Annual Report 2006 Contents
INTELEK designs and manufactures electronic systems for
satellite and microwave communications and is a specialist
manufacturer for the aerospace market.
Group Highlights 1
Chairman’s Statement 2
Chief Executive’s Review 4
Financial Review 16
Directors and Advisers 18
Directors’ Report 19
Statement of Directors’ Responsibilities 21
Corporate Governance Report 22
Remuneration Report 26
Auditors’ Report (Group) 29
Consolidated Income Statement 30
Consolidated Statement of Recognised 
Income and Expense 30
Consolidated Balance Sheet 31
Consolidated Cash Flow Statement 32
Notes to the Financial Statements 33
Five Year Summary 58
Auditors’ Report (Company) 59
Notice of Meeting 63
Glossary 65
Group Company Addresses 68 1 INTELEK
Report and Accounts 2006
Group Highlights
Sales up 12% at £35.2 million (2005: £31.5 million)
Headline profit (before restructuring costs) up 6% to £1.8 million
(2005: £1.7 million)
Profit before tax on continuing operations up 29% to £1.8 million
(2005: £1.4 million)
EPS on continuing operations up 46% to 1.56p (2005: 1.07p)
Full year dividend maintained at 0.36p
1
28%
29%
43%
29%
31%
40%
Satellite 
Communication
Microwave circuits
and components
Aerostructures
2006
2005
2,500
2,000
1,500
1,000
500
0
Operating profit by business segment (£000)
 Satellite communications
 Microwave circuits and components
 Aerostructures
Sales by business segment
2006 Total £35.2 million 2005 Total £31.5 million 2 INTELEK
Report and Accounts 2006
2 2
Chairman’s Statement
million). A similar performance from Paradise Datacom
and a very strong positive performance from CML
was offset by profit slipping back at Labtech from the
continued reduction in the long-standing telecoms
volume programme. The acquisition of the microwave
products division and the continued development of
Labtech towards providing MMIC packages and
specialist PCBs will reduce the company’s reliance on
volume telecoms work. 
Under International Financial Reporting Standards,
adopted at the half-year but in the full year
accounts for the first time, headline profit increased
by 6% to £1.8 million. The previous year’s figure of
£1.7 million was prior to the loss of £0.12 million on
Pascall Electronics Limited sold in March 2005.
Headline profit is after net interest of £0.31 million
(2005: £0.45 million) and the new IFRS net pension
finance cost of £0.58 million (2005: £0.63 million).
Further comment on the effects of the changeover
to International Financial Reporting Standards, I will
leave to Kevin Edwards in his Financial Review.
Profit before tax, at £1.8 million, recorded an
increase of 29% over the previous year, benefiting
from nil restructuring costs (2005: £0.3 million).
Dividend
The Board is recommending a maintained final
dividend of 0.24p (2005: 0.24p) per ordinary share,
bringing the total dividend for the year to 0.36p
(2005: 0.36p). If approved at the Annual General
Introduction
I am pleased to report that the Group continued to
make significant progress during the year. The new
microwave products division is now fully integrated
into Labtech. Paradise Datacom’s high data rate
modem is in production and operations in the
United States performed exceptionally well. CML
signed a 5 year supply agreement with Airbus after
a year in which both operational and financial
performance exceeded expectations.
Earnings per share on continuing businesses were
1.56p, compared with the previous year’s figure of
1.07p. Total borrowings increased by £1.1 million in the
year, mainly as a consequence of the purchase of the
microwave products division at Milton Keynes.
Results
Sales for the year increased by 11.7% to £35.2
million on a continuing company basis. CML
showed the highest volume growth with sales
increasing by 25%. At Paradise Datacom sales of
solid state power amplifiers increased by 21%
although overall sales increased by a modest 3%
due to a dip in modem sales as a result of the
anticipated effect of one long-standing product
being superseded by a more sophisticated modem
which only moved into volume production in
January 2006.
Headline operating profit (before restructuring costs),
at £2.7 million, was marginally lower than 2005 (£2.8
David Bramwell 3 INTELEK
Report and Accounts 2006
Meeting on 15 September 2006, this final dividend
will be paid on 27 September 2006 to shareholders
on the register at the close of business on 
1 September 2006.
Strategy
Our strategy continues to be centred on the
development of our businesses in the
communications industry and, in particular, the
satellite element of that industry. We intend to
develop shareholder value by building an integrated
Group with a significant share of niche global
markets in our chosen field of communications. We
also intend to enhance shareholder value by
continuing to support and develop our
aerostructures business for as long as it remains
part of the Intelek Group. We firmly believe in the
ability of our existing businesses to grow
organically within their chosen markets by sound
investment in product development, capital
equipment and enhanced geographic coverage. We
will also complement this organic growth by
suitable acquisition within our core activity as and
when the right opportunity is identified.
People
The skill, commitment and enthusiasm of our
employees are key to the ongoing success of the
Group and, on behalf of the Board, I would like to
record my sincere thanks to them for their loyalty
and valued contributions during the year. I would
also like to advise you that, after five years’ service
to the Group, Nigel Mills has tendered his resignation
to take effect from the date of the Annual General
Meeting in September. Nigel has been reducing his
time commitment to the Group and, after a period as
Chairman, is currently Non-Executive Deputy
Chairman. On behalf of the Board I would like to
thank Nigel for his contribution to the Group.
Prospects
We continue to be alert not only to the changes in
our marketplace but also to opportunities to advance
business in general. We intend to address the issue
of the Pension Scheme deficit by implementing
several initiatives underpinned by the knowledge that
a strong and successful Group is the real long-term
assurance a pension scheme has that its obligations
will be met. Many of the changes made at Paradise
Datacom over the last two years have borne fruit but
some have still so to do. At Labtech, the business
model is changing and I would not expect to see
significant growth or benefit coming from these
changes in the short term. CML should continue to
benefit from a vibrant market and its own improving
performance. Overall, I expect to see steady but
significant growth in our performance with a
continuing improvement in our balance sheet.
David M Bramwell
Chairman
6 June 2006
3
Overall, I expect to see steady but significant growth 
in our performance with a continuing improvement in 
our balance sheet. 4 INTELEK
Report and Accounts 2006
4
Intelek made encouraging progress overall with profit
before tax of £1.8 million, slightly ahead of market
expectations and some 29% higher than the 
previous year.
Paradise Datacom ended the year strongly and
increased sales of its solid state power amplifiers
(SSPAs) by over 20% on the previous year, which in
itself was an increase of 33% on 2004. Part of this
growth came from additional government business,
the sector of our market which has shown the most
consistent upward trend in recent years. Paradise
Datacom’s strong showing in amplifier products made
up for lower sales in modems where the new Evolution
modem has not yet been able to fully offset the
anticipated decline in the older P300 modem.
Nevertheless, the increasing level of Evolution order
inflow in the final quarter, combined with a $240k
government contract at the end of the year for the new
modem, provides us with growing confidence of a
recovery in modem sales in the current year.
Although our new Labtech Microwave Components
operation at Milton Keynes exceeded our original
aspirations, Labtech Circuits suffered from the
predicted continuing tail-off in one of its older
technology volume programmes on which I have
previously reported. This programme peaked in 2001
with sales of £9.0 million, representing 66% of
Labtech’s sales, while in the year to 31 March 2006
deliveries had reduced to £2.7 million, representing
26% of Labtech’s total sales. Sales on this programme
are expected to be in the order of £1.8 million in the
current year. On the new business front, it was very
pleasing to see Labtech receive the initial order for
engineering and pre-production units on a multi-year
military programme which requires the products and
technologies from both Labtech Circuits and Labtech
Microwave. We would not have won this programme
without the increased capability of both our sites and it
represents the type of work which is seen to be core
for the new, broader based Labtech.
The performance at CML was first-rate. On a sales
growth of 25%, CML has managed to triple its
operating profit to a level of 10% of sales — an
excellent figure in the extremely competitive
aerostructures market. The entire team at CML had
planned and implemented a number of changes during
the 2004/05 year which meant they were well placed
to respond efficiently to their major customers’
requirements to increase their respective build rates.
CML has maintained momentum throughout the year
Chief Executive’s Review
Ian Brodie 5 INTELEK
Report and Accounts 2006
5
and produced a very solid twelve month performance.
A measure of CML’s success and growing reputation
was that it was recently awarded a five year contract
by Airbus UK for the continuing manufacture of various
components on all of Airbus’ major current commercial
programmes. Deliveries of these components in
2005/06 amounted to £4.6 million.
Further action has been taken during the year on the
management of the Pension Scheme deficit including
a recent offer to certain deferred members of the
Defined Benefit Pension Scheme which would provide
them with an enhanced transfer value while, at the
same time, lowering the IAS 19 deficit. More detail will
be published once the likely take-up is known. Bank
facilities have been agreed to cover the maximum
potential level of take-up.
Intelek made encouraging progress overall with profit before tax of
£1.8 million, slightly ahead of market expectations and some 29%
higher than the previous year. 6 INTELEK
Report and Accounts 2006
Paradise Datacom, with facilities in Essex, UK and
Pennsylvania, USA, produces an extensive line of RF
and modem products used in the Satellite
Communications Industry. The worldwide satellite
communications  market is estimated at US $20 billion
according to various industry sources.
Satellite communications equipment is used
extensively on a worldwide basis to provide
internet/intranet, video, voice and other data services
for corporations, governments and the general
population. Paradise Datacom’s products are
incorporated in all facets of Satcoms from credit card
authorisation services to ruggidised military
applications. Solid state power amplifiers (SSPAs) are
used in the majority of satellite ground station
terminals and Paradise Datacom produces a wide
range of products to service this rapidly expanding
market segment. In addition, Paradise Datacom
produces satellite modems which are designed to
provide high capacity connections from multiple
locations to centralised hub stations. GSM back haul
services, internet trunking services, military
communications and disaster services are a few of the
market segments in which Paradise Datacom
products are applied.
Satellite communications is unique compared to fibre,
microwave and other technologies in that global
coverage can be initiated almost instantaneously by
just placing into service small inexpensive earth station
terminals. These types of terminals, which incorporate
Paradise Datacom products, are used where rapid
deployment of video, voice and data services are
essential and/or for locations that are remote and do
not have an adequate communications infrastructure.
In an increasingly global economy, satellite
communications will continue to grow to meet the
telecommunications needs of corporations,
governments and the military where there is a lack of
telecommunications infrastructure.
Paradise Datacom’s modem products consist of the
Evolution series designed to transmit duplex data
signals at rates up to 52 Mb/s (mega-bits per second),
and the legacy P300 series modem. The Evolution
modems utilise the latest firmware device technology
and are rich with features currently in demand by
government and commercial markets worldwide.
Paradise Datacom’s RF product range is one of the
most extensive available in the industry. The range
consists of Solid State Power Amplifiers (SSPAs) with
output power levels from 2 watts to 1,100 watts,
Block Up Converter modules (BUCs), Low-Noise
Amplifiers (LNAs) and a host of redundancy and
combining systems.
Satellite Communications Equipment
Paradise Datacom
Sales £14.1m (2005: £13.7m)
Operating Profit £2.0m (2005: £2.0m)
John Restivo President 7 INTELEK
Report and Accounts 2006
Paradise Datacom has identified a number of key
sectors to target which include Satellite News
Gathering (SNG), Military/Government, tube
amplifier replacement and GSM mobile phone
infrastructure. Industry-wide migration from tube
amplifiers to SSPA technology continues at an
increasing rate and, as a result, Paradise Datacom
has experienced a 21% growth in SSPA and low
noise amplifier (LNA) sales. 
In early 2005, Sales and Marketing launched a
targeted campaign on the tube-dominated SNG
market through market-focused advertisements,
field demonstrations and customer presentations.
The success of the campaign has been notable and
Paradise Datacom’s SNG repeat-customer list now
includes the leading US mobile satcom integrators.
Twelve months ago Paradise Datacom had
negligible business from this market segment but
turnover for the last financial year was over £1
million and continues to grow each quarter. 
The implementation of our Military/Government
marketing strategy has resulted in another strong
year of amplifier sales from this significant portion
of the global satcom market. Our products are
being utilised in US military networks in the Persian
Gulf as well as in Homeland Security and disaster
recovery networks in the US. In addition, Paradise
Datacom received additional follow-on contracts for
high power S-Band amplifiers used for the
telemetry, tracking and control of a constellation of
weather satellites. We are currently in pursuit of
three additional contracts for systems earmarked
for deployment during the 2006 fiscal year. Our
R&D Department is in the process of developing
new products specifically suited to this market.
The US operation has invested additional resource
in further development of the SSPA product line,
which has resulted in the release of several new
products. Paradise Datacom continues to push the
“state of the art” in the areas of RF power density,
remote access and packaging, including the use of
composite materials to gain weight and thermal
advantages. The move to our new State College
facility on the campus of Penn State University has
resulted in increased operational efficiencies and an
improved recruiting environment. Lower margin
VSAT (very small aperture terminal) amplifier
products continue to be de-emphasised as we
focus on higher margin SSPA products. This has
positioned the US operation for solid growth and
continued success for the future.
Government and Homeland Security programmes
continue to be the major market segments targeted
by our sales and marketing personnel with several
large programmes not yet awarded that are likely to
incorporate Paradise amplifier and modem
products. Paradise Datacom also continues to
expand its sales and marketing activity into regions
of the world not previously addressed. Sales from
the Asia Pacific region have increased from £0.2
million to over £1.4 million during the past year with
our anticipation of continued, strong growth based
on increased presence and new modem products. 
Paradise Datacom’s UK operation, being responsible
for the development of the Evolution series modem,
Satellite News Gathering in Iraq
Evolution Modem capable of 
up to 52 mega-bits per second 8 INTELEK
Report and Accounts 2006
continued to expand feature sets and completed the
development of a new modem protection switch and
the L-band version of the modem. The initial
deployment of Evolution modems to customer sites
for beta-testing has been completed with several
high profile customers resulting in an increasing rate
of order flow in the final quarter.
Our legacy modem products continue to find
market demand, with notable success in
developing countries installing GSM phone
infrastructure. The GSM market continues to
represent the largest commercial market for satellite
modems and medium power amplifiers used for the
transfer of traffic from voice and data circuits to
base station locations for eventual trunking on to
national telephone and data networks. We expect
sales of our legacy modem to continue over the
next few years, with a gradual reduction in
volumes, during which period we expect to see the
Evolution modem recover Paradise’s market share.
Although our modem product line experienced a 13%
decline in turnover and 10% decline in margin
contribution from the previous year, positive results
from our SSPA marketing and deployment strategies
has enabled us to improve our operating profit by 3%.
As we shift more of our market focus back on to
modems while still spending 12% of our total revenues
on R&D programmes, we expect to see solid growth
across both modem and RF product lines.
2004 2005 2006
135
130
125
120
115
110
105
100
Sales/Head (£000)
2004 2005 2006
4.5
4.4
4.3
4.2
4.1
4.0
3.9
3.8
3.7
3.6
Stock turns
2004 2005 2006
60
50
40
30
20
10
0
Return on Capital Employed (%)
Key Performance Indicators 
Three key ratios for each of the operating companies have been selected to highlight performance
movement in the last three years with brief explanatory comments where necessary.
(a) The sales per head ratio continues to benefit from the restructuring changes made over the last two years.
(b) Stock turns reduced in 2006 due to the requirement for a higher level of investment in inventories to support the amplifier
growth and the new modem product launch.
(c) ROCE has improved over the last three years, mainly as a result of the targeted reduction in total capital employed.
An earth station equipped with Paradise Datacom products 9 INTELEK
Report and Accounts 2006
Microwave Circuits and Components
Labtech
Dr Brian Mazonas
Managing Director
Labtech Circuits is one of the world leaders in
advanced microwave printed circuit processing
technology and MMIC (Monolithic Microwave
Integrated Circuit) packaging and multi-chip
interconnect, used extensively at component and
sub-system level within the Telecommunications
market. Microwave circuit boards are
manufactured in prototype and high volumes for
major telecommunications, military and space
system customers worldwide. 
Labtech Circuits’ technology is based on
processing high performance PTFE microwave
substrates with plated through holes. Circuits can
be bonded together in a multi-layer construction
and include precision machined metal backing for
high frequency applications such as broadband
digital radio links and microwave power amplifiers.
A “Chip & Wire” assembly clean room provides
fully assembled and packaged MMIC circuits which
enable very high levels of integration to be
achieved whilst utilising Labtech’s cost-effective
manufacturing techniques.
The combination of precision circuit machining,
(now including laser technology), advanced
automatic chemical processing and MMIC
packaging and assembly gives Labtech Circuits a
leading world-class capability in the microwave
printed circuit board market.
Labtech Microwave exploits its 16 years’ experience
to manufacture a range of high-end broadband
microwave components mainly for the European
defence market. Using high accuracy thin film
ceramic circuit manufacturing capability, Labtech
Microwave concentrates on designing and
manufacturing multi-octave microwave amplifiers,
switches and detector log video amplifiers (DLVAs).
The division operates out of a highly equipped
modern factory in Milton Keynes, which also
includes a 4,000 sq. ft. clean room. Labtech
Microwave and Labtech Circuits have worked
successfully together to design and develop a new
range of microwave products, which includes
broadband PIN switches, low cost gain modules
and high performance DLVAs.
Sales £10.2m (2005: £9.1m)
Operating Profit £0.7m (2005: £1.1m) 10 INTELEK
Report and Accounts 2006
Although the combination of Labtech Circuits and
Labtech Microwave generated sales growth of £1.1
million, the operating profit was eroded to £0.7
million by an expected decline in some of Labtech
Circuits’ principal older production programmes,
together with some unwelcome and substantial
increases in the cost of electricity and basic raw
materials such as gold and silver. However, Labtech
Microwave sales and profit were ahead of our
expectations in a year which has seen it fully
integrate into the Labtech structure.
The strategic goal of Labtech is to become an
integrated supplier of specialist microwave circuits,
assembled circuits and fully designed,
manufactured and tested microwave components
to the Telecommunications, Defence, SatCom and
Space markets. The combination of Labtech
Circuits and Labtech Microwave takes this initiative
much closer to fruition. Labtech’s prowess in
packaging miniature semiconductor MMICs
(monolithic microwave integrated circuits) and
providing a turn-key assembly and test facility at
Labtech Microwave is being heavily marketed.
During the trading year Labtech invested
approximately £1 million in processing equipment
which included a second Laser profiling centre,
high accuracy automatic photoprinter and a
dedicated line for the processing of precision thin
dielectric substrates for MMIC packaging and
multilayer applications. Key product development
programmes have been established throughout the
year including broadband PIN Switches, ERDLVAs
(extended range detector log video amplifiers)
aimed at the electronic warfare market, and
broadband amplifiers. Labtech Microwave have
also developed new products based on the thin
dielectric PCB technology developed by Labtech
Circuits.
In 2005/06, Labtech successfully reduced its
dependency on the highly competitive Telecom
market from 81% to 63% mainly due to its
increased product offering into the Defence market.
Mobile telecom has been an important sector for
Labtech, but volume and margins are reducing due
to global competitive pressures and the availability
of Asian suppliers, particularly for the lower end,
high volume boards. Labtech expects further
reduction in its volumes in this sector, whilst
expanding its services to the smaller volume, niche
segments of the market, such as military and
satcoms. Towards the end of the year the European
defence market benefited from the release of certain
EFA (European Fighter Aircraft) ‘Tranche 2’ contracts
and Labtech obtained some significant orders. The
added advantage of being able to offer specialist
microwave assembly and test services as well as
high-end PCBs is appealing to the defence market.
European Fighter Aircraft
Mobile telecom mast 11 INTELEK
Report and Accounts 2006
Labtech takes its responsibility to the environment
and its employees very seriously. As a heavy user
of numerous chemicals in its processes, Labtech
has adopted world-class working practices. The
International environment standard, ISO 14001, has
already been attained at Circuits’ location in
Presteigne and accreditation is targeted in June
2006 for the Milton Keynes site. Labtech works
closely with all regulating authorities, keeping in line
with the ever-tightening specifications. By way of
example, the Circuits’ operation uses about 276
cubic metres of water a day, then cleans it through
a high specification treatment plant before returning
it to the water supplier.
The outlook for 2006/07 remains cautious as
volumes at Labtech Circuits are expected to
decline further in older standard production
programmes. However, newer technology
programmes are increasing in production and as
the year progresses the investments in product
development and capital equipment will
increasingly attract new opportunities to a
repositioned Labtech.
