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Ultima Networks plc (ONZ)

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Wednesday 24 May, 2006

Ultima Networks plc

Final Results Year Ended 31 December 2005

                               Ultima Networks plc

                        Preliminary Statement of Results

                           Year ended 31 December 2005

                            Registered number 1435584

Chairman's Statement

It  has been a difficult year. The main objectives for 2005 were to increase the
market share of the established IT and related services businesses, to build the
new  telecoms  business profitably and to expand the legal software  activities.
This  was  expected  to  be achieved by organic growth and  the  acquisition  of
suitably complementary businesses. This strategy for development and growth  was
evidenced on 7 June 2005 by successfully moving the Company's quotation  to  the
AIM  Market  of  the London Stock Exchange plc where the transaction  costs  for
acquisitions are significantly lower than on the Official List of the UK Listing
Authority.   However,  despite  pursuing  a  number  of  potential   acquisition
opportunities, we did not complete a transaction.

The  Group made an operating loss of £115,000 (2004: profit £519,000)  on  Group
sales  of  £1,074,000  (2004: £1,659,000). However,  the  continuing  businesses
remain profitable with operating profits of £239,000 (2004: profit £590,000) and
sales of £968,000 (2004: £1,453,000).

The  IT  and related services division made an operating loss of £206,000 (2004:
profit  £271,000). The performance of C2 Communications Limited was particularly
disappointing;  it  failed to establish itself in its  chosen  markets  and  the
situation  was  very  similar  for SilCom Manufacturing  Technology  Inc.  As  a
consequence these two subsidiaries were no longer considered by the Board to  be
part of the ongoing strategy of the Group and on 14 November 2005 the sale of C2
Communications  Limited and the closure of SilCom Manufacturing Technology  Inc.
based in Canada were announced.

However,  the software businesses continued to contribute positively, albeit  at
lower levels than in the previous year. Cognito Software Limited found new sales
difficult  to close, but increased both licence and support revenues and  profit
margins.  Sales  of  the  new,  fully integrated,  trust  and  probate  software
solution,  Custodiens®, continued to increase as the year  progressed  and  with
further product development planned for 2006 is forecast to continue to do so.

The  other  products division contributed an operating profit of £91,000  (2004:
£248,000). Sales of solar cell installations were minimal due to difficulties in
obtaining supplies and therefore this activity may be discontinued in 2006.

The pre-tax loss was £360,000 (2004: profit £313,000). The tax charge of £40,000
(2004:  £28,000) is in respect of deferred tax and therefore no corporation  tax
is  payable  by  the  Group. The loss for the financial year after  taxation  is
£400,000 compared with a profit of £285,000 for 2004.

In  March 2006, the Company commenced the marketing of its freehold property  in
Bradford.  Any proceeds from the sale will be applied primarily in repaying  the
loans to Lloyds TSB Bank plc and Akhter Group plc, which are both secured on the
property  as  well  as repayment of the outstanding 8% loan  notes  and  accrued
interest. Any balance of the proceeds will provide funds for investment  in  the
profitable expansion of the Group, which is a priority for 2006 and beyond.

Humayun A Mughal

Operational Overview

IT and related services

Integrated  Publishing Systems Limited and Cognito Software Limited - Publishing
and legal application software

Sales  revenues  were £639,000 (2004: £943,000) producing operating  profits  of
£148,000  (2004: £342,000). The fall in sales revenues was against new  business
as  license  and support revenues increased. Sales of the new, fully integrated,
trust  and  probate  software  solution,  Custodiens®  increased  as  the   year
progressed and are expected to further increase in 2006.

SilCom Manufacturing Inc. (Canada) - Wireless networking production and services

Sales  revenues  were  £7,000  (2004: £66,000)  producing  operating  losses  of
£122,000  (2004: £73,000). SilCom ceased to trade in Canada on 31 December  2005
and  the  Wireless  production facility previously relocated  to  Pakistan  from
Canada has been mothballed.

C2 Communications Limited - Telecoms products and services

Sales  revenues  were £99,000 (2004: £140,000) producing an  operating  loss  of
£232,000 (2004: profit £2,000). On 1 November 2005 this subsidiary was sold.

Other products

Ultima  Networks  plc  and UTN Solutions (North) Limited  -  Electric  bicycles,
energy saving lamps and educational electronic kits

Sales  revenues  were £329,000 (2004: £510,000) producing operating  profits  of
£91,000 (2004: £248,000). Sales of solar cell installations were minimal due  to
difficulties  in  obtaining  supplies  and  therefore  this  activity   may   be
discontinued in 2006.

Financial Review

  §    Group turnover was £1,074,000 (2004: £1,659,000).

  §    Gross  margin for the year was 70% compared with 67% in 2004 due to  the
       sales of software licenses and support services comprising a higher proportion
       of Group turnover.

  §    Group selling and administration expenses were £1,109,000 (2004: £843,000).

  §    Loss  on  ordinary activities before taxation for the year was  £360,000
      (2004: profit £313,000)

  §    Loss per share was 0.20p (2004: earnings per share 0.14p).

