##### Table of Contents



As filed with the Securities and Exchange Commission on
September 29, 2006








UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 20-F


|           |  |                                                                                      
|---------- |  | -------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                      
|o          |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR
    (g) OF THE                   
|           |  | SECURITIES EXCHANGE ACT OF 1934                                                      
|           |  | OR                                                                                   
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES                  
|           |  | EXCHANGE ACT OF 1934
    For the fiscal year ended March 31, 2006                    
|           |  | OR                                                                                   
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES              
|           |  | EXCHANGE ACT OF 1934                                                                 
|           |  | OR                                                                                   
|o          |  | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE                      
|           |  | SECURITIES EXCHANGE ACT OF 1934
    Date of event requiring this shell company report



333-12430





M (2003) plc




(Exact name of Registrant as specified in its charter)





ENGLAND AND WALES


(Jurisdiction of incorporation or organization)


8 Salisbury Square


London EC4Y 8BB


United Kingdom


(Address of principal executive office)
































o þ




o þ






þ o


12b-2


o o þ




o þ


12b-2


o þ






þ o










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##### 



TABLE OF CONTENTS







|             |  |                                                                                  |    |      |    | 
|------------ |  | -------------------------------------------------------------------------------- | -- | ---- | -- | 
|             |  |                                                                                  |    | Page |   
|             |  |                                                                                  |    |      |   
|PART I       |  |                                                                                  | 2  |     
|Item 1:      |  | Identity of Directors, Senior Management
    and Advisers                        |    |      | 2  | 
|Item 2:      |  | Offer Statistics and Expected Timetable                                          |    |      | 2  | 
|Item 3:      |  | Key Information                                                                  |    |      | 2  | 
|Item 4:      |  | Information on the Company                                                       |    |      | 5  | 
|Item 5:      |  | Operating and Financial Review and
    Prospects                                 |    |      | 6  | 
|Item 6:      |  | Directors, Senior Management and
    Employees                                   |    |      | 8  | 
|Item 7:      |  | Major Shareholders and Related Party
    Transactions                            |    |      | 9  | 
|Item 8:      |  | Financial Information                                                            |    |      | 10 | 
|Item 9:      |  | The Offer and Listing                                                            |    |      | 11 | 
|Item 10:     |  | Additional Information                                                           |    |      | 11 | 
|Item 11:     |  | Quantitative and Qualitative Disclosures
    about Market Risk                   |    |      | 16 | 
|Item 12:     |  | Description of Securities other than Equity
    Securities                       |    |      | 16 | 
|PART II      |  |                                                                                  | 17 |     
|Item 13:     |  | Defaults, Dividend Arrearages and
    Delinquencies                              |    |      | 17 | 
|Item 14:     |  | Material Modifications to the Rights of
    Security Holders and Use of Proceeds |    |      | 17 | 
|Item 15:     |  | Controls and Procedures                                                          |    |      | 17 | 
|Item 16A:    |  | Audit Committee Financial Expert                                                 |    |      | 17 | 
|Item 16B:    |  | Code of Ethics                                                                   |    |      | 17 | 
|Item 16C:    |  | Principal Accountant Fees and Services                                           |    |      | 17 | 
|Item 16E:    |  | Purchases of Equity Securities by the
    Issuer and Affiliated Purchasers       |    |      | 17 | 
|PART III     |  |                                                                                  | 18 |     
|Item 17:*    |  | Financial Statements                                                             |    |      | 18 | 
|Item 18:     |  | Financial Statements                                                             |    |      | 18 | 
|Item 19:     |  | Exhibits                                                                         |    |      | 18 | 
|EXHIBIT 12.1 |  |                                                                                  |    |     
|EXHIBIT 12.2 |  |                                                                                  |    |     
|EXHIBIT 13.1 |  |                                                                                  |    |     
|EXHIBIT 12.2
|EXHIBIT 12.2
|EXHIBIT 13.1





| |   |                                                                     
| | - | --------------------------------------------------------------------
| | * | We have responded to Item 18 in lieu of responding to this
    Item.