One of Labtech’s recently 
released Microwave components
2006 includes Labtech Microwave
The inclusion of Labtech Microwave in the asset base and the fall in Labtech Circuit’s performance have resulted in a downturn in
the key ratios for the last 12 months.
2004 2005 2006
94
92
90
88
86
84
82
80
Sales/Head (£000)
2004 2005 2006
10
8
6
4
2
0
Stock turns
2004 2005 2006
35
30
25
20
15
10
5
0
Return on Capital Employed (%)
Key Performance Indicators
Examples of Labtech Circuits’ boards 
and MMIC Packaging 12 INTELEK
Report and Accounts 2006
Aerostructures
CML
Geoff Stewart
Managing Director
Sales £11.0m (2005: £8.8m)
Operating Profit £1.1m (2005: £0.4m)
CML provides a comprehensive service in the
manufacture of aircraft structures and system
components from the supply of individual machined
or composite components through to complete
sub-assemblies or kits of parts.
The group has four divisions located on two sites in
Birkenhead in the North West of England.
The Precision Machining Division is focused on 4
and 5-axis machining of aluminium and hard metals.
Principal products, covering almost the full range of
Airbus aircraft, include interspar ribs, landing gear
rib supports and sidestay fittings, underwing access
panels and engine thrust fittings and aft mounting
brackets. The award this year of a 5-year contract
covering these items also includes an additional
package of stringers for the Airbus A340.
Components for military and rotary wing aircraft are
also supplied to other customers. Of particular
significance in 2006/07 will be the introduction of
work on the A400M programme through other
suppliers to Airbus.
The Composites Division specialises in the
manufacture and repair of glass and carbon fibre
components and assemblies. Products include
various wing and fuselage fairings, covers, and
panels, nose and tail cone assemblies, air-
conditioning ducts, flooring, etc. The largest new
build programme is the Raytheon Hawker 800XP
whilst spares and other new build requirements are
supplied for a variety of civil, business and military
aircraft programmes.
The Fabrication Division manufactures extruded
fuselage and wing stringers for the Hawker 800XP
build programme plus various other sheet metal parts,
primarily as spares for the in-service fleet of Airbus
aircraft.
The Treatments Division provides a comprehensive
in-house surface treatments capability supporting
the other three divisions but also has a valuable
external customer base. INTELEK
Report and Accounts 2006
Raytheon Hawker corporate jet Airbus A318, 319, 320 and 321
13
CML performed extremely well in 2005/06 with
sales up by 25% and operating profit increasing
threefold on the previous year. Tight control of
manufacturing processes, underpinned by careful
financial management, has seen gross margins
sustained, stock turns improve and a positive cash
position maintained throughout the year. 
The upturn in sales was principally a reflection of
improved market conditions, in particular the
increase in build rates for the Airbus family of
aircraft and Raytheon’s Hawker 800 series 
business jets. 
The main volume increases came in the Precision
Machining division, where we had quickly increased
capacity recognising the shifting pattern in the
marketplace. Sales here were up 24%, and £400k
was invested in new machining centres. Sales in
the Composites division grew by 41%, and with the
market trend toward the increasing use of
composite materials, we shall be looking at how
best to develop this valuable capability. 
During the year, the management team was
strengthened with additional support in production
management and continuous improvement
techniques. Development of CML’s 164 employees
continues to be a priority, with training at all levels
within the company. This programme, and further
investment in machinery, will improve productivity,
expand capacity and secure CML’s long-term future
in what is expected to be a strong aerospace
market in at least the next three years. 
Significant steps have been taken to implement
CML’s strategy to gain new business from the
existing customer base and develop new
customers and programmes both in the UK and
overseas. A major achievement in the year was
securing a five-year agreement with Airbus, our
largest customer, guaranteeing a percentage of
volume requirements for certain components
across a range of aircraft. In 2005/06, CML shipped
£4.6 million in respect of these components. This
provides a firm platform from which to develop the 14 INTELEK
Report and Accounts 2006
business. In the latter part of 2005, we
strengthened our sales team, employing a sales
agent based in France. We have already received
orders from two major French suppliers to the
European aerospace industry. 
As part of CML’s ongoing commitment to improve
health and safety and the environment, we have
focused training for both our Health & Safety
Committee and supervision in comprehensive risk
assessment and improvement techniques.
Investment in energy control, swarf management
and coolant reclamation systems has yielded
significant reductions in waste in support of
working toward achieving ISO 14001 accreditation
in the next twelve months.
Airbus A400M, Military Aircraft
2004 2005 2006
80
70
60
50
40
30
20
10
0
Sales/Head (£000)
2004 2005 2006
10
8
6
4
2
0
Order book (£ million)
2004 2005 2006
40
35
30
25
20
15
10
5
0
Return on Capital Employed (%)
Key Performance Indicators
Improvement in all of the above key ratios reflects CML’s strong performance over the past year and the current health of the aerospace
industry. Order book is for 12 months only. 15 INTELEK
Report and Accounts 2006
Paradise Datacom currently operates within a
robust satellite communications market bolstered
by a number of strategic investment programmes
across government sectors. We currently benefit
from industry-leading solid state technology in the
amplifier market which allows us to increase the
power levels and win market share from tube
amplifiers. In the modem market, the new Evolution
high data rate product will be competing with our
two much larger competitors and their longer
established high data rate modems. This will
provide us with a significant challenge to grow
market share meaningfully but we believe firmly
that we now have the platform and the additional
features which will allow us to do this over the next
two/three years.
Labtech is beginning to see the benefits of its new
business model but will still have to offset the fall-
off in its high volume telecommunications product.
The new investment in automatic assembly
equipment for the MMIC product and the new
process lines, combined with the opportunities
opening up for us in Microwave components,
should result in a significant change to Labtech’s
centre of gravity.
CML’s prospects at this time look excellent with a
12 month order book as at 31 March 2006 on
current build rates standing at £8.7 million (2005:
£7.9 million) and with the opportunity to broaden
significantly its customer base in Europe. The
recently announced Airbus contract also provides
CML with a visibility that allows them to initiate
appropriate investment programmes to meet the
considerable demands of the major Airbus
programmes over the next five years.
The deficit in the Defined Benefit Pension Scheme
will continue to require careful management, but we
have proven able to manage the obligation,
covering the agreed contribution level with steadily
increasing cash generation from our trading
operations.
The opportunities available to Intelek within our
existing markets look exciting. Although we are
dependent to a certain extent on the state of the
global economy, we believe the Group is operating
in the right markets with the right product offering
and has the calibre of people necessary for its
ongoing success. We look forward to updating
shareholders on our progress. 
Ian D Brodie
Chief Executive
6 June 2006
Outlook 16 INTELEK
Report and Accounts 2006
Financial Review
Kevin Edwards
International Financial Reporting Standards
(IFRS)
Results for the year have been reported for the first
time under IFRS. Comparative figures have been
restated accordingly. Reconciliations of key figures
between UK GAAP and IFRS are shown in note 37
to the financial statements. The Group has decided
not to apply IFRS to the individual accounts of the
parent company and subsidiaries, and a separate set
of accounts under UK GAAP are included for the
parent company at the back of the Annual Report.
The main effects of IFRS for the Group are:
i) replacement of goodwill amortisation with
annual impairment testing
ii) inclusion of the deficit of the defined benefit
pension scheme
iii) exclusion of dividends not yet paid
iv) separation of discontinued businesses, with
their post-tax results shown below tax on
continuing businesses
The net impact on equity at 31 March 2005 is a
reduction of £10.6 million to £11.0 million,
principally due to the pension fund deficit being
shown on the balance sheet.
Result
The 12% increase in sales to £35.2 million came
primarily from CML and the first full year of
Labtech’s microwave components acquisition. This
change in mix had a slight impact on gross
margins, down 1% to 28%. Sales and
administrative expenses increased by £0.5 million,
£0.2 million to support the growth in activity, and
£0.3 million for year-on-year one-off changes in
centrally held provisions and pension costs.
Research and Development costs
R&D investment at Paradise Datacom was
maintained at 12% of sales, of which £1.6 million
was charged to profit (2005: £1.6 million). Labtech
invested £0.2 million (2005: £Nil) in its new
microwave components division.
Finance costs
With lower average debt across the year, interest
costs reduced to £0.3 million and interest cover
(measured against headline operating profit) improved
to 8.7 times (2005: 6.2 times). Pension finance costs
are the net of the expected return on scheme assets
and implicit interest on scheme obligations. The net
cost of £0.6 million is down 7% on 2005.
Profit before tax from continuing operations
Restructuring costs in CML reduced profit before
tax in 2005 to £1.4 million. The 2006 result is 29%
higher at £1.8 million.
Taxation
The effective tax rate reduced from 35% to 27% of
profit before tax (34% to 27% on a headline basis,
as set out in Note 10). The principal reduction
derives from a more representative distribution of
the research and development cost for the new
Evolution modems between the UK and USA sales
organisations. This impacted on the 2004/05
computation, producing a prior year benefit in this 17 INTELEK
Report and Accounts 2006
£2.3 million. This was after £1.4 million of
contributions paid into the defined benefit pension
scheme and £0.25 million of working capital
injected into the new microwave components
division. Capital investments in the business,
including assets on finance lease, amounted to
£2.4 million. £1.0 million was invested at Labtech
as part of the strategy to move the business into
more complex processes, with additional laser and
multi-layer facilities. CML applied £0.6 million to
upgrade equipment, keeping in step with the
growth in aerospace demand. £0.3 million was
invested at Paradise, primarily on test equipment
and design projects. £0.5 million was applied in
settling the microwave acquisition cost and a
residual earn-out payment to the founders of
Paradise Datacom. After £1.0 million for interest,
tax, dividends and adjustments for foreign currency
restatement, the net debt movement was an
increase of £1.1 million to £3.4 million.
Shareholders’ equity
Actuarial gains and losses on valuing the defined
benefit pension scheme, over and above the charge
or credit made through the Income Statement, are
recognised directly in equity. In 2006, this gave rise
to a charge of £0.6 million (2005: £1.5 million). With
net profit for the year of £1.3 million and dividends
paid in the year of £0.3 million, equity closed £0.4
million higher at £11.4 million.
Kevin N Edwards
Finance Director
6 June 2006
year’s charge. Looking forward, the tax rate for the
Group is expected to increase to 32%–35% with
the increasing incidence of US-based profits and
likely reductions in available US tax reliefs.
Discontinued operations
There were no discontinued activities during the
year. The profit in 2005 is for the trading results and
profit on disposal of Pascall Electronics, sold on 
18 March 2005.
Earnings per share
EPS on continuing businesses increased 46% to
1.56p, 17% on a headline basis (i.e. before
restructuring costs). Total EPS for 2005 (3.31p)
includes the profit on disposal of Pascall
Electronics, £1.9 million.
Pension
The Group’s defined benefit pension scheme was
valued for IFRS purposes at 31 March 2006 by the
scheme actuary. The outcome was a 1% increase
in the gross deficit to £13.0 million. This was
disappointing, given the £2.8 million increase in
scheme assets. The £3.0 million increase in
liabilities came about from two primary factors: the
lowering of the discount rate from 5.5% to 5.0%
and the adoption of more up-to-date mortality
tables. In conjunction with the scheme trustee, the
Group is working with advisers on a number of
initiatives that may achieve a step reduction in the
deficit during 2006/07.
Cash flow
Cash generated from operations increased 21% to 18 INTELEK
Report and Accounts 2006
Directors and Advisers
David M Bramwell
Non-Executive Chairman. Age 57.
Appointed to the Board in October 2004. Deputy
Chairman of Rights and Issues Investment Trust plc
and Chairman of several venture capital backed
businesses. Previously Chief Executive of the
Peterhouse Group plc and Managing Director of two
engineering companies. David has a First Class
Honours Degree in Engineering and a Doctorate in
Business Management.
Nigel L Mills
Non-Executive Deputy Chairman. Age 45.
Appointed to the Board in 2001 as an Executive
Director on acquisition of Paradise Datacom Ltd by
Intelek. Became Non-Executive on 1 October 2004.
Founder of Paradise Datacom in 1988, Nigel has a
BSc (Hons) in Electrical & Electronic Engineering, is a
Chartered Engineer, and a Fellow of the Institute of
Electrical Engineers. 
Donald Wilson
Senior Independent Non-Executive Director. Age 73.
Appointed to the Board in 1995. Previously Managing
Director of Rank Xerox (UK) Limited, and Chairman of
Rank Xerox, Sweden, Norway, Denmark and Ireland.
Ian D Brodie 
Chief Executive. Age 54.
Appointed Chief Executive of the Group in 1999 after
joining the Board as Group Finance Director in 1992.
Held senior operational finance appointments within
the GEC, Plessey and Chloride Groups. Ian is a
member of the Institute of Chartered Accountants of
Scotland having trained at Binder Hamlyn and
obtained post-qualifying experience with Touche Ross
& Co. London.
Kevin N Edwards
Finance Director/Company Secretary. Age 49.
Appointed to the Board in May 2000. Previously
Finance Director of Textron Fastening Systems
Limited, a subsidiary of Textron Inc., and Finance
Director of several subsidiaries within the GEC Group,
having qualified as a Chartered Accountant with Ernst
and Young.
Auditors 
RSM Robson Rhodes LLP
Chartered Accountants
Centre City Tower, 7 Hill Street, 
Birmingham, B5 4UU
Solicitors
DLA
Victoria Square House, 
Victoria Square, Birmingham, B2 4DL
Bankers
Barclays Bank PLC 
Park House, Stoke Gifford, 
Bristol, BS34 8TN
Fortis Bank
The Imperium, Imperial Way, 
Worton Grange, Reading, RG2 0TD
Sovereign Bank. 
2790 West College Avenue, Suite 800,
State College,PA 16801, USA
Stockbrokers
Brewin Dolphin Securities 
Edmund House, 12–22 Newhall Street,
Birmingham, B3 3DB
Registrars 
and Transfer Office 
Lloyds TSB Registrars
The Causeway, Worthing, 
West Sussex, BN99 6DA 19 INTELEK
Report and Accounts 2006
Directors’ Report
The Directors present their report and the audited
financial statements for the year ended 31 March
2006.
Business review and principal activities
The principal activities of the Group are the design and
manufacture of electronic systems for satellite and
microwave communications and manufacture of
precision parts for the aerospace market. There have
not been any significant changes in the Company’s
principal activities in the year under review. The
Directors are not aware at the date of this report of any
likely major changes in the Company’s activities in the
next year.
This Report should be read in conjunction with the
Chairman’s Statement, the Chief Executive’s Review
and the Financial Review. In particular, details of the
Group’s trading during the year and an indication of
likely future developments are contained in the Chief
Executive’s Review on pages 4 to 15.
Results and dividends
The results for the year are set out on page 30. The
profit on continuing ordinary activities before taxation
amounts to £1,806,000 (2005: £1,402,000). An interim
dividend of 0.12p (2005: 0.12p) per Ordinary Share
was paid on 25 January 2006. A final dividend of 0.24p
(2005: 0.24p) per share is recommended for approval
at the Annual General Meeting on 15 September 2006.
It is proposed that this should be paid on 
27 September 2006 to shareholders on the register at
the close of business on 1 September 2006.
Research and development activities
The Group continued to invest in new product
development, primarily in satellite communications and
microwave components.
Key performance indicators
Key performance indicators are set out and explained
for each business segment in the Chief Executive’s
Review.
Principal risks and uncertainties facing the Group
The Annual Report contains certain forward-looking
statements. These statements are made by the
Directors in good faith, based on the information
available to them up to the time of approval of this
report. Actual results may differ from those expressed
in such statements, depending on a variety of factors.
These factors include customer acceptance of the
Group’s products; changes in customer requirements
and in levels of demand in the market; restrictions to
market access; competitive pressure on pricing,
delivery or technology; delays or additional cost in
product design and launch programmes; fluctuations
in manufacturing delivery performance, yields and
costs; the loss or lack of key personnel; overall
economic conditions.
Financial instruments
The Group’s operations expose it to a variety of
financial risks including the effects of changes in
interest rates on debt, foreign currency exchange
rates, credit risk and liquidity risk. 
The Group’s principal financial instruments comprise
cash and bank deposits, bank loans and overdrafts
and obligations under finance leases together with
trade debtors and trade creditors that arise directly
from its operations.
The main risks arising from the Company’s financial
instruments can be analysed as follows:
Price risk
The Group has no significant exposure to securities
price risk, except indirectly through its responsibility
for the Group defined benefit pension scheme.
Foreign currency risk
The Group is exposed in its trading operations to the risk
of changes in foreign currency exchange rates. The main
foreign currencies in which the Group operates are the
euro and the US dollar. The Group uses derivative
instruments in its management of this risk. This is
explained in notes 1 and 36 of these financial statements.
Credit risk
The Group’s principal financial assets are bank
balances, cash, and trade debtors, which represent
the Group’s maximum exposure to credit risk in
relation to financial assets.
The Group’s credit risk is primarily attributable to its
trade debtors. Credit risk is managed by monitoring
the aggregate amount and duration of exposure to any
one customer depending upon their credit rating. The
amounts presented in the balance sheet are net of
allowances for doubtful debts, estimated by the
Group’s management based on prior experience and
their assessment of the current economic environment.
The Group has no significant concentration of credit risk,
with exposure spread over a large number of customers.
The credit risk on liquid funds is limited because the
counterparties are banks with high credit-ratings
assigned by international credit-rating agencies.
Liquidity risk 
The Group’s policy has been to ensure continuity of
funding through acquiring an element of the Group’s fixed
assets under finance leases, and arranging funding for
operations via medium-term loans and additional revolving
credit facilities to aid short-term flexibility.
Cash flow interest rate risk
Interest bearing assets comprise cash and bank
deposits, all of which earn interest at a market rate.
The interest rate on bank borrowings is at market rate 20 INTELEK
Report and Accounts 2006
Directors’ Report (continued)
and the Group’s policy is to keep the bank borrowings
within defined limits such that the risk that could arise
from a significant change in interest rates would not
have a material impact on cash flows. The Group’s
policy is to maintain other borrowings at fixed rates to
fix the amount of future interest cash flows. The
Directors monitor the overall level of borrowings and
interest costs to limit any adverse effects on financial
performance of the Company.
Environment
The Group’s policy with regard to the environment is to
ensure that we understand and effectively manage the
actual and potential environmental impact of our
activities. Our operations are conducted such that we
comply with all legal requirements relating to the
environment in all areas where we carry out our
business. During the period covered by this report the
Group has not incurred any significant fines or
penalties or been investigated for any significant
breach of environmental regulations.
The principal business segments for which
environmental matters are relevant in reviewing the
Group are CML and Labtech, and comments in this
respect are contained within the Chief Executive’s
Review on pages 11 and 14.
Directors
The Directors listed on page 18 served throughout the
year. Mr D Wilson retires having reached the statutory
retirement age and, being eligible, he offers himself for
re-election. Mr K N Edwards retires by rotation and,
being eligible, he offers himself for re-election.
Details of the interests of the Directors and their families
in the Ordinary Shares of the Company are set out below:
Directors’ shareholdings 
The interests of the Directors and their families in the
Ordinary Shares at the beginning and end of the year
were as follows:
31 March 31 March 
2006 2005
David Bramwell 1,250,000 1,250,000
Nigel Mills 10,416,550 10,416,550
Ian Brodie 364,027 336,437
Kevin Edwards 120,401 100,000
Don Wilson 258,592 258,592
There are no non-beneficial interests. There have been
no changes in the above Directors’ interests in the
period to 6 June 2006. 
The Directors’ options to subscribe for shares under
the Executive, Savings Related and other share option
schemes, are set out in the Remuneration Report on
pages 26 to 28.
Share capital
As at 6 June 2006, the Directors have been notified of
the following interests amounting to 3% or more of the
issued share capital of the Company:
Rights & Issues
Investment Trust Plc 12,925,000 — 15.02%
N L Mills 10,416,550 — 12.10%
R B Fletcher 5,946,081 — 6.91%
Framlington Investment 
Management Ltd. 4,850,000 — 5.63%
Payment of creditors
The Group’s policy for the year ending 31 March 2007,
for all suppliers, is to fix terms of payment for each
business transaction, to ensure that the supplier is
aware of those terms, and to abide by the agreed
terms of payment. The Company had no trade
creditors.
