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Intec Telecom Systems, Wells Court 2, Albert Drive, Woking, Surrey GU21 5UB  UK
tel: +44 (0)1483 745800  fax: +44 (0)1483 745860  e-mail: info@intec-telecom-systems.com
web: www.intec-telecom-systems.com
Annual report and accounts
2002
Intec Telecom Systems PLC Report & Accounts 2002 Officers, professional advisers and shareholder information
DIRECTORS
Michael Frayne Executive Chairman
Kevin Donald Adams Chief Executive Officer
John Lawrence Arbuthnott Finance Director
Edward Morrison Astle Non-executive Director
Gordon Crawford Non-executive Director
Roger Steven McDowell Non-executive Director
COMPANY SECRETARY
Jean Barbara Exelby
REGISTERED OFFICE
Wells Court 2
Albert Drive
Woking
Surrey GU21 5UB
PRINCIPAL BANKERS
The Royal Bank of Scotland plc
62-63 Threadneedle Street
London EC2R 8LA
SOLICITORS
Travers Smith Braithwaite
10 Snow Hill
London EC1A 2AL
BROKER
Robert W Baird Ltd
Mint House
77 Mansell Street
London
E1 8AF
REGISTRARS
Capita IRG Plc
Bourne House
34 Beckenham Road
Beckenham
Kent BR3 4TU
AUDITORS
Deloitte & Touche
180 Strand
London
WC2R 1BL
www.intec-telecom-systems.com
Total commitment to providing
the world’s best Operations
Support Systems 
1 Financial Highlights
2 Executive chairman’s statement
4 Chief executive’s statement 
and review
10 Finance directors’ review
15 Board of Directors
16 Corporate governance
20 Report by the Board to
shareholders on Directors’
remuneration
24 Product review
27 Directors’ report
29 Statement of Directors’
responsibilities
30 Independent auditors’ report
31 Consolidated profit and 
loss account
32 Consolidated statement of total
recognised gains and losses
32 Reconciliation of movements in
consolidated shareholders’ funds
33 Consolidated balance sheet
34 Company balance sheet
35 Consolidated cash 
flow statement
36 Notes to the cash 
flow statement
37 Notes to the accounts
56 Trading record
57 Officers, professional advisers
and shareholder information Financial highlights
Page_1 Intec Telecom Systems PLC Annual report and accounts 2002
Revenue increased by 19%
EBITDA increased by 9%
Operating cash inflow of £2.8 million
Customer base grown by 34% to 272
Successful conclusion of two competitor acquisitions
New products brought successfully to market
2002 2001 %
Note £’000 £’000 change
Revenue 47,474 39,798 +19.3%
EBITDA before exceptional items i 3,739 3,414 +9.5%
Operating loss (13,325) (140,046)
Basic loss per share (7.94p) (80.21p)
Adjusted earnings per share ii 0.46p 1.14p
• Million pound plus contracts signed with COLT Telecommunications and SBC
• Successful acquisitions concluded for two major competitor business units, at ICL and Ericsson
• Agreement reached with BT plc on patent litigation, in favour of Intec with no settlement costs, 
IPR or product impacts
£’000 £’000
Notes to the Financial Highlights
i Total operating loss (13,325) (140,046)
Depreciation 1,745 1,380
Amortisation of goodwill and other intangibles 7,079 8,680
Impairment of goodwill 7,464 133,400
Exceptional item (Poland debtor provision) 776 –
EBITDA before exceptional items 3,739 3,414
ii Adjusted earnings per share calculation based on the following adjusted earnings after tax:
Loss after tax (14,782) (140,371)
Amortisation of goodwill and other intangible assets 7,079 8,680
Impairment of goodwill 7,464 133,400
Writedown of investments 321 283
Exceptional item (Poland debtor provision) 776 –
Adjusted earnings after tax 858 1,992
2002 2001
£’000 £’000
KEY CUSTOMER DATA
Cumulative:
Contracted customer base 254 203
Contracted customers from current year acquisitions 18 –
Total contracted customer base 272 203 +34%
Cumulative:
Contracted installations 359 257
Contracted installations from current year acquisitions 24 –
Total contracted installation base 383 257 +49% Executive chairman’s statement
The telecommunications industry has experienced a particularly difficult and, in some cases, painful year
in 2002. The previously expected vitality and growth of the global telecommunications business have
been overshadowed by a series of business and technical issues. Equity valuations in the sector have
suffered in sympathy. Yet Intec Telecom Systems has remained focused on its goals of sustainable,
profitable growth, cash generation, market share development, continuous product improvement and
high customer satisfaction. We remain certain that these objectives will ultimately deliver maximum
shareholder value when the industry returns to its long-term pattern of real growth and success.
In 2002 Intec Telecom Systems has demonstrated that the right strategic approach can overcome a market that
has been at least as difficult as any previous downturn in the sector. At the start of the year we predicted, despite
the uncertainties that we saw in this market, that turnover growth in the region of 20% was a realistic and
obtainable objective. I am therefore very pleased to report that we have increased revenues from the £39.8
million recorded in 2001 to £47.5 million this year – an increase of just over 19%. Just as importantly, this growth
has been achieved alongside positive operating cash flow of almost £2.8 million, and improved EBITDA. This has
come against a background of intense competition for new business and stringent cost-control measures by our
target customers. Intec’s response to this has also naturally included rigorous cost management. I must therefore
begin my report by thanking Intec’s staff, partners and suppliers for their outstanding contribution in this
challenging market. I am aware of few other comparable companies in our sector that have been able to achieve
such positive results.
Intec’s business this year has been built around a strategy of focusing on understanding market developments
and our customers’ requirements, and delivering high quality systems profitably to meet them. At the start of the
year Intec’s senior management team performed a detailed review of business conditions and opportunities, our
product offering, and our business model. The strategic decisions flowing from the review have been
fundamental to our delivery of good results in a market that has been substantially more competitive this year.
Our strategic approach is explained in more depth in the Chief Executive’s review of the year.
A key part of our strategy remains a positive but careful approach to acquisitions. We believe that the OSS vendor
market will continue to consolidate around a smaller number of viable players. Intec has been very active, having
completed a number of successful acquisitions. Our acquisition strategy has been to expand our customer base in
existing areas of expertise through consolidation of competitors and to seek to move into new segments within
the overall OSS space to achieve further product diversification. In January 2002 we acquired the OSS products
business of former competitor International Computers Limited (“ICL”). ICL is now operating as an Intec
consulting and systems integration partner under the Fujitsu brand. This acquisition brought us around 20 new
customers and a global partner in Fujitsu. 
Similarly, after the year end, we announced the acquisition of the interconnect software business unit of Ericsson,
bringing us over 40 customers and another global partnership. These consolidation acquisitions firmly cement our
dominance in the market sectors in which we are active, and impact positively on the competitive landscape. The
recurring revenue streams we derive from these core market acquisitions help us to fund the continuing
development and support of our products. The expanded customer base offers excellent cross-selling
opportunities for other products and services, further increasing annual turnover.
We have also spent a considerable time in 2002 examining other acquisition opportunities, particularly those that
would take us into new OSS markets. That we have not chosen this year to pursue any of the many opportunities
we considered is, once again, a result of our strategy. Although there are many interesting technologies and
companies that we considered, these have to be tempered with a realistic assessment of their financial and
strategic potential. This is even more critical in a difficult market, where the inherent operating problems of many
companies are only too obvious.
Within our continuing business the core product lines of convergent mediation (Inter-mediatE) and interconnect
billing (InterconnecT) have justified our view that they are increasingly critical components of the infrastructure of
a telecoms company. In a competitive market it is vital that carriers take every possible opportunity to protect and
increase network revenues while minimising unnecessary operating costs. Both mediation and interconnect billing
have proven capabilities in fulfilling these opportunities. The feedback we have had from many customers on the
real operating benefits and short-term return on investment from buying our technology is very pleasing. As a
consequence of these factors and our effective execution, in 2002 we have once again seen our customer base
increase substantially, with high profile wins in all areas. Actual customer numbers were approaching 280 at the 
Page_2 Intec Telecom Systems PLC Annual report and accounts 2002
Scor saetosus zothecas,
semper pret osius ma
trimonii adquireret quin
que nn alis syrtes, et
saburre circu mgre diet
apparatus belli re tosius
oratori amputat rures,
quamquam qua drupei
fortiter ferm en tet uti
litas fiducia sui re mulus
chirographi iocari sae
tosus catelli, quod aqu
ae sulis corrumperet
utilitas zothecas.  Executive chairman’s statement continued
year end, and with the recent Ericsson agreement are now well over 300. Perhaps most significantly, Intec now
supplies core OSS technology to over 50% of the world’s largest telecommunications carriers. The business
stability and market presence that these major customers bring are key contributors to our present and future
success. The good relationship we have with customers was underlined by two exceptionally successful User
Conferences during the year, in Florida and London, with record attendances from operators, despite the obvious
pressure today on business schedules and travel budgets. Delivering world-class support services from our four
worldwide Centres of Excellence remains at the heart of our customer strategy.
2002 has been a year when all businesses in our sector have necessarily focused closely on costs. Intec made a
decision early in the present business cycle that we would attempt to preserve both product investment and staff
expertise as far as was consistent with good financial performance. The revenue growth anticipated by
management has been achieved and hence we have been able to maintain the planned product investment. We
believe this is a good strategic decision that increases our technical leadership at a time when competitors are
cutting back. Ongoing product investment is a necessity in the increasingly complex telecoms market, where next-
generation services are now a reality. Our core products remain state-of-the-art, and the expansion of our product
line with complementary systems opens new opportunities for future growth. Despite acquisitions, we have held
our staff numbers to only modest growth, by close analysis of operating needs and we have targeted hiring to
support current revenue-led expansion plans. Intec has also strengthened its management team this year, and the
contribution they are making worldwide is evident in our results, improved market share and product capabilities.
In 2003 we intend to continue executing a business strategy that has proved successful in 2002. However, we will
balance this with a continual strategic review of market demands and conditions, and seek new opportunities to
expand the business and increase shareholder value. There are some positive signs in the marketplace, and I am
confident that Intec is better placed than ever to achieve further growth.
Mike Frayne
Executive Chairman
2 December 2002
Page_3 Intec Telecom Systems PLC Annual report and accounts 2002 Chief executive’s statement and review
In the past twelve months Intec has made excellent progress in its objective of becoming one of the world’s
leading companies in the Operations Support Systems business. The backdrop to that statement is an industry
that has suffered a very tough year. Yet Intec has prospered, and I want to begin my review of the year by
recording my thanks to the customers, investors and advisers who have supported us, the partners and suppliers
who work alongside us and, most of all, the hard-working and dedicated staff at Intec who ultimately make it
possible.
OVERVIEW
In 2002 I am pleased to report that Intec has been able to deliver positive cash flow, increased EBITDA and
turnover, and greater market share in our core business areas. We have brought to market several high-quality
new products, and increased the degree of commitment to Intec technology in many of our larger accounts
through cross-selling. We added almost 70 new companies to our customer base, and completed another
successful acquisition by taking over the OSS products business of ICL. In addition we have completed a review of
our entire product line and product development processes, creating a more efficient and capable organisation
that will deliver the leading-edge, next-generation OSS products our customers need. These are all key objectives
of our strategy, and their successful execution has allowed Intec to prosper during 2002, and create the
foundation for continuing success in coming years.
STRATEGY
In 2002 Intec has become an increasingly focused company as a result of substantial effort aimed at refining our
strategy. We have critically examined every aspect of the business, from initial product research and development
all the way through to post-sales customer support, and made numerous decisions and changes as a result. In
part this was driven by the need to find greater efficiency and business advantage in a market that has become
much more competitive. But Intec has also matured as a business, learning to focus its resources on the most
productive areas and developing strategic business processes to meet the undoubted challenges in the market.
The result has been another year of growth, at a time when many competitors have cut back significantly, and a
stronger position for the future.
Our future strategy is based on the following objectives:
• Profitable growth within our key markets of mediation and billing through increased market share
• Expansion of our core product lines through targeted acquisitions or internal development
• Continuing, critical review of business performance and future potential of all product offerings
• Targeted investment in markets and technologies that have the highest potential for good returns
• Continuous improvement in quality, performance and efficiency of all aspects of the business
Despite our success in 2002 we have not forgotten that Intec, as a public company, has an obligation to its
shareholders to maximise the value of their investment. Equity markets worldwide have tumbled, and Intec has
been subject to the same downward pressures as all other technology companies. My belief is that in such an
environment the only possible response is to perform as well as we can as a business, and to ensure that the
market is informed of our progress and future strategic objectives. Improved shareholder value will naturally
follow business success as markets recover. We have taken the view that short term measures, such as a severe
reduction in development budgets or cutting back on staff resources, while undoubtedly a way to deliver higher
short-term profits, are a dangerously weakening strategy for the future.
Looking forward, we see positive signs in the longer term in our sector. Intec is a true market leader in its key
areas, and we are very well positioned to benefit from a return to better market conditions. The products we sell
remain vitally important to any telecoms company, and Intec has OSS technology that is proven to meet the
demands of the largest and the most sophisticated operators. However, we are not simply waiting for this to
happen. I believe that the strategy we have developed in 2002 will allow Intec to actively improve its competitive
performance in 2003 and to fulfil the goals we set ourselves just over five years ago when Intec was founded.
2002 RESULTS
In 2002 the financial uncertainties faced by telecoms companies have severely impacted many of their suppliers,
as major capital expenditure projects were delayed or even eliminated. Expenditure has continued to receive much
higher levels of scrutiny, and purchasers have been more aggressive in pursuing more favourable prices and terms.
The impact on suppliers has been clear, with many experiencing falling revenues and sharply reduced margins.
This has naturally made for much more difficult trading conditions, as some OSS vendors pursued business at any
price, regardless of the longer term consequences to their businesses and their customers.
Page_4 Intec Telecom Systems PLC Annual report and accounts 2002
Scor saetosus zothecas,
semper pret osius ma
trimonii adquireret quin
que nn alis syrtes, et
saburre circu mgre diet
apparatus belli re tosius
oratori amputat rures,
quamquam qua drupei
fortiter ferm en tet uti
litas fiducia sui re mulus
chirographi iocari sae
tosus catelli, quod aqu
ae sulis corrumperet
utilitas zothecas.  Chief executive’s statement and review continued
At the start of the year, mindful of the competitive pressures ahead, Intec set itself targets that were both
ambitious but, we believed, achievable. In the event, Intec has almost exactly met its growth target of a 20%
increase in revenues. We have also delivered both positive cash flow and increased EBITDA, as a result of a strong
focus on cash collections and cost management.
The overall balance of business has been very encouraging, with both new licence revenues and revenues from
professional services showing steady growth. New business has been the weakest area across the OSS industry,
with a reduction in the rate of new contracts awarded to many vendors quite evident. Therefore, Intec’s ability to
find and win new customers is particularly pleasing. Recurring revenues have also grown again, underlining the
stability of our business model, and Intec’s ability to generate high levels of customer satisfaction.
As Intec’s product portfolio has developed, we have continued to focus on cross-selling opportunities within our
existing customer base. A good proportion of the new business we have won in 2002 has come from existing
customers, although we have also been successful in selling into many new, high-profile accounts.
PRODUCTS
A review of product developments can be found on page 24. This year’s Annual Report to shareholders will also
include a copy of our new company overview, and further product details are given there. In summary, we have
taken the opportunity in 2002 of thoroughly reviewing our entire product portfolio with a view to aligning
development expenditure more closely with the marketplace opportunities. As a result a couple of minor products
have been removed from our development roadmap, while others have been promoted to a higher level of
investment. All products are subject to an ongoing return on investment-based business case analysis and this is
paying dividends in both cost management and product roadmaps.
BUSINESS REVIEW
Intec develops and supplies Operations Support Systems (OSS) software to communications companies in two
main areas: convergent mediation and intercarrier settlements. We also have a number of associated products
which fall broadly into the OSS sector known as ‘revenue assurance,’ and a new product, Inter-activatE, which
offers service activation and provisioning facilities. These products can be sold individually or, increasingly often,
with each other to meet wider customer needs. We have also noted this year much greater attention from
customers on vendor performance and long term financial stability. Carriers making substantial, business-critical
OSS investments want to contract with companies they can trust to be around in future to support them and to
develop products. Intec, as a public company with very sound finances and a good trading record, is an attractive
partner and we have made numerous financially-oriented presentations to support product bids.
New sales are made of product licences, implementation, consulting and support services, with a strong recurring
revenue stream developing from these sales in future years from support and maintenance, and volume-based
licence upgrades. Intec’s pricing model is based on processing volume, providing for a cost to the customer that is
closely linked to its own revenues and business operations, yet providing Intec with future revenue streams as
traffic expands.