i



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##### Table of Contents



PRESENTATION OF FINANCIAL AND OTHER INFORMATION


telent


Under the terms of the M (2003) plc scheme of
arrangement, all of our assets, other than those necessary to
fund the administration of the scheme and the Company will be
distributed to scheme creditors in accordance with the scheme of
arrangement. While M (2003) plc shares, and ADRs
representing M (2003) plc shares, remain outstanding
following the effectiveness of the financial restructuring, the
Directors believe that there will be no circumstances under
which any value will be returned to shareholders of M
(2003) plc. As that is the case, the Directors believe M
(2003) plc shares and ADRs are worthless.











1



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##### Table of Contents






PART I





Item 1: Identity of Directors, Senior Management
and Advisers







Item 2: Offer Statistics and Expected
Timetable







Item 3: Key Information


SELECTED CONSOLIDATED FINANCIAL DATA






2



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##### Table of Contents



SELECTED CONSOLIDATED FINANCIAL DATA 
(continued)


|                                                                                                                                                  |                        |       |           |   |      |  |           |      |   |  |           |         |         |      |           |           |           |  |           |           |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------- | ----- | --------- | - | ---- |  | --------- | ---- | - |  | --------- | ------- | ------- | ---- | --------- | --------- | --------- |  | --------- | --------- | --------- | 
|                                                                                                                                                  |                        | 2006  |           |   | 2005 |  |           | 2004 |   |  | 2003      |         |         | 2002 |          
|                                                                                                                                                  |                        | £000  |           |   | £000 |  |           | £000 |   |  | £000      |         |         | £000 |          
|                                                                                                                                                  |                        |       |          
|STATEMENT OF OPERATIONS DATA:                                                                                                                     |                        |       |           |   |      |  |           |      |   |  |           |         |         |      |           |           |           |  |           |          
|Revenues                                                                                                                                          |                        |       |           |   |      |  |           |      |   |  |           |         |         |      |           |           |           |  |           |          
|                                                                                                                                                  | Network Equipment      |       |           |  |      |  |           |     |   |  |           | 100,000 |         |      |           | 1,131,000 |           |  |           | 1,812,000 |          
|                                                                                                                                                  | Network Services       |       |           |  |      |  |           |     |   |  |           | 68,000  |         |      |           | 743,000   |           |  |           | 969,000   |          
|                                                                                                                                                  | Other                  |       |           |  |      |  |           |     |   |  |           |        |         |      |           | 22,000    |           |  |           | 465,000   |          
|                                                                                                                                                  |                        |      
|                                                                                                                                                  |                        | Total |           |   |     |  |           |      |  |  |           |         | 168,000 |      |           |           | 1,896,000 |  |           |           | 3,246,000 | 
|                                                                                                                                                  |                        |      
|Operating
    loss(1)                                                                                                                             |                        |       | (622      | ) |      |  | (1,284    | )    |   |  | (58,000   | )       |         |      | (608      | )         |           |  | (6,392    | )        
|Other income/(expense),
    net(2)                                                                                                                |                        |       | 327       |   |      |  | 361       |      |   |  | 2,335,000 |         |         |      | (295      | )         |           |  | 23        |          
|Income/(loss) from continuing operations before income taxes,
    minority interest and cumulative effect of changes in accounting
    principles |                        |       | (295      | ) |      |  | (923      | )    |   |  | 2,277,000 |         |         |      | (903      | )         |           |  | (6,369    | )        
|Income/(loss) from continuing operations before cumulative
    effects of changes in accounting principles                                        |                        |       | (259      | ) |      |  | (1,108    | )    |   |  | 2,276,000 |         |         |      | (756      | )         |           |  | (6,094    | )        
|Cumulative effects of changes in accounting
    principles(3)                                                                                     |                        |       |          |   |      |  |          |      |   |  |          |         |         |      |          |           |           |  | (240      | )        
|Net income/(loss)                                                                                                                                 |                        |       | (259      | ) |      |  | (1,108    | )    |   |  | 2,276,000 |         |         |      | (807      | )         |           |  | (6,150    | )        
|Cash dividends declared per common share                                                                                                          |                        |       |           |   |      |  |           |      |   |  |           |         |         |      |           |           |           |  |           |          
|                                                                                                                                                  | £ per share            |       |           |  |      |  |           |     |   |  |           |        |         |      |           |          |           |  |           |          |          
|                                                                                                                                                  | $ equivalent per share |       |           |  |      |  |           |     |   |  |           |        |         |      |           |          |           |  |           |          |          
|BALANCE SHEET DATA:                                                                                                                               |                        |       |           |   |      |  |           |      |   |  |           |         |         |      |           |           |           |  |           |          
|Total assets                                                                                                                                      |                        |       | 7,687     |   |      |  | 8,266     |      |   |  | 8,961     |         |         |      | 3,111     |           |           |  | 4,925     |          
|Net assets/(liabilities)                                                                                                                          |                        |       | 7,593     |   |      |  | 7,852     |      |   |  | 8,960     |         |         |      | (2,500    | )         |           |  | (1,493    | )        
|Capital stock                                                                                                                                     |                        |       | 799,000   |   |      |  | 799,000   |      |   |  | 799,000   |         |         |      | 1,220     |           |           |  | 1,203     |          
|Shares issued and outstanding (thousands)                                                                                                         |                        |       | 2,793,011 |   |      |  | 2,793,011 |      |   |  | 2,793,011 |         |         |      | 2,793,011 |           |           |  | 2,793,011 |          





| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | For fiscal 2002, operating loss is reflected after business
    restructuring and asset impairment charges of
    £5,319 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (2) | For fiscal 2006 and 2005, other income is entirely comprised of
    bank interest. For fiscal 2004, other income includes a gain on
    financial restructuring of £2,183 million and a gain
    on settlement of equity forward contracts of
    £123 million. For fiscal 2002, other income includes a
    gain on early retirement of debt of £166 million which
    was previously shown as extraordinary income. This
    reclassification was made on adoption of SFAS 145,
    Recission of FASB Statements No. 4, 44, and 64,
    Amendment of FASB Statement No. 13, and Technical
    Corrections.
|
| | (3) | We adopted
    EITF 00-19,
    Accounting for Derivative Instruments Indexed to, and
    Potentially Settled in, the Companys Own Stock, in
    fiscal 2002. The value of such instruments, as of the
    implementation date, was recorded as a cumulative effect of a
    change in accounting principles of £240 million in
    fiscal 2002.                                                                                                                                                                                                                                                            

3



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EXCHANGE RATE INFORMATION






|                                 |  |      |        |     |  |  |        | 
|-------------------------------- |  | ---- | ------ | --- |  |  | ------ | 
|2006                             |  | High |        | Low
|                                 |  |     
|April                            |  |      | 1.8220 |     |  |  | 1.7389 | 
|May                              |  |      | 1.8911 |     |  |  | 1.8286 | 
|June                             |  |      | 1.8817 |     |  |  | 1.8108 | 
|July                             |  |      | 1.8685 |     |  |  | 1.8203 | 
|August                           |  |      | 1.9102 |     |  |  | 1.8711 | 
|September (through September 26) |  |      | 1.9050 |     |  |  | 1.8630 | 



|                            |  |         |        | 
|--------------------------- |  | ------- | ------ | 
|Fiscal Year Ended March 31, |  | Average
|                            |  |        
|2002                        |  |         | 1.4320 | 
|2003                        |  |         | 1.5541 | 
|2004                        |  |         | 1.8400 | 
|2005                        |  |         | 1.8506 | 
|2006                        |  |         | 1.7795 | 

RISK FACTORS


As a result of our financial restructuring, we have ceased
business operations and shall distribute our remaining assets to
our creditors.








