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Ultima Networks PLC (UTN)

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Wednesday 18 September, 2002

Ultima Networks PLC

Interim Results

Ultima Networks PLC
18 September 2002


Ultima Networks PLC ('the Group') - Statement of Interim Results

Chairman's Statement


Despite difficult business conditions the Group continued its progress towards
profitability. The Group's operating loss was reduced by 98% to £8,000 for the
half year (H1 2001: £459,000).

The Group continued to focus on areas of the business where profitable growth
can be achieved. Good progress has been made by our software division where
turnover increased by 12.5% to £458,000 (H1 2001: £407,000). This resulted in an
operating profit of £61,000 (H1 2001: loss £49,000). Cognito Software, our legal
accounting and workflow management software company, performed particularly well
with an increase of over 12% in the number of users since January 2002 and an
increase in recurring revenues of over 22% compared to 30 June 2001.

In contrast, the networking division's results continued to be disappointing and
further steps have been taken to eliminate non-profitable elements of this
business. The networking division's turnover decreased by 72% to £661,000 (H1
2001: £2,361,000). This resulted in an operating loss of £138,000 (H1 2001: loss
£227,000).


Financial highlights

  • Operating loss reduced by 98% to £8,000 (H1 2001: £459,000)

  • Loss before tax reduced by 81% to £112,000 (H1 2001: £599,000)

  • Group turnover down 60% to £1,119,000 (H1 2001: £2,768,000)

  • Software Division turnover up 12.5% to £458,000 (H1 2001: £ 407,000)

  • Networking Division turnover down 72% to £661,000 (H1 2001: £2,361,000)

  • Loss per share 0.06p (H1 2001: 0.31p)

  • Company voluntary arrangement completed in April 2002

  • Ultima Network PLC's full listing on London Stock Exchange restored in May
    2002

  • Microvitec House let from April 2002 on a 10 year lease at £240,000 per
    annum

  • Rescheduling of company debt in April 2002 through a £1.8 million secured
    loan from LloydsTSB Bank plc and a £0.9 million secured loan from Akhter
    Group plc, both repayable over 10 years


Outlook

Investment in research and development continued across the Group. In the
software division approximately £68,000 was spent in the period on developing
new products and enhancing the existing product range. Developments included web
enabling the existing products and the introduction of new products such as
digital dictation and voice recognition software.

In our networking products company, SilCom, development continues on the
wireless links product range. The company is developing a gigabit bandwidth
link, which should be ready for marketing within 6 to 8 months. Research and
developments costs in the period on this product were approximately £92,000.


Group overheads

The rental income from letting Microvitec House will make a significant
contribution towards group overheads and interest costs in the second half of
the year. Although let from April 2002 no rent was due until July 2002 due to an
initial rent-free period.


Board Changes

Peter Thoms joined the Board as a non-executive director with effect from 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, who had
served as a non-executive director for the past six years retired by rotation at
the Annual General Meeting held on 19 June 2002.


Humayun A Mughal, Chairman                                   18 September 2002




Consolidated profit and loss account
For the six months ended 30 June 2002                             (Unaudited)       (Unaudited)       (Audited)
                                                                  First half 2002   First half 2001   Full year 2001
                                                           Note   £000              £000              £000

Turnover - continuing operations                                  1,119             2,768             3,408
- discontinued operations                                         -                 -                 983

Turnover                                                      1   1,119             2,768             4,391
Cost of sales                                                     (362)             (1,424)           (2,533)

Gross profit                                                      757               1,344             1,858
Net operating expenses                                            (828)             (1,803)           (2,327)
Exceptional credit on approval of voluntary arrangement           139               -                 980
Exceptional credit on provision for onerous leases                -                 -                 291
Exceptional operating (costs)/profit                          2   (76)              -                 274

Analysis of operating loss - continuing operations                (8)               (459)             843
- discontinued operations                                         -                 -                 233

Operating (loss)/profit                                    1      (8)               (459)             1,076

Exceptional non-operating item - loss on closure of               
business                                                          -                 -                 (1,061)