Donations
The Group did not make any political or charitable
donations in the year (2005: £Nil).
Employee involvement
During the year the Group has continued its policy of full
involvement of employees wherever possible. This has
taken place through the provision of information,
consultation on policy issues where appropriate, and the
mutual setting of objectives against which performance is
measured. The Group takes the approach of maximising
performance through the heightening of awareness of
corporate objectives and policies.
Disabled persons
It is the Group’s policy to offer equal opportunities to
disabled persons applying for vacancies, having regard
to their abilities in relation to the job for which they
apply. It is also Group practice, wherever possible, to
continue the employment of any employees who
become disabled during the course of their
employment.
Corporate governance
The Board’s formal statement of Compliance with the
Combined Code is given on page 22 and its
Remuneration Report on page 26.
Special business
A resolution will be proposed at the Annual General
Meeting to renew the existing authority of the
Directors, conferred by a resolution passed in
September 2005, to allot unissued shares in the
Company. The authority (resolution 8 in the Notice of 21 INTELEK
Report and Accounts 2006
Meeting) will extend until the earlier of the Annual
General Meeting for 2007 and fifteen months from the
date of the Annual General Meeting for 2006.
The Company was authorised at the Annual General
Meeting in September 2005 to purchase up to 10% of
its issued Ordinary Shares, subject to certain
restrictions. This authority has not yet been exercised,
but the Directors consider that purchases by the
Company of its Ordinary Shares for cancellation could
in certain circumstances be advantageous to
Shareholders, and are accordingly seeking the renewal
of the authority (resolution 9 in the Notice of Meeting)
to extend until the earlier of the Annual General
Meeting for 2007 and fifteen months from the date of
the Annual General Meeting for 2006. This authority
will only be exercised if to do so would result in an
increase in earnings per share. Under the proposed
authority, the maximum price payable for the purchase
of shares shall not exceed 5% above the average of
the middle market quotations taken from The London
Stock Exchange Official List for the five business days
before a purchase is made, and the minimum price
shall be 5p per share.
In addition, the Directors consider it advisable that
they continue to have power to make allotments of
Ordinary Shares in the Company for cash, up to a
maximum of 4,303,803 Ordinary Shares, being 5% of
the issued Ordinary Share Capital of the Company at
31 March 2006. The authority (resolution 10 in the
Notice of Meeting) will extend until the earlier of the
Annual General Meeting for 2007 and fifteen months
from the date of the Annual General Meeting for 2006.
Auditors
So far as the Directors are aware, there is no relevant
information needed by the Company’s auditors in
connection with preparing their report of which the
Company’s auditors are unaware.
The Auditors, RSM Robson Rhodes LLP , offer
themselves for reappointment in accordance with
Section 385 of the Companies Act 1985.
Approval
The Report of the Directors was approved by the
Board on 6 June 2006 and signed on its behalf by:
K N Edwards
Director and Secretary
6 June 2006
Statement of Directors’ Responsibilities
Company law in the United Kingdom 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 and of
the profit or loss of the Group for that period. 
The Directors are required to prepare the Group
financial statements in accordance with IFRS as
adopted by the EU and have elected to prepare the
Parent Company financial statements in accordance
with UK Accounting Standards. 
In preparing each of the Group and Parent Company
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;
 for the Group financial statements, state whether
they have been prepared in accordance with IFRS
as adopted by the EU; and
 for the Parent Company financial statements,
state whether applicable UK Accounting
Standards have been followed.
The Directors are responsible for ensuring that the
Company and the Group maintain proper accounting
records which disclose with reasonable accuracy at any
time the financial position of the Company and enable
them to ensure that the financial statements comply
with the Companies Act 1985. They are also responsible
for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information on
the Group’s website. Legislation in the United Kingdom
governing the preparation and dissemination of the
financial statements and other information included in
annual reports may differ from legislation in other
jurisdictions. 
On behalf of the Board 
K N Edwards
Director and Secretary
6 June 2006 22 INTELEK
Report and Accounts 2006
Corporate Governance Report
Combined Code
In June 1998, the Combined Code on Corporate
Governance was issued by the London Stock
Exchange, and this was revised in July 2003 (‘the
Code’). Section 1 of the Code is applicable to
companies. A statement on how the Company has
applied the principles and a statement explaining the
extent to which it has complied with the provisions of
the Code appear below. The Code contains fourteen
principles of governance, which are divided into the
following six areas:
1. Directors
The Company is controlled through a Board of
Directors, which presently comprises two executive and
three non-executive Directors. David Bramwell is non-
executive Chairman, Ian Brodie is Chief Executive and
Kevin Edwards is Finance Director. Don Wilson is the
Senior Independent non-executive Director and Nigel
Mills is non-executive Director. The Board strongly
believes that shareholders derive considerable benefit
from the presence on the Board of Don Wilson who has
many years senior executive experience. Despite being
over 70, Don has agreed to return to the Board,
although he will submit himself for re-election at each
AGM. All other Directors will submit themselves for 
re-election at least every three years. Appointments to
the Board are made on the recommendation of the
Nomination Committee.
The Board has a formal schedule of matters reserved
to it and meets at least eleven times a year. It is
responsible for overall Group strategy, policy on
corporate governance issues, acquisition policy,
approval of major capital expenditure and
consideration of significant financial and operational
matters. It monitors the exposure to key business risks
and reviews the strategic direction of the trading
subsidiaries, their annual budgets and progress
towards the achievement of those budgets and their
investment programmes. It also considers legislative,
environmental, health and safety and employment
issues. The Board has approved a written statement of
the division of key responsibilities between the
Chairman and the Chief Executive.
The Chairman leads the Board, ensuring that each
Director is able to make an effective contribution. He also
monitors the information provided to the Board to ensure
it is sufficient, timely and clear, and from time to time the
Board reviews the adequacy of this information.
The Board held twelve meetings during 2005/06, other
than those required for specific approvals (for example,
bank mandates and annual accounts). The
attendances were:
David Bramwell 12
Ian Brodie 12
Kevin Edwards 12
Nigel Mills 12
Don Wilson 12
Five of the meetings were combined with visits to
subsidiary company operations and one included
presentations by senior executives on their areas of
responsibility. Individual visits to operational sites by
non-executive Directors also occurred. In addition to
the regular Board meetings, key financial information is
circulated to Directors outside of meetings. The Chief
Executive has regular direct contact with the non-
executive Directors and keeps them informed of
material developments between Board meetings.
All Directors have direct access to the Company
Secretary and are able to take independent
professional advice in the furtherance of their duties if
necessary. The Company maintains Directors &
Officers’ insurance in respect of the risk of claims
against Directors.
The Chairman held two meetings during the year with
the non-executive Directors, without the executive
Directors being present. The Senior Independent
Director held one meeting during the year with the
other Directors, without the Chairman being present, 
to review the Chairman’s performance, as described 
in more detail below.
The Board has adopted an induction process for new
Directors and this is facilitated by the Chief Executive
and the Company Secretary. The Chairman ensures
that all Directors receive appropriate training on
appointment and then subsequently as needed, taking
into account their need to update their skills and their
knowledge of the Company's business. 
The Board has established three standing committees,
the Audit Committee, the Remuneration Committee
and the Nomination Committee, which operate within
defined terms of reference. Details may be obtained
from the Company Secretary. The minutes of
committee meetings are available to all the Directors.
During the year, the Remuneration Committee met four
times, the Audit Committee twice and the Nomination
Committee twice. All committee meetings were
attended by all members of the relevant committee.  23 INTELEK
Report and Accounts 2006
Since 1 April 2005, the Board has undertaken an
evaluation of its performance and the performance of
its committees and the individual Directors. This
comprised:
 Appraisal of the Finance Director by the Chief
Executive
 Appraisal of the Chief Executive by the Senior
Independent non-executive Director
 Appraisal of the Chairman and the other non-
executive Directors and of the Board as a whole
collectively by the Board
The appraisals focused on performance against
objectives set for the past year, on establishing
objectives for the new financial year and, for the
Board, on its operation and effectiveness. The Board
was satisfied that the process showed that the Board
and its committees worked effectively. 
2. Directors’ remuneration
The Remuneration Committee consists of the
Chairman and the Senior independent non-executive
Director and meets at least two times a year. Its
responsibilities include a review of the performance of
executive Directors and other senior executives prior
to determining their remuneration. The remuneration of
the non-executive Directors is determined by the
Board of Directors as a whole. No Director plays a part
in the discussion about his own remuneration. 
The Remuneration Report is set out on pages 26 to 28. 
3. Nomination committee
The principal role of the Nomination Committee is to
identify and nominate, for Board approval, candidates to
fill Board vacancies as and when they arise. It is
required to prepare a description of the role, and
capabilities required, for any appointment, and to
maintain contact with major shareholders about
appointments to the Board. It also reviews the induction
process for newly appointed Directors, reviews annually
the time required of non-executive Directors, keeps the
structure, size and composition of the Board under
review, and considers Board succession planning for
both executive and non-executive Directors. The
committee comprises Don Wilson (Chairman), David
Bramwell, both Independent non-executive Directors,
and Ian Brodie, Chief Executive. 
For Board appointment the committee seeks advice
and recommendations from the Group’s lawyers,
corporate finance advisers and auditors.
During the year, the committee reviewed the balance
of experience on the Board and recommended to the
Board that no additional appointments were required.
The Chairman of the Nominations Committee will be
available at the Annual General Meeting to answer any
questions about the work of the committee.
4. Accountability and audit 
A review of the performance of the Group’s trading
subsidiaries, of the financial position of the Group and
of the Group’s prospects is included in the Chairman’s
statement, the Chief Executive's review and the
Financial Review set out on pages 2 to 17. The
Directors’ responsibilities for the financial statements
are described on page 21. 
Internal Control
The Board of Directors is responsible for the Group’s
system of internal control and for reviewing its
effectiveness. In designing the system of internal
control, consideration is given to the significant risks to
the business, the probability of these risks manifesting
themselves and the overall cost of controlling them.
The system is designed to manage rather than
eliminate the risk of failing to achieve business
objectives and therefore can only provide reasonable,
and not absolute, assurance against material
misstatement or loss.
The implementation and day-to-day operation of the
system of internal controls has been delegated to
executive Directors and senior management, but the
effectiveness of the system is regularly reviewed by the
Board in a process that accords with the Turnbull
Report. As part of its corporate governance
procedures, the Board has received regular reports on
specific areas of risk. If appropriate, these reports
include recommendations for improvement in controls
or for the management of those risks. Furthermore,
steps continue to be taken to integrate risk
management procedures into the Group’s operations,
to extend awareness of the importance of the
management of risk and to ensure that recommended
improvements brought to the attention of the Board
are implemented. In conjunction with the Audit
Committee, the Board has carried out an annual
review of the overall effectiveness of the system of
internal control and risk management procedures
during the year and up until the date of approval of the
annual report. 24 INTELEK
Report and Accounts 2006
auditor and external auditors to attend the meeting for
the year’s results. During the latter meeting, the external
auditors were given the opportunity to talk with the
committee without the presence of management.
Main activities of the committee during the year
At its meeting in May, the committee reviewed the
annual financial statements of the Company and
received reports from the internal auditors on control
matters and from the external auditors on the conduct
of their audit, their review of accounting policies, areas
of judgement and the financial statements and their
comments on risk and internal control. A similar review
was undertaken at its November meeting when the
interim statements were considered.
At these meetings, the committee also dealt with the
following particular matters:
 It reviewed the role and processes of the internal
auditor and his effectiveness;
 It reviewed the policy on engagement of the
external auditors for non-audit work, as referred
to below;
 It established policies on the appointment and
removal of internal and external auditors;
 It reviewed the plans presented by the external
auditors for conduct of the year-end audit.
External auditors
The Company places great importance on the
effectiveness and independence of its external auditors
and, together with them, is careful to ensure their
objectivity is not compromised. At its May meeting, the
auditors presented to the committee the findings from
their audit, together with details of how they ensure that
their objectivity and independence are not
compromised.
It is the role of the committee to ensure compliance
with the Board’s policy in respect of services provided
by, and fees paid to, the auditors. Audit fees are
negotiated by the Finance Director and approved by
the Audit Committee. For other services that may be
provided by the auditors, the Company’s policy is:
Audit related services
The auditors are invited by the Company to undertake
those services that they are required to and are most
suited to perform. Such work would include stock
exchange related reporting and where appropriate,
assistance with acquisitions.
Taxation
The external auditors assist the Group to meet general
Corporate Governance Report (continued)
Audit committee and auditors
Role of the audit committee
The Audit Committee is responsible for:
 Monitoring the integrity of the financial statements
of the Company and any formal announcements
relating to the Company’s financial performance,
and reviewing significant financial reporting
judgements contained therein;
 Reviewing the Company’s internal financial
controls and, unless expressly addressed by the
Board itself, the Company’s internal control and
risk management systems;
 Monitoring and reviewing the effectiveness of the
Company’s internal audit operation;
 Making recommendations to the Board, for a
resolution to be put to the shareholders for their
approval in general meeting, in relation to the
appointment of the external auditors and the
approval of the remuneration and terms of
engagement of the external auditors;
 Reviewing and monitoring the external auditors’
independence and objectivity and the
effectiveness of the audit process, taking into
consideration relevant UK professional and
regulatory requirements; 
 Developing and implementing a policy on the
engagement of the external auditors to supply
non-audit services, taking into account relevant
guidance regarding the provision of non-audit
services by the external audit firm.
The Audit Committee is required to report its findings
to the Board, identifying any matters in respect of
which it considers that action or improvement is
needed, and make recommendations as to the steps
to be taken.
Composition of the audit committee
The Audit Committee comprises David Bramwell
(Chairman) and Don Wilson, both of whom served
throughout the year. Both members of the committee
are considered to be independent. David Bramwell has
relevant financial experience.
Meetings and attendance
The committee met twice during 2005/06 to consider,
inter alia, the annual results, the interim results and the
independence, objectivity and reappointment of the
Auditors. Internal financial control systems were also
considered at each meeting. The Chairman of the
committee also invited the Chief Executive and the
Finance Director to attend each meeting and the internal 25 INTELEK
Report and Accounts 2006
tax compliance requirements as well as providing
advice on acquisitions and tax planning. Should
opportunities arise for them to advise on special tax
projects, their suitability is assessed at the time to
ensure it would not compromise their audit
independence, with the work being tendered where
appropriate.
Consulting
To avoid any possible conflict of interest the Group’s
policy is not to employ its auditors for general
consulting work.
Following its May 2005 meeting, the committee
recommended to the Board that a resolution be put to
shareholders at the Annual General Meeting for the
reappointment of the external auditors, and to
authorise the Directors to fix their remuneration.
Internal audit
The internal audit work is contracted-out to Norris
Small, Chartered Accountants. The firm has no
association with the external auditors. As well as its
reviews of the internal auditor’s role and processes,
during its meeting in 2005/06, the committee received
presentations from the internal auditor, the results of
work undertaken by him and his plan for work in 2006.
The committee considered the need for an internal
audit function and decided that, in view of the size 
of the Group, a full-time resource could not be 
justified and that the service should continue to be
contracted-out.
Overview
As a result of its work during the year, the Audit
Committee has concluded that it has acted in
accordance with its terms of reference and has
ensured the independence and objectivity of the
external auditors.
The Chairman of the Audit Committee will be available
at the Annual General Meeting to answer any
questions about the work of the committee.
5. Relations with shareholders
The Company encourages two-way communication
with both its institutional and private investors and
responds promptly to all enquiries received orally or in
writing. During the year the Chairman, Chief Executive
and the Finance Director, either separately or together,
attended a number of meetings with analysts, and with
major shareholders. Written reports about the
Company by analysts or brokers are circulated to all
Directors.
All shareholders receive at least twenty working days’
notice of the Annual General Meeting at which all
Directors are available for questions. Each substantive
issue is the subject of a separate resolution. The
numbers of proxy votes for and against each
resolution are announced at the meeting, after the
voting has taken place.
6. Going concern
After making enquiries, the Directors have formed a
judgement at the time of approving the financial
statements that there is a reasonable expectation that
the Company and the Group have adequate resources
to continue in operational existence for the foreseeable
future. For this reason, they continue to adopt the
going concern basis in preparing the financial
statements.
7. Corporate governance compliance statement
The Company is pleased to report that it has complied
throughout the year ended 31 March 2006 with the
provisions set out in Section 1 of the Code, except:
A2.2 The Chairman is a Director of Rights and
Issues Investment Trust plc, a significant shareholder
of Intelek plc. The Board is satisfied that this does not
influence the Chairman in his role on the Board and
considers him to be independent for the purposes of
the code.
A3.1 The Senior Independent Director, Don Wilson,
has been on the Board for more than nine years,
having been appointed on 14 July 1995. The Board
considers that Don Wilson continues to provide
independent and valuable input to the Board, bringing
to bear his extensive experience as a senior executive
at Rank Xerox and elsewhere.
D1.1 The Senior Independent Director does not
attend meetings with major shareholders as a matter
of routine. However, he is available should he be
required and is present at the AGM. The Chairman
attends the six-monthly announcements to
shareholders and, with a 1.5% shareholding, has a
close affinity with shareholders’ interests. 26 INTELEK
Report and Accounts 2006
Remuneration Report
The Directors present the
Remuneration Report for
the financial year ended
31 March 2006.
This report has been
prepared in accordance
with the Directors’
Remuneration Report
Regulations 2002. 
The report also meets
the relevant requirements
of the Listing Rules of
the Financial Services
Authority.
As required by the
Directors’ Remuneration Report Regulations 2002, a
resolution to approve this Directors’ Remuneration
Report will be proposed at the Company’s Annual
General Meeting.
The auditors are required to report to the shareholders
on the “auditable part” of the Directors’ Remuneration
Report and to state whether in their opinion the
“auditable part” of the Directors’ Remuneration Report
has been properly prepared in accordance with the
Companies Act 1985. This Report therefore has
separate sections containing unaudited and audited
information.
Unaudited Information
Remuneration Committee
The Remuneration Committee is responsible for
determining the remuneration and other terms of
employment of the executive Directors. No external
advisers have been used. In determining remuneration for
the year, the Committee has given full consideration to
the requirements of the Combined Code. 
The Remuneration Committee consists wholly of
independent non-executive Directors who have no
day-to-day involvement in the running of the Group’s
business. The following independent non-executive
Directors served as members of the Remuneration
Committee during the year and to the date stated:
Don Wilson (Chairman of the Remuneration
Committee) (to 6 June 2006)
David Bramwell (to 6 June 2006)
Remuneration policy
The key objectives of the Committee in determining
the remuneration packages of executive Directors for
2006 and subsequent years are:
1. The recruitment, retention and incentivisation of
Executive management. 
2. The alignment of Executive management and
shareholder interests.
The remuneration packages of executive Directors
comprise the following elements:
Basic salary and benefit
Basic annual salaries for executive Directors are
reviewed annually having regard to individual
performance and market practice. Benefits provided to
executive Directors vary but may comprise the
provision of a company car and health insurance. 
Annual bonus
The targets for annual bonus are set each year by the
Committee. The maximum bonus is 100% of basic
salary. Bonus in excess of 10% of basic salary is payable
33% in shares and 67% in cash. Bonus at 10% or below
is payable in cash. The bonus for 2005/06 comprised
three elements based respectively on: (a) Headline Profit
Before Tax at each quarter end during the year; (b) Net
debt at the year end; (c) Headline EPS for the full year
with bonus commencing at 90% of the prior year EPS.
Share options and Long-Term Incentive Plan
The Company has the following share options
schemes: an Executive Scheme, a SAYE Scheme and
an International Sharesave Scheme.
The Executive Scheme is designed to promote long-
term improvement in the performance of the Company,
sustained increase in shareholder value and clear
linkage between Executive reward and the Company’s
performance. There are two sections of the scheme
still operative, 1995 and 2000. The 1995 and 2000
sections are conditional upon achieving headline EPS
growth in the aggregate of 6% above RPI in the 3
years prior to exercise. 
The Chief Executive has been granted separate
options over 700,000 shares at an option price of 17p
per share, being the mid-market price on the date of
his appointment, with the same performance
conditions as the 1995 Plan. These options are now
exercisable with the performance conditions having
already been satisfied. These shares will be provided
out of the Employee Share Ownership Plan. The
difference between the option price and the cost of the
shares to the Plan was charged to profit in the year to
31 March 2000 and is recorded as a provision against
investment in own shares. In addition, the Chief
Executive is entitled to a bonus on 50,000 shares
issued under the 1995 scheme equal to the difference
between the grant price of the shares and the price
existing on the initial allocation to him. The total bonus
payable amounts to £8,000, which was charged to
profit in the year to 31 March 2000.
