38,535
Other reserve (see notes                  1,628               -               -
4 and 7)
Merger reserve                              249             249             249
Foreign exchange reserve                    103               3              17
Profit and loss account                 (2,707)           (857)           1,264
EQUITY SHAREHOLDERS' FUNDS               236,129          (603)          41,550

Reconciliation of                     Unaudited       Unaudited         Audited
Movements in
Consolidated                           31 March        31 March    30 September 
Shareholders' Funds                        2001            2000            2000
                                          £'000           £'000           £'000

(Loss)/profit for the                   (3,971)             759           2,880
financial period
Foreign exchange                             86               3              17
translation differences
Issue of share capital net of           196,836               -          40,018
associated expenses
Contingent consideration (see             1,628               -               -
notes 4 & 7)
Net addition to or reduction in         194,579             762          42,915
shareholders' funds
Opening shareholders'                    41,550         (1,365)         (1,365)
funds/(deficit)
Closing shareholders'                   236,129           (603)          41,550
funds/(deficit)

Consolidated cash flow statements
                                  Unaudited       Unaudited         Audited
                                   6 months        6 months            Year
                                      ended           ended           ended
                                   31 March        31 March    30 September
                    Note               2001            2000            2000
                                      £'000           £'000           £'000
Net cash
(outflow)/
inflow from
operating
activities           (i)              (554)             150         (4,889)
                                    
Returns on
investments
and servicing
of finance                             
Interest                               739                7             628
received                         
Interest                               (7)              (10)            (19)
element of finance
lease rental
payments
Interest paid                         (22)              (98)           (120)
                                     
                                      710              (101)            489

Taxation
Overseas                                             
taxation paid                         (30)              (43)            (53)
UK                                                  
Corporation                           (19)                -               -
taxation paid
                                      (49)              (43)            (53)
Capital investment
Payments to                          (791)             (204)         (1,458)
acquire                             
tangible
fixed assets
Payment to                           (304)                -          (1,872)    
acquire               
Intellectual Property Rights
Proceeds on                                             
disposal of                             -                 2              25
fixed assets
                                  (1,095)             (202)         (3,305)
                                  
Acquisitions
Investment in                           -              (5)             (5)
associated                            
undertakings
Investment in                   (205,056)               -              (5)
subsidiaries                    
Net cash                          1,572                14              14
acquired in               
subsidiaries                    (203,484)               9               4
                                
Cash (outflow) before
management
of liquid resources and   
financing                       (204,472)            (187)         (7,754)

Use of liquid resources
Decrease in term                       
deposits                            (328)               -          (18,291)     
Escrow account                       679                -             (679)     
                 
Financing
Issue of ordinary share                                     
capital                          202,057                -           43,090
Share issue costs
charged to the share
premium account                   (5,221)               -           (3,839)
Capital element of                   (59)             (55)            (111)     
£finance lease rental
payments                                     
(Decrease)/increase in (ii)(iii)  (7,344)            (242)          12,416


Notes to the consolidated cash flow statements

                                      Unaudited       Unaudited         Audited
                                       6 months        6 months            Year
                                          ended           ended           ended
                                       31 March        31 March              30
                                                                      September
                                           2001            2000            2000
                                          £'000           £'000           £'000
(i)              Reconciliation
                 of operating
                 (loss)/profit
                 to net cash
                 (outflow)/
                 inflow from
                 operating
                 activities

                 Operating                                                
                 (loss)/profit          (4,319)           1,096           3,160
                 Shares gifted                                
                 to employees                 -               -             214
                 Depreciation               520             200             528 
                              
                 Amortisation             3,695               2             100
                 of goodwill              
                 and other
                 intangible
                 assets
                 Loss/(gain) on               -             (1)             (1)
                 disposal of                  
                 fixed assets
                 Decrease/                   66               -               -
                 (increase) in               
                 stock
                 Decrease/                1,153         (3,277)         (9,475) 
                 (increase) in            
                 debtors
                 (Decrease)/            (1,669)           2,130            585  
                 increase in            
                 creditors                                
                 Net cash                 (554)             150         (4,889)
                 (outflow)/               
                 inflow from
                 operating
                 activities

(ii)             Reconciliation
                 of net cash
                 flow to
                 movement in
                 net debt

                 (Decrease)/            (7,344)           (242)          12,416
                 increase in            
                 cash in the
                 period
                 Net cash                   59               55             111
                 outflow from                
                 decrease in
                 finance lease
                 Net cash                 (351)              -           18,970
                 outflow from          
                 (decrease)/                
                 increase in
                 liquid
                 resources

                 Change in net          (7,636)           (187)         31,497  
                 debt resulting         
                 from cash                                               
                 flows
                 Amounts owed                 -           3,382          3,382
                 to former                   
                 parent company
                 Movement in
                 net funds              (7,636)           3,195          34,879
                                                          
                 Net debt at 1           31,221         (3,658)         (3,658) 
                 October 2000/           
                 1999

                 Net (debt)/             23,585           (463)          31,221
                 funds at 31             
                 March/30
                 September

                                        Audited                       Unaudited
                                             30       Cash flow        31 March
                                      September
                                           2000                            2001
                                          £'000           £'000           £'000
(iii)            Analysis of
                 movement in
                 net debt
                 Cash in hand            12,495         (7,344)           5,151
                 and at bank
                                                                          
                 Finance leases           (244)              59           (185)
                 Term deposits           18,291             328          18,619
                 Escrow account             679           (679)               -

                 Total                   31,221                          23,585


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 are 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 increase 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 9
May 2001.

NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION

2. TURNOVER AND SEGMENTAL  ANALYSIS
                                      Unaudited       Unaudited         Audited
                                       6 months        6 months            Year
                                          ended           ended           ended
                                       31 March        31 March    30 September 
                                           2001            2000            2000
                                          £'000           £'000           £'000
Turnover by activity
Licence Sales                             5,394           3,342          11,413
                                          
Recurring income:
         ASP Service                        563              62             138
         Volume upgrade licence                           
         fees                             1,103           1,132           1,934
         Support and                                      
         maintenance fees                 4,048           1,033           2,397
Professional services income:
         Implementation and                               
         migrations                       1,732           1,602           3,374
         Consulting income                  364             424           1,023 
              
Hardware                                    211               -               -
Non-Telecom - custom network                                  
solutions                                   978               -               -

Total Turnover                           14,393           7,595          20,279 
                                         
Turnover by destination
United Kingdom                              909           1,565           2,319
Continental Europe                        5,021           3,510           8,731
Eastern Europe                              828             488           3,516
Middle East                                  22               -               -
Africa                                      351             439           1,411
Asia Pacific                              2,102             720           2,384
North America                             4,320               -              73
South America                               840             873           1,845
Total Turnover                           14,393           7,595          20,279

Turnover by origin
United Kingdom                            8,325           7,483          19,977
Continental Europe                          171             112             288
Asia -Pacific                                 -               -              14
North America                             5,897               -               -
South America                                 -               -               -
                                         14,393           7,595          20,279

Profit/(loss) before tax by
origin
United Kingdom                          (2,155)           1,176           4,541
Continental Europe                           77           (182)           (276)
Asia -Pacific                             (177)               -           (428)
North America                           (1,434)               -               -
South America                                41               -               -
                                        (3,648)             994           3,837

Net assets/(liabilities) by
origin
United Kingdom                           30,598           (611)          41,638
Continental Europe                           97               8           (121)
Asia -Pacific                            22,796               -              33
North America                           182,643               -               -
South America                               (5)               -               -
                                        236,129           (603)          41,550


NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION

3. (LOSS)/EARNINGS PER ORDINARY SHARE
                                   Unaudited        Unaudited           Audited
                                    6 months         6 months              Year
                                       ended            ended             ended
                                    31 March         31 March      30 September 
                                        2001             2000              2000
                                       £'000            £'000             £'000

Basic and diluted (loss)                                  
/earnings                            (3,971)              759             2,880

Exceptional flotation                                       
costs (tax adjusted)                       -                -               556
Amortisation of                                             
intangible assets                      3,695                2               100
Adjusted (loss)/earnings               (276)              761             3,536

                                      Number           Number            Number
Basic weighted average                             
number of shares                 166,549,879       125,142,692       132,814,764
Potential ordinary                                          
shares                                     -                -            303,268
Diluted weighted average
number of shares                 166,549,879       125,142,692       133,118,032
                 

                                       Pence            Pence             Pence
Diluted (loss)/earnings                                  
per ordinary share                    (2.38)             0.61              2.16
Adjustments for                          -                  -              0.01
potential ordinary                       
shares
Basic (loss)/earnings                                    
per ordinary share                    (2.38)             0.61              2.17

Exceptional flotation                    -                  -              0.42
costs                                    
Amortisation of                                             
intangible assets                       2.21                -              0.08
Adjusted (loss)/earnings
per ordinary share                    (0.17)             0.61              2.67
                                      

For the 6 months ended 31 March 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. ACQUISITIONS

(i) COMPGEN

On 21 December 2000 the group acquired Computer Generation Incorporated ('
CompGen') for a consideration of £170.5 million plus the acquisition costs of
£0.8 million relating to the acquisition.  Goodwill arising on the acquisition
of CompGen has been disclosed as an intangible asset and will be amortised
over 15 years.

Analysis of the acquisition of CompGen:-

Net assets at date of
acquisition 
and provisional fair value                         Alignment of     Provisional
                                                     accounting      fair value
                                     Book value        policies        to group
                           Note           £'000           £'000           £'000

Tangible fixed assets                       471               -             471
Stocks                                      108               -             108
Debtors                                   4,676               -           4,285
Cash                                      2,319               -           2,319
Deferred taxation            1           35,514        (35,514)               -
Creditors due within one
year                                    (7,120)               -         (7,120)
                                         35,968        (35,514)              63

Goodwill arising on                                                     171,258
acquisition
                                                                        171,321

Discharged by:

Cash                                                                    170,496
Acquisition costs                                                           825
                                                                        171,321


NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION

4. ACQUISITIONS (continued)

(ii) CHA

On 1 February 2001 the group acquired CHA Systems, Inc. ('CHA') for an initial
consideration of £11.27 million plus the acquisition costs of £0.475 million
relating to the acquisition.  Goodwill arising on the acquisition of CHA has
been disclosed as an intangible asset and will be amortised over 15 years.
Under the terms of our agreement contingent consideration becomes due on
achieving certain revenue and EBIT targets for the calendar year ending 31
December 2001.