Our results for 2002 are not directly comparable with 2001, as a result of acquisitions in both periods (see page
13 for acquisition details.) However, all revenue streams (new licences, professional services, and recurring
income) have shown good growth, particularly in comparison to OSS industry trends this year. In 2002 new
licence sales grew by almost 10%, representing 33% of turnover, a strong result in a market that has proved
highly competitive for new business. Intec increased its customer base by 69 with 18 of these arising from
acquisitions bringing our total customer base to 272. (With the post-year end acquisition of the ‘Settler’ business
unit from Ericsson, we now serve around 310 telecoms companies worldwide, with over 400 installations
increasing our penetration within some of the world’s largest carriers.) I believe this is an exceptional result. The
flow of new contracts announced by many OSS vendors has reduced substantially in 2002, so Intec’s ability to
generate new contract wins underlines our belief that sustained investment in products and distribution channels
is the correct approach.
We have undoubtedly gained significant market share this year, consolidating the position of InterconnecT as
clear market leader and moving Inter-mediatE close to market leadership. InterconnecT now has over 140
installed sites, with new customers such as Maxis in Malaysia, Global Telecom in Brasil, Telus in Canada,
VimpelCom in Russia and VSNL in India. Industry estimates put our market share for interconnect billing systems 
Page_5 Intec Telecom Systems PLC Annual report and accounts 2002 Chief executive’s statement and review continued
at around 40%, and this has increased considerably with the acquisition of the ‘Settler’ business unit. Our US
Carrier Access Billing System, InterconnecT CABS CG, has also been a very strong performer, winning no less than
9 new licences and over 35 service contracts. We substantially upgraded our CABS processing facilities in the US
in 2002 to handle this new business, and we also launched a new version of InterconnecT CABS CG with a
‘Carrier Grade’ designation to highlight greatly improved performance, making it suitable for very large US
operators. InterconnecT ITU, our version for international settlements according to ITU rules, has continued to be
a good revenue earner, with several new clients added in the year, including Maroc Telecom, Sonatel, and
Telecom Egypt.
Inter-mediatE, our high performance convergent mediation system has more than fulfilled our expectations,
moving towards a dominant position in the industry, with over 110 systems installed. Competition for new
mediation contracts has been intense, with many previously strong competitors showing significant downturns in
their win rates. Intec won 16 new Inter-mediatE licences in 2002, many of them in combination with either
InterconnecT or InterconnecT CABS CG. Notable wins included Centennial, US Cellular and BellSouth in the US,
Reliance Infocom in India, Macquarie in Australia, Telecom Egypt, Sonofon in Denmark, and Smartcom in Chile.
However, our two most notable mediation contracts this year were with COLT Telecommunications for a pan-
European roll-out that replaced four other vendors’ systems, and with one of the world’s largest carriers, SBC
Communications in the US, for a single platform usage collection system. Both are multi-million pound contracts
which clearly establish Inter-mediatE as the premier platform in high-volume convergent mediation.
After the end of the year we were pleased to reach an agreement with British Telecom plc that successfully
concluded a long outstanding legal dispute relating to software patents. Under the agreement Intec and its
customers will enjoy freedom from any further litigation by BT in respect of these patents. We have not had to
make any alteration to our products, nor make any payments to BT for Intellectual Property Rights at any stage.
We also now intend to begin building a commercial relationship with BT and its operations worldwide.
Professional services income rose by 27% in 2002 to £12.3 million, representing over 26% of turnover. This
figure primarily comprises revenue from implementations, consulting and training associated with licence sales,
and from ongoing professional services that help customers maximise the benefit of their investment, such as
customisation work or special reports. There is also a contribution from non-core services in the US
communications sector, plus a small contribution from hardware sales. Intec performs many implementations
through, or in partnership with, other companies, including IBM, HP Compaq, Accenture and Logica. These
partnerships give us substantial additional reach in a global marketplace, and allow us to absorb variations in staff
demand for professional services. We have increased our focus on the partner channel in 2002, and we have
invested significantly in training partners in selling and supporting our products. Our professional services teams
are based from four Centres of Excellence – UK, US (Atlanta & Dallas), Malaysia and Brazil – allowing us to
provide highly-trained consultants in all regions.
One of our key business goals is to increase our recurring revenue stream steadily, through ensuring high levels of
customer satisfaction and retention, to the point where this income underpins a significant proportion of our
basic operating costs. This is an important long-term objective for any mature software company, as it provides
high business stability and the opportunity to deliver good operating margins through additional new business
sales. We have moved further towards this goal in 2002, with a 23% increase in recurring revenue, representing
almost 42% of turnover. Recurring revenue is developed from both support and maintenance contracts, and from
volume-based licence upgrades. In 2002 an increased contribution also came from bureau services, as
InterconnecT CABS bureau sales grew significantly. In the US we are steadily growing our customer base of CLECs
and ILECs using InterconnecT CABS on a bureau basis, and we have seen a pleasing increase in larger carriers
turning to our services.
REGIONS
During 2002 Intec has worked hard to manage its cost base in a way that is aligned with our ambitions to
develop the business, improve our products, and provide high levels of customer satisfaction. We have critically
examined all of our operations on a cost/benefit basis, and we have made a number of changes as a result. Some
local sales offices have been closed, while offices in India and Italy have been opened or expanded to deal with
increased activity. Intec has customers in over 50 countries and it is clearly not realistic to have in-country sales
support for them all. Instead, we use a ‘Centre of Excellence’ concept that provides very high levels of local skill
and resources in four major centres, one each for EMEA (Europe, Middle East and Africa), North America, Asia-
Pacific and the Caribbean/Latin American (CALA) region. Our smaller sales offices, totalling 15, are strongly
supported by the Centres of Excellence.
Page_6 Intec Telecom Systems PLC Annual report and accounts 2002 Chief executive’s statement and review continued
All regions have performed well, especially in a telecoms market that is very difficult worldwide, but particuarly
challenging in some areas. Against that is the clear fact that telecoms remains a strong growth industry, especially
in high population, developing markets such as India and the Pacific Rim. We have organised the business to
address these regional hotspot opportunities and the results in 2002 reflect growing success in these areas.
In the relatively mature markets of Europe, where we generated revenues of £16.9 million or 37% of turnover,
the market is still awaiting the arrival of next-generation mobile services, some of which are now expected to
enter commercial service in 2003. Many operators are now anticipating these services by upgrading older OSS
technology to deal with the more complex, high-value services that are expected. A good example of this is our
deal with COLT Telecommunications, one of our best-established customers for InterconnecT, for a pan-European
roll-out of Inter-mediatE. This deal, won against strong competition, will see Inter-mediatE replace four older
systems and will enable COLT to simplify its software support requirements as well as offering greater capabilities
and performance. We also signed notable agreements with Sonofon in Denmark and Swisscom Mobile.
One of the highlights of the year was a groundbreaking contract with VimpelCom, one of Russia’s most dynamic 
mobile operators, and our first in this country. Communications, particularly mobile services, is a growth industry
in the former Eastern Bloc states, and a high-profile win such as VimpelCom is important in helping us generate
further success. Africa contributed strong revenues of £1.7 million, attributable to good business in both
Southern Africa and in developing northern states like Morocco.
In the Asia-Pacific region, which represented over £5.5 million in revenue or growth of 11%, we have seen some
very important new customer wins. These included Maquarie Corporate Telecommunications, an innovative IP-
based provider in Australia, Maxis Malaysia, one of the region’s pre-eminent GSM operators, and VSNL and
Reliance in India, a very fast-growing market.
In the North American market, which has perhaps been the most challenging for many vendors, Intec had an
exceptional 2002, with strong sales for both Inter-mediatE and InterconnecT CABS CG driving revenue growth of
67% to £21.1 million. However, we were also successful in introducing our original InterconnecT product into the
region, with sales to several US and Canadian carriers that are increasing their international interconnect business.
Our CABS billing operation in Dallas was expanded to cope with much increased customer numbers and traffic
levels. A new release of InterconnecT CABS CG targets larger ILECs, CLECs and even the RBOCs, and we have
seen a number of wins at this level. US operators have been very cost-conscious this year, so Intec’s message has
been focused on the high financial return on investment that new OSS can deliver, in addition to the pure
technical and operational benefits. This message has helped us to win substantial accounts, notably SBC, a strong
endorsement of the performance and scalability of the Inter-mediatE platform. With these and other contracts,
the North America region has become our largest revenue source.
Intec’s CALA (Caribbean and Latin America) region has also grown strongly, with revenues of £3.9 million
representing growth of 55%, despite the many political and economic uncertainties in the area. Large
populations and low but fast-rising penetration of telephone services in the region are driving the telecoms
business in CALA, and Intec is well placed to acquire further customers (The post-2002 acquisition of the Ericsson
Settler business also brings us many new customers in the region). In February we announced a major agreement
with Cable & Wireless in the West Indies to add InterconnecT ITU to installations of InterconnecT and Inter-
mediatE supporting 14 sites. We also extended our agreement with Digicel in Jamaica to cover its expansion plans
into other Caribbean islands, a strong endorsement of the value of InterconnecT to them. Working with Logica,
we sold Inter-mediatE to Smartcom PCS in Chile, extending our long relationship with Logica on settlements
products to mediation.
BUSINESS DEVELOPMENT
Our sales, marketing and partner operations have also been subject to extensive review in 2002. We have re-
organised certain areas of the sales operation to reflect better business opportunities and priorities, both in terms
of geography and product offerings. This has included strengthening the management team with several proven
individuals. Marketing operations have also been developed, with new programs in branding, marketing
literature, PR, and a new, award-winning website. Our Partners operation has continued to expand, with a
number of high-profile companies joining the Intec partner program, and extensive training and cooperation
taking place. Ericsson has also now become an Intec Partner, post year-end. During 2002 we won a number of
important new customers with our Partners, including Smartcom PCS in Chile with Logica, Maroc Telecom with
HP, and VimpelCom in Russia and Eircell in Ireland with ICL.
Page_7 Intec Telecom Systems PLC Annual report and accounts 2002 Chief executive’s statement and review continued
USER GROUPS
Intec User Groups are one of the great strengths of the company, creating a genuine two-way dialogue between
Intec and its customers that helps, among other things, to define future product direction. Customer satisfaction,
a key Board-level business measure at Intec, is surveyed on a regular basis through the User Groups and used as
strategic input to our operating objectives and development policy. In 2002 we ran two exceptionally successful
User Conferences, in Florida and London, each attracting over 100 customer delegates. Given the current
restrictions on travel budgets, and time pressures on telecoms staff, I believe this underlines the value that
customers put on their continuing relationship with Intec.
STAFF AND INFRASTRUCTURE
The success that Intec has enjoyed this year has been largely attributable to very hard work in a difficult business
environment by Intec’s staff. They have had to contend with intense competition and customers who are
scrutinising every expenditure very carefully. At the same time Intec itself has been highly cost-conscious and
efficiency focused. In short, we have asked our staff to do more with less – and they have responded with hard
work, intelligence and dedication.
During the year we have made a number of changes to our corporate structure, including the relocation of
certain functions, particularly in the development team, with a view to greater efficiency and reduced operating
costs. These benefits have shown through in our ability to generate positive cash flow and an EBITDA profit,
despite pricing and other pressures. We expect that these measures will generate savings in 2003.
Despite acquisitions, staff numbers grew only modestly in 2002, from 485 at the end of 2001 to 500 at the end
of the period under review. A number of these are attributable to acquisitions, particularly our purchase of ICL’s
OSS business unit in January, which brought us extra expertise in both billing and mediation. Intec continually
reviews skills and staffing levels required in light of market conditions. Our record for staff retention remains well
above industry averages, and we continue to operate best practice remuneration and staff management policies,
with consistency of benefits and employment conditions in the light of local regulations in all regions. Many staff
are shareholders, and all staff can partake in a share options program. In 2002 we also conducted an extensive
Staff Survey to better understand how staff can benefit from, and contribute to, Intec as a business. This survey
will be conducted every year. 2002 also saw the initiation of a program to create ‘Employee Relations Forums’.
These are mandatory for companies based in the European Union, above a certain size. Intec has not yet reached
this threshold, but we believe that ERFs represent a good example of best practice in staff relations, and we have
decided to implement them across the company in 2002/3. We also initiated a successful, employee-led cost
saving initiative programme which has saved many thousands of pounds across the company from innovative
ideas. Staff receive a modest bonus for each accepted idea.
Intec has continued to invest in its business infrastructure, with numerous programs to improve internal
communications, information systems, working conditions and customer support facilities, such as training and
presentation suites. Intec is working actively towards certification to the telecoms industry quality standard,
TL9001.
OUTLOOK
2002 has been a year of very mixed fortunes for the telecoms sector, and Intec has done well to prosper in these
times. It would be unwise to predict that 2003 will be substantially better, although there are some signs that the
climate is improving. However, it is worth noting that many telecoms companies continue to deliver good
financial results, particularly in developing markets, that a number of large telecoms players have reduced their
debt exposure significantly and that the long awaited next-generation mobile services of UMTS/3G are expected
to be launched to paying customers in the near future. Telecoms traffic continues to climb and the arrival of
exciting new services such as MMS will undoubtedly stimulate it further.
Page_8 Intec Telecom Systems PLC Annual report and accounts 2002
20_11_2002
Intec Telecom Systems
acquires Ericsson’s
‘Settler’ interconnect
billing product unit
20_10_2002
Intec Telecom Systems
acquires Ericsson’s
‘Settler’ interconnect
billing product unit
29_12_2002
Intec confirms multimillion-
Pound deal with SBC
24_01_2003
Intec and Giza Systems
sign a second OSS deal
with Telecom Egypt Chief executive’s statement and review continued
For Intec, the future looks promising. We have achieved outright market leadership in one sector, and
are arguably very close to it in another. We have generated increased EBITDA and positive operating
cash flows and we intend to continue this trend. Our customer base has grown strongly in 2002 and we
see ongoing demand for our products and services. We have a number of new products coming to
market or recently arrived, and we have greatly solidified our product roadmaps for the next few years.
The challenges of the current market have made us a more efficient, more competitive organisation,
with higher product quality, and our ongoing investment in many areas means we are well placed to
thrive. The market remains turbulent, and we are not complacent about the need to work hard to
continue to grow the business, but I am optimistic that 2003 will be, like 2002, a successful year for
Intec.
Kevin Adams
Chief Executive Officer
2 December 2002
Page_9 Intec Telecom Systems PLC Annual report and accounts 2002
Title to chart
£millions
Name goes here
00%
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00%
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00%
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00%
Title to chart
£millions
0.0
98
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VISUAL REFERENCE ONLY. VISUAL REFERENCE ONLY.
20_07_2003
Intec Telecom Systems
acquires Ericsson’s
‘Settler’ interconnect
billing product unit
20_06_2003
Intec Telecom Systems
acquires Ericsson’s
‘Settler’ interconnect
billing product unit
29_08_2003
Intec confirms multimillion-
Pound deal with SBC
24_09_2003
Intec and Giza Systems
sign a second OSS deal
with Telecom Egypt
20_03_2003
Intec Telecom Systems
acquires Ericsson’s
‘Settler’ interconnect
billing product unit
20_02_2003
Intec Telecom Systems
acquires Ericsson’s
‘Settler’ interconnect
billing product unit
29_04_2003
Intec confirms multimillion-
Pound deal with SBC
24_05_2003
Intec and Giza Systems
sign a second OSS deal
with Telecom Egypt Finance director’s review
Financial highlights
2001 2000
Note £’000 £’000
Xxxxxxxxxxxx xxx xxx
Xxxxxxxxxxxx i xxx xxx
Xxxxxxxxxxxx ii xxx xxx
Xxxxxxxxxxxx xx xx
Xxxxxxxxxxxx iii xx xx
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ii Tremulus chirographi iocari saetosus catelli, quod Aquae Sulis corrumperet utilitas zothecas. Incredibiliter
fragilis matrimonii suffragarit quadrupei, eti am verecundus ossifragi vix comiter iocari utilitas quadrupei.
iii Tremulus chirographi iocari saetosus catelli, quod Aquae Sulis corrumperet utilitas zothecas. Incredibiliter
fragilis matrimonii suffragarit quadrupei, eti am verecundus ossifragi vix comiter iocari utilitas quadrupei.
OVERVIEW
During 2002 we have focused on managing the business for a good financial performance against a background
of considerable uncertainty and highly competitive conditions. We can do little to influence the wider business
climate, and the activities of customers and competitors. During the period we have continued to invest in
product development & support and the global distribution and delivery capability. Against this background I am
therefore pleased to report that Intec has delivered the level of revenue growth we expected at approximately
20%, increased EBITDA, with positive operating cash flows of £2.8 million achieved by focused credit control and
cash management. We consider this to be a major achievement given the severe trading conditions in our sector.
