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Ultima Networks PLC (UTN)

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Tuesday 30 April, 2002

Ultima Networks PLC

Final Results

Ultima Networks PLC
30 April 2002


Chairman's Statement


Trading Performance

Over the past financial year there has been significant restructuring and change
within the Group. This began in February 2001 with changes in senior management
and significant cost reduction measures being put in to place. The
implementation of the restructuring programme culminated with Ultima Networks
PLC and certain of its subsidiary companies entering into Company Voluntary
Arrangements ('CVA's) in November 2001. The CVA was adopted as a means of
restructuring the Group with a view to restoring profitability and growth whilst
at the same time reaching a settlement with existing creditors.


Ultima Networks PLC completed its voluntary arrangement on 24 April 2002,
opening the way for the Group to apply to the UK Listing Authority for
restoration of its full listing on the London Stock Exchange. SilCom
Manufacturing Technology Inc ('SilCom') completed its CVA in February 2002.
Integrated Publishing Systems Limited ('IPS') and Cognito Software Limited
('Cognito') have satisfied their financial obligations in full and earlier than
expected under their CVAs and will be discharged from their CVAs shortly. An
exceptional profit of £1.55 million has been recognised in these accounts in
respect of the reduction in group liabilities at the date of approval of the
CVAs to the amounts due under the CVAs.


Throughout the year the Group had the ongoing support of its largest
shareholder, Akhter Group plc ('Akhter Group'). On 9 November 2001 Akhter Group
purchased Ultima Network PLC's £2.58 million of indebtedness to HSBC Bank plc
('HSBC') from HSBC for a total cash consideration of £1.80 million and then
wrote off the discount received from HSBC. This transaction gives rise to an
exceptional profit of £0.78 million in these accounts.


Total sales for 2001 of £4.39 million were 37% lower than the £6.95 million
achieved in 2000. The profit before tax was £0.51 million compared to a loss of
£0.78 million in the previous year. The profit for the year is stated after net
exceptional credits to the profit and loss account totaling £1.26 million.
Excluding the effect of the exceptional items the result for the year before tax
would have been a loss of £0.75 million. The profit per share of 0.30p compares
to a loss per share of 0.41p in 2000.


Net group borrowings at 31 December 2001 were £2.83 million as compared to £3.83
million at 31 December 2000. Included in the figures at 31 December 2001 are
secured borrowings of £1.80 million from Akhter Group (2000: £Nil). Bank
borrowings at 31 December 2001 were £Nil as compared to £2.65 million at 31
December 2000.


The Board is not recommending the payment of a dividend.


Networking Division

The sales of the Networking Division were £3.44 million compared to £5.87
million in 2000. This resulted in an operating profit of £0.34 million compared
to an operating loss of £0.89 million in 2000.


Our Networking Services operation, UTN Solutions, achieved sales of £2.68
million compared to £4.32 million in 2000. This resulted in an operating profit
of £0.09 million, after an exceptional profit of £0.22 million relating to the
CVA, compared to an operating loss of £0.32 million in 2000. During the year the
Division's Portsmouth operation was closed down following a number of years of
heavy trading losses. Our Haydock operation was also scaled down during the year
and, following its move to new premises in Burnley, is now focusing on a new
suite of products that we expect to give growth prospects for the future.


The Networking Products operation, through our Canadian subsidiary SilCom,
achieved sales of £0.76 million compared to £1.55 million in 2000. This resulted
in an operating profit of £0.25 million compared to an operating loss of £0.97
million in 2000. The operating profit is after expenditure of approximately
£0.29 million on research and development and an exceptional profit of £0.39
million relating to the CVA.

As previously reported, SilCom's CATV and manufacturing operations were
discontinued during the year resulting in a significant reduction in ongoing
staff and research and development costs. SilCom is now concentrating on its
wireless networking product range.


Software Division

The sales of the Software Division were £0.95 million compared to £1.08 million
in 2000. However, a reduction in overhead costs and increased margins resulted
in an operating profit of £0.19 million compared to an operating loss of £0.20
million in the previous year. The operating profit is after an exceptional
profit of £0.10 million relating to the CVAs. Software development expenditure
for the division was approximately £0.12 million for the year.


Cognito had a particularly successful year developing its legal software product
to meet the needs of a broader market place.


Overheads

Group overheads for the year were £0.30 million before exceptional profits of
£1.62 million, which comprised £0.84 million in respect of CVA completion and
£0.78 million in respect of a gain on extinguishment of debt. This compares to
group overheads of £0.24 million in the previous year before a net exceptional
credit to the profit and loss account of £1.34 million.