4



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5



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Item 4: Information on the Company


HISTORY AND DEVELOPMENT OF THE COMPANY






Financial Restructuring








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Cash: £340 million in cash;                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Senior Notes: U.S.$717,139,584 (approximately
    £437 million) in aggregate principal amount of new
    guaranteed senior secured notes due April 2008 issued by Marconi
    Corporation plc, with interest payable quarterly in cash at a
    rate of 8% per annum. Since the implementation of the
    schemes, Marconi Corporation plc has fully redeemed for
    U.S. dollars these Notes;                                                                                                          
|
| |  | Junior Notes: U.S.$486,881,472 (approximately
    £297 million) in aggregate principal amount of new
    guaranteed junior secured notes due October 2008 issued by
    Marconi Corporation plc, with interest payable quarterly in cash
    at a rate of 10% per annum or, at our option, in kind, by
    issuing additional junior notes, at a rate of 12% per
    annum. Since the implementation of the schemes, Marconi
    Corporation plc has fully redeemed for U.S. dollars these
    Notes; and
|
| |  | Marconi Corporation plc Shares: 995 million ordinary
    shares, representing 99.5% of Marconi Corporation plcs
    issued ordinary share capital on May 19, 2003.                                                                                                                                                                                                                                                                                                                                      





6



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BUSINESS OVERVIEW






PROPERTY, PLANT AND EQUIPMENT




7



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Item 5: Operating and Financial Review and
Prospects


non-deductible








Pursuant to the M (2003) plc scheme of arrangement, the
remaining assets of M (2003) plc will be distributed to
scheme creditors, and it is intended that M (2003) plc will
be dissolved. There will be no circumstances under which any
value will be returned to shareholders under the terms of the
scheme.










8



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Item 6: Directors, Senior Management and
Employees


DIRECTORS AND SENIOR MANAGEMENT


Directors




|                         |  |     |    |       |  |         
|------------------------ |  | --- | -- | ----- |  | --------
|Name                     |  | Age |    | Title
|                         |  |     |    |      
|John Jameson White       |  |     | 68 |       |  | Chairman
|Christopher James Shaw   |  |     | 53 |       |  | Director
|Richard Anthony Robinson |  |     | 58 |       |  | Director



John Jameson White


Christopher James Shaw


Richard Anthony Robinson


Executive Officers


Kevin David Smith


COMPENSATION




|                      |  |       |    |       |  |  |    | 
|--------------------- |  | ----- | -- | ----- |  |  | -- | 
|                      |  | 2006  |    | 2005 
|                      |  | £000 |    | £000
|                      |  |      
|Directors emoluments |  |       | 37 |       |  |  | 37 | 



9



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BOARD PRACTICES


General








EMPLOYEES




SHARE OWNERSHIP




|             |  |             |        |  |          |  |     |          |              |  |      |  |  |  |        | 
|------------ |  | ----------- | ------ |  | -------- |  | --- | -------- | ------------ |  | ---- |  |  |  | ------ | 
|             |  | On          |        |  |          |  |     |          | At March 31, | 
|             |  | Appointment |        |  | Acquired |  |     | Disposed |              |  | 2006 | 
|             |  |             |       
|R A Robinson |  |             | 11,442 |  |          |  | nil |          |              |  | nil  |  |  |  | 11,442 | 
|C J Shaw     |  |             | nil    |  |          |  | nil |          |              |  | nil  |  |  |  | nil    | 
|J J White    |  |             | nil    |  |          |  | nil |          |              |  | nil  |  |  |  | nil    | 
|             |  |            



|                                     |  |             |        |  |         |  |     |           |  |  |              |  |  |      |     |  |  |  |        | 
|------------------------------------ |  | ----------- | ------ |  | ------- |  | --- | --------- |  |  | ------------ |  |  | ---- | --- |  |  |  | ------ | 
|                                     |  | On          |        |  |         |  |     |           |  |  | At March 31, | 
|Plan                                 |  | Appointment |        |  | Granted |  |     | Exercised |  |  | Lapsed       |  |  | 2006 |    
|                                     |  |             |       
|The Marconi Launch Plan              |  |             | 1,000  |  |         |  | nil |           |  |  | nil          |  |  |      | nil |  |  |  | 1,000  | 
|The Marconi Long Term Incentive Plan |  |             | 15,164 |  |         |  | nil |           |  |  | nil          |  |  |      | nil |  |  |  | 15,164 | 
|Total                                |  |             | 16,164 |  |         |  | nil |           |  |  | nil          |  |  |      | nil |  |  |  | 16,164 | 
|                                     |  |            