REVENUE
In the twelve months ended 30 September 2002, our fifth year of operations and our second full year as a public
company, revenue increased by 19% to £47.5 million, against £39.8 million for the equivalent period in 2001.
Several substantial acquisitions were made early in 2001, against two relatively small ones in 2002, so the figures
are not directly comparable. In that context, and against a difficult industry background, the achieved growth has
been a strong performance. Our continuing ability to be successful in licence sales is directly attributable to
continuing investment in our product set. Our customers consider them to be truly convergent, and thus able to
meet the challenges of emerging technologies such as 3G. Increased investment in global product support
infrastructure has enhanced customer service and our customer retention strategy.
Intec’s stable business model has been an important factor in helping us to meet our forecast revenue objectives.
Intec has a strong recurring revenue line generated by support and upgrade charges from our large installed base,
and a growing professional services business. We have also worked hard to maintain and improve revenues from
new licence sales, undoubtedly the most challenging part of the revenue mix in a difficult and cost-sensitive
market. Major deals signed with companies such as COLT and SBC have been important successes in 2002, in
addition to our ability to sell multiple licences from an expanded product line to both existing and new customers.
REVENUE ANALYSIS
Intec has five principal sources of revenue in its core OSS business - sales of software licences for its two major
product families, Settlement (InterconnecT & InterconnecT CABS) and Inter-mediatE, and associated products in
related areas; recurring revenues from annual support contracts; ASP and bureau services; volume-based licence
upgrades; and revenues from implementation, consultancy, education and training services. In addition, Intec
derived a small proportion (approximately 6%) of revenues from hardware and non-OSS communications
products and services. Revenues from the majority of software licence contracts and ASP/bureau services are
based on the volume of traffic processed by our software for each customer. In 2002, licences represented 33%
of turnover at £15.5 million (2001: £14.2 million), an increase of just under 10%. Strong pricing pressure in
software licences has been felt in 2002, and this has impacted both total revenue growth and margins, although
increased contract values from multiple licence sales and larger deals have offset this to a degree. However, the
important fact is that Intec has won these new contracts and has thus increased its long-term recurring 
revenue stream.
Page_10 Intec Telecom Systems PLC Annual report and accounts 2002
Scor saetosus zothecas,
semper pret osius ma
trimonii adquireret quin
que nn alis syrtes, et
saburre circu mgre diet
apparatus belli re tosius
oratori amputat rures,
quamquam qua drupei
fortiter ferm en tet uti
litas fiducia sui re mulus
chirographi iocari sae
tosus catelli, quod aqu
ae sulis corrumperet
utilitas zothecas.  Finance director’s review continued
Revenues from professional services amounted to a total of £12.3 million (2001: £9.6 million) or 26% of
turnover. This revenue stream has grown by 27% in 2002, primarily due to a good number of implementation
projects resulting from contracts signed in late 2001 and through 2002. Margins on professional services have
shown reasonable resilience in the current climate. A new feature we see in professional services, particularly
concerning mediation and the requirement to address network change, is repeat business from the existing
customer base. We expect this trend to continue as the telecoms market develops.
Recurring revenues come from annual fees for maintenance and support, from volume-based licence upgrades,
and from ASP/bureau services. Similar support and upgrade policies exist across all key product lines. Recurring
revenues grew, as expected, over the 2001 figure of £10.7 million to £15.0 million, reflecting both the growth in
our software user base since 2001 and the very high quality customer base of Tier One and Tier Two customers
that Intec OSS software supports. Turnover from ASP and bureau services, which are included in recurring
revenues, grew from £1.7 million in 2001 to £2.8 million in 2002, as a result of a growing contribution from US
InterconnecT CABS bureau operations. We expanded our Dallas office facilities substantially in 2002 to cope with
this demand. In total, recurring income represented a very satisfactory 41% of turnover. In our contract
negotiations we avoid extending licence discounts to support & maintenance contracts wherever possible.
On a regional basis, all operations made a contribution to revenues, with North America as the largest
contributor, at £21.1 million (2001: £12.6 million) or 44% of turnover, showing the benefit of a full year’s
contribution from acquisitions (2001: approximately 9 months contribution). The EMEA region at £16.9 million or
37% of turnover was the second largest operation. This was down on 2001 (£19.7 million), as a result of large
contracts signed in the UK in the previous year. Both the Middle East and Africa regions showed good growth
over 2001 as our investment in these developing markets began to show results. Turnover also grew 11% in the
Asia-Pacific region to £5.5 million (2001: £5.0 million). CALA (Caribbean and Latin America) continues to be a
successful market for us, with revenue up 55% to £4.0 million, despite the economic and political difficulties in
parts of the region.
COSTS
Gross margin has remained largely unchanged at 67% (2001: 68%) with the slight decline largely due to
increased third party payments for implementation services, mainly in large US projects. Going forward we have
the internal resources in the necessary geographies to deliver these projects ourselves.
Distribution costs of £9.9 million compare to last year’s £9.2 million. Of the total increase of 8.6%, around 3% is
attributable to acquisitions. The remainder is due to increased resources being deployed in the US, Malaysia and
Middle-East offset by savings in the EMEA region where distribution channels have been re-organised in Germany,
Denmark and Portugal. Our global distribution channel is largely in place now to support both the current and
expected business levels, but will, like all other major cost areas, be regularly reviewed with activity changes
around the world.
Development costs of £8.0 million compare to 2001 costs of £5.9 million. The increase of 35% is attributable in
part (14%) to acquisitions. The remaining increase is from continuing investment in core product areas, both in
functionality and support capability to service our increased customer base, and also from expanding our product
portfolio.
New products developed in the period include Inter-activatE, our service activation solution. As highlighted in the
product section, Intec is reviewing development expenditure carefully across each product line or proposed
development, with a view to maximising return on each one. Cost growth in future periods will be at a lower
level as a result of initiatives to restructure our development centres and from general cost saving and productivity
measures. Intec incurs a proportion of its development expenditure for InterconnecT in South Africa, and we have
therefore continued to benefit from lower Sterling costs throughout the period.
Other administrative expenses of £12.1 million compare to prior year expenses of £10.1 million. The increase of
20% is attributable to a number of factors, namely the impact of acquisitions (15% of the increase), non-
recurring expenditure associated with the legal costs of BT litigation which has now been successfully concluded,
and a foreign exchange loss in our CALA region as a direct result of the Argentinean currency crisis. Net of
provisions, underlying administrative expenses have reduced from the prior year.
Page_11 Intec Telecom Systems PLC Annual report and accounts 2002 Finance director’s review continued
EARNINGS
Earnings performance in 2002 has been impacted by pricing pressure caused by competitor activity and capital
expenditure sensitivity among telecoms customers. We have also made a strategic decision to maintain
expenditure wherever sensible on product development and business infrastructure that we regard as critical to
sustained performance now and in the future. Neverthless, through a combination of higher revenues and careful
cost management Intec has been able to deliver EBITDA before exceptional items of £3.7 million (2001: £3.4
million) and positive operating cash inflow of £2.8 million (2001: outflow £3.7 million). Adjusted earnings per
share were 0.46p per ordinary share (2001: 1.14p).
In 2001, like many technology companies, we recorded a substantial writedown of goodwill due to both
impairment and normal amortisation of goodwill in acquisitions. In 2002, no further impairment has been
identified on our US acquisitions of Compgen and CABS. However, we made a relatively small writedown of £7.5
million on the acquisitions of Dataphone and i2i, which with normal amortisation of goodwill and intangibles of
£7.1 million, results in an actual group operating loss of £13.3 million (2001: £140.0 million).
EXCEPTIONAL ITEMS
During the year, our Polish associate failed to meet its obligations to Intec. We have instituted legal proceedings
in Poland to recover the outstanding amount due to us and have in the meantime provided for the trading
exposure of £0.8 million. In addition we have provided an amount of £0.15 million against the investment in the
Group balance sheet.
TAXATION
The major trading companies in the UK and the US have not incurred corporate tax liabilities. However, we 
have suffered corporate taxation is a number of our overseas trading subsidiaries and branches amounting to 
£0.7 million, of which £0.3 million is in respect of previous years. The remainder of the tax charge is in respect of
withholding tax, which is deducted at source in certain jurisdictions and which we cannot recover, amounting to
£0.6 million.
The US operations have substantial ongoing tax benefits arising from goodwill allowances which will continue to
ameliorate tax charges against profits in future periods. In addition, there are significant losses brought forward in
the US.
CASH FLOWS
Given the concerns around the telecoms sector we have focused additional effort on improving our trade debtors
collections and we achieved a significant improvement in the annualised debtor-days ratio of 105 days compared
to 147 days at 30 September 2001, amounting to a 29% reduction. Post year-end cash collections have
continued at a satisfactory level.
We are pleased to report a positive operating cash inflow of £2.8 million compared to a cash outflow of £3.7
million in 2001, being operating positive for the last three quarters. Overall our cash resources moved from £17.7
million at the start of the year to £13.3 million at 30 September 2002, after funding £5.2 million in acquisitions.
BALANCE SHEET
Our cash balance of £13.3 million is more than sufficient to meet the Group’s operating requirements. A
significant proportion of our liquid funds are invested in a cash plus fund to spread risk and improve yields. The
carrying amount of goodwill is £61.9 million which is stated after an impairment write down of £7.5 million,
reflecting reduced market values in acquired companies. This impairment charge was reported at the end of the
third quarter of 2002, and no further impairment has been considered necessary.
As a precautionary measure, in light of the current difficulties in the Telecoms market, we have increased our
general bad debt provisions over 2001.
ACQUISITIONS
Intec has a long-term policy of business expansion through both organic development and carefully-evaluated and
managed acquisitions. Since becoming a public company in mid-2000, Intec has made a series of acqusitions in
the OSS sector aimed at either consolidating competitive businesses to generate greater market share, or
acquiring and integrating companies with complementary technology. The following progress review considers
acquisitions made during the 2002 financial year.
Page_12 Intec Telecom Systems PLC Annual report and accounts 2002 Finance director’s review continued
ICL OSS business (UK)
In January 2002 Intec acquired the OSS business unit of ICL (which now operates under the Fujitsu brand). This
former competitor had established a position in both interconnect billing and mediation, and had won accounts
in some 20 companies. Intec acquired both billing (Prospero) and mediation (SIMS) customer contracts, the IPR to
the products, and a small number of primarily technical staff. The agreement with ICL also made it a distribution
partner for Intec, as it was not intending to leave the OSS business, but to focus on systems integration and
consulting services. The net initial consideration amounted to £2.55 million paid in cash and £1.04 million
deferred consideration to be paid over the two year period from the date of acquisition.
Intec’s integration of this acquired business has now been effectively concluded. Intec has identified effective
migration strategies to move the acquired ICL customers to Intec’s more established and successful alternatives.
Once this transition has been completed, the ICL products will be removed from the marketplace. Support for the
products still in operation continues according to the agreement made with ICL. The customer base is generating
the expected support revenues and reported £1.5 million from the date of acquisition. Intec has also signed a key
contract in Russia in partnership with ICL, and generated additional services business in the UK as a result of the
acquired product.
Interconnexxion Africa (Pty) Limited
On 31 July 2002, Independent Technology Systems Limited, a wholly owned subsidiary company of Intec Telecom
Systems PLC agreed to acquire its distribution partner in South Africa, Interconnexxion Africa (Pty) Ltd. The total
consideration, paid in ordinary shares, amounted to £560,000 plus acquisition costs of £3,000. Pursuant to the
agreement, Intec has acquired all assets of Interconnexxion, including customer licensing and support contracts
and equipment for payment of £209,000, which has been satisfied by the issue of 822,835 new ordinary shares
of 1p each. In addition, an outstanding loan of Interconnexxion of £351,000 was settled by the issue of
1,381,890 new ordinary shares of 1p each.
Acquiring Interconnexion allows Intec to take control of its distribution channel in a key emerging market,
eliminate certain costs, invest more effectively in sales resources, and provide closer support to new and existing
customers. Africa is a region with high growth potential in telecommunications, particularly in the wireless sector.
In 2002, sales in Africa contributed £1.7 million to Intec’s turnover. Following the acquisition Intec had three
customers in South Africa: the PTT, Telkom South Africa, and mobile operators MTN and Cell-C. The new
operation is also targeting customers in other key emerging markets in Africa such as Nigeria.
Ericsson ‘Settler’ business unit (Sweden) – post balance sheet
In November 2002 Intec announced the post-year end acquisition of Ericsson’s ‘Settler’ business unit, its major
competitor in the interconnect billing market. With this acquisition Intec will expand its base of supported
customers by approximately 40 carriers. The agreement also covers the Settler development team in Sweden and
exclusive worldwide rights to develop and market the Settler product range. The agreement includes further
cooperation between the two companies where Ericsson will continue to offer solutions based on Settler as well
as Intec’s InterconnecT product suite.
The total consideration amounts to US$5.1 million (£3.3 million). The acquisition is expected to be revenue and
earnings enhancing, generating new license revenues, related services work and recurring revenues for support &
maintenance. A key benefit of the agreement are the synergies that will be achieved. Ericsson has a direct
presence in some countries where Intec has none, enabling a greater reach. In other areas, where the two
companies have previously competed fiercely, efforts can be re-directed to other productive opportunities. The
agreement enables Ericsson as well as other successful Settler partners to be able to offer their telecom customers
Intec billing technology from either the InterconnecT or the Settler range.
FOREIGN CURRENCY AND TREASURY
Intec normally invoices its customers in Sterling, US dollars or Euros, which balances the risk of exposing the
group to significant foreign currency gains and losses. The group has a net cash position and so is only exposed
to interest rate movements on its cash and cash investments. The group’s policy is currently not to hedge either
foreign exchange or interest rate exposures.
Page_13 Intec Telecom Systems PLC Annual report and accounts 2002 Finance director’s review continued
FUTURE OUTLOOK
Intec has a sound financial position, which is required in an uncertain economic climate, with our strong cash
position providing resilience against seasonal variations in billings and providing reassurance to our customers. In
2003 Intec’s finances will continued to be managed on a sound basis, ensuring good accounting practice and
best practice risk management policies are adopted throughout the Group.
We will also continue with stringent cost management policies, balanced against necessary investments, which
yield positive returns on investment to improve profitability, now and in the future.
John Arbuthnott FCMA
Finance Director
2 December 2002
Page_14 Intec Telecom Systems PLC Annual report and accounts 2002 Board of directors
The Board
The Directors of the Company and their responsibilities within the Group are set out below:
Executive Directors
Michael Frayne, Chairman, 43
Mike Frayne has over 20 years experience in the IT industry. Prior to founding his own business, he worked as a
consultant for a number of years in IT management roles in the investment banking industry. He holds an MBA
from Wits Business School, Johannesburg and a BSc in Information Technology and Psychology. Mike has co-
founded businesses that today employ over 1,000 people.
Kevin Donald Adams, Chief Executive Officer, 47
Kevin Adams has over 25 years experience in IT and was appointed CEO of the group in June 2000, prior to
which he had been the Managing Director of Intec since October 1997. Previously he held senior positions in
Logica’s international telecommunication software business and has held Managing Director positions with
Admiral Software and Blyth Software, where he headed up their UK and European operations respectively.
John Lawrence Arbuthnott FCMA, Finance Director, 49
John Arbuthnott has 25 years commercial and financial experience, primarily in the oil industry. Prior to joining
Intec in 1999 he worked in interim finance management roles with Centrica and BHP . John has direct experience
and involvement in listed company reporting and financial management as well as mergers, acquisitions, alliances,
joint ventures, partnering, outsourcing and capital raising.
Non-Executive Directors
Roger Steven McDowell, 47
Roger McDowell is a non-executive director of Wax Digital UK Ltd, Booth Industries Group plc and the former
CEO of Oliver Ashworth Group plc. Roger joined Oliver Ashworth as CEO after leaving University. Over a twenty
year period, he grew the business from a small single site pipeline product distributor with sub £1 million turnover
to a profitable PLC with 25 sites and hundred million pound plus turnover. Since leaving this role in 2000, Roger
has held several appointments as non-executive Chairman and non-executive Director of small start up companies
in a range of industries.
Gordon Crawford, 47
Gordon Crawford is Chairman and founder of London Bridge Software Holdings plc, a company which provides
credit management based software and consultancy services. Gordon has been involved in the computer software
industry for over 20 years. A graduate of the University of Newcastle upon Tyne, he worked in software
development before joining Wang in 1982, leaving in 1987 to start his own software development company.