Directors’ shareholdings
These are as set out in the Directors’ Report on 
page 20.
Don Wilson 27 INTELEK
Report and Accounts 2006
Pension contributions
The Company makes annual contributions to the
Intelek Pension Schemes for the executive Directors.
The Schemes are funded, Inland Revenue approved,
contributory occupational pension schemes.
Service contracts and letters of appointment
The executive Directors are provided with service
contracts, none of which exceeds one year.
Ian Brodie and Nigel Mills have notice entitlements of
one year. Kevin Edwards has a notice entitlement of
six months. In the event of the Company being taken
over and the Directors leaving the Company, the notice
periods are as follows: Ian Brodie, two years; Kevin
Edwards and Nigel Mills, one year. Don Wilson and
David Bramwell have contracts with notice
entitlements of three months.
The Committee considers the Directors’ notice
entitlements to be appropriate as they are in line with
the market and take account of the Directors’
knowledge and experience.
Non-executive Directors
The fees of non-executive Directors are determined by
the full Board to an amount not exceeding £200,000,
as set out in the Memorandum and Articles of
Association. The non-executive Directors are not
eligible for bonuses or pension benefits.
Performance graph
This graph shows the Company’s performance for the
last five years, as measured by the Total Shareholder
Return (TSR) (with dividends reinvested), for equity
shareholders of Intelek plc, compared with the TSR of
the Techmark 100 index.
This index was chosen as it represents a broad
indication of performance in the sector in which the
Company operates.
Audited information
Directors’ emoluments
Details of the Directors’ emoluments are as follows:
Current year Previous year
Pension Pension
Salary/ contribu- contribu-
fees Benefits Bonus tions Total Total tions
£000 £000 £000 £000 £000 £000 £000
Executive
Ian Brodie 153 15 69 33 270 194 30
Kevin Edwards 113 10 51 16 190 135 15
Non-Executive
David Bramwell 30 — — — 30 12 —
Nigel Mills 30 2 1 10 43 81 18
Don Wilson 24 — — — 24 24 —
Total 350 27 121 59 557 446 63
Benefits comprise primarily car allowances and medical care.
200
100
0
Return
Intelek
FTSE Techmark 100
Total Return Analysis
2001 2002 2003 2004 2005 2006
Source: Bloomberg 28 INTELEK
Report and Accounts 2006
No Director was materially interested either at the year end or during the year in any contract of significance to the Group.
2006 2005
Directors’ pensions No. No.
The number of Directors who are accruing benefits under:
— money purchase schemes 2 2
— defined benefit schemes (further accrual terminated 1 October 2002) 1 1 
Directors’ defined benefit pension entitlement excluding additional voluntary contributions:
Increase in accrued Transfer value of Accumulated total Accumulated total 
annual pension increase less Directors’ accrued pension at accrued pension at
excluding inflation contributions 31 March 2006 31 March 2005
£000 £000 £000 £000
Ian Brodie — 3 18 18
The transfer value of the Directors’ accrued benefit at the end of the financial year is shown below. (Note that the
transfer value represents a liability of the Company, not a sum paid or due to an individual.)
Ian Brodie £000
Transfer value at 31 March 2005 239
Increase in transfer value (less Director’s contributions) 27
Transfer value at 31 March 2006 266
Directors’ share options
Ordinary shares under the Executive Scheme, all of which are exercisable:
Granted Exercised Expired Option
31 March during during during 1 April price Expiry
Scheme 2006 year year year 2005 £ date
Ian Brodie 1995 50,000 — — — 50,000 0.330 29.01.07
1995 250,000 — — — 250,000 0.360 29.07.07
Special 700,000 — — — 700,000 0.170 20.09.07
2000 250,000 — — — 250,000 0.190 11.02.12
Total 1,250,000 — — — 1,250,000
Kevin Edwards 1995 150,000 — — — 150,000 0.350 28.07.07
2000 250,000 — — — 250,000 0.190 11.02.12
2000 100,000 — — —100,000 0.105 07.01.13
Total 500,000 — — —500,000 
Nigel Mills 2000 50,000 — — — 50,000 0.105 07.01.13
Total 50,000 — — — 50,000
Ordinary shares under the Savings Related Scheme
Granted Exercised Expired Option
31 March during during during 1 April price Expiry
2006 year year year 2005 £ date
Ian Brodie 6,529 — — — 6,529 0.340 01.03.07
Total 6,529 — — — 6,529 
The options for Ian Brodie are discussed in more detail on page 26.
The bid price at 31 March 2006 was 11.5p. The highest bid price during the year was 15.0p and the lowest bid
price during the year was 9.0p.
The performance criteria for annual bonuses and share options are set out in the unaudited section of this report.
Approval
The Directors’ Remuneration Report was approved by the Board on 6 June 2006 and signed on its behalf by:
D Wilson
Director
Chairman of the Remuneration Committee
6 June 2006 
Remuneration Report (continued) 29 INTELEK
Report and Accounts 2006
Independent Auditors’ Report 
to the Shareholders of Intelek plc
We have audited the Group financial statements on
pages 30 to 57. These Group financial statements have
been prepared under the accounting policies set out
therein.
We have reported separately on the Parent Company
financial statements of Intelek plc for the year ended
31 March 2006 and on the information in the Directors’
Remuneration Report that is described as having been
audited.
This report is made solely to the Company’s
shareholders, as a body, in accordance with Section
235 of the Companies Act 1985. Our audit work has
been undertaken so that we might state to the
Company’s shareholders those matters we are
required to state to them in an auditors’ report and for
no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s
shareholders, as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of Directors and
Auditors 
The Directors’ responsibilities for preparing the Annual
Report and the Group financial statements in
accordance with applicable law and International
Financial Reporting Standards (IFRSs) as adopted for
use in the European Union are set out in the Statement
of Directors’ Responsibilities.
Our responsibility is to audit the Group financial
statements in accordance with relevant legal and
regulatory requirements and International Standards on
Auditing (UK and Ireland).
We report to you our opinion as to whether the Group
financial statements give a true and fair view and
whether the Group financial statements have been
properly prepared in accordance with the Companies
Act 1985 and Article 4 of the IAS Regulation. We also
report to you if, in our opinion, the Directors’ Report is
not consistent with the Group financial statements, if
we have not received all the information and
explanations we require for our audit, or if information
specified by law regarding Directors’ remuneration and
other transactions is not disclosed.
We review whether the Corporate Governance Report
reflects the Company’s compliance with the nine
provisions of the 2003 FRC Combined Code specified
for our review by the Listing Rules of the Financial
Services Authority, 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 other information contained in the Annual
Report, and consider whether it is consistent with the
audited Group financial statements. The other
information comprises the Chairman’s Statement, the
Chief Executive’s Review, the Financial Review, the
Corporate Governance Report, the Remuneration
Report and the Directors’ Report. We consider the
implications for our report if we become aware of any
apparent misstatements or material inconsistencies
with the group financial statements. Our
responsibilities do not extend to any other information.
We report to you whether in our opinion the
information given in the Directors’ Report is consistent
with the financial statements.
Basis of audit opinion
We conducted our audit in accordance with
International Standards on Auditing (UK and Ireland)
issued by the Auditing Practices Board. An audit
includes examination, on a test basis, of evidence
relevant to the amounts and disclosures in the Group
financial statements. It also includes an assessment of
the significant estimates and judgements made by the
Directors in the preparation of the Group financial
statements, and of whether the accounting policies are
appropriate to the Group’s circumstances, 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 Group 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 Group financial statements.
Opinion
In our opinion:
 The Group financial statements give a true and fair
view, in accordance with IFRSs as adopted for use
in the European Union of the state of affairs of the
Group as at 31 March 2006 and of its profit for the
year then ended. 
 The Group financial statements and part of the
Directors’ Remuneration Report described as
having been audited have been properly prepared
in accordance with the Companies Act 1985 and
Article 4 of the IAS Regulation.
 The information given in the Directors’ Report is
consistent with the financial statements.
As explained in Note 1 to the Group financial
statements, the Group in addition to complying with its
legal obligation to comply with IFRSs as adopted for
use in the European Union, has also complied with the
IFRSs as issued by the International Accounting
Standards Board.
In our opinion the Group financial statements give a
true and fair view, in accordance with IFRSs, of the
state of the Group’s affairs as at 31 March 2006 and of
its profit for the year then ended.
RSM Robson Rhodes LLP
Chartered Accountants and Registered Auditors 
Birmingham, England
11 July 2006 30 INTELEK
Report and Accounts 2006
Consolidated Income Statement
for the year ended 31 March 2006
2006 2005
Note £000 £000
Continuing operations
Sales 3 35,212 31,524 
Cost of goods sold (25,473) (22,376)
Gross profit 9,739 9,148
Selling and administrative expenses (5,274) (4,781)
Research and development expenses (1,764) (1,578)
Headline operating profit 2,701 2,789 
Interest receivable 4 71 28 
Interest payable 4 (382) (475)
Expected return on pension scheme assets 5 761 653
Interest on pension scheme obligations 5 (1,345) (1,284)
Finance costs — net (895) (1,078)
Headline profit 1,806 1,711
Restructuring costs 6 — (309)
Profit before tax 6 1,806 1,402
Taxation 9 (483) (493)
Profit after tax from continuing operations 1,323 909
Profit after tax from discontinued operations 7 — 1,893
Profit for the year attributable to equity shareholders 3 1,323 2,802
Earnings per share 10
Basic 1.56p 3.31p
Diluted 1.56p 3.31p
Continuing
Basic 1.56p 1.07p
Diluted 1.56p 1.07p
Discontinued
Basic 0.00p 2.24p
Diluted 0.00p 2.24p
Consolidated Statement of Recognised Income and
Expense
for the year ended 31 March 2006
2006 2005
Note £000 £000
Foreign exchange translation differences (net of tax) (5) 9 
Net gain/(loss) on hedge of net investment in foreign subsidiary (net of tax) 39 (47)
Actuarial gains and losses on defined benefit pension plan 5 (943) (2,138)
Deferred tax on actuarial gains and losses 5 283 641
Income and expense recognised directly in equity (626) (1,535)
Profit for the year 1,323 2,802 
Total recognised income and expense for the year
attributable to equity shareholders of the Parent 697 1,267 31 INTELEK
Report and Accounts 2006
Consolidated Balance Sheet
as at 31 March 2006
2006 2005
Note £000 £000
ASSETS
Goodwill 12 13,608 13,414 
Intangible assets 13 466 343 
Property, plant and equipment 14 6,176 5,729 
Deferred tax assets arising on pension obligation 5, 20 3,914 3,875 
Other deferred tax assets 20 418 584 
Total non-current assets 24,582 23,945 
Inventories 16 4,218 3,479 
Trade and other receivables 17 6,701 6,000 
Current tax assets 18 30 —
Cash and cash equivalents 19 1,114 1,091 
Total current assets 12,063 10,570 
Total assets 36,645 34,515 
LIABILITIES
Defined benefit pension obligation 5 (13,048) (12,918)
Borrowings 34 (2,065) (2,100)
Deferred tax liabilities 20 (1,070) (898)
Deferred government grants 21 (93) (100)
Total non-current liabilities (16,276) (16,016)
Borrowings 34 (2,452) (1,335)
Trade and other payables 22 (6,454) (5,330)
Current tax liabilities 18 — (235)
Provisions and other liabilities 23 (73) (601)
Total current liabilities (8,979) (7,501)
Total liabilities (25,255) (23,517)
Net assets attributable to equity shareholders 3, 26 11,390 10,998 
SHAREHOLDERS’ EQUITY
Issued capital 24 4,304 4,304 
Share premium 26 9,104 9,104 
Own shares 26, 27 (326) (326)
Other reserve 26 4,366 4,366 
Retained earnings 26 (6,058) (6,450)
Total equity 11,390 10,998 
Approved by the Board of Directors and signed on their behalf on 6 June 2006 by:
I D Brodie
Directors
K N Edwards
} 32 INTELEK
Report and Accounts 2006
Consolidated Cash Flow Statement
for the year ended 31 March 2006
2006 2005
Note £000 £000
Cash flows from operating activities
Cash generated from operations 28 2,281 1,883 
Interest paid (382) (534)
Interest received 71 28 
Tax (paid)/received (190) 82 
Net cash from operating activities 1,780 1,459 
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 70 116 
Purchases of property, plant, equipment and intangible assets (710) (1,004)
Proceeds from sale of businesses 7 — 4,587
Acquisition of businesses 30 (462) —
Net cash from investing activities (1,102) 3,699 
Cash flows from financing activities
Increase/(decrease) in bank loans 334 (4,065)
Finance lease payments (590) (602)
Dividends paid 11 (305) (407)
Net cash from financing activities (561) (5,074)
Net increase in cash and cash equivalents 117 84 
Cash and cash equivalents at 1 April 1,091 946 
Effect of foreign exchange rates (94) 61 
Cash and cash equivalents at 31 March 19, 29 1,114 1,091 33 INTELEK
Report and Accounts 2006
Notes to the Financial Statements
for the year ended 31 March 2006
1. Significant Accounting Policies
(a) Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and
IFRIC interpretations and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS for the
first time. The comparative data for the year to 31 March 2005 have been restated and reconciliations are included in note
37 to explain the changes. The policies have been consistently applied for all years presented.
(b) Basis of consolidation
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly,
to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements
of all of the Group’s subsidiaries are included in the consolidated financial statements from the date that control commences
until the date that control ceases.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from
the effective date of acquisition or up to the effective date of disposal. 
All Intra-Group transactions, balances, income and expenses are eliminated on consolidation.
(c) Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured as the
aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business
combination. The assets, liabilities and contingent liabilities that meet the conditions under IFRS 3 are recognised at their
fair values at the acquisition date.
Goodwill arising on acquisition is recognised as an asset, being the excess of the cost of the business combination over the
net fair value of the assets being acquired. 
(d) Foreign currency
The individual financial statements for each company are presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purposes of the consolidated financial statements, the results and
financial position of the Group are expressed in pounds sterling, which is the functional currency of the Company. 
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional
currency are translated at the foreign exchange rate ruling at the date of transaction. Monetary assets and liabilities in
foreign currencies are translated at the exchange rates ruling at the balance sheet date. Foreign exchange differences
arising are recognised in the income statement.
The results and cash flows of overseas subsidiaries are translated to sterling at average exchange rates. The assets and
liabilities are translated at exchange rates ruling at the balance sheet date. Foreign exchange differences arising are
classified as equity and transferred to the Group’s translation reserve. Translation reserves are recognised as income or as
expense in the period in which the related overseas subsidiary is disposed of.
In order to hedge its exposure to certain foreign currency exchange risks, the Group uses derivative financial instruments
(forward contracts) to hedge significant exposure on foreign exchange transactions. This is explained in the Financial
instruments accounting policy.
(e) Financial instruments
Financial assets and liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Trade receivables: trade receivables do not carry any interest and are stated at their nominal value as reduced by
appropriate allowances for estimated irrecoverable amounts.
Financial liability and equity: financial liabilities and equity instruments are classified according to the substance of the
contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets
of the Group after deducting all of its liabilities. 34 INTELEK
Report and Accounts 2006
Notes to the Financial Statements
for the year ended 31 March 2006
1. Significant Accounting Policies (continued)
Bank borrowings: interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs.
Finance charges, including premiums on settlement or redemption, are accounted for on an accruals basis to the profit and
loss account using the effective interest method.
Trade payables: trade payables are not interest bearing and are stated at their nominal value.
Derivative financial instruments and hedge accounting
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is
designated as a hedging instrument and, if so, the nature of the item being hedged. The Group designates certain derivatives
as either:
 hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge)
 hedges of highly probable forecast transactions (cash flow hedge)
 hedges of net investments in foreign operations (net investment hedge)
Changes in the value of a fair value hedge are recorded in the Income Statement, together with any changes in the fair
value of the hedged asset or liability that are attributable to the hedged risk.
Changes in the value of a cash flow hedge are recorded in the Income Statement except for changes in the effective
portion, which are recognised initially in equity and either:
(i) transferred to the Income Statement when the hedged item affects profit and loss, or, if the item is no longer expected
to occur, immediately;
(ii) transferred to the initial measurement of a non-financial asset arising as a result of the hedged item.
Foreign currency borrowings are used as a net investment hedge. Any gain or loss on the hedge is recognised in equity.
Gains and losses accumulated in equity are transferred to the Income Statement on disposal of the foreign operation.
The Group does not use derivative financial instruments for speculative purposes.
(f) Intangible assets
(i) Goodwill
In respect of acquisitions since 1 April 2004, goodwill arising on consolidation represents the excess of cost of
acquisition over the Group’s interest in the fair value of the net identifiable assets and liabilities of the acquired entity at
the date of acquisition. For acquisitions prior to this date, goodwill is included on the basis of its deemed cost, which
represents the amount recorded under previous GAAP . Goodwill is recognised as an asset and assessed for impairment
at least annually. Impairment is assessed by comparing the goodwill with the discounted cash flows projected for the
acquired entity, using a pre-tax discount rate that management estimate to be the risk adjusted average cost of capital
for that entity.
(ii) Research and development
Research expenditure is written off as incurred. Expenditure on a development project will be written off as incurred
unless and until:
(i) the project is identified as being:
(a) for a new or substantially improved product or process;
(b) technically feasible;
(c) commercially feasible, with a high probability that recovery will take place
and (ii) measurable costs can be attributed to the asset and adequate resources are available to complete the project. 35 INTELEK
Report and Accounts 2006
1. Significant Accounting Policies (continued)
For a project meeting these criteria, subsequent costs will be capitalised and amortised from the date the product or
process is available for use on a straight-line basis over the product’s estimated life up to a maximum of 3 years.
(iii) Acquired intangible assets
Intangible assets that are acquired as a result of a business combination are recorded at fair value at acquisition date,
provided they can be separately and reliably measured. The assets are amortised on a straight-line basis over their
expected useful lives.
(g) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment loss. Cost comprises
the purchase price and costs directly incurred in bringing the asset into use. Where assets are in the course of construction
at the balance sheet date, they are classified separately and not depreciated.
Depreciation is charged so as to write off the cost of assets to their residual value over their expected useful lives using the
straight-line method. The principal rates are as follows:
Freehold land Nil
Leasehold properties Over the lease period
Plant and equipment 7%–33%
(h) Leases
Leasing agreements that transfer substantially all the risks and rewards of ownership to the Group are classified as Finance
Leases. Assets financed by a Finance Lease are accounted for as if they had been purchased outright, with the
corresponding liability to the leasing company included as an obligation. The rentals payable are apportioned between
interest, which is charged to the Income Statement, and capital, which reduces the outstanding obligation. All other leases
are classified as Operating Leases and lease rentals are charged to the Income Statement on a straight-line basis over the
term of the lease.
Depreciation of finance leased assets is consistent with that for owned assets unless there is no reasonable certainty that
the Group will obtain ownership by the end of the lease term, in which case depreciation is straight-line over the period of
the lease.
Benefits received and receivable as an incentive to enter into an Operating Lease are also spread on a straight-line basis
over the lease term.
(i) Impairment of non-current assets
All non-current assets are assessed annually for indications of impairment. Where impairment is likely, the fair value is
measured and any impairment loss is charged to the Income Statement.
(j) Inventories
Inventories are valued at the lower of cost and estimated net realisable value, due allowance being made for obsolete and
slow-moving items. Cost includes the relevant proportion of production overhead assuming normal levels of activity. Net
realisable value is the estimated selling price less the estimated costs of completion and selling expenses.
(k) Employee benefits
(i) Defined contribution plans
Obligations for contributions to defined contribution pension plans are recognised as an expense in the Income
Statement as incurred.