  §    Net debt increased by £159,000 to £3,248,000 (2004: £3,089,000).

  §    Consolidated balance sheet remains positive with net assets of  £388,000
       (2004: £836,000).

  §    Continuing operations are profitable with operating profits of  £239,000
       (2004: £590,000).

 Consolidated profit and loss account
 for the year ended 31 December 2005

                                         2005            2004
                                         £000            £000
Continuing operations                    968            1,453
Discontinued operations                  106              206

                                       1,074            1,659
Cost of sales
Continuing operations                   (238)            (455)
Discontinued operations                  (89)             (89)

                                        (327)            (544)
Gross profit
Continuing operations                    730              998
Discontinued operations                   17              117

                                         747            1,115
Selling and administration expenses
Continuing operations                   (738)            (655)
Discontinued operations                 (371)            (188)

                                      (1,109)            (843)
Other operating income
Continuing operations                    247              247

Operating (loss)/ profit
Continuing operations                    239              590
Discontinued operations                 (354)             (71)

                                        (115)             519
Exceptional item - discontinued          (35)             -

(Loss)/ profit on ordinary              (150)             519
activities before interest and

Net interest payable and similar        (210)            (206)

(Loss)/ profit on ordinary              (360)             313
activities before taxation

Taxation                                 (40)             (28)

(Loss)/ profit for the financial        (400)             285

Basic and diluted (loss)/ earnings
per share - pence
Continuing operations                  (0.01)            0.17
Discontinued operations                (0.19)           (0.03)

Prior  to  2005 Other Operating Income has been reported in Turnover. Therefore,
Turnover in 2004 has been restated in these accounts to exclude this income.

Consolidated balance sheet
at 31 December 2005

                                 2005              2004
                                 £000     £000     £000     £000
Fixed assets
Tangible assets                          3,907             4,121

Current assets
Stocks                           114                130
Debtors                          232                416
Cash at bank and in hand           4                237

                                 350                783
Creditors: amounts falling    (1,674)            (1,576)
due within one year

Net current liabilities                 (1,324)             (793)

Total assets less current                2,583             3,328

Creditors: amounts falling              (2,195)           (2,492)
due after more than one

Net assets                                 388               836

Capital and reserves
Called up share capital                  7,554             7,551
Share premium account                    5,602             5,598
Revaluation reserve                      2,071             2,142
Other reserves                           1,334             1,334
Profit and loss account                (16,173)          (15,834)

Shareholders' funds                        388               791
Minority interest                            -                45

                                           388               836

Consolidated cash flow statement
for the year ended 31 December 2005

                                           2005              2004
                                           £000              £000
Cash flow statement

Cash inflow from operating                   56               266

Returns on investments and                 (169)             (171)
servicing of finance

Taxation                                      -                 -

Minority interest                             -                45

Acquisitions and disposals                  (45)                -

Capital expenditure and                      (8)              (63)
financial investment

Cash (outflow)/ inflow before              (166)               77
management of liquid
resources and financing

Financing                                  (251)               75

(Decrease)/ increase in cash               (417)              152
in the year

Note: an analysis of the above cash flows between continuing and
discontinued operations is provided below.

Reconciliation of net cash flow to movement in
net debt

                                           £000             £000

(Decrease)/ increase in cash               (417)             152
in the year

Cash outflow from decrease                  258              120
in debt and lease financing

(Increase)/ decrease in net                (159)             272
debt from cashflows

Movement in net debt in the                (159)             272
Net debt at the start of the             (3,089)          (3,361)

Net debt at the end of the               (3,248)          (3,089)

Consolidated statement of total recognised gains and losses
for the year ended 31 December 2005

                                            2005        2004
                                            £000        £000

(Loss)/ profit for the financial year      (400)         285
Currency translation differences on         (10)          16
foreign investment

Total recognised (losses) and gains        (410)         301
relating to the financial year

Reconciliation of movement in shareholders' funds
for the year ended 31 December 2005

                                    Group            Company
                                2005     2004     2005     2004
                                £000     £000     £000     £000

(Loss)/ profit for the         (400)       285   (2,372)     72
financial year
Issue of ordinary share capital   7        195        7     195
Freehold property revaluation     -      1,084        -   1,084
Currency translation            (10)        16        -       -
differences on foreign currency

Net (decrease)/ increase to    (403)     1,580   (2,365)  1,351
shareholders' funds

Opening shareholders' funds     791      (789)    2,746   1,395

Closing shareholders' funds     388       791       381   2,746


Turnover represents sales of products and services to customers outside the
Group  excluding value added tax or equivalent sales tax. The  analysis  of
turnover by geographical destination is as follows:

                                            2005       2004
                                            £000       £000
     United Kingdom                        1,067      1,593
     North America                             7         66

     Total                                 1,074      1,659

     IT and related services                 745      1,149
     Other products                          329        510

     Total                                 1,074      1,659

                                            2005       2004
                                            £000       £000
     IT and related services               (206)        271
     Other products                          91         248