Gordon is also a non-executive director of The Innovation Group plc.
Edward Morrison Astle, 48
Edward Astle is currently a Group Director of National Grid Transco Plc, responsible for all their non-regulated
businesses. He is also a non-executive director of 3GLab Ltd. Between 1997 and 1999 he was a main board
director of BICC plc responsible for the international telecoms cable systems division. Previously he spent eight
years at Cable & Wireless plc, rising to the main board where he was responsible for all their global network
businesses.
Page_15 Intec Telecom Systems PLC Annual report and accounts 2002
AWAITING IMAGE. Corporate governance
STATEMENT ON APPLICATION OF THE COMBINED CODE
Listed companies are required to conform to the Listing Rules of the UK Listing Authority. This includes the
Combined Code on Corporate Governance (“the Code”), which sets out fourteen Principles of Good
Governance. A statement on how the Company has applied these Principles and a statement explaining the
extent of compliance with the provisions of the Code appears below.
THE DIRECTORS
The Company is controlled by the Board of Directors, comprising an Executive Chairman, Chief Executive, and
Finance Director, and three independent non-Executive Directors. The non-Executive Directors are Gordon
Crawford, Edward Astle, and Roger McDowell, who was appointed on 5 September 2002 on the retirement of
the previous Director, Dr. Ceri James. The Board meets monthly to discuss and agree on the various matters
brought before it through a comprehensive briefing document prepared by the Executive Directors and senior
managers from all principal functions of the business. The three non-Executive Directors, who are all shareholders,
are considered to be independent of management, as defined in Section A3.2 of the Code. They have been
appointed for specified terms, and provide the necessary balance to the Executive Directors as a result of their
outside expertise. All Directors have substantial experience in relevant positions and in the management of Listed
companies of significant size.
The Board has a formal schedule of matters reserved to it for decision. The Board formally reviews all matters
affecting the Company, including strategy, acquisitions, disposals, budgets, business development, investor
relations, product development goals, and senior appointments. In its review the Board also monitors the
company’s exposure to key business risks.
All Directors have access to the advice and services of the Company Secretary and to other senior managers, and
may take independent professional advice on any matter which they believe warrants it at the Company’s
expense.
All Directors are required to submit themselves for re-election under the retirement by rotation provisions in the
Company’s Articles of Association if they have held office for more than 30 months since their appointment or
last re-appointment. Both Mike Frayne and John Arbuthnott will submit themselves for re-election at the
forthcoming Annual General Meeting. The unexpired term of both their service contracts is two and a half
months.
The Board has established an Audit Committee and a Remuneration Committee. Each committee operates within
defined terms of reference. There is no Nomination Committee as the Board as a whole formally considers the
necessity for the appointment of additional Directors at regular intervals in the light of the Company’s
development.
THE AUDIT COMMITTEE
The Audit Committee is chaired by Roger McDowell. Its other members are Edward Astle and Gordon Crawford.
It meets at least once a year. The Committee has responsibility for, among other things, reviewing the Company’s
annual report and accounts, its quarterly reports, and the involvement of the Company’s auditors in that process.
The Committee reviews compliance with legal requirements, accounting standards and the rules of the UK Listing
Authority, the scope, objectivity and cost-effectiveness of the audit process, and helps ensure that an effective
system of internal financial control is maintained. The ultimate responsibility for reviewing and approving the
annual report and accounts and the quarterly reports remains with the Board as a whole.
THE REMUNERATION COMMITTEE
The Remuneration Committee, which meets at least twice a year, is charged with setting the levels and conditions
for Directors’ pay, bonuses and all other benefits, including compensation payments. The Remuneration
Committee is chaired by Edward Astle and its other members are Roger McDowell and Gordon Crawford. The
primary responsibilities of the committee are:
• making recommendations to the Board on the Company’s policy on Directors’ and senior staff remuneration;
• to set remuneration at a level appropriate to the responsibility and experience of the Directors;
• to ensure that remuneration is adequate to attract and retain Directors and staff of the required calibre; and
• that remuneration is in line with current industry practice, and set in light of pay and conditions of other staff
within the group.
Page_16 Intec Telecom Systems PLC Annual report and accounts 2002 Corporate governance continued
DIRECTOR’S REMUNERATION
A significant element of Directors’ remuneration can be in the form of annual bonuses, linked closely to the
Company’s turnover and EBITDA performance. The Remuneration Committee sets policy on bonuses and
objectives. The committee also takes account of the Combined Code’s recommendation on the length and
conditions for Service Contracts for Directors. The Report by the Board to shareholders on Directors’ remuneration
can be found on pages 20 to 22.
CHAIRMAN’S AND CHIEF EXECUTIVE’S RESPONSIBILITIES
The Chairman is responsible for the running of the Board and for major non-operational matters such as
developing the Group strategy and overseeing merger and acquisition activity. The Chief Executive is charged with
the management of the Company’s business activities to meet the objectives set out by the Board. Meetings of
the Group’s senior management team take place at regular intervals, with Divisional Managers and other senior
staff reporting formally to the Board on activities, budgets and objectives to ensure an appropriate level of control
and information exchange is maintained.
ACCOUNTABILITY AND AUDIT
Financial reporting
The Directors are responsible for preparing the financial statements which are presented on pages 31 to 55 
A statement of Directors’ responsibilities is presented on page 29. Half year and quarterly reports are also 
presented in a timely fashion, in compliance with Listing Authority requirements and to meet accepted best-
practice market standards.
Going concern statement
The Directors, having made suitable enquiries and analysis of the accounts, consider that the Group has adequate
resources to continue in business for the foreseeable future and that it is therefore appropriate to adopt the
going concern basis in preparing financial statements.
Internal control and risk management
The Directors, who are responsible for the Group’s system of internal control, have established systems to ensure
that an appropriate and reasonable level of oversight and control is provided. These systems are reviewed for
effectiveness not less than annually by the Audit Committee and the Board, and include financial, operational,
compliance and risk management controls.
The Directors have reviewed the effectiveness of internal control of the Group in the period under consideration,
and have taken into account any material developments which have taken place since 30 September 2002 up to
the date of approval of the Annual report, the procedures and systems set out above, and the reports provided by
individual managers. Such a system can only provide a reasonable and not absolute level of assurance against
material misstatement or loss.
A formal process for identifying, evaluating and managing the significant risks faced by the Group has remained
in place up to the approval date of the annual report and accounts. That process is formally reviewed by the
Board on an annual basis, is monitored regularly by the Executive Directors, and accords with the publication by
the Turnbull working party on guidance for directors on internal control – Internal Control: Guidance for Directors
on the Combined Code.
Financial control
Financial results with comparison to budgets and latest forecasts are reported on a monthly basis to the Board by
the relevant senior managers across the Group, together with a report on operational achievements, objectives
and issues encountered. Managers are supplied with detailed information on budget performance and variances
to allow them to prepare their reports and address any problems. Detailed annual budgets are reviewed and
approved by the Board. Budgets and objectives are updated regularly in the light of market developments and
Company progress. Any significant variances from budgets are discussed at monthly Board meetings and actions
set in place to address them.
Page_17 Intec Telecom Systems PLC Annual report and accounts 2002 Corporate governance continued
Operational control and risk management
Operating and regional units formally report to the Board at monthly intervals on all non-financial matters, such
as customer account management across all regions, sales performance, research and development project
progress, product quality and customer support metrics, marketing programmes, IT systems, internal service level
agreements and human resources issues.
Risk management is applied through a systematic process of:
• identification of risk sources by senior managers;
• assessment of the effects of risk;
• formulation of strategies to address each risk; and
• inclusion of appropriate contingency provision in budgets if required.
All senior managers of key operational areas of the business compile a list of significant risks, rank each risk for
likelihood and impact, and set out plans for their management and mitigation, in light of the relative impact and
costs. This information is reviewed monthly and summarised into a Risk Report which is reviewed by the main
Board on a half yearly basis.
Quality compliance
During 2002 Intec initiated a programme to achieve compliance with the standard known as TL9001, a formal
quality standard for the telecommunications industry equivalent in scope to ISO9001. Product quality is measured
quantitatively on an ongoing basis, in terms of outstanding known issues, with a defined escalation and
rectification process that recognises the importance of any problems to customers. The Company employs a full-
time compliance manager at Woking who, with quality representatives in our major offices, maintains and
monitors compliance with a library of formal quality and process procedure documents covering all aspects of
Intec’s operations, which are held and accessible to all staff on the Company’s intranet. The compliance manager
in conjunction with the Board agrees an annual audit programme, which he undertakes assisted by nominated
experts in the organisation covering all geographies and operational areas of business.
External communications and price sensitive information
The requirement for Compliance with relevant Listing Authority provisions, such as staff share dealing and
external communications, is communicated regularly to staff and actively monitored and regulated by the
Company Secretary. An understanding of compliance and regulatory issues is now a part of staff induction
training, is set out in the Company Handbook, and forms part of the terms and conditions of employment. Staff
are notified on a regular basis of any applicable closed periods or other restrictions on dealing or external
communications consequent on working for a Listed company. Only specific senior staff are authorised to
comment externally on matters which might be considered to be share price sensitive information, and a Board-
level process exists for determining which events or information should be considered price sensitive.
Information management and security
The Group uses computer systems for the majority of its financial control and record-keeping purposes. These
systems are regularly reviewed for their ability to provide the security, accuracy and availability of information
required to manage and control the business. The Group has established controls and procedures over the off-site
storage of data held on computers, has a defined and monitored information security policy for all staff,
maintains appropriate measures against deliberate external attack, regularly audits all computers for legal
compliance and educates all staff in these matters. Security systems have been reviewed and upgraded during the
current year to deal with perceived changes to the risk of loss, damage or information corruption through internal
and external factors.
SHAREHOLDER RELATIONS
The Company engages in full and open communication with both institutional and private investors and responds
promptly to all queries received. In conjunction with the Company’s brokers and other financial advisers all
relevant news is distributed in a timely fashion through appropriate channels to ensure shareholders are able to
access material information on the Company’s progress. The Group’s Annual and Interim reports are circulated to
all shareholders on record and other interested parties, and may also be requested through a number of channels
operated by World Investor Link. An investor relations web site has been established which contains all publicly
Page_18 Intec Telecom Systems PLC Annual report and accounts 2002 Corporate governance continued
available financial information and news on the Company. The Company received a techMARK award from the
London Stock Exchange for the best Investor Relations web site in 2002. The Company also monitors the
opinions of shareholders and the research published by market analysts in so far as this is practicable, and
responds to concerns when appropriate. The Company reports quarterly on its performance, holding publicly
accessible conferences or teleconferences where investors may question the Directors on any aspect of its
business or related matters. All shareholders have at least twenty-one working days’ notice of the Annual General
Meeting, which is held at a convenient location with adequate facilities for the expected audience. The Directors
and committee chairs are available for questions at the Annual General Meeting. The Company meets all
provisions of the Combined Code in respect of Proxy voting arrangements and Resolutions.
COMPLIANCE STATEMENT
The Listing Rules require the Board to report on compliance with the forty-five Code provisions throughout the
year ended 30 September 2002. Save for the limited exception outlined below, the Board believes that the
Company has complied throughout the financial year with the provisions set out in Section 1 of the Combined
Code:
A.2.1 The Board has not identified a senior non-Executive Director, as the governance of the Company is
considered to be a matter for the Board as a whole.
Page_19 Intec Telecom Systems PLC Annual report and accounts 2002 Report by the Board to shareholders on directors’ remuneration
REMUNERATION COMMITTEE
The Remuneration Committee, which meets at least twice a year, has responsibility for making recommendations
to the Board on the Company’s policy on staff remuneration and for the determination, within agreed terms of
reference, of specific remuneration packages for each of the Executive Directors and senior management
(including pension rights and any compensation payments). The Committee is guided in its operation and
decision making by the Code of Best Practice provisions on remuneration in the Combined Code of the UKLA.
The Committee is chaired by Edward Astle and its other members are Roger McDowell (from 5 September 2002,
replacing Dr Ceri James) and Gordon Crawford. None of the Committee has any personal financial interests
(other than as shareholders), conflicts of interests arising from cross-directorships or day-to-day involvement in
running the business.
The Committee consults the Chairman and the Chief Executive about its proposals and has access to professional
advice from inside and outside the Company. No Director plays a part in any discussion about his or her own
remuneration. The primary responsibilities of the Committee are:
• making recommendations to the Board on the Company’s policy on Directors’ and senior staff remuneration,
and to oversee share option schemes;
• to set remuneration at a level appropriate to the responsibility and experience of the Directors;
• to ensure that such remuneration is adequate to attract and retain Directors and staff of the required calibre;
and
• that remuneration is in line with current industry practice, and set in light of pay and conditions of other staff
within the group.
REMUNERATION POLICY
Executive remuneration packages are:
• designed to attract, motivate and retain Directors of the calibre needed to maintain the Company’s position as
a market leader within the IT and telecoms industry;
• designed to align the interests of executives with shareholders; and
• constructed with a substantial performance-related element set against appropriately demanding targets.
The performance measurement of the Executive Directors and key members of senior management, and the
determination of their annual remuneration packages, are undertaken by the Committee. The remuneration of
the non-Executive Directors is determined by the Board.
There are four main elements of the remuneration package for Executive Directors and senior management:
a basic salary;
b flexible benefits (including pension arrangements);
c annual bonus payments; and
d share option incentives.
BASIC SALARY
An Executive Director’s basic salary is reviewed annually, and paid as a fixed cash sum monthly. The Remuneration
Committee, in determining salary adjustments, considers increased responsibilities such as the size of the group,
individual performance and contribution, and pay market pressures. In setting salaries the Committee considers
the Group as a whole and relies on up-to-date information extract from market reports on a comparator group of
similar companies within the sector. No increases have been made to the basic salary arrangements from the 
prior year.
Page_20 Intec Telecom Systems PLC Annual report and accounts 2002 Report by the Board to shareholders on directors’ remuneration continued
FLEXIBLE BENEFITS (INCLUDING PENSION ARRANGEMENTS)
Intec operates a flexible benefits scheme for all staff and Directors, under which they may choose how a benefits
allowance of 28 per cent of salary is allocated towards a range of employee benefits, including holiday in excess
of the statutory minimum of twenty days and personal pension contributions. Any unallocated amounts will be
paid monthly in cash. Outside of the Flexible Benefits scheme, all staff and the Directors are also entitled to
private medical insurance and death in service benefit. All Directors are eligible to participate in the performance
related annual bonus scheme for senior management described above. The maximum potential bonus will not
exceed 100 per cent of salary.
ANNUAL BONUS PAYMENTS
The Directors believe that retaining a workforce which is motivated to achieve the Group’s objectives is
fundamental to its continued prosperity. Accordingly, Executive Directors and key employees are eligible to
participate in a performance related annual bonus scheme. The maximum potential bonus for any individual,
together with the associated performance measures and targets, are set by the Remuneration Committee.
Challenging performance measures and internal targets reflecting the objective of achieving key results were set
for the year ended 30 September 2002 and reflected an appropriate balance between Group revenue, earnings
and business unit objectives. Overall results did not meet the targets set and therefore no bonuses have been
earned for this year.
SHARE OPTIONS
The Group operates the Intec Company Share Option Scheme (“Company Scheme”) which is constituted by
rules, and includes a section which has been approved by the Inland Revenue under the Income and Corporation
Taxes Act 1988 (“UK Approved Section”). The Remuneration Committee may select eligible employees and full-
time Directors of the Company and its participating subsidiaries, nominated by the Directors, to receive options
over Ordinary Shares in the Company.
Details of the options granted and performance criteria are set out in notes 6 and 19 to the accounts. The
rationale behind the grant of such options is to incentivise as well as to strengthen the links between the interests
of the optionholders and those of the shareholders. All options granted are subject to certain vesting conditions.
DIRECTORS’ CONTRACTS
The Directors’ service contracts are terminable on 12 months’ prior written notice by either party, but the
Company has the option to terminate the agreement immediately at any time on making a payment of salary in
lieu of the notice period. Copies of Directors’ service contracts will be available for inspection at the Annual
General Meeting.
NON-EXECUTIVE DIRECTORS
Each of the non-Executive Directors (Mr Roger McDowell, Mr Edward Astle and Mr Gordon Crawford) is engaged
on letters of appointment. All appointments are subject to re-appointment by the Board at the next AGM.
Appointments are terminable on three months’ prior written notice or in the event that the non-Executive
Director ceases to be a Director of the Company. Each non-Executive Director receives annual fees of £25,000
payable by equal monthly instalments in arrears. Non-Executive Directors are entitled to directors’ and officers’
liability insurance cover under any scheme established by the Company. Non-Executive Directors do not
participate in share option or bonus schemes.