(ii) Defined benefit plan
The Group’s net obligation in respect of its defined benefit pension plan is calculated by estimating the amount of
future benefit payable to members, discounted to present value, and deducting the fair value of the plan assets. The
calculation is performed by a qualified actuary on an annual basis using the projected unit credit method. Actuarial
gains and losses are included in the Statement of Recognised Income and Expense. Current and past service costs,
curtailments and settlements are recognised within operating profit. Returns on scheme assets and interest on
obligations are recognised as a component of financing costs. 36 INTELEK
Report and Accounts 2006
Notes to the Financial Statements
for the year ended 31 March 2006
1. Significant Accounting Policies (continued)
(iii) Share-based payment transactions
Share-based incentive arrangements are provided to employees under the Group’s share option, incentive and other
share award schemes. Share-based arrangements put in place since 7 November 2002 are valued at the date of grant
or award and charged to operating profit over the performance or vesting period of the scheme. Options are valued
using an appropriate pricing model (Black Scholes). The annual charge is modified to take account of shares forfeited by
employees who leave during the performance or vesting period and where it becomes unlikely that the option or shares
will vest.
(l) Provisions
A provision is recognised in the Balance Sheet when the Group has a legal or constructive obligation as a result of a past
event. The provisions are not discounted.
(i) Warranty
Provision for warranty is made only for those customer claims in respect of which the Group expects to incur liability.
(ii) Restructuring
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and
the restructuring either has commenced or has been announced publicly. Future operating costs are not provided for.
(iii) Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract
are lower than the unavoidable cost of meeting its obligations under the contract.
(m) Revenue recognition
(i) Sales represent the invoiced value, excluding value added tax, of goods and services, where the significant risks and
rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties
regarding recovery of the consideration due or the possible return of goods.
(ii) Interest income is accrued on a timely basis, by reference to the principal outstanding and at the effective interest rate
applicable.
(n) Government grants
Government grants are recognised in the Balance Sheet initially as deferred income. Grants in respect of assets are
transferred to the Income Statement as other operating income over the estimated useful life of the asset concerned. Grants
to compensate for expenses are transferred to the Income Statement in the same periods as the expenses are incurred.
(o) Taxation
The tax charge for the year includes the charge for tax currently payable and deferred taxation. The current tax charge
represents the estimated amount due that arises from the operations of the Group in the financial year and after making
adjustments in respect of prior years.
Deferred tax is recognised in respect of all differences between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit, except where the temporary
difference arises from goodwill or from the initial recognition of assets or liabilities that affect neither accounting nor taxable
profit.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised.
Deferred tax is measured at the tax rates that are enacted or substantially enacted at the Balance Sheet date.
2. General information
Intelek plc is a company incorporated in the United Kingdom under the Companies Act 1985. 37 INTELEK
Report and Accounts 2006
3. Business and geographical segments
For management purposes, the Group is currently organised into three operating divisions: Satellite communications, Microwave
circuits and components, and Aerostructures. These divisions are the basis on which the Group reports its primary segment
information. The Group was previously involved with Power supplies and RF . That division was discontinued with effect from 
18 March 2005 (see note 7).
2006 2005
Sales Profit Margin Sales Profit Margin
Business segment £000 £000 % £000 £000 %
Satellite communications 14,114 2,027 14 13,711 1,960 14
Microwave circuits and components 10,194 652 6 9,086 1,149 13
Aerostructures 10,996 1,091 10 8,818 360 4
Eliminate intra-segment trading (92) — — (91) — —
Continuing operations 35,212 3,770 11 31,524 3,469 11
Central costs (1,069) (731)
Net interest costs (311) (447)
Pension finance costs and curtailment gain (584) (580)
Restructuring costs: Aerostructures — (309)
Taxation (483) (493)
Discontinued operation: 
Power supplies and RF (see note 7) — 1,893 
Total for the period 35,212 1,323 31,524 2,802 
Intra-segment sales are charged at prevailing market rates.
Assets Liabilities Net Assets Liabilities Net
£000 £000 £000 £000 £000 £000
Satellite communications 20,872 (7,893) 12,979 21,670 (8,476) 13,194 
Microwave circuits and components 6,646 (3,905) 2,741 5,870 (3,363) 2,507 
Aerostructures 5,882 (3,129) 2,753 4,663 (2,239) 2,424 
Continuing operations 33,400 (14,927) 18,473 32,203 (14,078) 18,125 
Centre and consolidation adjustments (1,117) 3,168 2,051 (2,147) 4,063 1,916 
Defined benefit pension obligation 3,914 (13,048) (9,134) 3,875 (12,918) (9,043)
Total for the period 36,197 (24,807) 11,390 33,931 (22,933) 10,998 
Capital expenditure Capital expenditure
Funded by Other Funded by Other
Finance non-cash Finance non-cash
Tangible Lease Intangible expenses Tangible Lease Intangible expenses
£000 £000 £000 £000 £000 £000 £000 £000
Satellite communications 233 (18) 130 (526) 415 — 78 (460)
Microwave circuits and components 987 (766) — (505) 493 (329) — (513)
Aerostructures 556 (415) — (271) 317 (150) — (263)
Continuing operations 1,776 (1,199) 130 (1,302) 1,225 (479) 78 (1,236)
Centre 3 — — (1) 2 — — 21
Pension finance cost and curtailment gain — — — (584) — — — (580)
Total for the period 1,779 (1,199) 130 (1,887) 1,227 (479) 78 (1,795)
Geographical segments
The Group’s operations are located in the United Kingdom, with the exception of Paradise Datacom LLC, which is registered in 
the USA.
Sales Net assets Capital expenditure
2006 2005 2006 2005 2006 2005
£000 £000 £000 £000 £000 £000
UK 14,696 12,063 9,679 9,516 1,716 1,165 
Rest of Europe 11,926 11,235 — — — —
North America 5,836 5,872 1,711 1,482 193 140 
Rest of World 2,754 2,354 — — — —
Total for the period 35,212 31,524 11,390 10,998 1,909 1,305 
The sales analysis in the above table is based on the location of the customer. The analysis of assets and capital expenditure is
based on the location of the operation. 38 INTELEK
Report and Accounts 2006
Notes to the Financial Statements
for the year ended 31 March 2006
4. Interest
2006 2005
Interest received £000 £000
Bank deposit interest 71 28 
Interest paid
Bank loans and overdrafts (258) (330) 
Finance leases (75) (62) 
Other loans — (34) 
Amortisation of loan arrangement fees (49) (49) 
Total (382) (475)
5. Pension commitments
The Group operates a defined benefit pension scheme that was closed to new members in January 2000 and ceased further
service accrual for employees in September 2002. The scheme has a net deficit, for which the Group has agreed a Schedule of
Contributions with the Trustee. This requires payment of £1,316,000 a year to 2016, plus scheme expenses. In addition, the
Group has arranged a £2.4 million guarantee in favour of the scheme, based on certain of the Group’s assets. The scheme owns
the 999 year lease of the premises occupied by Labtech Ltd, a Group subsidiary, at Presteigne, Powys. The premises are let
under a 24 year lease expiring in 2018 at a current commercial rental of £72,000 per annum.
The defined benefit scheme was valued by the scheme actuary at 31 March 2006. The key assumptions applied were:
At 31 March At 31 March
2006 2005
% %
Rate of increase in salaries 3.20 3.30 
Rate of increase in pensions in payment 2.70 2.80 
Discount rate 5.00 5.50 
Inflation 2.70 2.80
Expected return on plan assets 7.35 6.34
Mortality:
The valuation in 2005 used the mortality table PMA 92 (2000). The 2006 valuation uses PMA 92 (2010). This brings the projection
of scheme obligations up to date for expected lifespans, with, for example, men aged 65 now expected to live 19 years longer, 
up from 18 previously.
The market value of the assets and obligations of the defined benefit scheme, and the expected rates of return, are as follows:
Long-term rate of
Value at return expected
31 March at 31 March
2006 2005 2006 2005
£000 £000 % %
Equities 12,401 6,191 7.50 7.50 
Freehold property 700 700 9.00 7.50 
Property fund 718 — 7.50 —
Government Bonds 1 1,686 4.25 4.75 
Corporate Bonds 499 1,122 5.00 5.50 
Cash 625 2,408 4.25 4.50 
Fair value of assets 14,944 12,107 
Present value of scheme obligations (27,992) (25,025)
Actuarial deficit (13,048) (12,918)
Deferred tax 3,914 3,875 
Actuarial deficit after deferred tax (9,134) (9,043)
The Group’s policy is to recognise all actuarial gains and losses immediately. Consequently, there are no unrecognised gains 
or losses.
The expected rates of return are determined after taking advice and using available market data. 39 INTELEK
Report and Accounts 2006
5. Pension commitments (continued)
2006 2005
£000 £000
Movement in scheme obligations during the year:
As at 1 April 2005 (25,025) (22,882)
Interest (1,345) (1,284)
Curtailment gain — 51 
Distributions 1,207 1,155 
Experience gains and losses (2,829) (2,065)
As at 31 March 2006 (27,992) (25,025)
Movement in scheme assets during the year:
As at 1 April 2005 12,107 10,447 
Distributions (1,207) (1,155)
Contributions 1,397 2,235 
Expected return on assets 761 653 
Actual return less expected return on assets 1,886 (73)
As at 31 March 2006 14,944 12,107 
The amounts reflected in the Group’s Income Statement are as follows:
2006 2005
£000 £000
Operating profit
Curtailment gain recognised in administration expenses — 51 
Total — 51 
Net finance cost
Expected return on pension scheme assets 761 653 
Interest on pension scheme obligations (1,345) (1,284)
Total (584) (631)
The actuarial gains and losses are recognised net of tax in the Statement of Recognised Income and Expense:
Actual return less expected return on pension scheme assets 1,886 (73)
Experience gains and losses arising on scheme obligations 71 (770)
Changes in assumptions underlying the present value of the scheme obligations (2,900) (1,295)
(943) (2,138)
Less: deferred tax thereon 283 641 
Actuarial gains and losses (660) (1,497)
The history of experience gains and losses is as follows:
2006 2005 2004 2003 2002
£000 £000 £000 £000 £000
Fair value of assets 14,944 12,107 10,447 8,847 11,856 
Present value of scheme obligations (27,992) (25,025) (22,882) (22,680) (19,917)
Difference between the expected and actual return on scheme assets:
Amount 1,886 (73) 1,108 (4,060)
Percentage of scheme assets 13% -1% 11% -46%
Experience gains and losses on scheme liabilities:
Amount 71 (770) (314) (817)
Percentage of present value of the scheme obligations 0% -3% -1% -4%
Total gross amount recognised in the Statement of Recognised Income and Expense:
Amount (943) (2,138) 794 (6,304)
Percentage of present value of the scheme obligations -3% -9% 3% -28%
Defined Contribution Schemes
The Group also operates defined contribution schemes for all qualifying employees. The assets of the schemes are held 
separately from those of the Group. In 2006, £421,000 was expensed (2005: £369,000), representing contributions payable to 
those schemes by the Group at rates specified in the scheme rules.  40 INTELEK
Report and Accounts 2006
JOB 12133 — PROOF 01 — 30/05/2006
Notes to the Financial Statements
year ended 31 March 2006
6. Analysis of profit before taxation
The profit before taxation is stated after charging:
2006 2005
£000 £000
Depreciation of tangible and amortisation of intangible assets 1,262 1,235 
Cost of inventories recognised as an expense 25,571 22,384
Auditors’ remuneration 60 56 
Auditors’ fees for non-audit services (see below) 78 34
Staff costs (see note 8) 12,409 10,540
Operating lease rentals: plant hire 520 535 
property 692 702 
Research and development (Amounts amortised from deferred expenditure £23,000 (2005: £Nil)) 1,764 1,578
Loss on sale of fixed assets 46 14 
and after crediting:
Realised foreign exchange gains 48 99 
Rental income — 8
Deferred income from government grants 7 10 
Net gain on sale of fixed assets — 28
Auditors’ fees comprise:
Audit 60 56 
Non-audit:
Tax services compliance 33 20
advisory 39 14 
Other services 6 —
78 34
Pascall Electronics disposal (see below) — 31
Total 138 121
The auditors received £30,500 in 2005 (2006: £Nil) for services in connection with the disposal of Pascall Electronics. These were
expensed as part of the profit after tax from discontinued operations. 
Restructuring costs
In 2005, the Group incurred exceptional restructuring costs at CML and Paradise Datacom of £309,000.
7. Discontinued operations 
On 18 March 2005, the Group completed the disposal of Pascall Electronic (Holdings) Ltd and its trading subsidiary Pascall
Electronics Ltd. The consideration included a contingent element estimated at the year end March 2005 at £100,000. This 
element has been finalised and settled at £130,000 less expenses. The change to International Accounting Standards has 
affected the calculation of the profit on disposal, with a deduction of £169,000 from net assets for the prepayment to the 
defined benefit pension scheme. There were no disposals in the current year.
The results of the discontinued operations in the Consolidated Income Statement are analysed as follows:
2006 2005
£000 £000
Sales — 5,769 
Expenses — (5,885)
Profit on disposal 33 1,927 
Profit before tax 33 1,811 
Tax (7) 82 
Profit after tax 26 1,893 
Sales of the discontinued operations were principally obtained in the USA. Cash flows of the discontinued operations are shown 
in note 28 of these financial statements. 41 INTELEK
Report and Accounts 2006
7. Discontinued operations (continued)
The revised summary of the transaction is as follows:
Profit Cash
Fixed assets 721 
Current assets 3,220 
Current liabilities (1,304)
Net assets of the disposed businesses 2,637 
Cash included in net assets — 41 
Consideration 4,830 4,830 
Expenses (233) (233)
Net proceeds 4,597 4,597 
Profit/cash flow on disposal 1,960 4,638 
Net operating loss in 2004/05 prior to disposal (116)
Taxation 75 
Profit after taxation 1,919 
Accounted for in the financial statements for the year to 31 March: 2005 1,893 4,587 
2006 26 51 
The additional profit on disposal in 2006 has been recognised in administrative expenses and the additional net cash flow arising
has been recognised in cash generated from operations.
In consideration for Pascall’s withdrawal from the Group’s defined benefit pension scheme, a special contribution was agreed at
£864,000 plus any tax savings that may arise. £800,000 of this was paid in March 2005 and £64,000 in April 2005.
8. Employees
2006 2005
No. No.
The average monthly number of Group employees, including executive Directors, was:
Production 336 308 
Administration and sales 59 62 
395 370 
Costs in respect of these employees were:
£000 £000
Wages and salaries 10,936 9,358 
Social security costs 1,052 864 
Other pension costs (see note 5) 421 318 
12,409 10,540
Other pension costs comprise:
Defined benefit scheme curtailment gain — (51)
Defined contribution scheme 421 369 
421 318
Directors’ emoluments, pension arrangements and share options are disclosed in the Remuneration Report on page 26, details of
which form part of these financial statements. 42 INTELEK
Report and Accounts 2006
JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006
Notes to the Financial Statements
year ended 31 March 2006
9. Taxation
2006 2005
£000 £000
Continuing operations
United Kingdom Corporation Tax
Current tax on income for the year — —
Adjustment in respect of prior years (1) 49
Total (1) 49
Overseas Tax
Current tax on income for the year (223) (294)
Adjustment in respect of prior years 312 39 
Total 89 (255)
Current taxation 88 (206)
Deferred taxation (571) (287)
Total taxation (483) (493)
Taxation on discontinued operations (see note 7) (7) 82
The difference between the total current taxation for continuing operations shown above and the amount calculated by applying
the standard rate of UK corporation tax to the profit before tax is as follows: 
Profit on ordinary activities before taxation 1,806 1,402 
Theoretical tax at UK corporation tax rate 30% (2005: 30%) (542) (421)
Effects of:
different tax rates (193) (153)
adjustments in respect of prior years 311 88 
research and development tax credit 38 45 
other (expenditure) that is not tax deductible/income that is not taxable 68 31
utilisation/(creation) of tax losses 70 (43)
deferred tax timing differences 336 247 
Actual current taxation 88 (206)
Taxation on items charged to equity
Deferred tax credit on actuarial gains and losses on defined benefit plans (continuing operations) 283 641
10. Earnings per Share
Basic earnings per share (EPS) were calculated based on the profit for the year divided by the weighted average number of
ordinary shares outstanding during the period, excluding those held by the Employee Share Trust which are accounted for as an
investment in own shares (see note 27). The total for 2006 was 84,586,012 (2005: 84,586,012). Diluted EPS is calculated by
adjusting the number of shares used in the basic EPS calculation to assume conversion of all dilutive potential ordinary shares
resulting from outstanding share options. There were 327,500 exercisable share options in existence at the year end (2005: Nil) 
the exercise price for which is below the average fair value of 12.2p per share of the ordinary shares in issue during the year.
These create a dilution in shares of 45,635 (2005: Nil).
The split of continuing and discontinued earnings per share has been shown on the face of the Income Statement.
In order to provide a trend measure of underlying performance, the Board also monitors headline EPS, computed 
as follows:
Earnings EPS
2006 2005 2006 2005
£000 £000 p p
Profit for the year 1,323 2,802 1.56 3.31 
Restructuring costs — 309 — 0.37 
Tax on restructuring costs — (93) — (0.11)
Post-tax profit from discontinued operations — (1,893) — (2.24)
Headline 1,323 1,125 1.56 1.33
Effective headline tax rate 27% 34% 43 INTELEK
Report and Accounts 2006
11. Dividends
The following dividend payments have been made, in each case on 86,076,072 ordinary 5p shares:
2006 2005
Rate Date £000 £000
Interim 2003/04 0.12p 6 April 2004 103
Final 2003/04 0.24p 1 October 2004 207
Interim 2004/05 0.12p 26 January 2005 103
Final 2004/05 0.24p 30 September 2005 207
Interim 2005/06 0.12p 25 January 2006 103
Less: dividends paid to employee share trust (5) (6)
305 407
At 6 June 2006, the 2005/06 final dividend had not been approved by Shareholders and as such was not included as a liability.
The dividend is expected to be £207,000, 0.24 pence per share, and to be paid on 27 September 2006 to shareholders on the
register at 1 September 2006.
12. Goodwill
Note £000
Cost
At 1 April 2005 15,726
Exchange adjustment 172
Additions 30 41
At 31 March 2006 15,939
Amortisation/impairment
At 1 April 2005 (2,312)
Exchange adjustment (19)
At 31 March 2006 (2,331)
Net book value
At 31 March 2006 13,608
At 31 March 2005 13,414 
The goodwill relates entirely to the Satellite Communications business segment, a cash generating unit. No impairment has been
recognised in either 2005 or 2006.
Impairment
During the year, the goodwill was tested for impairment against cash flow projections for the unit discounted at management’s
estimate of the risk adjusted cost of capital. The cash flows were taken from the unit’s business plan for 2007 to 2009, extended
thereafter at similar growth rates. The pre-tax discount rate applied was 11.3%. After sensitivity analysis of the results, in
particular for presumed growth rates, it was concluded that no impairment was required. 44 INTELEK
Report and Accounts 2006
JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006
Notes to the Financial Statements
year ended 31 March 2006
13. Intangible assets
Development expenditure £000
Cost
At 1 April 2005 343
Additions 130
Reclassification 16
At 31 March 2006 489
Amortisation
At 1 April 2005 —
Charge for the year (23)
At 31 March 2006 (23)
Net book value
At 31 March 2006 466
At 31 March 2005 343
The additions relate entirely to assets acquired from third parties. The useful economic life of the intangible assets is three years.
Amortisation is charged to Research and Development expenses in the Income Statement. 