The contingent consideration will become payable once CHA revenues exceed
$6.96 million (approximately £4.8 million); the maximum payable is $14.4
million (approximately £9.8 million) if CHA achieves revenues of $13 million
(approximately £9.0 million).  The calculated consideration will be derived
from a function of the revenue range between $6.96 million and $13 million.

Current projections estimate that up to $3 million (approximately £2.1
million) could become due under the arrangements and this has been provided
for.  Any payment would be satisfied in the ratio of 55% cash and 45% shares.

Analysis of the acquisition of CHA :-

Net Assets at date of acquisition
and provisional fair value                                Alignment Provisional
                                                                 of
                                                         accounting  fair value
                                                    Book   policies    to group
                                                   value
                                                   £'000      £'000       £'000

Tangible fixed assets                                222          -         222
Debtors                                              608          -         608
Cash                                               (750)          -       (750)
Creditors due within one year                    (1,341)          -     (1,341)
Creditors due after one year                       (123)          -       (123)
                                                 (1,383)          -     (1,383)

Goodwill arising on acquisition                                          15,218
                                                                         13,835
Discharged by:

Cash                                                                      6,576
Share issue                                                               4,694
Contingent consideration (£1.15 million
cash and £0.94 million shares to be
issued)                                                                   2,090
Acquisition costs                                                           475
                                                                         13,835


NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION

4. ACQUISITIONS (continued)

(iii) i2i

On 14 February 2001 the group acquired Inception to Implementation (M) SDN.
BHD ('i2i') for an initial consideration of  £21.6 million  plus the
acquisition costs of £0.37 million relating to the acquisition.

Contingent consideration of up to a maximum of $7.5 million (approximately £
5.2 million) could become payable under the terms of the agreement based on a
proportion of receipts of licence revenue from named customer wins.  A large
proportion of this contingent consideration lapsed on the acquisition of CHA's
CABS product.

Current projections estimate that up to $1 million (approximately £0.7
million) could become due under the arrangements.  This has been provided for
and payment would be satisfied by the issue of shares.

The assets acquired were £3,000 cash, the intellectual property rights for i2i
and existing customers.  The goodwill of £22.7 million arising on the
acquisition of i2i has been disclosed as an intangible asset and will be
amortised over 15 years.

Total consideration satisfied by:-                                        £'000

Cash                                                                      7,913
Share issue                                                              13,710
Contingent consideration                                                    688
Acquisition costs                                                           367
                                                                         22,679


NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION

5. DEBTORS
                                    Unaudited       Unaudited          Audited
                                     31 March        31 March     30 September
                                         2001            2000             2000
                                        £'000           £'000            £'000

Debtors
Trade debtors                          11,882           6,333           10,755
Corporation tax recoverable                 -              16                -
Withholding tax recoverable
  Due within one year                       -             166              142
  Due after more than one
   year                                     -               -                2
Other debtors                           3,188              99              631
Prepayments and accrued
income                                  2,836           1,006            2,264

                                       17,906           7,620           13,794

6. CREDITORS
                                    Unaudited       Unaudited          Audited
                                     31 March        31 March     30 September
                                         2001            2000             2000
                                        £'000           £'000            £'000

Creditors: falling due
within one year
Bank overdraft                              -             282                -
Obligations under finance
leases                                    121             115              119
Trade creditors                         2,650             920            1,381
Amounts owed to former
parent company                              -           3,055                -
Amounts owed to fellow group
undertakings                                -             828                -
Corporation tax                           722               -              839
Overseas tax                              275               -               43
Other creditors including
taxation and social security            2,026             522              379
Accruals                                3,175             472            3,066
Contingent consideration                1,150               -                -
                                       10,119           6,194            5,827

Creditors: falling due after
more than one year
Obligations under finance
lease                                      64             185              125
Long-term note payable -
stockholders                              116               -                -
                                          180             185              125

Maturity of obligations
under finance lease
Within one year                           121             115              119
More than one year but not
more than two years                        64             122              125
More than two years but not
more than five years                        -              63                -
                                          185             300              244

NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION

7. STATEMENT OF MOVEMENTS ON RESERVES

                         Called   Share                  Foreign  Profit
                             up premium                 exchange     and
                          share account   Other  Merger  reserve    loss
                        capital         reserve reserve          account Total
                          £'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          351 201,706       -       -        -       - 202,057
shares
Share issue expenses          - (5,221)       -       -        -       - (5,221)
Fair value of shares to
be issued as part of
contingent
consideration                 -       -   1,628       -        -       -   1,628
Retained loss for the
period                        -       -       -       -        - (3,971) (3,971)
Foreign exchange
translation                   -       -       -       -       86       -      86
                              
At 31 March 2001          1,836 235,020   1,628     249      103 (2,707) 236,129