Page_21 Intec Telecom Systems PLC Annual report and accounts 2002 Report by the Board to shareholders on directors’ remuneration continued
Table A – Emoluments of the directors
Performance 2002 2001
Salary/Fees Benefits bonus Total T otal
£’000 £’000 £’000 £’000 £’000
Kevin Adams 247 1 – 248 228
John Arbuthnott 160 1 – 161 145
Mike Frayne 129 22 – 151 131
Edward Astle 25 – – 25 25
Gordon Crawford 25 – – 25 25
Roger McDowell
1
2–– 2 –
Ceri James
2
25–– 25 25
613 24 – 637 579
1 Roger McDowell appointed 5 September 2002
2 Ceri James resigned 5 September 2002
There have been no increases in directors’ salaries during the current year. The difference between 2002 and
2001 are due to salaries which applied for a full twelve months in 2002 compared to a pro-rata prior period.
Table B – Interests of the directors
The interests of the Directors and their immediate families, both beneficial and non-beneficial, in the ordinary
shares of the Company were as follows:
2002 2001
Ordinary Ordinary
Shares Shares
Kevin Adams 6,323,474 6,323,474
John Arbuthnott 321,570 321,570
Mike Frayne
1
255,108 255,108
Mike Frayne
2
85,452,524 94,052,524
Edward Astle
3
13,384 13,384
Gordon Crawford 693,262 1,193,262
Roger McDowell 500,000 –
93,559,322 102,334,854
The above interests are in the ordinary share capital of the Company. No Director had any beneficial interest in
any share capital of other Group companies or in any debenture of any Group company. As at 2 December 2002
there were no changes to the interests of the Directors as stated above.
1 This figure relates to ordinary shares which are ultimately owned by a Jersey trust of which the family of Mike Frayne are 
beneficiaries.
2 This figure relates to ordinary shares owned by Mican Limited. Of these shares, 28,353,519 (33.18%) are ultimately owned by a
Jersey trust of which the family of Mike Frayne are beneficiaries (2001: 28,353,519 (30.15%)).
3 This includes 7,744 ordinary shares owned by Barclays Nominee, the beneficiary of which is Mr. Edward Astle.
Page_22 Intec Telecom Systems PLC Annual report and accounts 2002 Report by the Board to shareholders on directors’ remuneration continued
Table C – Share options
Options to subscribe for or acquire ordinary shares of the Company were held by the following Directors during 
the year:
Outstanding Outstanding at
at 1 October 30 September Exercise
Director Scheme 2001 Granted Lapsed 2002 price
Kevin Adams Approved
1
8,451 – – 8,451 £2.87
1/2
Kevin Adams Unapproved
1
137,318 – – 137,318 £2.05
Kevin Adams Unapproved
2
55,882 – – 55,882 £1.07
Kevin Adams Approved
3
– 8,147 (8,147) – £0.70
1/2
Kevin Adams Unapproved
3
– 534,710 (534,710) – £0.70
1/2
John Arbuthnott Approved
1
7,964 – – 7,964 £2.87
1/2
John Arbuthnott Unapproved
1
65,025 – – 65,025 £2.05
John Arbuthnott Unapproved
2
37,765 – – 37,765 £1.07
John Arbuthnott Approved
3
– 10,147 (10,147) – £0.70
1/2
John Arbuthnott Unapproved
3
– 346,995 (346,995) – £0.70
1/2
Mike Frayne Approved
1
8,348 – – 8,348 £2.87
1/2
Mike Frayne Unapproved
1
52,684 – – 52,684 £2.05
Mike Frayne Unapproved
2
32,353 – – 32,353 £1.07
Mike Frayne Unapproved
3
– 314,285 (314,285) – £0.70
1/2
1 These options, granted in June 2000, have vested and are exercisable from the date of announcement of results for the years
ended/ending 30 September 2000, 2001, 2002 and 2003 in the ratio of 20%, 30%, 30% and 20% respectively.
2 These options, granted on 21 June 2001, have vested and are exercisable from the date of announcement of results for the years
ended/ending 30 September 2001, 2002, 2003 and 2004 in the ratio of 20%, 30%, 30% and 20% respectively.
3 These options, granted on 27 March 2002, had specific performance critera based on achieving target revenue of £44.46 million and
EBITDA in excess of £5.53 million for the year ended 30 September 2002. As the EBITDA performance criteria was not met, these
options have lapsed.
Page_23 Intec Telecom Systems PLC Annual report and accounts 2002 Product review
PRODUCT STRATEGY
This product strategy review is intended to give an overall description of developments within Intec Telecom
System’s major product lines in 2002, and an overview of intended developments in coming periods. We
recommend that it should be read in conjunction with the Product Overview given in the Intec Telecom Systems
Corporate Overview 2002/3 (sent to all shareholders with this report, and available from Intec). Detailed product
information can be obtained directly from Intec or downloaded from the web site: www.intec-telecom-
systems.com
Since its formation Intec set out to build a leading market share position in certain products that fall within the
specialised area of the telecoms software market generally known as Operations Support Systems (OSS). OSS are
the fundamental building blocks of the information systems used by telecoms companies to provide services to
customers and to generate revenues from network operations. Without OSS a modern telecoms company cannot
function, and the quality of its systems helps determine the performance of the business. Research reports on the
OSS market suggest that it has an overall size of approximately $30 billion annually.
Within this market Intec has focused on two related areas: interconnect billing and convergent mediation.
Interconnect was the company’s original focus, and this was expanded to include mediation with the December
2000 purchase of Atlanta-based Computer Generation, Inc.. This followed a successful commercial partnership
between the two companies. Other acquisitions and internal product developments have brought Intec additional
products that support these core competencies.
Intec’s product development policy is to invest a substantial proportion of its revenues in developing additional
functionality for existing software, developing next-generation products that will eventually supersede existing
offerings, and expanding its product range into new areas. However, all developments are the subject of rigorous
business case analysis, and justification at Board level, to ensure that they will effectively meet real market
requirements and thus allow profitable sales to be made.
Products are created and managed by Intec’s Product Operations division, which works closely with other parts of
the company, particularly sales and marketing groups, to ensure that Intec offers software that has the
functionality and performance required by customers worldwide, when they need it. Intec also benefits from
active and well-supported User Groups which contribute substantially to product development. As part of the
ongoing process to ensure our products are properly understood by their target customers a full rebranding and
re-positioning exercise was carried out in 2002, and a new website with greatly expanded product details created.
InterconnecT
InterconnecT, the company’s original product, is the clear market share leader in the global market for
interconnect billing systems, with around 150 customers, including Vodafone, Orange, France Telecom, Hutchison
3G, BellSouth and many others. InterconnecT allows these companies to produce high-value bills for carrying
each other’s communications traffic. The sums involved can run into hundreds of million of dollars (or more)
annually.
During 2002 we have continued to build InterconnecT’s market share, and to develop the capabilities of the
product to meet customer requirements in the many countries and the wide range of networks where it is
installed.
There are two variants of InterconnecT, for standard domestic and international interconnect bill settlement, and
for international settlement according to the rules defined by the International Telecommunications Union
(InterconnecT ITU). Both products have been the subject of substantial version upgrades in 2002. We believe both
products are widely considered the benchmark for functionality and performance in the marketplace.
With the acquisition of business units from ICL and Ericsson, we also have customers running their former
interconnect products, Prospero and Settler. Prospero has been discontinued as a development product but will
continue to be supported. Settler will be developed and supported in line with its existing roadmap. Both
products, and InterconnecT, will be superseded by the next generation platform now under development.
Page_24 Intec Telecom Systems PLC Annual report and accounts 2002 Product review continued
InterconnecT CABS CG
In 2001 Intec acquired a Dallas, Texas-based company, CHA Systems, which was successfully developing and
marketing a carrier access billing product for the domestic US marketplace. This is effectively the local US
equivalent of domestic interconnect billing in other regions. This product, since rebranded as InterconnecT CABS
CG is now winning many more customers in the US, for both carrier-operated systems and an Intec-delivered
bureau service. Current customer numbers stand at over 100. In mid-2002 this product was upgraded in
performance, functionality and standards-compliance to meet the needs of the largest CLECs, ILECs and even
RBOCs in the US. To recognise this, we added CG (Carrier Grade) to its name. Development continues on
InterconnecT CABS CG to ensure that it continues to be the most effective product in the fast-changing and very
competitive world of US telecommunications.
Inter-mediatE
Inter-mediatE provides the vital services of network usage data collection, processing and distribution – together
know as mediation. When an event occurs on a communications network, such as a telephone call, an Internet
connection, or the delivery of a service or transaction, information on that event needs to be accurately identified,
processed, and forwarded to other systems, including billing, so that it can be charged to a customer. Mediation
thus lies at the heart of revenue generation for a carrier, and also strongly impacts functions such as network
management, service provision, and customer care.
Inter-mediatE is a convergent mediation system, which is to say that it can manage many different types of
network event: conventional switched calls, unswitched (packet-based) traffic like Internet Protocol (IP) data,
mobile communications, and next-generation systems like UMTS (3G). It is also designed to handle the very
highest volumes of traffic found in major carriers today – over 100 customers use Inter-mediatE, including Bell
South, Verizon, SBC, Telstra and Hutchison 3G.
In 2002 Inter-mediatE reached Version 4 status, a major release that added many new capabilities intended to
address the needs of all operators but particularly carriers looking to the next generation of complex, high-value
services. This will include things like picture message, multi-media content, and location-based services. In
addition, Inter-mediatE has been enhanced this year with new capabilities in the key area of information
reporting, to allow customers to build a detailed view of what is happening in their networks. Initial customer
feedback on this capability is very good.
Other products
Our core products of InterconnecT and IntermediatE are supported by a number of ancillary products that are
usually but not necessarily sold in conjunction with them. Perhaps the most significant development in 2002 
was the first release of a new product, Inter-activatE, which offers activation and service provisioning capabilities.
Inter-activatE is designed to lower service activation costs by offering a single-platform environment for multiple
service activation, high levels of automation, and comprehensive auditing and fallout management capabilities.
Inter-activatE has already won its first customers, and feedback from those sites is helping define future 
product direction.
Intec has also begun marketing two new products, Maxi-routE and Maxi-solvE. These products assist operatiors in
determining Least Cost Routing options and in automating the reconciliation of interconnect invoices. Both
products help carriers improve revenues and cut operating costs, and we expect good demand for both.
During the year Intec also reviewed the position and future contribution of a number of minor products, primarily
in the revenue assurance fraud management area, that were acquired with companies bought in 2001. Although
Intec remains in the revenue assurance market with other capabilities, the fraud product has been discontinued as
an actively developed and marketed item.
Page_25 Intec Telecom Systems PLC Annual report and accounts 2002 Product review continued
ROADMAP
The telecommunications market is very dynamic, and many new services are being currently offered to
consumers. Intec’s development policy is to have available products that meet actual customer demand when it
materialises. Therefore, we maintain a detailed product roadmap for both existing products, and, more
importantly, for next-generation platforms, that will deliver the performance and functionality that we anticipate
will be required. This roadmap extends to approximately five years from the present time, and covers such issues
as new platform definition, development, introduction and marketing, current system wind-down and retirement,
and customer migration between old and new versions. The roadmap process is intended to ensure high levels of
customer loyalty and retention through continuity of quality products and service, maximum return on Intec’s
development investment, and continual improvement in operating performance and market responsiveness.
The current roadmap for our core InterconnecT and Inter-mediatE products defines a full, but staged, introduction
of next-generation platforms over a time span of the next twenty four months. Development projects to ensure
this are now well advanced. These next-generation platforms will offer higher functionality, improved
performance, and lower operating costs to existing and new customers.
For more information on Intec products and services, please visit www.intec-telecom-systems.com
Page_26 Intec Telecom Systems PLC Annual report and accounts 2002 Directors’ report
The Directors present their annual report and the audited financial statements for the year ended
30 September 2002.
ACTIVITIES
Intec Telecom Systems develops and markets telecoms Operations Support Systems software (OSS) and provides
related professional services such as implementation, consultancy and training, on a global basis. The Company
also operates its software as an Application Service Provision (‘ASP’) or bureau service for a number of customers.
REVIEW OF DEVELOPMENTS AND FUTURE PROSPECTS
The Group intends to continue with its present business strategy of developing and selling software and services 
to telecom operators. A full review of the business can be found in the Chairman’s Statement and Chief 
Executive’s Review.
RESULTS AND DIVIDENDS
The results for the year are shown in the profit and loss account. A full review of the results for the year can be
found in the Chief Executive’s Review and Finance Director’s Review. The Directors do not recommend the
payment of a dividend (2001: £nil).
POST BALANCE SHEET EVENT
On 20 November 2002, the Company announced its intention to acquire Ericsson’s ‘Settler’ business unit for a
sum of $5.1 million (£3.3 million). Further details are provided in the Finance Directors’ Review.
DEVELOPMENT EXPENDITURE
The Group commits substantial resources to research and development activities to ensure its products meet
present and future market expectations. The Group expenses development expenditure as it is incurred. The
development expenditure expensed at cost in the period was £8,026,000 (2001: £5,869,000).
DIRECTORS AND THEIR INTERESTS
Ceri James resigned as non-executive director on 5 September 2002 and was replaced on the Board by 
Roger McDowell.
None of the Directors had a material interest in any contract to which the parent company or any subsidiary was
a party during the financial year. The interests of the Directors in the share capital of the Company are shown in
Table B of the Report by the Board to shareholders on directors’ remuneration (“Table B”).
SHARE CAPITAL
Details of the movements in share capital can be found in note 19. 270,000 ordinary 1p shares are held by Intec
Employee Share Trust at a cost of £2.05 each. See note 12 for more details.
SUBSTANTIAL SHAREHOLDINGS
So far as the Company is aware, apart from certain Directors’ interests that are disclosed in Table B, the only
holdings of 3% or more in the issued share capital of the Company at 30 September 2002 (being notifiable
interests in accordance with Sections 198 to 208 of the Act) are Mican Limited 44.90% and Henderson Global
Investors 10.98%.
POLICY ON PAYMENT OF CREDITORS
It is the Group’s normal practice to make payments to suppliers in accordance with agreed terms provided that
the supplier has performed in accordance with the relevant terms and conditions. Trade creditors at 30 September
2002 represented, on average 19 days’ purchases (2001: 22 days) for the group and 5 days’ purchases (2001: 13
days) for the Company.
Page_27 Intec Telecom Systems PLC Annual report and accounts 2002 Directors’ report continued
CHARITABLE CONTRIBUTIONS
The Group made charitable contributions of £14,657 during the year (2001: £1,631). Neither the Company nor
any of its subsidiaries made any donation for political purposes in 2002 or 2001.
EMPLOYMENT OF DISABLED PERSONS
The Group operates in a number of countries, and continued the policy regarding the employment of disabled
persons. It is Group policy to offer equal opportunities to disabled people, and to continue wherever possible the
employment of staff who become disabled, and to offer retraining for purposes of career development to 
disabled staff.
INVOLVEMENT
The Group encourages all staff to share a commitment to the success of the business, and to its operation as a
responsible and ethical organisation. The Group supports both formal and informal communication between
Directors, managers and staff, through regular individual reviews, quarterly staff briefings, and monthly internal
newsletters. An annual, confidential survey of staff opinions is also conducted, and Intec has also begun the
process of setting up Employee Relations Forums consistent with the guidelines suggested by the EU. All new
staff joining the company receive formal induction training, including awareness of their obligations as employees
of a listed company. Staff training needs are reviewed regularly. A staff Share Options scheme is open to all
employees, and a large proportion of staff are now shareholders.
ENVIRONMENTAL POLICY
It is the Group’s policy to support and encourage environmentally sound business operations. Recognising that
the Group’s own operations have minimal direct environmental impact, our policy is to:
1 Meet all statutory obligations placed on us.
2 Where sensible, encourage working practices, such as teleconferencing, teleworking and electronic
information exchange, that reduce environmental load.
3 Re-cycle waste products wherever possible, encourage use of environmentally friendly materials, and dispose
safely of any non-recyclable materials.
BRANCHES OUTSIDE THE UK
The Group has subsidiaries or offices in Australia, Brazil, France, Switzerland, Hong Kong, India, Italy, Lebanon,
Malaysia, Mexico, Portugal, Spain, Taiwan, South Africa, and the USA.
ANNUAL GENERAL MEETING
The resolutions to be proposed at the annual general meeting, together with explanatory notes, appear in the
separate Notice of Annual General Meeting sent to all shareholders. The proxy card for registered shareholders is
distributed with the annual accounts.