(Loss)/profit on ordinary activities before taxation
and interest                                                      (8)               (459)             15

Gain on extinguishment of debt                                    -                 -                 779
Net interest payable                                              (104)             (140)             (281)

(Loss)/profit on ordinary activities before taxation              (112)             (599)             513

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

Unrecovered (loss)/profit for the financial period                (112)             (599)             576

(Loss)/profit per share and diluted (loss)/profit per                       
share                                                             (0.06)p           (0.31)p           0.30p






Consolidated balance sheet
                                                                (Unaudited)       (Unaudited)       (Audited)
                                                                30 June 2002      30 June 2001       31 Dec 2001
                                                                £000              £000              £000
Fixed assets
Tangible fixed assets                                           3,173             2,042             3,229
                                                                3,173             2,042             3,229
Current assets
Stock                                                           233               43                32
Debtors                                                         691               1,114             705
Cash at bank and in hand                                        67                752               74
                                                                991               1,909             811

Creditors - amounts due within one year                         (1,927)           (6,788)           (4,107)

Net current liabilities                                         (936)             (4,879)           (3,296)

Total assets less current liabilities                           2,237             (2,837)           (67)

Creditors - amounts due after one year                          (3,553)           (1,101)           (1,101)
Provisions for liabilities and charges                          -                 (649)             -

Net liabilities                                                 (1,316)           (4,587)           (1,168)

Capital and reserves
Called up equity share capital                                  7,434             7,434             7,434
Share premium account                                           5,520             5,520             5,520
Revaluation reserve                                             1,124             -                 1,124
Acquisition reserve                                             1,334             1,334             1,334
Profit and loss account                                         (16,728)          (18,875)          (16,580)

Deficit on shareholders' funds - equity                         (1,316)           (4,587)           (1,168)






Consolidated cash flow statement
                                                                (Unaudited)       (Unaudited)       (Audited)
                                                                First half 2002   First half 2001   Full year 2001
                                                                £000              £000              £000

Cash (outflow)/inflow from operating activities                 (814)             144               359

Returns on investment and servicing of finance                  (60)              (140)             (149)

Taxation                                                        -                 1                 -

Capital expenditure and financial investment                    (1)               138               15

Acquisitions and disposals                                      -                 -                 -

Cash (outflow)/inflow before financing                          (875)             143               225

Financing
Increase/(reduction) in net debt                                868               (84)              (84)

Net cash inflow/(outflow) from financing                        868               (84)              (84)

(Decrease)/increase in cash in the period                       (7)               59                141



Notes


 1. Segmental analysis
                                                                    (Unaudited)       (Unaudited)       (Audited)
                                                                    First half 2002   First half 2001   Full year 2001
                                                                    £000              £000              £000
    Turnover
    Networking division - continuing operations                     661               2,361             3,444

    Software division - continuing operations                       458               407               947

    Total                                                           1,119             2,768             4,391


    Operating loss
    Networking division - continuing operations                     (138)             (227)             (269)

    Software division - continuing operations                       61                (49)              94

    Group overheads                                                 6                 (183)             (294)

    Net exceptional operating items                                 63                -                 1,545

    Total                                                           (8)               (459)             1,076




 2. Exceptional costs

    Exceptional costs of £76,000 comprise professional fees incurred in
    restoring the Company's listing on the London Stock Exchange in May 2002 and
    in letting Microvitec House and an arrangement fee in connection with the
    mortgage advanced during the period.

 3. Dividends

    The Board is not recommending the payment of an interim dividend at this
    time.

 4. Other information

These interim results are prepared on the basis of accounting policies which are
consistent with those set out in the Annual Report for the year ended 31
December 2001.

The profit and loss accounts for the half years ended 30 June and the balance
sheets as at 30 June are unaudited.

The comparative figures for the year ended 31 December 2001 are not the Group's
statutory accounts for the financial year. Those accounts have been reported on
by the Company's auditors and delivered to the Registrar of Companies. The
report of the auditors was unqualified and did not contain a statement under
section 237(2) or (3) of the Companies Act 1985.


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