14. Property, plant and equipment
Assets in the
Freehold Leasehold Plant and course of
properties properties Equipment construction Total
£000 £000 £000 £000 £000
Cost at 1 April 2004 106 1,115 18,678 — 19,899 
Exchange adjustment — (1) (38) — (39) 
Additions — 55 1,317 80 1,452 
Disposals (94) — (1,536) — (1,630)
Disposal of subsidiary — (251) (3,534) — (3,785)
Acquisition of business — — 253 — 253
Cost at 31 March 2005 12 918 15,140 80 16,150 
Exchange adjustment — 2 101 — 103
Additions — 101 1,683 — 1,784
Disposals — (58) (366) — (424) 
Reclassification — (5) 69 (80) (16) 
Cost at 31 March 2006 12 958 16,627 — 17,597 
Depreciation at 1 April 2004 (26) (320) (13,008) — (13,354)
Exchange adjustment — — 21 — 21
Charge for the year — (56) (1,464) — (1,520)
Disposals 25 (3) 1,346 — 1,368 
Disposal of subsidiary — 107 2,957 — 3,064 
Depreciation at 31 March 2005 (1) (272) (10,148) — (10,421)
Exchange adjustment — — (60) — (60)
Charge for the year — (50) (1,189) — (1,239)
Disposals — — 299 — 299 
Depreciation at 31 March 2006 (1) (322) (11,098) — (11,421)
Carrying amount 31 March 2006 11 636 5,529 — 6,176 
31 March 2005 11 646 4,992 80 5,729
The carrying amount of plant and equipment includes £2,735,000 (2005: £1,925,000) in respect of leased assets, the
depreciation charge on which amounted to £395,000 (2005: £383,000). The carrying amount of leasehold properties includes
£233,000 (2005: £239,000) in respect of a long leasehold property and £403,000 (2005: £407,000) in respect of short leasehold
property. 45 INTELEK
Report and Accounts 2006
15. Subsidiaries
The principal investments, all of which are wholly owned, are as follows:
Country of incorporation Activity
Intelek Properties Ltd UK Investment company
Paradise Datacom Ltd UK Manufacturer of satellite communications equipment
Paradise Datacom LLC USA Manufacturer of satellite communications equipment
Labtech Ltd UK Manufacturer of microwave communications components
CML Group Ltd UK Manufacturer of aerostructure components
16. Inventories
2006 2005
£000 £000
Work in progress 1,938 1,835 
Raw materials and components 2,280 1,644 
4,218 3,479 
The above inventory has been pledged as security for the Group’s bank loans and overdrafts.
In the Directors’ opinion, the replacement cost of inventories does not differ materially from the stated amounts.
17. Trade and other receivables
2006 2005
£000 £000
Trade receivables: Gross 6,164 5,397 
Provision for impairment (97) (48)
Other receivables 152 94 
Prepayments and accrued income 482 557 
6,701 6,000 
The Group has no significant concentration of credit risk, with trade receivables spread over a large number of customers and
representing an average of 46 days of sales (2005: 47 days). The Directors consider the carrying amounts of trade and other
receivables approximate to their fair values.
18 Current tax assets/(liabilities)
2006 2005
£000 £000
Overseas taxation 30 (235)
30 (235) 46 INTELEK
Report and Accounts 2006
JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006
Notes to the Financial Statements
year ended 31 March 2006
19. Cash and cash equivalents
Cash and cash equivalents comprise cash held by the Group and short term bank deposits with maturity of three months or less.
The carrying value of these approximates to their fair value. The credit risk on liquid funds is limited because counterparties are
banks with high credit ratings assigned by international credit-rating agencies.
2006 2005
£000 £000
Cash 875 682
Cash held on deposit 239 409
1,114 1,091
20. Deferred taxation
2006 2005
£000 £000
Provisions at 1 April 3,561 3,232 
Exchange adjustment (11) (25)
Income Statement (571) (287) 
Equity 283 641
Provisions at 31 March 3,262 3,561 
2006 2005
DB Other DB Other
pension assets Liabilities Net pension assets Liabilities Net
Defined benefit pension 3,914 — — 3,914 3,875 — — 3,875
Capital allowances — 153 (517) (364) — 55 (498) (443)
Other timing differences — 265 (553) (288) — 199 (400) (201)
Losses ———— — 330 — 330 
3,914 418 (1,070) 3,262 3,875 584 (898) 3,561
21. Deferred government grants
2006 2005
£000 £000
At 1 April (100) (152)
Disposal of subsidiary — 21 
Income Statement 7 31 
At 31 March (93) (100)
22. Trade and other payables
2006 2005
£000 £000
Trade payables (3,965) (3,008)
Other taxes and social security (615) (515)
Other payables (568) (346)
Accruals (1,306) (1,461)
(6,454) (5,330) 47 INTELEK
Report and Accounts 2006
23. Provisions and other liabilities
2006 2005
£000 £000
Warranty (73) (35)
Acquisition costs (see note 30) — (421)
Costs of disposal of business — (145)
(73) (601)
The warranty provision is not discounted and is estimated to be fully utilised within 12 months. 
24. Share Capital
2006 2005
£000 £000
Authorised:
110,000,000 (2005: 110,000,000) Ordinary 5p shares 5,500 5,500
Allotted and fully paid:
86,076,072 (2005: 86,076,072) Ordinary 5p shares 4,304 4,304
Share options
Details of the Group share option schemes are set out in the Remuneration Report on page 26. At 31 March 2006 there were
outstanding options under the Executive Scheme in respect of 2,550,000 ordinary shares, exercisable between 2006 and 2013 at
prices varying between 10.5p and 36p per share, outstanding options under the SAYE Scheme in respect of 362,440 ordinary
shares, exercisable in 2006 at a price of 34p, and outstanding options under the International Sharesave Scheme in respect of
86,963 ordinary shares, exercisable in 2007 at a price of 19p.
The movement in the year in respect of share options is analysed as follows:
Exercise
Scheme Date of grant 2006 Lapsed 2005 price (p) Expiry
1986 approved 20/10/95 — (30,000) 30,000 — —
1995 approved 09/10/96 27,500 (7,500) 35,000 28.0 10/10/06
12/01/98 70,000 (15,000) 85,000 16.0 13/01/08
20/08/99 55,000 — 55,000 20.0 21/08/09
28/01/00 15,000 — 15,000 33.0 29/01/10
27/07/00 7,500 — 7,500 35.0 28/07/10
1995 unapproved 12/01/98 — (50,000) 50,000 — —
28/01/00 50,000 — 50,000 33.0 29/01/07
27/07/00 150,000 — 150,000 35.0 28/07/07
28/07/00 250,000 — 250,000 36.0 29/07/07
2000 approved 20/12/00 50,000 — 50,000 35.5 19/12/10
10/08/01 139,500 (60,000) 199,500 34.0 09/08/11
08/08/02 73,000 (7,500) 80,500 14.0 07/08/12
08/01/03 227,500 (52,500) 280,000 10.5 07/01/13
2000 unapproved 10/08/01 135,000 — 135,000 34.0 09/08/11
08/08/02 500,000 — 500,000 19.0 11/02/12
08/01/03 100,000 — 100,000 10.5 07/01/13
1,850,000 (222,500) 2,072,500 
Chief Executive option 19/09/00 700,000 — 700,000 17.0 20/09/07
2,550,000 (222,500) 2,772,500 
Accrued/(lapsed)
SAYE 25/07/01 362,440 (29,115) 391,555 34.0 01/09/06
International sharesave 31/12/01 86,963 16,231 70,732 19.0 01/02/07
2,999,403 3,234,787  48 INTELEK
Report and Accounts 2006
JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006
Notes to the Financial Statements
year ended 31 March 2006
25. Share-based payments
In accordance with IFRS 2 ‘Share-based payment,’ the Group has appraised share options granted after 7 November 2002. The
only options applicable to date are those issued on 8 January 2003 at a price of 10.5p, expiring on 7 January 2013. The options
were issued conditional upon achieving growth in earnings per share at a rate in excess of 2% a year above the retail price index
over any consecutive three years in the ten year period from 31 March 2002. The details are as follows:
2006 2005
Weighted Weighted
No. average price No. average price
Outstanding at 1 April 380,000 10.5p 500,000 10.5p
Options forfeited (52,500) 10.5p (120,000) 10.5p
Outstanding at 31 March 327,500 10.5p 380,000 10.5p
Exercisable at 31 March 327,500 10.5p 380,000 10.5p
For these options, the fair value has been assessed, applying the Black-Scholes option pricing model. The model assumed
volatility of 39.1%, expected dividend yield of 2.8% and risk free interest rate of 4.2%. On this basis, the fair value of the options
at grant date was 3.8p. No accrual has been taken to the Income Statement as the amounts are not material. At 31 March 2006, a
charge of £12,000 would have been accrued (2005: £6,000).
26. Changes in shareholders’ equity
Retained earnings
Share Accumu-
Share Premium Own Other Hedging Translation lated
capital Account shares Reserve reserve reserve profits Total
£000 £000 £000 £000 £000 £000 £000 £000
At 1 April 2004 4,304 9,104 (326) 4,366 — — (7,310) 10,138 
Exchange difference on hedging ———— (11) — — (11)
Exchange difference on translation 
of overseas operation ————— (27) — (27)
Actuarial losses arising on defined 
benefit pension plan, net of tax —————— (1,497) (1,497)
Dividends paid —————— (407) (407)
Transfer from income statement — — ———— 2,802 2,802
At 31 March 2005 4,304 9,104 (326) 4,366 (11) (27) (6,412) 10,998 
Exchange difference on hedging ———— (89) — — (89)
Exchange difference on translation 
of overseas operation ————— 123 — 123 
Actuarial losses arising on defined 
benefit pension plan, net of tax —————— (660) (660)
Dividends paid —————— (305) (305)
Transfer from income statement —————— 1,323 1,323 
At 31 March 2006 4,304 9,104 (326) 4,366 (100) 96 (6,054) 11,390 
The hedging and translation reserves represent, respectively, the accumulated net currency variations on hedging instruments
and equity shareholders’ interest in overseas net assets.
27. Own Shares
Own shares represent the cost of shares in Intelek plc purchased in the market and held by the Intelek plc Employee Share
Ownership Plan (ESOP).
The Intelek plc ESOP trust was established by a deed on 7 November 1991 made between the Company and EFG Reads
Trustees Limited of Jersey. The trust was established for the benefit of the bona fide employees or former employees of the
Company and other Group companies (the Beneficiaries). The trust is a discretionary trust whose assets are shares in the
Company and the Trustees have full authority and power to distribute such shares as they deem fit to the Beneficiaries. In
addition, the Trustees may satisfy options granted by the Company to participants in one or more of the Group’s share option
schemes should the Trustees in their absolute discretion and with the agreement of the Company decide to do so. 49 INTELEK
Report and Accounts 2006
27. Own Shares (continued)
Administration costs amount to £5,000 per annum. As of 31 March 2006, the Trust held 1,490,060 (2005: 1,490,060) Ordinary
shares of 5p each in the capital of the Company (1.73% of the allotted share capital), the market value of which at 31 March
2006 was £178,807 (2005: £186,258), i.e. 12.0p per share (2005: 12.5p per share). Dividends on these shares have not been
waived. As of 31 March 2006, 2,999,403 (2005: 3,234,787) shares of the Company are under option to the participants in the
Group’s Share Option Schemes and the Trustees may by agreement with the Company use all or any of the shares in the Trust to
satisfy such options. As of today’s date, 700,000 shares in the Trust have been set aside for the options.
28. Cash generated from operations
2006 2005
£000 £000
Headline operating profit from operations 2,701 2,789 
Operating loss from discontinued operation — (57)
Depreciation and amortisation 1,257 1,520 
Pension curtailment gain — (51)
Pension contribution paid towards deficit (1,397) (1,371)
Deferred income (7) (31)
(Profit)/loss on disposal of tangible fixed assets 53 (11)
Increase in inventories (644) (278)
(Increase)/decrease in receivables (586) 152
Increase in payables 968 203 
Net cash flow before restructuring 2,345 2,865
Restructuring — (182)
Special pension contribution in respect of Pascall disposal (64) (800)
Cash generated from operations 2,281 1,883
Being: Continuous operations 2,345 3,106 
Discontinued operations (64) (1,223)
Other cash flow in respect of the discontinued operation:
Interest — (58)
Capital expenditure — (185)
Taxation — —
29. Reconciliation of net cash flow to movement in net debt
2006 2005
£000 £000
Net increase in cash and cash equivalents 117 84 
Effect of foreign exchange rates (233) 61 
Repayment of finance leases 590 602 
Cash (inflow)/outflow from debt (334) 4,065 
Changes in net debt resulting from cash flows 140 4,812 
New finance leases (1,199) (526)
Net movement in debt (1,059) 4,286 
Opening debt (2,344) (6,630)
Closing debt (3,403) (2,344)
Analysis of net debt:
Cash at bank 1,114 1,091 
Bank overdrafts and loans (3,223) (2,754)
Finance leases (1,294) (681)
Total net debt (3,403) (2,344) 50 INTELEK
Report and Accounts 2006
JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006
Notes to the Financial Statements
year ended 31 March 2006
30. Acquisitions
Cash flow in 2005/06 includes two elements for business acquisition:
2006 2005
£000 £000
(i) Settlement for the trade and assets of the Filtronic microwave facility (see note below) (421) —
(ii) A residual amount for the 2001 Paradise Datacom acquisition, associated with the earn-out agreement (41) —
(462) —
On 11 March 2005, Labtech Ltd, a wholly owned subsidiary of Intelek plc, completed the acquisition from Filtronics Components
Ltd of the trade and assets of Filtronics’ microwave components design manufacturing facility located in Milton Keynes, UK. The
total purchase price including expenses was £421,000 and this was settled in full in the year to 31 March 2006. There were no 
fair value adjustments and there was no payment for goodwill. The facility is now known as Labtech Microwave. The details are 
as follows:
Fair Value
£000
Tangible fixed assets 253 
Inventories 233 
486 
Provisions (65)
Total consideration 421
31. Commitments
2006 2005
£000 £000
Capital expenditure contracted but not provided for 304 180
32. Operating Lease Commitments
Commitments for future minimum lease payments under non-cancellable operating leases fall due as follows:
Total Total
Properties Plant 2006 Properties Plant 2005 
£000 £000 £000 £000 £000 £000
Within one year 603 246 849 593 528 1,121
Between one and five years 2,226 150 2,376 2,243 381 2,624
After five years 3,937 — 3,937 4,386 — 4,386
6,766 396 7,162 7,222 909 8,131
33. Contingent Liabilities and Assets
The Company is guarantor for the lease of the property occupied by Pascall Electronics on the Isle of Wight. The lease expires in
2016 and is at a current rental of £245,000 per annum. As part of the disposal agreement for Pascall Electronics, the Company
secured full indemnity for this guarantee from both the purchaser and the purchaser’s ultimate holding company. The Directors
consider it unlikely that there will be a default that affects the Group under this guarantee. Even if there were to be a default, the
Group would expect to be able to re-let the property and mitigate much of the liability. 51 INTELEK
Report and Accounts 2006
34. Borrowings
(a) Summary
2006 2005
£000 £000
Bank loans (3,223) (2,754)
Finance leases (1,294) (681)
(4,517) (3,435)
Non-current liabilities (2,065) (2,100)
Current liabilities (2,452) (1,335)
(4,517) (3,435)
(b) Maturity of borrowings
The maturity profile of the Group financial liabilities was as follows: 
2006 2005
Bank Finance Bank Finance
loans leases Total loans leases Total
£000 £000 £000 £000 £000 £000
In one year or less or on demand (1,891) (561) (2,452) (988) (347) (1,335)
In more than one year but not more than two years (1,066) (481) (1,547) (470) (212) (682)
In more than two years but not more than five years (266) (252) (518) (1,296) (122) (1,418)
(3,223) (1,294) (4,517) (2,754) (681) (3,435)
Bank overdraft and loans are fully secured on the assets of the Group.
(c) Borrowing facilities
The Group has the following undrawn committed borrowing facilities:
2006 2005
£000 £000
Expiring in less than one year 2,144 2,132 
Expiring in more than one year but not more than two years — —
Expiring in more than two years 1,168 1,470 
3,312 3,602 
(d) Finance leases
2006 2005
Minimum Minimum
lease Present lease Present
payments value payments value
£000 £000 £000 £000
Within one year (621) (561) (388) (349)
One to five years (783) (733) (361) (332)
(1,404) (1,294) (749) (681)
Less future finance charges 110 68 
Present value of lease obligations (1,294) (681)
The Group has not identified any operating leases that are required to be treated as finance leases on transition to IAS 17. 52 INTELEK
Report and Accounts 2006
JOB 12133 — PROOF 02 — 15/06/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006
Notes to the Financial Statements
year ended 31 March 2006
34. Borrowings (continued)
(e) Interest
The weighted average interest rates paid were as follows:
2006 2005
% %
Bank loans 6.0 6.0
Finance leases 7.5 6.6
(f) Fair value of financial liabilities
The fair value of financial liabilities at 31 March 2006 compared with book value was:
2006 2005
Book value Fair value Book value Fair value
£000 £000 £000 £000
Short-term borrowings (2,452) (2,471) (1,335) (1,344)
Long-term borrowings (2,065) (2,090) (2,100) (2,103)
(4,517) (4,561) (3,435) (3,447)
The fair value of other financial liabilities and assets is not considered to be materially different from recorded book values.
(g) Principal features of the Group’s borrowings
The Group’s borrowing facilities are secured by a debenture over the Group’s assets and unlimited cross guarantees given by the
Company and certain subsidiary undertakings. The Group has a bank loan of £1,891,000 being repaid at £135,000 a quarter. It
will be fully repaid by September 2009. The interest rate on the loan is 1.50% above the bank’s base rate.
35. Financial Instruments
The Group’s financial instruments comprise borrowings, cash at bank and various items such as trade debtors and creditors that
arise directly from its operations. The main purpose of these instruments is to raise finance for operations. The Group has not
entered into derivative transactions, with the exception of foreign exchange contracts in the normal course of trade, nor does it
trade in financial instruments as a matter of policy. The main risks arising from the Group’s financial instruments are interest rate
risk, liquidity risk and foreign currency risk. The Board’s policy on interest rate and liquidity risk is described in Note 1 in
significant accounting policies and in the Directors’ Report, which forms part of these financial statements.
Operations are financed through a mixture of retained profits, lease finance and bank borrowings. Other than finance leases and
loan notes, the Board’s policy is to use variable rate borrowings. To ensure continuity of debt funding the Group’s policy is to
keep a substantial part of debt as due in more than one year’s time. Short-term flexibility is achieved by overdraft facilities. 
Carrying and fair values of the Group’s financial assets and liabilities at 31 March 2006:
Carrying Fair
value value
Derivative instruments
— forward foreign currency contracts ——
Financial assets
— trade and other receivables 6,731 6,731
— cash and cash equivalents 1,114 1,114
Financial liabilities
— borrowings: bank loans (3,223) (3,223)
finance leases (1,294) (1,338)
— trade and other payables (6,454) (6,454) 53 INTELEK
Report and Accounts 2006
35. Financial Instruments (continued)
Management consider the fair values to approximate to the present value of future cash flows based on market rates. They do
not expect the derivative instruments to vary materially relative to their hedged item, having applied such sensitivities as:
(i) 1% increase in interest rates
(ii) 10% weakening in the value of sterling against all other currencies from the levels applicable at 31 March 2006.
The currency and interest rate profile of the Group’s financial assets and liabilities that are subject to interest rate risk at 31 March
2006 was:
Floating Fixed
Cash
and cash Bank Finance
equivalent loans leases Total
£000 £000 £000 £000
Sterling 548 — (1,257) (709)
US Dollars 522 (3,223) (37) (2,738)
Euro 44—— 44
1,114 (3,223) (1,294) (3,403)
The floating rate financial liabilities bear interest at rates based on the Barclays Bank base rate.
The fixed rate financial liabilities have a weighted average interest rate of 7.5% over a weighted average period of 2.7 years.
36. Derivative financial instruments
Currency derivatives
The Group utilises forward foreign currency contracts to hedge significant future transactions and cash flows. The instruments
purchased are primarily denominated in US$ and Euros. At 31 March 2006, they comprised:
Gross
contract
amount Carrying value Fair value
£000 £000 £000
Purchase:
US$ 106 — — 
Euro 232 — — 
These amounts are based on the market value of equivalent instruments at the Balance Sheet date. All of these derivatives are
designated and effective as cash flow hedges and have been deferred in equity. The contracts mature in less than one year.
Net investment hedge
The Group has a US-based subsidiary company which can affect the sterling Group Balance Sheet as a result of movements in
the sterling/dollar exchange rate. The Group has partly hedged the US subsidiary company’s net asset exposure at 31 March 
2006 using bank loans designated in US$. The net currency movements on the subsidiary net assets and the related bank loans
are recognised at each year end and recorded through reserves. At 31 March 2006, the Group held $6.8 million net assets
overseas and held loans of $5.6 million designated as a partial hedge against this exposure. This hedge has been tested for
effectiveness at inception and at each reporting date. 54 INTELEK
Report and Accounts 2006
JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006
Notes to the Financial Statements
year ended 31 March 2006
37. Explanation of transition to IFRS
The Group has complied with all provisions of IFRS. An explanation of how the transition from UK GAAP to IFRS has affected the
Group’s financial position, financial performance and cash flows is set out in the following tables and accompanying notes.