Item 7: Major Shareholders and Related Party
Transactions


MAJOR SHAREHOLDERS




10



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RELATED PARTY TRANSACTIONS







Item 8: Financial Information


LEGAL PROCEEDINGS




DIVIDEND POLICY




SIGNIFICANT CHANGES






11



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Item 9: The Offer and Listing


STOCK PRICE HISTORY/ MARKETS


over-the over-the


|                                      |  |                  |        |     |              |  |      |      |  |  |       |  |  |  |      | 
|------------------------------------- |  | ---------------- | ------ | --- | ------------ |  | ---- | ---- |  |  | ----- |  |  |  | ---- | 
|                                      |  | London Stock     |        |     |             
|                                      |  | Exchange         |        |     | ADRs         | 
|                                      |  | (Sterling pence) |        |     | (US dollars) | 
|                                      |  | High             |        |     | Low          |  |      | High |  |  | Low   | 
|                                      |  |                  |       
|Fiscal Year                           |  |                  |        |     |              |  |      |      |  |  |       |  |  |  |      | 
|April 1, 2001 to March 31, 2002       |  |                  | 424.00 |     |              |  | 6.25 |      |  |  | 12.85 |  |  |  | 0.18 | 
|April 1, 2002 to March 31, 2003       |  |                  | 12.55  |     |              |  | 1.27 |      |  |  | 0.44  |  |  |  | 0.04 | 
|April 1, 2003 to March 31, 2004       |  |                  | 1.80   | (*) |              |  | 0.60 | (*)  |  |  | 0.18  |  |  |  | 0.03 | 
|April 1, 2004 to March 31, 2005       |  |                  |       |     |              |  |     |      |  |  | 0.08  |  |  |  | 0.00 | 
|April 1, 2005 to March 31, 2006       |  |                  |       |     |              |  |     |      |  |  | 0.01  |  |  |  | 0.00 | 
|Fiscal Quarter                        |  |                  |        |     |              |  |      |      |  |  |       |  |  |  |      | 
|April 1, 2004 to June 30, 2004        |  |                  |       |     |              |  |     |      |  |  | 0.08  |  |  |  | 0.01 | 
|July 1, 2004 to September 30, 2004    |  |                  |       |     |              |  |     |      |  |  | 0.02  |  |  |  | 0.01 | 
|October 1, 2004 to December 31, 2004  |  |                  |       |     |              |  |     |      |  |  | 0.05  |  |  |  | 0.00 | 
|January 1, 2005 to March 31, 2005     |  |                  |       |     |              |  |     |      |  |  | 0.01  |  |  |  | 0.00 | 
|April 1, 2005 to June 30, 2005        |  |                  |       |     |              |  |     |      |  |  | 0.00  |  |  |  | 0.00 | 
|July 1, 2005 to September 30, 2005    |  |                  |       |     |              |  |     |      |  |  | 0.00  |  |  |  | 0.00 | 
|October 1, 2005 to December 31, 2005  |  |                  |       |     |              |  |     |      |  |  | 0.00  |  |  |  | 0.00 | 
|January 1, 2006 to March 31, 2006     |  |                  |       |     |              |  |     |      |  |  | 0.01  |  |  |  | 0.00 | 
|Month                                 |  |                  |        |     |              |  |      |      |  |  |       |  |  |  |      | 
|April 2006                            |  |                  |       |     |              |  |     |      |  |  | 0.01  |  |  |  | 0.00 | 
|May 2006                              |  |                  |       |     |              |  |     |      |  |  | 0.00  |  |  |  | 0.00 | 
|June 2006                             |  |                  |       |     |              |  |     |      |  |  | 0.00  |  |  |  | 0.00 | 
|July 2006                             |  |                  |       |     |              |  |     |      |  |  | 0.00  |  |  |  | 0.00 | 
|August 2006                           |  |                  |       |     |              |  |     |      |  |  | 0.00  |  |  |  | 0.00 | 
|September 2006 (through September 19) |  |                  |       |     |              |  |     |      |  |  | 0.00  |  |  |  | 0.00 | 