AUDITORS
Deloitte & Touche have expressed their willingness to continue in office as auditors and a resolution to reappoint
them will be proposed at the forthcoming Annual General Meeting.
Approved by the Board of Directors, and signed on behalf of the Board.
Jean B Exelby FCCA
Secretary
2 December 2002
Page_28 Intec Telecom Systems PLC Annual report and accounts 2002 Statement of directors’ responsibilities
United Kingdom company law requires the Directors to prepare financial statements for each financial year which
give a true and fair view of the state of affairs of the company and the group as at the end of the financial year 
and of the profit or loss of the group for that period. In preparing those financial statements, the Directors are
required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent; and
• state whether applicable accounting standards have been followed.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at
any time the financial position of the company and the group and to enable them to ensure that the financial
statements comply with the Companies Act 1985. They are also responsible for the system of internal control,
safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
Page_29 Intec Telecom Systems PLC Annual report and accounts 2002 Independent auditors’ report to the members of Intec Telecom Systems PLC
We have audited the financial statements of Intec Telecom System PLC for the year ended 30 September 2002
which comprise the profit and loss account, the balance sheets, the cash flow statement, the statement of total
recognised gains and losses and the related notes 1 to 22. These financial statements have been prepared under
the accounting policies set out therein.
Respective responsibilities of directors and auditors
As described in the statement of directors’ responsibilities, the company’s directors are responsible for the
preparation of the financial statements in accordance with applicable United Kingdom law and accounting
standards. Our responsibility is to audit the financial statements in accordance with relevant United Kingdom legal
and regulatory requirements, auditing standards, and the Listing Rules of the Financial Services Authority.
We report to you our opinion as to whether the financial statements give a true and fair view and are properly
prepared in accordance with the Companies Act 1985. We also report if, in our opinion, the directors’ report is
not consistent with the financial statements, if the company has not kept proper accounting records, if we have
not received all the information and explanations we require for our audit, or if information specified by law or
the Listing Rules regarding directors’ remuneration and transactions with the company and other members of the
group is not disclosed.
We review whether the corporate governance statement reflects the company’s compliance with the seven
provisions of the Combined Code specified for our review by the Listing Rules and we report if it does not. We
are not required to consider whether the board’s statements on internal control cover all risks and controls, or
form an opinion on the effectiveness of the group’s corporate governance procedures or its risk and control
procedures.
We read the directors’ report and the other information contained in the annual report for the above year as
described in the contents section and consider the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the financial statements.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom auditing standards issued by the Auditing Practices
Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the
financial statements. It also includes an assessment of the significant estimates and judgements made by the
directors in the preparation of the financial statements and of whether the accounting policies are appropriate to
the circumstances of the company and the group, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered
necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming
our opinion, we also evaluated the overall adequacy of the presentation of information in the financial
statements.
Opinion
In our opinion the financial statements give a true and fair view of the state of affairs of the company and the
group as at 30 September 2002 and of the loss of the group for the year then ended and have been properly
prepared in accordance with the Companies Act 1985.
Deloitte & Touche
Chartered Accountants and Registered Auditors
London
2 December 2002
Page_30 Intec Telecom Systems PLC Annual report and accounts 2002 Year ended 30 September 2002
Profit and loss account
Before Intangible
intangible amortisation
amortisation, impairment
impairment and
and exceptionals
exceptionals (notes 10,12) Total T otal
2002 2002 2002 2001
Note £’000 £’000 £’000 £’000
Turnover
Continuing operations 45,853 45,853 39,798
Acquisitions 1,621 1,621 –
Total turnover 2,4 47,474 47,474 39,798
Cost of sales 4 (15,430) (15,430) (12,675)
Gross profit 32,044 32,044 27,123
Distribution costs 4 (9,945) (9,945) (9,158)
Administrative expenses:
Development expenditure (8,026) – (8,026) (5,869)
Amortisation of goodwill and other intangible assets 10 – (7,079) (7,079) (8,680)
Impairment of goodwill 10 – (7,464) (7,464) (133,400)
Other administrative expenses 5 (12,079) (776) (12,855) (10,140)
Total administrative expenses 4 (20,105) (15,319) (35,424) (158,089)
Operating profit (loss)
Continuing operations 1,317 (13,611) (12,294) (140,124)
Acquisitions 677 (1,708) (1,031) –
Group operating profit (loss) 4,5 1,994 (15,319) (13,325) (140,124)
Share of operating profit in associate 12 ––– 78
Total operating profit (loss) 1,994 (15,319) (13,325) (140,046)
Amount written off investments 12 – (321) (321) (283)
Interest receivable and similar income 494 – 494 1,171
Interest payable and similar charges 7 (331) – (331) (73)
Profit (loss) on ordinary activities before taxation 2,157 (15,640) (13,483) (139,231)
Tax charge on profit (loss) on ordinary activities 8 (1,299) – (1,299) (1,140)
Profit (loss) on ordinary activities after taxation
retained for the financial year 858 (15,640) (14,782) (140,371)
Profit (loss)/earnings per share – basic 9 (7.94p) (80.21p)
Profit (loss)/earnings per share – adjusted 9 0.46p 1.14p
Profit (loss)/earnings per share – diluted 9 (7.94p) (80.21p)
The Company has taken advantage of S230 Companies Act 1985 and has not prepared a separate profit 
and loss account. The loss after taxation dealt with in the accounts of the company is £40,222,000
(2001: £91,378,000 loss).
Page_31 Intec Telecom Systems PLC Annual report and accounts 2002 Consolidated statement of total recognised gains and losses
Year ended 30 September 2002
2002 2001
£’000 £’000
Loss for the financial year (14,782) (140,371)
Exchange translation differences arising on foreign currency net investments (557) (168)
Total recognised gains and losses in the year (15,339) (140,539)
Reconciliation of movements in consolidated shareholders’ funds
2002 2001
£’000 £’000
Loss for the financial year (14,782) (140,371)
Other recognised gains and losses relating to the year (557) (168)
Issue of share capital net of associated expenses 3,353 197,182
Movement on contingent consideration on acquisitions (2,497) 2,497
(Decrease)/increase in shareholders’ funds (14,483) 59,140
Opening shareholders’ funds 100,690 41,550
Closing shareholders’ funds 86,207 100,690
Page_32 Intec Telecom Systems PLC Annual report and accounts 2002 30 September 2002
Consolidated balance sheet
2002 2001
Note £’000 £’000
Fixed assets
Intangible assets 10 63,422 73,181
Tangible assets 11 2,910 3,009
Investments 12 101 422
66,433 76,612
Current assets
Stocks 64 29
Debtors 13 17,965 19,103
Investments 14 5,151 2,966
Cash at bank and in hand 8,156 14,987
31,336 37,085
Creditors: falling due within one year 15 (5,796) (7,759)
Net Current assets 25,540 29,326
Total assets less Current Liabilities 91,973 105,938
Creditors: falling due after more than one year 16 – –
Deferred income due within one year (5,766) (5,248)
Total Net assets 86,207 100,690
Capital and Reserves
Called up share capital 19 1,903 1,836
Share premium account 20 238,652 235,366
Other reserves 20 – 2,497
Merger reserve 20 249 249
Foreign exchange reserve 20 (708) (151)
Profit and loss account 20 (153,889) (139,107)
Equity Shareholders’ Funds 86,207 100,690
These financial statements were approved by the Board of Directors on 2 December 2002.
Signed on behalf of the Board of Directors.
John Arbuthnott, FCMA
Finance Director
Page_33 Intec Telecom Systems PLC Annual report and accounts 2002 Company balance sheet
30 September 2002
2002 2001
Note £’000 £’000
Fixed assets
Investments 12 60,302 116,008
Current assets
Debtors 13 40,298 19,200
Investments 14 5,140 2,836
Cash at bank and in hand 3,802 12,910
49,240 34,946
Creditors: falling due within one year 15 (295) (2,341)
Net Current assets 48,945 32,605
Total Net assets 109,247 148,613
Capital and Reserves
Called up share capital 19 1,903 1,836
Share premium account 20 238,652 235,366
Other reserves 20 – 2,497
Profit and loss account 20 (131,308) (91,086)
Equity Shareholders’ Funds 109,247 148,613
These financial statements were approved by the Board of Directors on 2 December 2002.
Signed on behalf of the Board of Directors.
John Arbuthnott, FCMA
Finance Director
Page_34 Intec Telecom Systems PLC Annual report and accounts 2002 Year ended 30 September 2002
Consolidated cash flow statement
2002 2001
Note £’000 £’000
Net cash inflow/(outflow) from operating activities i 2,770 (3,716)
Returns on investments and servicing of finance 
Interest received 494 1,171
Interest element of finance lease rental payments (4) (17)
Interest paid and similar items (327) (56)
163 1,098
Taxation 
Overseas taxation (paid)/received (378) 5
UK Corporation taxation paid (10) (531)
(388) (526)
Capital investment 
Payments to acquire tangible fixed assets (1,651) (1,861)
Payment to acquire Intellectual Property Rights – (304)
Proceeds on disposal of fixed assets 59 74
(1,592) (2,091)
Acquisitions 
Investment in subsidiaries (5,222) (188,680)
Net cash acquired with subsidiaries 6 1,801
(5,216) (186,879)
Cash outflow before management of liquid resources and financing (4,263) (192,114)
Use of liquid resources
(Increase)/decrease in cash investments/term deposits (2,252) 15,377
Payments received from escrow 52 627
Financing
Issue of ordinary share capital – 183,700
Share issue costs charged to the share premium account – (4,922)
Capital element of finance lease payments (188) (234)
(Decrease)/increase in cash in the period ii, iii (6,651) 2,434
Page_35 Intec Telecom Systems PLC Annual report and accounts 2002 Notes to the cash flow statement
Year ended 30 September 2002
i Reconciliation of operating loss to net cash In flow/ out flow) from 
operating activities
2002 2001
£’000 £’000
Operating loss (13,325) (140,124)
Depreciation 1,745 1,380
Amortisation of goodwill and other intangible assets 7,079 8,680
Impairment of goodwill 7,464 133,400
Gain on disposal of fixed assets (25) (10)
(Increase)/decrease in stock (39) 79
Increase in debtors (172) (2,948)
Decrease/(increase) in creditors 43 (4,173)
Net cash inflow/(outflow) from operating activities 2,770 (3,716)
ii Reconciliation of net cash flow to movement in net funds
2002 2001
£’000 £’000
(Decrease)/increase in cash in the period (6,651) 2,434
Net cash outflow from decrease in finance lease 188 234
Net cash outflow/(inflow) from increase/(decrease) in liquid resources 2,200 (16,004)
Change in net funds resulting from cashflows (4,263) (13,336)
Finance leases acquired with subsidiary – (178)
Translation differences (195) 58
Movement in net funds (4,458) (13,456)
Net funds at 1 October 2001/2000 17,765 31,221
Net funds at 30 September 2002/2001 13,307 17,765
iii Analysis of movement in net funds
Foreign 30
30 September exchange September
2001 Cash flow translation 2002
£’000 £’000 £’000 £’000
Cash in hand and at bank 14,987 (6,651) (180) 8,156
Finance leases (188) 188 – –
Cash investments/term deposits 2,914 2,252 (15) 5,151
Escrow account 52 (52) – –
Total 17,765 (4,263) (195) 13,307
Page_36 Intec Telecom Systems PLC Annual report and accounts 2002 Year ended 30 September 2002
Notes to the accounts
1  ACCOUNTING POLICIES
Basis of accounting
The financial statements are prepared under the historical cost convention and in accordance with applicable
accounting standards. The particular accounting policies adopted are described below.
FRS 19 (Deferred tax) has been adopted in the year, but has not necessitated any restatement of prior 
year results.
Basis of consolidation
The Group financial statements consolidate the financial statements of Intec Telecom Systems PLC and all its
subsidiaries. The results of companies or business units acquired during the year are included from the date 
of acquisition.
On the acquisition of a business fair values are attributable to the group’s share of net separable assets. Where
the cost of acquisition exceeds the fair values attributable to such net assets, the difference is treated as
purchased goodwill and capitalised in the balance sheet in the year of acquisition.
Turnover
The Group derives its income principally from the sale of software licences, development projects performed for
clients and fees derived from installation, consultancy, training and maintenance.
Income from the sale of software licences is recognised on completion of contractual milestones or when
milestones are unconditional. These contractual milestone obligations normally include grant of licence on signing
of the contract, which coincides with delivery, installation of the software and customer acceptance, and as such
licence income is normally recognised prior to final customer acceptance testing.
Income from implementation of software is recognised on a percentage of completion basis over the period of
installation or on completion of contractual milestone performance obligations.
Income from development performed for clients is recognised over the life of the contract or in accordance with
contractual milestones. Where contracts with customers require significant development to the core software, any
applicable licence fees are recognised as income over the life of the development phase of the contract.
Fee income from consultancy, training and maintenance is recognised over the period in which the service is
provided and Turnover is stated net of value added tax.
Foreign currency translation
Foreign currency transactions are converted to sterling at the rates ruling at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates ruling on
the balance sheet date. These translation differences are taken to the profit and loss account.
The results of overseas subsidiaries are translated into sterling at average rates for the year. The net
assets/(liabilities) of overseas subsidiaries are translated at year end exchange rates. The exchange differences are
taken to reserves and reported in the statement of total recognised gains and losses.
Research and development expenditure
Research and development expenditure is expensed to the profit and loss account as incurred.
Page_37 Intec Telecom Systems PLC Annual report and accounts 2002 Notes to the accounts continued
Year ended 30 September 2002
1  ACCOUNTING POLICIES CONTINUED
Goodwill and intangible assets
For acquisition of a business, purchased goodwill is capitalised in the year in which it arises and amortised over its
estimated useful life up to a maximum of fifteen years. The directors regard fifteen years as a reasonable
maximum for the estimated useful of a goodwill since it is difficult to make projections exceeding this period.
Patents and trademarks are valued at cost on acquisition and are depreciated over their estimated useful
economic lives of up to ten years.
Tangible fixed assets
Depreciation is provided on cost in equal annual instalments over the estimated useful lives of the assets. 
The rates of depreciation are as follows:
Leasehold improvement 33
1/3
% per annum
Motor Vehicles 33
1/3
% per annum
Computer software & equipment 33
1/3
% per annum
Furniture and equipment 33
1/3
% per annum
Investments
Investments held as fixed assets are stated at cost less provision for any impairment.
Leases and hire purchase contracts
Tangible fixed assets acquired under finance leases and hire purchase contracts are capitalised at the estimated
fair value at the date of inception of each lease or contract and depreciated over their estimated useful lives. The
total finance charges are allocated over the period of the lease in such a way as to give a constant charge on the
outstanding liability.
Operating lease rentals payable are charged to profit and loss over the lease term.
Deferred taxation
Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay
more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on
current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in
taxation computations in periods different from those in which they are included in financial statements. Deferred
tax is not provided on timing differences arising from the revaluation of fixed assets where there is no
commitment to sell the asset, or on unremitted earnings of subsidiaries and associates where there is no
commitment to remit these earnings. Deferred tax assets are recognised to the extent that it is regarded as more
likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.
Financial instruments
Transactions denominated in foreign currencies are recorded at the rate ruling on the date of the transaction,
unless matching forward foreign exchange contracts have been entered into, in which case the rate specified in
the relevant contract is used. At the balance sheet date unhedged monetary assets and liabilities denominated in
foreign currencies are translated at the rate of exchange ruling at that date.
Page_38 Intec Telecom Systems PLC Annual report and accounts 2002 Year ended 30 September 2002
Notes to the accounts continued
2  TURNOVER AND SEGMENTAL REPORTING
Geographic areas – analysis by location of operations
Total Inter-segment External 
turnover turnover turnover
2002 2001 2002 2001 2002 2001
£’000 £’000 £’000 £’000 £’000 £’000
Turnover
United Kingdom 21,148 22,919 (1,509) (1,737) 19,639 21,182
Continental Europe 166 400–– 166 400
Asia-Pacific 1,758 1,072 – (64) 1,758 1,008
North America & Canada 25,566 17,224 (600) (215) 24,966 17,009
South America 945 205 – (6) 945 199
49,583 41,820 (2,109) (2,022) 47,474 39,798
Geographic markets – analysis by location of client
Turnover by destination
2002 2001
£’000 £’000
United Kingdom 3,519 6,105
Continental Europe 9,753 10,528
Eastern Europe 1,235 1,562
Middle East 728 680
Africa 1,687 814
Asia-Pacific 5,521 4,977
North America & Canada 21,058 12,576
South America 3,973 2,556
47,474 39,798
Turnover by type
Turnover by activity is set out below. It is not practicable to allocate either profit before taxation or net assets by
client location or activity.