Reconciliation of equity
1 April 2004
UK
GAAP Goodwill Pension Reclass. Dividend IFRS
Note: (a) (b) (c) (d)
ASSETS
Goodwill 13,473 ———— 13,473
Intangible assets 265 ———— 265
Property, plant and equipment 6,545 ———— 6,545
Deferred tax assets arising on 
pension obligation — — 3,731 — — 3,731
Other deferred tax assets 57 ———— 57
Total non-current assets 20,340 — 3,731 — — 24,071
Inventories 4,252 ———— 4,252
Trade and other receivables 9,206 — (1,496) — — 7,710
Current tax receivable 60 ———— 60
Cash and cash equivalents 946 ———— 946
Total current assets 14,464 — (1,496) — — 12,968
Total assets 34,804 — 2,235 — — 37,039
LIABILITIES
Defined benefit pension obligation — — (12,435) — — (12,435)
Borrowings (2,637) ———— (2,637)
Deferred tax liabilities (798) (235) 449 28 — (556)
Deferred government grants (152) ———— (152)
Total non-current liabilities (3,587) (235) (11,986) 28 — (15,780)
Borrowings (4,939) ———— (4,939)
Trade and other payables (6,393) — — 162 305 (5,926)
Current tax liabilities ————— —
Provisions and other liabilities — — — (256) — (256)
Total current liabilities (11,332) — — (94) 305 (11,121)
Total liabilities (14,919) (235) (11,986) (66) 305 (26,901)
Net assets 19,885 (235) (9,751) (66) 305 10,138
SHAREHOLDERS’ EQUITY
Issued capital 4,304 ———— 4,304
Share premium 9,104 ———— 9,104
Reserves 4,040 ———— 4,040
Retained earnings 2,437 (235) (9,751) (66) 305 (7,310)
Total equity 19,885 (235) (9,751) (66) 305 10,138 55 INTELEK
Report and Accounts 2006
37. Explanation of transition to IFRS (continued)
Reconciliation of equity
31 March 2005
UK
GAAP Goodwill Pension Reclass. Dividend IFRS
Note: (a) (b) (c) (d)
ASSETS
Goodwill 12,627 787 — — — 13,414
Intangible assets 343 ———— 343
Property, plant and equipment 5,729 ———— 5,729
Deferred tax assets arising on 
pension obligation — — 3,875 — — 3,875
Other deferred tax assets 152 — — 432 — 584
Total non-current assets 18,851 787 3,875 432 — 23,945
Inventories 3,479 ———— 3,479
Trade and other receivables 9,108 — (3,108) — — 6,000
Cash and cash equivalents 1,091 ———— 1,091
Total current assets 13,678 — (3,108) — — 10,570
Total assets 32,529 787 767 432 — 34,515
LIABILITIES
Defined benefit pension obligation — — (12,918) — — (12,918)
Borrowings (2,100) ———— (2,100)
Deferred tax liabilities (1,106) (322) 933 (403) — (898)
Deferred government grants (100) ———— (100)
Total non-current liabilities (3,306) (322) (11,985) (403) — (16,016)
Borrowings (1,335) ———— (1,335)
Trade and other payables (6,038) — — 505 203 (5,330)
Current tax liabilities (235) ———— (235)
Provisions and other liabilities — — — (601) — (601)
Total current liabilities (7,608) — — (96) 203 (7,501)
Total liabilities (10,914) (322) (11,985) (499) 203 (23,517)
Net assets 21,615 465 (11,218) (67) 203 10,998
SHAREHOLDERS’ EQUITY
Issued capital 4,304 ———— 4,304
Share premium 9,104 ———— 9,104
Reserves 4,040 ———— 4,040
Retained earnings 4,167 465 (11,218) (67) 203 (6,450)
Total equity 21,615 465 (11,218) (67) 203 10,998 JOB 12133 — PROOF 05 — 12/07/2006
56 INTELEK
Report and Accounts 2006
JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006
37. Explanation of transition to IFRS (continued)
Reconciliation of profit
Year ended 31 March 2005
UK GAAP Disc. Op. Goodwill Pension Reclass. IFRS
Note: (f) (a) (b) (c) 
Continuing operations
Sales 37,292 (5,768) — — — 31,524
Cost of goods sold (28,834) 4,882 — — 1,576 (22,376)
Gross profit 8,458 (886) — — 1,576 9,148
Selling and administrative expenses (6,289) 944 — 432 132 (4,781)
Other operating income 132 — — — (132) —
Research and development expenses ———— (1,578) (1,578)
Headline operating profit 2,301 58 — 432 (2) 2,789
Interest receivable ———— 28 28
Interest payable (506) 59 — — (28) (475)
Net pension finance cost — — — (631) — (631)
Finance costs — net (506) 59 — (631) — (1,078)
Headline profit 1,795 117 — (199) (2) 1,711
Amortisation (789) — 789 — — —
Restructuring costs (309) ———— (309)
Loss on disposal of 
discontinued operations (1,876) 1,876 — — — —
Profit before tax (1,179) 1,993 789 (199) (2) 1,402
Taxation (359) (82) (113) 60 1 (493)
Profit after tax from
continuing operations (1,538) 1,911 676 (139) (1) 909
Profit after tax from
discontinued operations — 1,893——— 1,893
Profit for the year (1,538) 3,804 676 (139) (1) 2,802
Earnings per share
Basic -1.82 4.50 0.80 -0.16 0.00 3.31
Diluted -1.82 4.50 0.80 -0.16 0.00 3.31
Notes to the Financial Statements
year ended 31 March 2006 57 INTELEK
Report and Accounts 2006
37. Explanation of transition to IFRS (continued)
Notes to the reconciliation of equity and of profit
(a) Under UK GAAP , goodwill was being amortised over 20 years. Under IFRS, there is no amortisation and this is made
retrospective to the date of transition, 1 April 2004. The effect is to increase goodwill in the Balance Sheet, with consequent
reductions in the amortisation charge in the Income Statement.
Under IFRS, goodwill must be reviewed annually for impairment. The goodwill relates entirely to Paradise Datacom. The cash
flow forecasts of Paradise Datacom have been projected for five years and discounted at 12%, being the management’s
estimate of the risk adjusted average cost of capital for that entity. This assessment confirmed that no adjustment for
impairment is required.
Also, under UK GAAP , provision for deferred tax on certain timing differences is subject to an assessment on the likelihood of
crystallisation. Under IFRS, full provision is required. This has the effect of increasing the deferred tax liability associated with
goodwill by £235,000 on 1 April 2004, with small adjustments thereafter.
(b) Under UK GAAP , contributions towards the defined benefit pension scheme were classified as prepayments, reduced by
annual charges to profit for the amortisation of the pension deficit as computed under SSAP 24. Under IFRS, the deficit is
computed on a more conservative basis, approximating to the values used for FRS 17, as disclosed in the notes to the 2005
Annual Report. The deficit gross of tax is recorded as an obligation of the Group, with the potential tax recovery shown as a
separate deferred tax asset.
The amortisation of the pension deficit in the Income Statement is reversed and the following entries are added:
(i) Curtailment gain/(loss) (part of operating profit)
(ii) Expected return on pension assets
(iii) Interest on pension liabilities
Actuarial gains and losses are charged directly to equity.
(c) There are several reclassifications required in both the Income Statement and the Balance Sheet. Most of these have no net
effect. The one adjusting item shown for net assets is the requirement under IFRS to accrue for holidays earned but not yet
taken. Accrual had only been taken previously where there was a contractual employee right to payment in lieu.
(d) Dividend under IFRS is recorded only upon payment being made, whereas under UK GAAP it was accrued for in the period to
which it related.
(e) The above changes increased/(decreased) the tax current and deferred liabilities as shown in the tables.
(f) Under IFRS, the results and associated gain/(loss) on disposal of discontinued operations (Pascall) are required to be
separated from continuing businesses and disclosed after taxation in the Income Statement. In addition, under UK GAAP ,
goodwill associated with the disposed business previously written off to reserves had to be reinstated and written off against
profit for the year. For Pascall, this amounted to £3,635,000. Under IFRS, this adjustment is not required.
(g) Under UK GAAP , all research and development expenditure had been expensed except for development projects
subcontracted to third parties where those projects were separately identifiable and for each of which the outcome could be
assessed with reasonable certainty. Under IFRS, the development expenditure has been reassessed in accordance with IAS
38 and management has concluded that no alteration in capitalisation is required as:
(i) Many of the development projects, especially for RF products, result in incremental improvements to existing products or
processes and significant capitalisation is considered unlikely;
(ii) Large projects, such as for the Evolution Modem, can only be capitalised once the development is both technically and
commercially feasible: the uncertainties in the technology and the marketplace make this difficult to substantiate, and a
prudent view has therefore been taken;
(iii) For intangible assets (in this case, R&D) acquired from third parties, there is a presumption in the new standards that the
commercial feasibility has been proven, and hence capitalisation is more likely to be appropriate.
Explanation of material adjustments to the cash flow statement
The cash flow statement has changed significantly only to reflect the accounting treatment of goodwill and pension amortisation. 58 INTELEK
Report and Accounts 2006
JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006 JOB 12133 — PROOF 01 — 30/05/2006
Five Year Summary
IFRS UK GAAP
2006 2005 2005 2004 2003 2002
£000 £000 £000 £000 £000 £000
Sales
Continuing operations 35,212 31,524 31,524 31,965 34,473 31,509
Discontinued operations — — 5,768 6,926 7,121 9,231
Total 35,212 31,524 37,292 38,891 41,594 40,740
Operating profit 2,701 2,789 2,301 2,370 2,462 3,150
Interest (311) (447) (506) (565) (745) (716)
Net pension finance cost (584) (631) ————
Headline profit 1,806 1,711 1,795 1,805 1,717 2,434
Continuing operations 1,806 1,711 1,911 1,508 1,749 1,783
Discontinued operations — — (116) 297 (32) 651
Amortisation of goodwill — — (789) (794) (803) (696)
Exceptional items — (309) (2,185) (289) (415) (228)
Profit before taxation 1,806 1,402 (1,179) 722 499 1,510
Taxation (483) (493) (359) (209) (331) (484)
Profit after taxation 1,323 909 (1,538) 513 168 1,026
Discontinued operations — 1,893————
Profit for the year 1,323 2,802 (1,538) 513 168 1,026
Earnings per ordinary share (pence)
Basic 1.56 3.31 (1.82) 0.61 0.21 1.34
Diluted 1.56 3.31 (1.82) 0.61 0.21 1.20
Headline: Continuing operations 1.56 1.33 1.49 1.47 1.21 1.52
Dividends per ordinary share (pence) 0.36 0.36 0.36 0.36 0.34 0.90
Net debt (3,403) (2,344) (2,344) (6,630) (9,259) (8,123)
Shareholders’ funds 11,390 10,998 21,615 19,885 20,126 21,859 59 INTELEK
Report and Accounts 2006
Independent Auditors’ Report 
to the Shareholders of Intelek plc
We have audited the Parent Company financial
statements on pages 60 to 62. These Parent Company
financial statements have been prepared under the
accounting policies set out therein. We have also
audited the information in the Directors’ Remuneration
Report that is described as having been audited.
We have reported separately on the Group financial
statements of Intelek plc for the year ended
31 March 2006.
This report is made solely to the Company’s
shareholders, as a body, in accordance with Section
235 of the Companies Act 1985. Our audit work has
been undertaken so that we might state to the
Company'’s shareholders those matters we are
required to state to them in an auditors’ report and for
no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s
shareholders, as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of Directors and
Auditors
The Directors’ responsibilities for preparing the Annual
Report, the Directors’ Remuneration Report and the
Parent Company financial statements in accordance
with applicable law and United Kingdom Accounting
Standards are set out in the Statement of Directors’
Responsibilities.
Our responsibility is to audit the Parent Company
financial statements and the part of the Directors’
Remuneration Report to be audited in accordance with
relevant legal and regulatory requirements and
International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the Parent
Company financial statements give a true and fair view
and whether the Parent Company financial statements
and the part of the Directors’ Remuneration Report to
be audited have been properly prepared in accordance
with the Companies Act 1985. We also report to you if,
in our opinion, the Directors’ Report is not consistent
with the Parent Company 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 regarding Directors’ remuneration and
other transactions is not disclosed.
We read other information contained in the Annual
Report, and consider whether it is consistent with the
audited Parent Company financial statements. The
other information comprises only the Directors’ Report,
the unaudited part of the Directors’ Remuneration
Report, the Chairman’s Statement and the Operating
and Financial Review. We consider the implications for
our report if we become aware of any apparent
misstatements or material inconsistencies with the
Parent Company financial statements. Our
responsibilities do not extend to any other information.
We report to you whether in our opinion the
information given in the Directors’ Report is consistent
with the financial statements.
Basis of audit opinion
We conducted our audit in accordance with
International Standards on Auditing (UK and Ireland)
issued by the Auditing Practices Board. An audit
includes examination, on a test basis, of evidence
relevant to the amounts and disclosures in the Parent
Company financial statements and the part of the
Directors’ Remuneration Report to be audited. It also
includes an assessment of the significant estimates
and judgements made by the Directors in the
preparation of the Parent Company financial
statements, and of whether the accounting policies are
appropriate to the Company’s circumstances,
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 Parent Company financial statements and the part
of the Directors’ Remuneration Report to be audited
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 Parent Company
financial statements and the part of the Directors’
Remuneration Report to be audited.
Opinion
In our opinion the Parent Company financial
statements give a true and fair view, in accordance
with United Kingdom Generally Accepted Accounting
Practice, of the  state of affairs of the Company as at
31 March 2006 and the Parent Company financial
statements and the part of the Directors’
Remuneration Report to be audited have been
properly prepared in accordance with the Companies
Act 1985. The information given in the Directors’
Report is consistent with the financial statements.
RSM Robson Rhodes LLP
Chartered Accountants and Registered Auditors
Birmingham, England
11 July 2006 60 INTELEK
Report and Accounts 2006
Intelek plc
Balance Sheet
as at 31 March 2006
2006 2005
Note £000 £000
ASSETS
Investment in subsidiaries P2 10,067 10,031 
Plant and equipment P3 13 11 
Deferred tax assets 4 184 
Total non-current assets 10,084 10,226 
Amounts due from subsidiaries 11,609 13,691 
Other receivables 50 67 
Cash and cash equivalents 4 2,106 
Total current assets 11,663 15,864 
Total assets 21,747 26,090 
LIABILITIES
Borrowings P4 (1,332) (1,766)
Total non-current liabilities (1,332) (1,766)
Borrowings P4 (2,836) (3,960)
Amounts due to subsidiaries (51) (932)
Trade and other payables (311) (549)
Total current liabilities (3,198) (5,441)
Total liabilities (4,530) (7,207)
Net assets 17,217 18,883 
EQUITY
Issued capital P6 4,304 4,304 
Share premium 9,104 9,104 
Own shares P6 (326) (326)
Other reserves 1,559 1,559 
Retained earnings P1, P5 2,576 4,242
Total equity P6 17,217 18,883  
The financial statements on pages 60 to 62 were approved by the Board of Directors and signed on their behalf on 6 June 2006 by:
I D Brodie
Directors
K N Edwards
} 61 INTELEK
Report and Accounts 2006
Notes to the Intelek plc Balance Sheet
Significant accounting policies and basis of preparation
The separate financial statements of the Company are presented as required by the Companies Act 1985. They have been prepared
under the historical cost convention and in accordance with applicable United Kingdom Standards (UK GAAP) and law.
Changes to accounting policy
Financial Reporting Standard FRS 21 ‘Events after the balance sheet date’ became effective in 2005. This standard does not permit
dividends to be accrued where they have not been approved at the Balance Sheet date.
FRS 17 ‘Retirement benefits’ has been incorporated for the first time in the primary financial statements. Previously, the potential
impact of its application had been disclosed in the notes to the Group financial statements.
Prior year numbers have been restated to accommodate these changes. 
Investments
Fixed asset investments in subsidiaries are shown at cost less provision for impairment.
Employee benefits: Defined benefit scheme
The Company participates in the Group’s multi-employer defined benefit pension scheme. The Company is unable to identify its share
of the underlying assets of the scheme as the assets form a single fund. Consequently, the Company accounts for the scheme by
expensing contributions as they become due. Details of the scheme assets and liabilities are set out in the notes to the Group’s
financial statements.
Cash flow and related party transactions
The Group consolidated financial statements contain a consolidated cash flow statement and therefore the Company has taken
advantage of the exemption under FRS 1 not to present its own cash flow statement. Similarly, the Company has taken advantage of
the exemption under FRS 8 not to disclose related party transactions.
Financial instruments
The Group financial statements include disclosure sufficient to satisfy FRS 25 and consequently, the Company has taken advantage of
the exemption not to present separate financial instrument disclosures. 
P1. Profit and loss account
As permitted by section 230 of the Companies Act 1985, the Company has elected not to present its own profit and loss account
for the year. The loss for the year ended 31 March 2006 was £1,272,000 (2005: £1,104,000).
P2. Fixed asset investments
2006 2005
£000 £000
Cost
At 1 April 10,808 10,732
Additions 2,241 76
Disposals (2,205) —
At 31 March 10,844 10,808
Provision
At 1 April and 31 March (777) (777)
Net book value 10,067 10,031
Additions comprise £41,000 for a residual earn-out payment for Paradise Datacom and £2,200,000 for a capital contribution into
a subsidiary, CML Group Limited. CML Group Limited was sold to another subsidiary in the Group shortly thereafter at net book
value, £2,205,000.  62 INTELEK
Report and Accounts 2006
P3. Plant and equipment
£000
Cost at 1 April 2005 240
Additions 3
Disposal (166)
Cost at 31 March 2006 77
Depreciation at 1 April 2005 (229)
Charge for the year (1)
Disposal 166
Depreciation at 31 March 2006 (64)
Net book value at 31 March 2006 13
Net book value at 31 March 2005 11
P4. Borrowings
2006 2005
£000 £000
Bank overdraft (945) (2,972)
Bank loans payable within one year (1,891) (470)
Loan notes payable within one year — (518)
(2,836) (3,960)
Bank loans payable:
in more than one year but not more than two years (1,066) (470)
in more than two years but not more than five years (266) (1,296)
(1,332) (1,766)
Further details are included in the Group financial statements, note 34.
P5. Retained earnings
2006 2005
£000 £000
At 1 April as previously reported — 5,943
Prior year adjustment — (206)
At 1 April 4,242 5,737
Loss for the year (1,272) (1,104)
Dividends (305) (407)
Exchange adjustment (89) 16
At 31 March 2,576 4,242
P6. Reconciliation of movements in equity
2006 2005
£000 £000
At 1 April as previously reported — 20,584
Prior year adjustment — (206)
At 1 April 18,883 20,378
Loss for the year (1,272) (1,104)
Dividends (305) (407)
Exchange adjustment (89) 16
At 31 March 17,217 18,883
Details of the share capital of Intelek plc and of the investment in own shares are disclosed in notes 24, 26 and 27 to the Group’s
financial statements.
Notes to the Intelek plc Balance Sheet 63 INTELEK
Report and Accounts 2006
Notice of Meeting
Notice is hereby given that the 2006 Annual General Meeting of the Company will be held at the premises of Intelek plc, South
Marston Park, Swindon, Wiltshire, SN3 4TR on Friday, 15 September 2006 at 11.00 am or, if later, immediately following the
conclusion of the Extraordinary General Meeting that is scheduled to commence at 10.30 am. The meeting will be for the following
purposes:
Ordinary Business
To consider and, if thought fit, pass the following resolutions as ordinary resolutions:
1 To receive and adopt the Statement of Accounts for the year ended 31 March 2006 together with the Directors’ Report and the
Auditors’ Report on those accounts and the auditable part of the Directors’ Remuneration Report.
2 To approve the Directors’ Remuneration Report for the year ended 31 March 2006.
3 To declare a final dividend for the year ended 31 March 2006 of 0.24 pence per ordinary share in the capital of the Company,
to be paid on 27 September 2006 to shareholders whose names appear on the register at the close of business on 
1 September 2006.
4 To re-elect Mr Donald Wilson as a Director. Mr Wilson is currently 73.
5 To re-elect Mr Kevin Neil Edwards, who retires by rotation, as a Director.
6 To reappoint RSM Robson Rhodes LLP as Auditors to hold office from the conclusion of the meeting to the conclusion of the
next meeting at which the accounts are laid before the Company.