     Total                                 (115)        519

                                            2005      2004
                                            £000      £000

     Rent receivable from freehold           247       247

                                             247       247

Note:  prior  to 2005 this income has been reported in Turnover.  Therefore,
Turnover  in  2004  has  been restated in these  accounts  to  exclude  this

     EXCEPTIONAL ITEM - Disposal of C2 Communications Limited

                                            2005      2004
                                            £000      £000

     Tangible fixed assets                    41         -
     Stock                                     -         -
     Debtors                                  38         -
     Cash                                      -         -
     Creditors                               (44)        -
     Goodwill  previously  written  off  to    -         -

                                              35         -
     Loss on disposal                        (35)        -
     Cash consideration                        -         -

                                               2005      2004
                                               £000      £000
     Corporation Tax
     Current tax on income for the year           -         -
     Adjustments in respect of prior years        -         -

     Current taxation                             -         -

     Deferred taxation
     Net origination of timing differences       40        28

     Tax charge on profit on ordinary            40        28

     Current tax reconciliation

     (Loss)/ profit on ordinary activities     (360)      313
     before taxation

     Theoretical tax at UK corporation tax     (108)       94
     rate 30% (2004: 30%)
     Effects of:
       - income not chargeable to                 -         -
     corporation tax
       - group relief                             -       (15)
       - expenditure not tax deductible          51        15
       - accelerated capital allowances          (6)      (12)
       - movement in losses                      31       (45)
       - R&D tax credits                         (5)      (59)
       - tax in overseas subsidiary              37        22

                                                  -         -

                                                 2005           2004
                                                Number         Number

     Weighted average ordinary shares in      204,600,559    204,394,191
     issue during the year
     Potentially dilutive share options           100,000        250,000
     under the Group's share option

     Weighted average ordinary shares for     204,700,559    204,644,191
     diluted earnings per share

                                              £'s        £'s
     (Loss)/ earnings attributable to
      Continuing operations                (12,000)   357,000
      Discontinued operations             (388,000)   (72,000)

The calculation of earnings per ordinary share is based on the (loss)/
profit after tax and the weighted average number of ordinary shares in
Issue during the year.


                                          2005        2004
                                          £000        £000

     Operating (loss)/ profit
        Continuing operations              239         590
        Discontinued operations           (354)        (71)

     Depreciation charge
        Continuing operations              124          66
        Discontinued operations             26          20

     Loss on disposal of fixed
        Continuing operations                -           -
        Discontinued operations             31          22

     Decrease/ (increase) in
        Continuing operations              (12)        (53)
        Discontinued operations             28          54

     Decrease/ (increase) in
        Continuing operations               53         283
        Discontinued operations             53         (99)

     (Decrease)/ increase in
        Continuing operations             (326)       (575)
        Discontinued operations            194          29

     Net cash inflow/ (outflow)
     from operating activities
        Continuing operations               78         311
        Discontinued operations            (22)        (45)

    Net cash inflow from                    56         266
     operating activities

                                           2005         2004
                                           £000         £000

     Returns on investment and
     servicing of finance
     Interest paid                         (169)        (174)
     Interest received                        -            3

     Net cash outflow from returns         (169)        (171)
     on investment and
     servicing of finance - all

    Capital expenditure and
     financial investment

    Purchase of tangible fixed
        Continuing operations                (4)          (4)
        Discontinued operations              (4)         (59)

    Sale of tangible fixed assets             -            -

    Net cash outflow from capital            (8)         (63)
     expenditure investment

    Acquisitions and disposals
    Purchase of shares in subsidiary        (45)           -

                                            (45)           -

    Issue of ordinary share capital           7          195
    Bank loan draw downs                     80          500
    Other loan draw downs                     -          250
    Repayment of bank loans                (226)        (196)
    Repayment of other loans               (112)         (90)
    Repayment of loan notes                   -         (584)

    Net cash (outflow)/ inflow from        (251)          75
     financing  - all continuing

                           beginning                    At end
                             of year    Cash flow       of year
                                £000      £000           £000

     Cash at bank and in         237      (233)             4
     Bank loans and           (1,867)      (38)        (1,905)
     Other loans                (942)      112           (830)

                              (2,572)     (159)        (2,731)
    Loan notes                  (517)        -           (517)

    Total                     (3,089)     (159)        (3,248)


This preliminary statement was approved by the directors on 23 May 2006.  It
has  been  agreed  with  the auditors, but does not constitute  the  Group's
statutory  accounts for the year ended 31 December 2005. Statutory  accounts
for the year ended 31 December 2004 have been delivered to the Registrar  of
companies,  whereas  those  for 2005 have been  approved,  audited  but  not
filed.  The  auditors have reported on the statutory accounts for  the  year
ended  31 December 2005; 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 2005 will be posted to shareholders by 2  June  2006
and will be available to the public from the Company's registered office  at
Ultima  Networks plc, Akhter House, Perry Road, Harlow, CM18 7PN and website


Rob Piper, Finance Director - Tel: 01279 821200

Alan MacKenzie, ARM Corporate Finance - Tel: 020 7512 0191


a d v e r t i s e m e n t