Turnover by activity
2002 2001
£’000 £’000
Licence Sales 15,481 14,165
Professional services income:
Implementation and migrations 6,937 4,752
Consulting and training income 1,793 1,904
Hardware 576 502
Non-Telecom – custom network solutions 2,957 2,493
Sub-total 12,263 9,651
Recurring income:
ASP Service 2,761 1,675
Volume upgrade licences 1,928 3,598
Support and maintenance fees 15,041 10,709
Sub-total 19,730 15,982
47,474 39,798
Page_39 Intec Telecom Systems PLC Annual report and accounts 2002 Notes to the accounts continued
Year ended 30 September 2002
2  TURNOVER AND SEGMENTAL REPORTING CONTINUED
Before After
amortisation amortisation
of goodwill of goodwill
and and
exceptional Amortisation Goodwill Exceptional exceptional
items of goodwill impairment items items
Year ended 30 September 2002 £’000 £’000 £’000 £’000 £’000
Loss before taxation
United Kingdom 677 (2,200) (1,684) (1,097) (4,304)
Continental Europe 185 (74) – – 111
Asia-Pacific 187 (420) (5,780) – (6,013)
North America & Canada 948 (4,385) – – (3,437)
South America 160––– 160
Loss before taxation 2,157 (7,079) (7,464) (1,097) (13,483)
Before After
amortisation amortisation
of goodwill of goodwill
and and
exceptional Amortisation Goodwill Exceptional exceptional
items of goodwill impairment items items
Year ended 30 September 2001 £’000 £’000 £’000 £’000 £’000
United Kingdom 1,077 (329) – (283) 465
Continental Europe 221 (9) – – 212
Asia-Pacific (84) (681) (16,000) – (16,765)
North America & Canada 2,576 (7,661) (117,400) – (122,485)
South America (658) – – – (658)
Loss before taxation 3,132 (8,680) (133,400) (283) (139,231)
Exceptional items comprise the writedown of own shares of £175,000 (2001: £283,000), a write down of the
Polish associate investment of £146,000 (2001: £nil) and provision against debtor balance with the Polish
associate of £776,000 (2001: £nil).
Excluding Including
unamortised Unamortised unamortised
goodwill goodwill goodwill
2002 2002 2002 2001
Net assets £’000 £’000 £’000 £’000
United Kingdom 14,804 2,321 17,125 26,995
Continental Europe (58) – (58) 258
Africa (464) – (464) –
Asia-Pacific 494 – 494 7,782
North America and Canada 9,295 59,607 68,902 65,655
South America 208 – 208 –
Net assets 24,279 61,928 86,207 100,690
Page_40 Intec Telecom Systems PLC Annual report and accounts 2002 Year ended 30 September 2002
Notes to the accounts continued
3  ACQUISITIONS
a  Current year acquisitions
Operational support systems business of ICL
On 25 January 2002, the group acquired the operational support systems (“OSS”) business of ICL, a Fujitsu
company (“the vendor”). The OSS business acquired comprises certain tangible fixed assets, intellectual property
rights, and customers.
The net initial consideration for the acquisition was £2,550,000 paid in cash plus acquisition costs of £19,000. 
In addition, deferred cash consideration is payable on a quarterly basis, calculated by reference to support
contract revenues over the two year period from the acquisition date. As at 30 September 2002, £335,000 of the
deferred consideration has been paid leaving an estimated £703,000 over the remainder of the two 
year period.
Goodwill arising on acquisition has been capitalised and is being amortised over two years from the date 
of acquisition.
Provisional
Net assets at date of acquisition fair value
and provisional fair value £’000
Tangible fixed assets 125
Goodwill arising on acquisition 3,482
3,607
Net initial cash consideration 2,550
Deferred consideration 1,038
Acquisition costs 19
3,607
Interconnexxion Africa (Pty) Limited
On 31 July 2002, Independent Technology Systems Limited, a wholly owned subsidiary company of Intec Telecom
Systems PLC (“Intec”) agreed to acquire its distribution partner in South Africa, Interconnexxion Africa (Pty) Ltd
(“Interconnexxion”). The total consideration, paid by the issue of 2,204,725 ordinary shares, amounted to
£560,000. Pursuant to the agreement, Intec has acquired all the assets of Interconnexxion, including customer
licensing and support contracts and equipment for payment of £209,000 The balance of the consideration of
£351,000 was used to settle an outstanding loan of Interconnexxion.
Goodwill arising on consolidation has been written off in full to the profit and loss account.
Provisional
Net assets at date of acquisition fair value
and provisional fair value £’000
Debtors 10
Cash 6
Creditors (1)
Goodwill arising on acquisition 548
563
Consideration paid in shares 560
Acquisition costs 3
563
Page_41 Intec Telecom Systems PLC Annual report and accounts 2002 Notes to the accounts continued
Year ended 30 September 2002
3  ACQUISITIONS CONTINUED
b  Prior year acquisitions
CABS (previously CHA Systems, Inc.
Contingent consideration of £5,009,000 was settled in respect of the acquisition of the CABS business.
£2,272,000 was paid in cash and the balance of £2,737,000 was settled through the issue of ordinary shares.
Additional costs of £46,000 have also been capitalised. The difference between the original estimated contingent
consideration and final consideration paid has been capitalised and amortised over the remaining useful economic
life.
c  Reconciliation to cash flow statement
£’000
Net initial consideration for ICL OSS business 2,569
Deferred consideration payments for ICL OSS business 335
Contingent consideration on prior year acquisition of CHA Systems, Inc. 2,318
5,222
d  Post balance sheet event
On 20 November 2002, the company signed an agreement with Ericsson AB of Sweden to acquire Ericsson’s
‘Settler’ interconnect billing product unit, including the Settler development team and worldwide rights to
develop and market the Settler product range. The total consideration amounts to US$5.1 million (£3.3 million).
4  ANALYSIS OF CONTINUING OPERATIONS AND ACQUISITION
Continuing Acquisitions Total
Year ended 30 September 2002 £’000 £’000 £’000
Turnover 45,853 1,621 47,474
Cost of sales (14,738) (692) (15,430)
Gross Profit 31,115 929 32,044
Distribution costs (9,870) (75) (9,945)
Development expenditure (8,026) – (8,026)
Amortisation of goodwill and other intangibles (5,371) (1,708) (7,079)
Impairment of goodwill (7,464) – (7,464)
Other administrative expenses (12,678) (177) (12,855)
Total administrative expenses (33,539) (1,885) (35,424)
Operating Loss (12,294) (1,031) (13,325)
Page_42 Intec Telecom Systems PLC Annual report and accounts 2002 Year ended 30 September 2002
Notes to the accounts continued
5  OPERATING LOSS
2002 2001
£’000 £’000
Operating loss is stated after charging/(crediting):
Depreciation of tangible fixed assets
Owned assets 1,627 1,100
Leased assets 118 280
Contractors’ fees 2,071 1,155
Operating lease payments
– land and buildings 1,430 1,328
– other 210 111
Auditors’ remuneration:
– group audit fees 190 251
– company audit fees 30 48
– UK other tax and reporting fees 103 72
– overseas tax and advisory fees 66 35
Profit on disposal of fixed assets (25) (10)
Loss on foreign exchange 316 212
In addition to the amounts disclosed above, the auditors received £312,000 for other taxation fees 
(2001: £1,026,000 in relation to acquisitions and share placings.)
In addition to goodwill amortisation and goodwill impairment, other exceptional items comprise the writedown of
own shares of £175,000 (2001: £283,000), write down of the Polish associate investment of £146,000 (2001:
£nil) and provision against debtor balance with the Polish associate of £776,000 (2001: £nil).
Page_43 Intec Telecom Systems PLC Annual report and accounts 2002 Notes to the accounts continued
Year ended 30 September 2002
6  INFORMATION REGARDING DIRECTORS AND EMPLOYEES
2002 2001
£’000 £’000
Directors’ emoluments
Salaries and fees 613 552
Benefits 3 27
Annual performance related bonuses – –
616 579
Further disclosures are provided in the Report by The Board to Shareholders on Directors’ Remuneration.
Average monthly number of persons employed including Executive Directors:
2002 2001
No. No.
Sales, support, marketing 116 134
Implementation and consulting 107 85
Development and product 168 167
Management and administrative (including executive directors) 69 70
460 456
2002 2001
£’000 £’000
Staff costs, including directors, comprised:
Wages and salaries 21,646 18,180
Social security costs 2,045 1,267
Pension costs 444 384
Other costs 852 313
24,987 20,144
Pension costs represent amounts paid to employees’ personal pension plans under the flexible benefits scheme.
7  INTEREST PAYABLE AND SIMILAR CHARGES
2002 2001
£’000 £’000
Bank interest 15 25
Finance lease interest 4 17
Other 312 31
Total 331 73
Other charges relate to costs written off on conversion of the convertible capital bond issued by Independent
Technology Systems Limited to Intec Telecom Systems PLC (see note 12).
Page_44 Intec Telecom Systems PLC Annual report and accounts 2002 Year ended 30 September 2002
Notes to the accounts continued
8  TAX ON LOSS ON ORDINARY ACTIVITIES
2002 2001
£’000 £’000
Current taxation:
UK corporation tax at 30% (2001: 30%) – 454
Overseas taxation 1,098 753
Prior year 273 (105)
Share of tax in associate at 30% – 38
Total current tax 1,371 1,140
Deferred taxation:
Origination and reversal of timing differences (72) –
Tax on loss on ordinary activities 1,299 1,140
The standard rate of current tax for the year is 34% (2001: 34%), based on the US federal income tax rate, since
the largest source of the Group’s revenues is in the USA. The current tax charge for the year exceeds 34% for the
reasons set out in the following reconciliation.
It is expected that the tax charges will continue to be reduced by the benefit of tax deductions for goodwill in the
US.
2002 2001
£’000 £’000
Loss on ordinary activities before tax (13,483) (139,231)
Tax on profit on ordinary activities at standard rate (4,583) (47,339)
Factors affecting charge for the period:
Depreciation in excess of capital allowances 124 77
Goodwill amortisation 2,325 2,879
Amounts written off investments/impairment of goodwill 2,794 45,430
Permanent differences (49) (68)
Relief for overseas tax (322) (207)
Utilisation of tax losses (13) (65)
Tax exemption on overseas profits (46) (111)
Withholding taxes 611 601
Foreign tax on branch profits 250 77
Higher/(lower) rates of overseas tax 6 (67)
Prior year 274 (105)
Share of tax in associate – 38
Total amount of current tax 1,371 1,140
Page_45 Intec Telecom Systems PLC Annual report and accounts 2002 Notes to the accounts continued
Year ended 30 September 2002
9  (LOSS)/EARNINGS PER ORDINARY SHARE
2002 2001
£’000 £’000
Basic and diluted loss (14,782) (140,371)
Amortisation of goodwill and other intangible assets 7,079 8,680
Impairment of goodwill 7,464 133,400
Amounts written off investments 321 283
Exceptional Polish debtor provision 776 –
Adjusted earnings after tax 858 1,992
Number Number
Basic and diluted weighted average number of shares 186,219,551 175,007,925
Pence Pence
Basic and diluted loss per ordinary share (7.94) (80.21)
Amortisation of goodwill and other intangible assets 3.80 4.96
Impairment of goodwill 4.01 76.23
Amounts written off investments 0.17 0.16
Exceptional Polish debtor provision 0.42 –
Adjusted earnings per ordinary share 0.46 1.14
For the year ended 30 September 2002 and the year ended 30 September 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.
10  INTANGIBLE ASSETS
IPR Goodwill Total
£’000 £’000 £’000
Cost
At 1 October 2001 2,041 213,320 215,361
Additions – 4,791 4,791
Translation differences (9) – (9)
At 30 September 2002 2,032 218,111 220,143
Accumulated amortisation
At 1 October 2001 306 141,874 142,180
Amortisation 234 6,845 7,079
Impairment provision – 7,464 7,464
Translation differences (2) – (2)
At 30 September 2002 538 156,183 156,721
Net book value
At 30 September 2002 1,494 61,928 63,422
At 30 September 2001 1,735 71,446 73,181
The Directors have performed impairment reviews of the goodwill arising on the company’s 2001 acquisitions.
This has resulted in a write-down of £5.7 million on the goodwill relating to i2i and £1.7 million on the
acquisition of Dataphone (UK) Limited.
Page_46 Intec Telecom Systems PLC Annual report and accounts 2002 Year ended 30 September 2002
Notes to the accounts continued
11  TANGIBLE FIXED ASSETS
Computer Furniture
Leasehold Motor software and and
improvement vehicles equipment equipment Total
Group £’000 £’000 £’000 £’000 £’000
Cost
At 1 October 2001 296 180 5,028 739 6,243
Acquired in year – – 125 – 125
Additions 61161,530801,687
Disposals – (128) (183) (104) (415)
Exchange differences (7) (1) (280) 10 (278)
At 30 September 2002 350 67 6,220 725 7,362
Accumulated depreciation
At 1 October 2001 73 162 2,592 407 3,234
Charge for year 84 17 1,451 193 1,745
Disposals – (125) (146) (99) (370)
Exchange differences (2) (1) (161) 7 (157)
At 30 September 2002 155 53 3,736 508 4,452
Net book value 
At 3 September 2002 195 14 2,484 217 2,910
At 30 September 2001 223 18 2,436 332 3,009
The net book value of computer software and equipment includes an amount of £nil (2001: £118,000) in respect
of assets held under finance leases. The net book value of motor vehicles includes an amount of £nil (2001:
£13,000) in respect of assets held under finance leases. The Company does not own any tangible 
fixed assets.
12  FIXED ASSET INVESTMENTS
Investment
and share
Own of profits
shares in associate Total
Group £’000 £’000 £’000
Cost
At 1 October 2001 and 30 September 2002 553 152 705
Provision
At 1 October 2000 283 – 283
Additions 175 146 321
As at 30 September 2002 458 146 604
Net book value
As at 30 September 2002 95 6 101
As at 30 September 2001 270 152 422
Own shares are held by the Intec Employee Share Trust. The trust currently holds 270,000 shares in the Company
at a cost of £2.05 each, which may subsequently be used to fund employers’ national insurance liability on the
exercise of unapproved share options. The middle market price of an ordinary share on 30 September 2002 was
£0.13. A provision of £175,000 has been made during the year to write down the value of the shares to £0.35
each.
Page_47 Intec Telecom Systems PLC Annual report and accounts 2002 Notes to the accounts continued
Year ended 30 September 2002
12  FIXED ASSET INVESTMENTS CONTINUED
Shares in Bond in
Loan to subsidiary subsidiary
subsidiary undertaking undertaking Total
Company £’000 £’000 £’000 £’000
Cost
At 1 October 2001 553 39,167 175,871 215,591
Additions –1811,9422,123
Transfers – 177,813 (177,813) –
Intra-group transfers – (16,090) – (16,090)
As at 30 September 2002 553 201,071 – 201,624
Provision
At 1 October 2001 283 – 99,300 99,583
Additions 175 41,564 – 41,739
Transfer – 99,300 (99,300) –
As at 30 September 2002 458 140,864 – 141,322
Net book value
As at 30 September 2002 95 60,207 – 60,302
As at 30 September 2001 270 39,167 76,571 116,008
On 26 November 2001, the company exercised the Convertible Capital Bond (“CCB”) issued by its subsidiary
company Independent Technology Systems Limited (“ITSL”). The CCB was exchanged for an equity investment in
“ITSL” equal to the cost of the Bond as at 26 November 2001 of £177.8 million. Accordingly the brought
forward provision against the CCB has also been transferred to provisions against equity investments.
Page_48 Intec Telecom Systems PLC Annual report and accounts 2002 Year ended 30 September 2002
Notes to the accounts continued
12  FIXED ASSET INVESTMENTS CONTINUED
The Company owns 100% of the share capital and voting rights of Independent Technology Systems Limited
(“ITSL”), Inception to Implementation (M) Sdn Bhd and Intec Telecom Systems do Brasil Limitada (marked with *
below). All other group companies listed below are owned by ITSL either directly, through a holding company or
another subsidiary company.