Post Balance Sheet Events and Outlook

The Group's principal asset is a freehold property in Bradford previously
occupied by the Displays Division. Following the disposal of the Displays
Division in 1998 the new owner continued to occupy the property until February
2001. Since that date the property has been empty. HSBC, as secured creditor,
had made it clear to the Board that the only option was to sell the property
with the proceeds being used to reduce the Group's indebtedness to HSBC. The
Group was unable to find a buyer at an acceptable price. Following the
extinguishment of bank debt the property was marketed for sale or let and I am
pleased to announce that on 12 April 2002 a ten year lease was signed by Serco
Limited to let the property at an initial rental of £0.24 million per annum.
This will provide a significant contribution towards the Group's overheads and
interest costs over this period.


On 26 April 2002 the Group secured a mortgage facility of £1.8 million from its
bankers, LloydsTSB Bank plc. This facility is secured on the Group's freehold
property and land in Bradford and will be used to repay the secured loan from
Akhter Group.


The CVA for UTN Solutions (South) plc was challenged by the Inland Revenue. In
view of the prospects for the company the Director of that company resolved to
put it into a Creditors Voluntary Liquidation in April 2002. This was approved
at shareholder and creditor meetings held on 18 April 2002. As a result goodwill
of £1.06 million previously written-off directly to reserves has been charged to
the profit and loss account for the year.


I am pleased to announce that Peter Thoms has joined the Board as a
non-executive director, effective 29 April 2002. Peter Thoms is the Finance
Director of NXT PLC and brings substantial business and financial experience to
the Board. Dr A Aitken, having served as a non-executive director for the past
six years and retiring by rotation at the forthcoming Annual General Meeting, is
not standing for re-election. I should like to take this opportunity to thank
him for his contribution to the Group over this period.


I should also like to take this opportunity to thank all our employees and
management for their continuing dedication and commitment to the Group.

Humayun A Mughal

Chairman                                                         30 April 2002


Consolidated profit and loss account

for the year ended 31 December 2001

                                                                                   2001                           2000
                                                                                   £000                           £000

Turnover
Continuing operations                                                             3,408                          4,347
Discontinued operations                                                             983                          2,605

Turnover                                                                          4,391                          6,952
Cost of sales                                                                   (2,533)                        (4,416)

Gross profit                                                                      1,858                          2,536

Net operating expenses                                                          (2,327)                        (3,857)
Exceptional credit on approval of voluntary                                         980                              -
arrangement
Exceptional credit on provision for onerous leases                                  291                          1,614
Exceptional operating costs                                                         274                          (674)

Analysis of operating profit/(loss)
Continuing operations                                                               843                            642
Discontinued operations                                                             233                        (1,023)


Operating profit/(loss)                                                           1,076                          (381)

Exceptional non-operating item                                                  (1,061)                              -

Profit/(loss) on ordinary activities before                                          15                          (381)
interest

Exceptional gain on extinguishment of debt                                          779                              -
Interest payable and similar charges                                              (281)                          (402)

Profit/(loss) on ordinary activities before                                         513                          (783)
taxation

Tax on profit/(loss) on ordinary activities                                          63                              -

Profit/(loss) for the financial year                                                576                          (783)
                                                                        ---------------                 --------------


Earnings/(loss) per share                                                         0.30p                        (0.41)p
                                                                         --------------                ---------------

Diluted earnings/(loss) per share                                                 0.30p                        (0.41)p
                                                                         --------------                ---------------



Consolidated balance sheet

at 31 December 2001

                                                                                  2001                           2000
                                                                   £000           £000            £000           £000
Fixed assets
Tangible assets                                                                  3,229                          2,277

Current assets
Stocks                                                               32                            215
Debtors                                                             705                            998
Cash at bank and in hand                                             74                            554

                                                                    811                          1,767
Creditors: amounts falling due within one year                  (4,107)                        (6,253)

Net current liabilities                                                        (3,296)                        (4,486)

Total assets less current liabilities                                             (67)                        (2,209)

Creditors: amounts falling due after one year                                  (1,101)                        (1,101)
Provisions for liabilities and charges                                               -                          (679)

Net liabilities                                                                (1,168)                        (3,989)
                                                                         -------------                   ------------
Capital and reserves
Called up share capital                                                          7,434                          7,434
Share premium account                                                            5,520                          5,520
Revaluation reserve                                                              1,124                              -
Other reserves                                                                   1,334                          1,334
Profit and loss account                                                       (16,580)                       (18,277)

Deficit of shareholders' funds - Equity                                        (1,168)                        (3,989)
                                                                         -------------                   ------------



Consolidated cash flow statement

for the year ended 31 December 2001

                                                                                     2001                        2000
                                                                                     £000                        £000


Cash inflow/(outflow) from operating activities                                       359                        (90)
Returns on investments and servicing of finance                                     (149)                       (295)
Taxation                                                                                -                           5
Capital expenditure and financial investment                                           15                       (136)

Cash inflow/(outflow) before management of liquid                                                               (516)
resources and financing                                                               225
Financing                                                                            (84)                        (57)

Increase/(decrease) in cash in the year                                               141                       (573)
                                                                            -------------              --------------


NOTES

1. GOING CONCERN


The Group has net liabilities of £1.17 million and net current liabilities of
£3.30 million at 31 December 2001. However, the Directors consider it
appropriate to prepare the accounts on the Going Concern basis based on working
capital projections prepared for the Group and the continued financial support
of Akhter Group plc.