7 To authorise the Directors to fix the remuneration of the Auditors.
Special Business
To consider and, if thought fit, to pass Resolutions 8, 9 and 10, as to which 8 will be proposed and voted on as an Ordinary
Resolution, and 9 and 10 will be proposed and voted on as Special Resolutions.
8 That the Directors be and are hereby generally and unconditionally authorised pursuant to the provisions of Section 80 of the
Companies Act 1985 (“Act”) to exercise all the powers of the Company to allot relevant securities as defined by such Section
provided that:
a) the maximum nominal amount of such securities that may be allotted under this authority (within the meaning of that
Section) is £1,196,196; and
b) this authority shall, unless it is (prior to its expiry) duly revoked or is renewed, expire at the conclusion of the Annual
General Meeting of the Company to be held in 2007 or fifteen months from the date of passing this Resolution (whichever
shall occur first) save that the Company may, before such expiry, make an offer or agreement which will or may require
relevant securities to be allotted after such expiry and the Directors of the Company may allot relevant securities in
pursuance of such offer or agreement as if the power conferred hereby had not yet expired;
and provided also that the authority granted by this Resolution is in substitution for any existing authority to allot relevant
securities previously granted to the Directors which (to the extent that it remains in force and unexercised) is hereby revoked.
9 That the Company be authorised pursuant to Section 166 of the Act to make market purchases (as defined by Section 163 of
that Act) of Ordinary shares of 5p in the capital of the Company on such terms as the Directors of the Company may determine,
provided that such authority shall be limited as follows:
a) the Company shall purchase not more than 8,607,607 Ordinary Shares of 5p each (representing 10 per cent of the
Company’s issued ordinary share capital);
b) the price per Ordinary Share (exclusive of dealing and other incidental costs and stamp duty) to be paid by the Company
shall be:
i) not less than 5p; and
ii) not more than 105% of the average of the middle market quotations of the shares in question taken from The London
Stock Exchange daily official list for each of the five business days immediately preceding the date upon which the
purchase is made; 64 INTELEK
Report and Accounts 2006
c) the authority granted by this Resolution shall, unless it is (prior to its expiry) duly revoked, expire at the conclusion of the
Annual General Meeting to be held in 2007 or twelve months from the date of passing this Resolution (whichever shall
occur first). However, the Company may purchase its own shares of 5p each after this date provided that any such
purchase is made pursuant to a contract concluded before this authority expires, under which such purchase will or may
be completed or executed wholly or partly after such expiry, and provided also that the authority granted by this Resolution
is in substitution for any authority to purchase its own shares previously granted to the Company which (to the extent that it
remains in force and unexercised) is hereby revoked.
10 That, subject to and conditional upon the passing of Resolution 8 set out above, the Directors of the Company be and are
hereby empowered pursuant to Section 95 of the Act to allot equity securities (within the meaning of Section 94 of the Act) for
cash pursuant to Section 80 of the said Act as if Section 89(1) of the said Act did not apply to any such allotment, provided that
this power shall be limited to:
a) the allotment of equity securities in connection with a rights issue in favour of or general offer to Ordinary shareholders
where the equity securities respectively attributable to the interests of all the Ordinary shareholders are proportionate (as
nearly as may be) to the number of Ordinary shares held by them (but subject to such exclusions and other arrangements
as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements and any legal or
practical difficulties or the requirements of any regulatory body or stock exchange); and
b) the allotment, otherwise than pursuant to subparagraph a) above, of equity securities up to an aggregate nominal value of
£215,190;
and shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2007 or fifteen months from the
date of passing this Resolution, whichever shall occur first, save that the Company may before such expiry make an offer or
agreement which would or may require equity securities to be allotted after such expiry and the Directors of the Company may
allot equity securities in pursuance of such offer or agreement as if the power conferred hereby had not expired and provided
also that the authority and power hereby conferred shall be in substitution for any previous authority conferred upon the
Directors pursuant to the said Section 95 prior to the date of passing this Resolution.
By Order of the Board
K N Edwards 
Director and Secretary
South Marston Park, Swindon, Wiltshire, SN3 4TR 
6 June 2006
Notes
1 To be entitled to attend and vote at the meeting (and for the purpose of the determination by the Company of the number of
votes they may cast), members must be entered on the Company’s register of members by close of business on Wednesday,
13 September 2006.
2 A member entitled to vote at the above meeting is entitled to appoint one or more proxies to attend and, on a poll, to vote
instead of the member. A proxy need not also be a member of the Company.
3 A form of proxy for the use of members is enclosed with this notice. To be effective the form of proxy must be deposited, duly
completed and signed, at the Company’s registrars, Lloyds TSB Registrars, SEA 10846, The Causeway, Worthing, West Sussex,
BN99 6ZL, not less than forty-eight hours before the time appointed for the holding of the meeting. Completion of the proxy
does not preclude a member from subsequently attending and voting at the meeting in person if he so wishes.
4 There will be available for inspection at the Registered Office of the Company during normal business hours from the date of
this notice until the date of the Annual General Meeting, and at the place of meeting from 9.30 am on 15 September 2006 until
the conclusion of the meeting: a) the register of Directors’ interests in accordance with Section 325 of the Companies Act 1985, 
and b) copies of the Directors’ service contracts.
5 Biographical details of all those Directors who are offering themselves for re-election at the meeting are set out on page 18.
Notice of Meeting 65 INTELEK
Report and Accounts 2006
Glossary
Satellite Communications
Amplifier
A device used to boost the strength of an
electronic signal. 
Analog 
A form of transmitting information characterized
by continuously variable quantities, as opposed to
digital transmission, which is characterized by
discrete bits of information in numerical steps. An
analog signal is responsive to changes in light,
sound, heat and pressure. 
Aperture
A cross sectional area of the antenna which is
exposed to the satellite signal. 
Backhaul 
A terrestrial communications channel linking an
earth station to a local switching network or
population centre. 
Bandwidth
A measure of spectrum (frequency) use or
capacity. For instance, a voice transmission by
telephone requires a bandwidth of about 3,000
cycles per second (3KHz). A TV channel occupies
a bandwidth of 6 million cycles per second (6
MHz) in terrestrial systems. In satellite based-
systems a larger bandwidth of 17.5 to 72 MHz is
used to spread or “dither” the television signal in
order to prevent interference. 
Bit 
A single digital unit of information.
Bit Error Rate 
The fraction of a sequence of message bits that
are in error. A bit error rate of 10-6 means that
there is an average of one error per million bits. 
Bit Rate 
The speed of a digital transmission, measured in
bits per second. 
Block Down Converter 
A device used to convert the 3.7 to 4.2 KHz signal
down to UHF or lower frequencies (1 GHz and
lower). 
C Band 
This is the band between 4 and 8 GHz with the 6
and 4 GHz band being used for satellite
communications. Specifically, the 3.7 to 4.2 GHz
satellite communication band is used as the down
link frequencies in tandem with the 5.925 to 6.425
GHz band that serves as the uplink. 
Carrier
The basic radio, television, or telephony centre of
frequency transmit signal. The carrier in an analog
signal is modulated by manipulating its amplitude
(making it louder or softer) or its frequency
(shifting it up or down) in relation to the incoming
signal. Microwave and satellite communications
transmitters operate in the band from 1 to 14
GHz.
Channel 
A frequency band in which a specific broadcast
signal is transmitted. Television signals require a 6
MHz frequency band to carry all the necessary
picture detail.
DBS 
Direct broadcast satellite. Refers to service that
uses satellites to broadcast multiple channels of
television programming directly to home mounted
small-dish antennas. 
Delay 
The time it takes for a signal to go from the
sending station through the satellite to the
receiving station. This transmission delay for a
single hop satellite connection is very close to
one-quarter of a second. 
Demodulator 
A satellite receiver circuit which extracts or
“demodulates” the “wanted” signals from the
received carrier. 
Digital 
Conversion of information into bits of data for
transmission through wire, fibre-optic cable,
satellite, or over air techniques. Method allows
simultaneous transmission of voice, data or video. 
Downlink 
The satellite to earth half of a 2-way
telecommunications satellite link. Often used to
describe the receive dish end of the link. 
Earth Station 
The combination of antenna, amplifiers, frequency
converters and electronics used to transmit/receive
a signal via satellite. Earth Station antennas vary in
size from 2 foot to 12 foot (65 centimetres to 3.7
metres) diameter size used for TV reception to as
large as 100 feet (30 metres) in diameter sometimes
used for international communications. 
Footprint 
A map of the signal strength over the earth’s
surface. Different satellite transponders on the
same satellite will often have different footprints of
the signal strength.
Forward Error Correction (FEC) 
Adds unique codes to the digital signal at the
source so errors can be detected and corrected at
the receiver. 
Frequency
The number of times that an alternating current
goes through its complete cycle in one second of
time. One cycle per second is also referred to as
one hertz.
Geostationary
Refers to a satellite angle with zero inclination, so
the satellite appears to hover over one spot on
the earth’s equator. For a planet the size and
mass of the earth, the satellite orbit required is
22,237 miles above the surface.
Gigahertz (GHz) 
One billion cycles per second. Signals operating
above 3 Gigahertz are known as microwaves.
Above 30 GHz they are know as millimetre waves.
As one moves above the millimetre waves signals
begin to take on the characteristics of Iightwaves. 
Hertz (Hz) 
A measure of frequency. One cycle per second.
INMARSAT
The International Maritime Satellite Organization
operates a network of satellites for international
transmissions for all types of international mobile
services including maritime, aeronautical, and
land mobile. 
INTELSAT 
The International Telecommunications Satellite
Organization operates a network of satellites for
international transmissions. 
Interference 
Energy which tends to interfere with the reception
of the desired signals, such as fading from airline
flights, RF interference from adjacent channels, or
ghosting from reflecting objects such as
mountains and buildings. 
Ka Band 
The frequency range from 18 to 31 GHz. 
Kbps 
Kilobits per second. Refers to transmission speed
of 1,000 bits per second. 
Kilohertz (kHz) 
Refers to a unit of frequency equal to 1,000 hertz. 
Klystron 
A microwave tube which uses the interaction
between an electron beam and the RF energy on
microwave cavities to provide signal amplification.
The klystron operates on principles of velocity
modulation very similar to those in a TWT except
that klystron interaction takes place at discrete
locations along the electron beam. Common types
of klystrons are the reflex klystron (an oscillator
having only one cavity), two-cavity klystron
amplifiers and oscillators, and multi-cavity klystron
amplifiers. 
Ku Band 
The frequency range from 10.9 to 17 GHz. 
L-Band 
The frequency range from 0.5 to 1.5 GHz. Also
used to refer to the 950 to 1,450 MHz used for
mobile communications. 
Low Noise Amplifier (LNA) 
This is the preamplifier between the antenna and
the earth station receiver. For maximum
effectiveness, it must be located as near the
antenna as possible, and is usually attached
directly to the antenna receive port. The LNA is
especially designed to contribute the least
amount of thermal noise to the received signal.  66 INTELEK
Report and Accounts 2006
Glossary
Low Noise Block Downconverter (LNB) 
A combination Low Noise Amplifier and
downconverter built into one device attached to
the feed. 
Megahertz (MHz) 
Refers to a frequency equal to one million hertz,
or cycles per second. 
Microwave 
Line-of sight, point-to-point transmission of
signals at high frequency. Many TV systems
receive some television signals from a distant
antenna location with the antenna and the system
connected by microwave relay. Microwaves are
also used for data, voice, and indeed all types of
information transmission. 
Microwave Interference 
Interference which occurs when an earth station
aimed at a distant satellite picks up a second,
often stronger signal, from a local telephone
terrestrial microwave relay transmitter. Microwave
interference can also be produced by nearby
radar transmitters as well as the sun itself.
Relocating the antenna by only several feet will
often completely eliminate the microwave
interference. 
Modem 
Short for modulator/demodulator. A
communications device that converts one form 
of a signal to another that is suitable for
transmission over communication circuits,
typically from digital to analog and then from
analog to digital.
Modulation 
The process of manipulating the frequency or
amplitude of a carrier in relation to an incoming
video, voice or data signal. 
Modulator 
A device which modulates a carrier. Modulators
are found as components in broadcasting
transmitters and in satellite transponders. 
Multiplexing 
Techniques that allow a number of simultaneous
transmissions over a single circuit. 
Noise 
Any unwanted and unmodulated energy that is
always present to some extent within any signal. 
Rain Outage 
Loss of signal at Ku or Ka Band frequencies due
to absorption and increased sky-noise
temperature caused by heavy rainfall. 
Receiver (Rx) 
An electronic device which enables a particular
satellite signal to be separated from all others
being received by an earth station, and converts
the signal format into a format for video, voice or
data. 
RF
Radio Frequency refers to alternating current
having characteristics such that if the current is
input to an antenna, an electromagnetic field is
generated suitable for wireless broadcasting and
communication. These frequencies cover a
significant portion of the electromagnetic radiation
spectrum, extending from 9 kilohertz to thousands
of gigahertz.
Router 
Network layer device that determines the optimal
path along which network traffic should be
forwarded. Routers forward packets from one
network to another based on network layer
information. 
Satellite 
A sophisticated electronic communications relay
station orbiting 22,237 miles above the equator
moving in a fixed orbit at the same speed and
direction of the earth (about 7,000 mph east to
west). 
Slot 
That longitudinal position in the geosynchronous
orbit into which a communications satellite is
“parked”. Communications satellites are typically
positioned in slots which are based at two to
three degree intervals. 
SNG 
Satellite news gathering usually with a
transportable uplink truck. 
Spectrum 
The range of electromagnetic radio frequencies
used in transmission of voice, data and television. 
SSPA 
Solid state power amplifier. A VSLI solid state
device that is gradually replacing Travelling Wave
Tubes in satellite communications systems
because they are lighter weight and are more
reliable. 
Synchronization (Sync) 
The process of orienting the transmitter and receiver
circuits in the proper manner in order that they can
be synchronized. 
Transmitter
An electronic device consisting of oscillator,
modulator and other circuits which produce a
radio or television electromagnetic wave signal for
radiation into the atmosphere by an antenna. 
Transponder 
A combination receiver, frequency converter, and
transmitter package, physically part of a
communications satellite. Transponders have a
typical output of five to ten watts, operate over a
frequency band with a 36 to 72 megahertz
bandwidth in the L, C, Ku, and sometimes Ka
Bands or in effect typically in the microwave
spectrum, except for mobile satellite
communications. Communications satellites
typically have between 12 and 24 onboard
transponders although the INTELSAT VI at the
extreme end has 50. 
TWT (Travelling-wave tube) 
A microwave tube of special design using a
broadband circuit in which a beam of electrons
interacts continuously with a guided electromagnetic
field to amplify microwave frequencies. 
TWTA (Travelling-wave-tube amplifier) 
A combination of a power supply, a modulator (for
pulsed systems), and a travelling-wave tube, often
packaged in a common enclosure. 
Uplink 
The earth station used to transmit signals to a
satellite. 
VSAT 
Very small aperture terminal. Refers to small earth
stations, usually in the 1.2 to 2.4 metre range.
Small aperture terminals under 0.5 metre are
sometimes referred to as Ultra Small Aperture
Terminals (USATs) 
Waveguide 
A metallic microwave conductor, typically
rectangular in shape, used to carry microwave
signals into and out of microwave antennas.  67 INTELEK
Report and Accounts 2006
Microwave Communications
Broadband Amplifiers
Components which amplify microwave signals
over a broad range of frequencies such as
Octaves (e.g. 6–12GHz) or multi-octaves (e.g.
2–18GHz). 
Chip
An unpackaged semiconductor device or
integrated circuit.
Chip & Wire Assembly
Operation of attaching bare semiconductor chips
to a circuit or package and connecting to the
chips using thin wires.
Clean Room
A manufacturing area with high levels of humidity,
temperature and dust control.
Digital Radio Link
A pair of subsystems which can transmit and
receive high frequency digital data. Can be used
on mobile telecom base stations to provide
network connectivity.
ERDLVA
Extended Range Detector Log Video Amplifier —
detects incoming microwave signals over a very
wide input power range (e.g. >70 decibels).
Output voltage is directly proportioned to
incoming power measured in decibels.
Laser Profiling
Using a Laser to accurately separate individual
circuits from a multicircuit panel.
MIC
Microwave Integrated Circuit. The technology of
integrating microwave chips into a circuit.
Microwave
A general term relating to the frequency bands
(~1GHz to 100GHz) in which a product operates.
Microwave Power Amplifiers
Amplify microwave signals from relatively low
powers (e.g. 0.001 watts) to output levels from ~5
to say 2000 watts. 
MMIC
Monolithic Microwave Integrated Circuit —
operating in the microwave frequency range.
These circuits are made out of substrate material
suitable for operating at very high frequencies,
e.g. GaAs (Gallium Arsenide), and are available as
chips or chips in packages.
Multilayer
A PCB consisting of more than 2 dielectric and
copper foil layers.
Package
The package of a semiconductor is the physical
and electrical interface between the chip and the
system in which it operates.
PCB
Printed Circuit Board — used extensively in the
electronics industry to integrate individual
components and chips.
Phased Array Radar
Usually uses a static antenna face and steers the
radar beam electronically as opposed to more
conventional radars which physically rotate
through 360º.
Photoprinter
Transfers a precision artwork film pattern onto a
circuit board using UV light exposure.
PIN Switch
An electronic component capable of quickly
routing high frequency microwave signals by
using silicon PIN Diodes.
Plated Through Holes
Holes drilled through microwave dielectric
insulating substrates and then electro plated to
provide electrical connection from top conductor
layers to bottom conductor layers.
PTFE Substrates
Dielectric material used to produce high performance
microwave circuits. This material contains a
significant element of PTFE (Teflon) to reduce
microwave signal transmission losses of power.
Thin Dielectric Substrate
Microwave circuit material with a dielectric
(sandwiched between 2 copper foil layers)
thickness of say 0.005 inches.
Ultra Broadband Microwave Amplifier Gain
Modules
Modular building blocks which can be cascaded
to make a 2–18GHz microwave amplifier or used
in a microwave sub-system to provide distributed
gain at various key points.
Wire Bonding
Operation of electrically connecting to
semiconductor chips using thin wire typically 25
micron in diameter. 68 INTELEK
Report and Accounts 2006
Group Company Addresses
Registered Office
Intelek plc
PO Box 25, Spitfire Way, South Marston Park, 
Swindon, Wiltshire, SN3 4TR
Tel: (01793) 827000  
Fax: (01793) 827578
E-mail: info@intelek.plc.uk
Website: www.intelek.plc.uk
Trading Subsidiaries
CML Group Limited*
Price Street, Birkenhead, 
Wirral, CH41 3PT
Tel: (0151) 647 5531   
Fax: (0151) 650 0668
E-mail: enquiries@cml-group.com
Website: www.cml-group.com
Labtech Limited*
Labtech Circuits
Unit 1, Broadaxe Business Park, 
Presteigne, Powys, LD8 2UH
Tel: (01544) 260093   
Fax: (01544) 260310
Labtech Microwave
8 Vincent Avenue, 
Crownhill, Milton Keynes, MK8 0AB
Tel: (01908) 261755   
Fax: (01908) 261788
E-mail: ptfe@labtech.ltd.uk
Website: www.labtechcircuits.com
* Held directly by Intelek plc.
Registered Office
Intelek plc
PO Box 25, Spitfire Way, South Marston Park, 
Swindon, Wiltshire, SN3 4TR
Tel: (01793) 827000  
Fax: (01793) 827578
E-mail: info@intelek.plc.uk
Website: www.intelek.plc.uk
Trading Subsidiaries
Paradise Datacom
Paradise Datacom Ltd*
1 Wheaton Road, Witham,
Essex, CM8 3UJ
Tel: (01376) 515636   
Fax: (01376) 533762
E-mail: sales@paradise.co.uk
Paradise Datacom LLC
328 Innovation Boulevard, 
Suite 100, State College, 
PA 16803, USA
Tel: (001) 814 238 3450   
Fax: (001) 814 238 3814
E-mail: sales@paradisedata.com
Website: www.paradisedata.com  Intelek plc
P .O. Box 25, South Marston Park,
Swindon, Wiltshire, SN3 4TR, UK
Tel: +44 (0)1793 827000
Fax: +44 (0) 1793 827578
E-mail: info@intelek.plc.uk
Web site: www.intelek.plc.uk