% of ordinary 
Country of share capital
registration and voting Principal
/incorporation rights activities
Sales support
development and
Independent Technology Systems Limited* Great Britain 100% implementation
Sales support and
Intec Telecom Systems do Brasil Limitada* Brazil 100% implementation
Sales support
development and 
Inception to Implementation (M) Sdn Bhd* Malaysia 100% implementation
Intec USA, Incorporated USA 100% Holding company
Sales support
development
Computer Generation, Inc USA 100% and implementation
Sales support
development and
Independent Technology Systems America, Inc USA 100% implementation
Computer Generation Europe Limited Great Britain 100% Dormant
Sales support 
Computer Generation (Asia Pacific) Pty Limited Australia 100% and implementation
Sales support 
Intec Telecom Systems (France) SARL France 100% and implementation
Intec Telecom Systems Deutschland GmbH Germany 100% Sales support
Sales support and 
Intec Systems (Asia) Sdn Bhd Malaysia 100% implementation
Independent Technology Systems (Asia) Pte.Ltd Singapore 100% Sales support
Intec Systems Americas Inc USA 100% Dormant
Dataphone Holdings Limited Great Britain 100% Holding company
Independent Technology Systems 
SL Unipersonal** Spain 100% Sales support
Intec Telecom Systems 
(Revenue Assurance Division) Limited** Great Britain 100% Sales support
Intec Telecom Systems Italia SpA Italy 100% Sales support
Interconnexxion Africa (Pty) Limited South Africa 100% Sales support
**Two of the Dataphone companies acquired last year have been renamed as above.
Page_49 Intec Telecom Systems PLC Annual report and accounts 2002 Notes to the accounts continued
Year ended 30 September 2002
13  DEBTORS
Group Company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
Trade debtors 13,676 13,535 – –
Amounts owed by subsidiary undertakings – – 40,213 19,173
Corporation tax recoverable 196 216 – –
Withholding tax recoverable – 82 – –
Deferred tax (see Note 18) 72 – – –
Other debtors 301 1,139 – 16
Prepayments and accrued income
Due within one year 3,720 3,669 85 11
Due after more than one year – 462––
17,965 19,103 40,298 19,200
14  INVESTMENTS HELD AS CURRENT ASSETS
Group Company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
Cash investments/term deposits in excess of 7 days 5,151 2,914 5,140 2,836
Escrow account – 52 – –
5,151 2,966 5,140 2,836
15  CREDITORS: FALLING DUE WITHIN ONE YEAR
Group Company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
Obligations under finance leases – 188 – –
Trade creditors 1,767 2,007 10 92
Corporation tax 454 454 155 153
Overseas tax 516 356 – –
Other creditors including taxation and social security 686 601 10 –
Accruals 1,670 2,235 120 178
Deferred/contingent consideration 703 1,918 – 1,918
5,796 7,759 295 2,341
16  CREDITORS: FALLING DUE AFTER MORE THAN ONE YEAR
Group Company
2002 2001 2002 2001
£’000 £’000 £’000 £’000
Obligations under finance leases – – – –
Maturity of obligations under finance leases
Within one year – 188 – –
Page_50 Intec Telecom Systems PLC Annual report and accounts 2002 Year ended 30 September 2002
Notes to the accounts continued
17  FINANCIAL INSTRUMENTS
The Group’s financial instruments comprise some cash and liquid resources, and various monetary items, such as
trade debtors, trade creditors, etc., that arise directly from its operations. The main purpose of these financial
instruments is to raise working capital for the Group’s operations.
Short-term debtors and creditors have been omitted from the following disclosures other than as appropriate in
the currency profile of monetary assets and liabilities.
The Group has invested £5 million in a cash plus fund yielding a variable rate of interest over the investment
term. This amount is accessible within 24 hours, however due to the nature of the investment it has been
classified as current asset investments.
At present, the Group does not enter into forward foreign currency contracts or other derivative instruments as
the related exposures are not material to the Group and do not warrant such complexity.
The fair values of the Group’s financial assets and liabilities as at 30 September 2002 and 30 September 2001 are
equal to their carrying value.
Currency profile of net monetary assets
The table shows the Group’s currency profile, which gives rise to net currency gains or losses recognised in the
profit and loss account. These comprise the monetary assets and liabilities of the Group which are not
denominated in the functional currency of the operation involved.
There were no hedging gains or losses at the start of the year, carried forward at the end of the year or
recognised in the year ended 30 September 2002 or 30 September 2001.
Sterling
2002 2001
Functional currency £’000 £’000
Euro 3,720 1,480
US Dollars 2,777 1,702
Other 409 2,235
6,906 5,417
18  DEFERRED TAX
The amount of deferred tax provided and unprovided in the financial statements is:
2002 2001
Provided Unprovided Provided Unprovided
£’000 £’000 £’000 £’000
Timing differences 72 6,311 – 8,501
The Directors have only recognised deferred tax assets to the extent that they consider it more likely than not that
the assets will be recovered. At the year end the group has an unprovided deferred tax asset of £6,311,000. This
includes the value of US losses carried forward of £7,244,000 offset by deferred tax liabilities on US short term
timing differences. The utilisation of the losses cannot be reliably foreseen.
Page_51 Intec Telecom Systems PLC Annual report and accounts 2002 Notes to the accounts continued
Year ended 30 September 2002
19  CALLED UP SHARE CAPITAL
2002 2001
Number and value of shares: Number £’000 Number £’000
Authorised: 
Ordinary shares of 1p each 300,000,000 3,000 300,000,000 3,000
Allotted, called up and fully paid: 
Ordinary shares of 1p each 190,326,242 1,903 183,611,910 1,836
On 8 March 2002, 4,509,607 new ordinary shares were issued as part of the final payment of deferred
consideration payable on the prior year acquisition of CHA Systems, Inc.
On 9 August 2002, 2,204,725 new ordinary shares were issued at £0.254 each, in full and final consideration for
the acquistion of Interconnexxion Africa (Pty) Limited.
Details of Share Options
The Company operates a UK Approved and Unapproved share option Scheme and a US Stock Option Plan for 
the benefit of Directors and employees. Details of the share options granted in the year are as follows:
Date from
Outstanding Outstanding which
1 October 30 September Exercise exercisable
2001 Granted Lapsed Exercised 2002 price (see notes)
Approved Scheme
1
88,221 – (6,832) – 81,389 £2.87
1/2
(2)
Approved Scheme
2
217,021 – (14,701) – 202,320 £2.87
1/2
(2)
Unapproved Scheme
1
259,527 – (37,549) – 221,978 £2.05 (2)
Unapproved Scheme
2
1,052,662 – (90,987) – 961,675 £2.05 (2)
US Plan
3
352,919 – (11,039) – 341,880 £3.40 (3)
Unapproved Scheme
3
29,939 – (1,472) – 28,467 £3.40 (3)
US Plan
4
12,185––– 12,185 £3.40 (4)
Unapproved Scheme
5
683,226 – (3,562) – 679,664 £0.87
1/2
(6)
US Plan
5
306,853 – (14,789) – 292,064 £0.87
1/2
(6)
US Plan
7
111,985 – (12,166) – 99,819 £0.87
1/2
(6)
Unapproved Scheme
5
124,999 – – 124,999 £1.07 (6)
Unapproved Scheme
8
685,524 – (72,259) – 613,265 £1.07 (6)
Unapproved Scheme
9
73,529––– 73,529 £1.01 (9)
Unapproved Scheme
10
73,529––– 73,529 £1.01 (10)
Approved scheme
11
– 1,936,075 (1,023,397) – 912,678 £0.70
1/2
(12)
Unapproved scheme
11
– 6,403,010 (4,114,746) – 2,288,264 £0.70
1/2
(12)
US Plan
11
– 4,940,664 (2,197,867) – 2,742,797 £0.70
1/2
(12)
4,072,119 13,279,749 (7,601,366) – 9,750,502
Page_52 Intec Telecom Systems PLC Annual report and accounts 2002 Year ended 30 September 2002
Notes to the accounts continued
19  CALLED UP SHARE CAPITAL CONTINUED
1 these options have no specific performance conditions and have vested and are exercisable as set out in note (2) below.
2 these options have vested as the applicable performance conditions were met, namely consolidated turnover for the year ended 30
September 2000 exceeded £20 million. The exercise dates for the these grants are as follows:
20% after the announcement of the results for the financial year ended 30 September 2000;
30% after the announcement of the results for the financial year ending 30 September 2001;
30% after the announcement of the results for the financial year ending 30 September 2002;
20% after the announcement of the results for the financial year ending 30 September 2003.
The expiry date is ten years from the date the options were granted.
3 these options were granted as part of the acquisition of CompGen. They have no specific performance conditions and have vested
and are exercisable in full.
4 these options were granted as part of the acquisition of CompGen. and were immediately exerciseable within specified time limits. To
the extent they were not exercised, they lapsed. The remaining options have met specific individual option-holder’s performance
conditions and have vested and are exercisable in full.
5 these options would only have vested in full if both of the following performance conditions had been met:
(a) consolidated turnover for the year 30 September 2001 exceeded £40 million and
(b) EBITDA for the year 30 September 2001 exceeded £3.8 million.
As turnover exceeded £36 million but was below £40 million and EBITDA exceeded £3.4 million but was below £3.8 million, 50% of
these options have vested and the remaining 50% have lapsed .
The vested options are exercisable as set out in note (6) below:
6 the exercise & expiry dates for the these grants are as follows:
20% after the announcement of the results for the financial year ended 30 September 2001;
30% after the announcement of the results for the financial year ending 30 September 2002;
30% after the announcement of the results for the financial year ending 30 September 2003;
20% after the announcement of the results for the financial year ending 30 September 2004.
The expiry date is ten years from the date the option was granted.
7 these options have no specific performance conditions and have vested and are exercisable as set out in note (6) above.
8 these options have no specific performance conditions and have vested and are exercisable as set out in note (6) above.
9 these options were granted to a senior member of staff. They have no performance criteria and will vest in full on 31 December
2002. They lapse if not exercised by 30 June 2003.
10 these options were granted to a senior member of staff. They have specific performance criteria and vest in full on 31 December
2002 provided that the performance criteria are met. They lapse if not exercised by 30 June 2003.
11 these options have the following performance conditions:
a. consolidated turnover for the year 30 September 2002 exceeding £44.46 million and
b. EBITDA for the year 30 September 2002 exceeding £5.53 million and
c. Divisional results exceeding targets;
d. Specific performance criteria for each member of staff.
As turnover exceeded £44.46 million but EBITDA was below £5.53 million, only those options where conditions (c) and (d) have been met
have vested and the remaining options have lapsed .
On vesting, these options are exercisable as set out in note (12) below:
12 the exercise & expiry dates for these grants are as follows:
20% after the announcement of the results for the financial year ended 30 September 2002;
30% after the announcement of the results for the financial year ending 30 September 2003;
30% after the announcement of the results for the financial year ending 30 September 2004;
20% after the announcement of the results for the financial year ending 30 September 2005.
The expiry date is ten years from the date the option was granted.
The market price of the Company’s Ordinary shares as at 30 September 2002 was £0.13 and the high and low during the year ended 30
September 2002 was £0.98 and £0.13 respectively. The average closing middle market price for the year was £0.54.
Page_53 Intec Telecom Systems PLC Annual report and accounts 2002 Notes to the accounts continued
Year ended 30 September 2002
20  STATEMENT OF MOVEMENTS ON SHARE CAPITAL AND RESERVES
Called Share Foreign Profit
up share premium Other Merger exchange and loss
capital account reserve reserve reserve account Total
Group £’000 £’000 £’000 £’000 £’000 £’000 £’000
As at 1 October 2001 1,836 235,366 2,497 249 (151) (139,107) 100,690
Adjustment to fair value 
of shares issued as part of 
contingent consideration – – 340––– 340
Issues of ordinary shares 67 3,286 (2,737) – – – 616
Decrease in deferred consideration – – (100) – – – (100)
Loss for the period ––––– (14,782) (14,782)
Foreign exchange translation –––– (557) – (557)
At 30 September 2002 1,903 238,652 – 249 (708) (153,889) 86,207
Called Share Profit
up share premium Other and loss
capital account reserve account Total
Company £’000 £’000 £’000 £’000 £’000
As at 1 October 2001 1,836 235,366 2,497 (91,086) 148,613
Adjustment to fair value of shares issued 
as part of contingent consideration – – 340 – 340
Issues of ordinary shares 67 3,286 (2,737) – 616
Decrease in deferred consideration – – (100) – (100)
Loss for the year – – – (40,222) (40,222)
At 30 September 2002 1,903 238,652 – (131,308) 109,247
21  FINANCIAL COMMITMENTS
The Group’s financial commitments in respect of operating leases:
2002 2001
Land and Land and
buildings Other buildings Other
Company £’000 £’000 £’000 £’000
Leases which expire: 
Within one year 83 144 129 61
Within two to five years 949 – 957 146
After five years 111 – ––
1,143 144 1,086 207
The Company has no commitments under operating leases.
Page_54 Intec Telecom Systems PLC Annual report and accounts 2002 Year ended 30 September 2002
Notes to the accounts continued
22  RELATED PARTY TRANSACTIONS
Amounts Amounts 30
30 September charged paid September
Related 2001 to/(from) (received) 2002
party Transaction £’000 £’000 £’000 £’000
Starbrook BV i Accounting sundry expenses 75 55 (64) 66
Iocore Australia ii Payroll services (1) (4) 5 –
Iocore Benelux iii Services & related expenses (60) – 60 –
Adaptive Systems iv Payroll services (8) (32) 40 –
i Starbrook BV is a registered company in Amsterdam and a wholly owned subsidiary of Mican Limited.
ii Mican Limited is the ultimate parent company of Iocore Australia (75%).
iii Iocore Benelux is wholly owned by Iocore Finland which is jointly >50% owned by Mican Limited and
Starbrook BV.
iv Mican Limited is the ultimate parent company of Adaptive Systems (70%).
As disclosed in the previous annual report the immediate parent company is Mican Limited, which at 30
September 2002 owns 44.9% of the issued ordinary share capital. To ensure that the Company is able to operate
and make decisions independently, Mican has entered into a contractual undertaking with the Company (the
“Relationship Agreement”) that for as long as it holds Ordinary Shares, representing more than 30 per cent of the
issued ordinary share capital of the Company, it (and it will procure that its associates) shall conduct any
arrangement or relationship with the Company so as to ensure that all transactions and relationships between
Mican (and its associates) and the Company in the future will be at arms’ length and on a normal commercial
basis. The Relationship Agreement is intended to prevent a conflict of interests arising between the Company and
Mican (or any of its associates), or the possibility of arrangements taking place to the detriment of the general
body of shareholders of the Company in this context, or the company’s independence being compromised.
The Board believes that the Company is capable of carrying on its business independently of Mican and its
associates and that all transactions and relationships between the Company and Mican and its associates are and
will be at arm’s length on normal commercial terms. The terms of the Relationship Agreement provide that each
party shall (and shall exercise all powers vested in it to procure, so far as it is properly able, that, in the case of
Mican, each of its associates and, in the case of the Company, each other member of the Group, shall) only enter
into, amend or terminate any transaction between Mican or any of its associates and any member of the Group
with the approval of the majority of the independent Non-Executive Directors.
Page_55 Intec Telecom Systems PLC Annual report and accounts 2002 Trading record
2000 2001 2002
£’000 £’000 £’000
Turnover 
Continuing operations 20,279 39,798 45,853
Acquisitions –– 1,621
Total turnover 20,279 39,798 47,474
Total cost of sales (6,514) (12,675) (15,430)
Gross profit 13,765 27,123 32,044
Distribution costs (3,258) (9,158) (9,945)
Administrative expenses:
Development expenditure (3,029) (5,869) (8,026)
Amortisation of goodwill and other intangible assets (100) (8,680) (7,079)
Impairment of goodwill – (133,400) (7,464)
Other exceptional items (579) – (776)
Other administrative expenses (3,639) (10,140) (12,079)
Total administrative expenses (7,347) (158,089) (35,424)
Operating profit/(loss)
Continuing operations 3,160 (140,124) (12,223)
Acquisitions –– (1,102)
Group operating profit/(loss) 3,160 (140,124) (13,325)
Share of operating profit in associate 153 78 –
Amount written off investments – (283) (321)
Net interest receivable and similar income 642 1,171 494
Net interest payable and similar charges (118) (73) (331)
Profit/(loss) on ordinary activities before taxation 3,837 (139,231) (13,483)
Tax charge on (loss)/profit on ordinary activities (957) (1,140) (1,299)
Profit/(loss) on ordinary activities after taxation and 
retained profit/(loss) for the financial year 2,880 (140,371) (14,782)
Adjusted net earnings after tax 3,536 1,992 858
EBITDA before exceptionals 4,520 3,414 3,739
(Loss)/Earnings per share – basic 2.17p (80.21p) (7.94p)
(Loss)/Earnings per share – adjusted 2.67p 1.14p 0.46p
Contracted customer base* 56 203 272
Contracted installations* 73 257 383
*Figures provided include customer and installation data for acquired companies only after their 
acquisition date.
Page_56 Intec Telecom Systems PLC Annual report and accounts 2002