2.     SEGMENTAL ANALYSIS
                                                                                2001                  2000
                                                                                £000                  £000
TURNOVER
Networking Division                                                            3,444                 5,870
Software Division                                                                947                 1,082

                                                                               4,391                 6,952
                                                                          ----------            ----------

                                                                                2001                  2000
                                                                                £000                  £000
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE INTEREST
Networking Division                                                            (269)               (1,287)
Software Division                                                                 94                 (196)
Group overheads                                                                (294)                 (238)
Exceptional items                                                                484                 1,340

                                                                                  15                 (381)
                                                                          ----------            ----------

3.     EXCEPTIONAL OPERATING ITEMS
                                                                                2001                  2000
                                                                                £000                  £000
Gain on approval of Company Voluntary Arrangement ('CVA')
Ultima Networks PLC                                                              271                     -
SilCom Manufacturing Technology Inc                                              389                     -
UTN Solutions (North) Limited                                                    221                     -
Integrated Publishing Systems Limited                                             41                     -
Cognito Software Limited                                                          58                     -

                                                                                 980                     -
                                                                      --------------        --------------
Other
Release of onerous lease provision (Ultima Networks PLC)                         291                 1,614
                                                                      --------------        --------------
Microvitec plc pension plan provision (Ultima Networks PLC)                      274                 (274)
                                                                      --------------        --------------
Fixed asset and stock valuation adjustments (SilCom                                -                 (400)
Manufacturing and UTN Solutions (South) plc)
                                                                      --------------        --------------

The exceptional profits in the current year represent the difference between
creditors within the scope of voluntary arrangements at the date of approval of
the arrangements and the amount to be paid to those creditors by way of a
distribution after the year-end.

4.     EXCEPTIONAL NON-OPERATING ITEMS
                                                                                2001                  2000
                                                                                £000                  £000
Ultima Networks PLC
Gain on extinguishment of debt                                                   779                     -
                                                                      --------------        --------------
Loss on closure of business                                                  (1,061)                     -
                                                                      --------------        --------------

On 9 November 2001 Akhter Group plc purchased Ultima's £2.58 million of
indebtedness to HSBC Bank plc ('HSBC') from HSBC for a total cash consideration
of £1.80 million and then wrote off the discount received from HSBC.

The loss on closure of a business above is the transfer of goodwill previously
written-off directly to reserves to the profit and loss account in respect of
UTN Solutions (South) plc.



5.     TAXATION
                                                                                2001                  2000
Current                                                                         £000                  £000
UK corporation tax at 30% (2000: 30%) on the profit on ordinary
activities                                                                         -                     -
Foreign tax                                                                       63                     -

                                                                                  63                     -
                                                                      --------------        --------------

There is no UK corporation tax charge for the year due to the availability of
trading losses brought forward and tax losses incurred during the year. The
Group has significant trading losses carried forward which will impact on future
taxation charges.



6.     PROFIT/(LOSS) PER SHARE

The basic and diluted profit/(loss) per Ordinary Share has been calculated on
the weighted average number of Ordinary Shares in issue during each year.



7.     ANALYSIS OF NET DEBT
                                                     At beginning       Cash flow     Other non-            At end
                                                          of year                   cash changes           of year
                                                             £000            £000           £000              £000
Cash at bank and in hand                                      554           (480)              -                74
Bank loans and overdrafts                                 (3,200)             621          2,579                 -
Other loans                                                     -               -        (1,800)           (1,800)

                                                          (2,646)             141            779           (1,726)
Loan notes                                                (1,101)               -              -           (1,101)
Finance leases                                               (84)              84              -                 -

                                                          (1,185)              84              -           (1,101)

Total                                                     (3,831)             225            779           (2,827)
                                                   --------------  -------------- --------------    --------------

The non-cash changes during the year comprise a £1,800,000 refinancing of debt
and a £779,000 debt extinguishment.



8. OTHER INFORMATION


This preliminary statement, which has been agreed with the auditors, does not
constitute the Company's statutory financial statements for the year ended 31st
December 2001. Statutory financial statements for 2000 have been delivered to
the Registrar of Companies, whereas those for 2001 have not yet been approved,
audited or filed. The auditors have reported on the financial statements for the
year ended 31 December 2000; their report was unqualified and did not contain a
statement under Section 237(2) or (3) of the Companies Act 1985.

The Annual Report for 2001 will be posted to shareholders as soon as practicable
and will be available to the public from the Company's registered office at
Ultima Networks PLC, Akhter House, Perry Road, Harlow, Essex CM18 7PN.



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