| |   |                                                                               
| | - | ------------------------------------------------------------------------------
| | * | To May 16, 2003, which was the last day of dealings in M
    (2003) plc shares




Item 10: Additional Information


MEMORANDUM AND ARTICLES OF ASSOCIATION


20-F


MATERIAL CONTRACTS




12



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EXCHANGE CONTROLS




TAXATION


Prospective and existing holders of our shares or of ADRs
representing our shares should be aware that the Directors
believe that there will be no circumstances under which any
additional value will be returned to shareholders of M
(2003) plc.


United States Federal Income Taxation






Prospective holders should consult their own tax adviser with
respect to the U.S. federal, estate, state, local, gift and
other tax consequences of acquiring, owning and disposing of our
ordinary shares and/or ADRs.


U.S. Holders should also review the discussion below
under  United Kingdom Taxation for the
U.K. tax consequences to a U.S. holder of our ordinary
shares and/or ADRs.




13



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| |                                                                 
| | ----------------------------------------------------------------
| | Sale or Other Disposition of M (2003) plc Shares and/or
    ADRs







Non-U.S. Non-U.S. Non-U.S.




| |                                                  
| | -------------------------------------------------
| | Passive Foreign Investment Company Considerations







mark-to mark-to


14



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Prospective holders should consult their
own tax advisers as to whether our ordinary shares and/or ADRs
would qualify for the
mark-to-market election
and whether such election is advisable.






Holders are urged to consult their own tax advisers regarding
whether an investment in our ordinary shares or ADRs will be
treated as an investment in PFIC stock and the consequences of
an investment in a PFIC.


Backup Withholding and Information Reporting


Non-U.S. non-U.S.




| |                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Prospective holders should consult their own tax advisers
    as to their qualification for exemption from backup withholding
    and the procedure for obtaining this exemption.

United Kingdom Taxation




HMRC Treaty




15



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##### Table of Contents





| |                          
| | -------------------------
| | Taxation of capital gains





| |   |                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the U.S. holder carries on a trade, profession or vocation
    in the U.K. through a permanent establishment; and                                 
|
| |  | the shares or ADRs are or have been used, held or acquired for
    the purposes of the trade, profession, vocation or permanent
    establishment.

Treaty Non-Resident


U.K. stamp duty and stamp duty reserve tax (SDRT)








DOCUMENTS ON DISPLAY


1-800-SEC-0330.


16



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Item 11: Quantitative and Qualitative
Disclosures about Market Risk







Item 12: Description of Securities other than
Equity Securities




17



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##### Table of Contents






PART II





Item 13: Defaults, Dividend Arrearages and
Delinquencies







Item 14: Material Modifications to the Rights of
Security Holders and Use of Proceeds







Item 15: Controls and Procedures







Item 16A: Audit Committee Financial
Expert







Item 16B: Code of Ethics







Item 16C: Principal Accountant Fees and
Services







Item 16E: Purchases of Equity Securities by the
Issuer and Affiliated Purchasers




18



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PART III





Item 17: Financial Statements


20-F.





Item 18: Financial Statements







Item 19: Exhibits


| |    |      |  |                                                                                                                                                                                                                                                                     
| | -- | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1  | .1** |  | Memorandum and Articles of Association of M (2003) plc                                                                                                                                                                                                              
| | 2  | .1  |  | Specimen ordinary share certificate of M (2003) plc                                                                                                                                                                                                                 
| | 2  | .2   |  | Deposit Agreement dated as of September 6, 2000 between M
    (2003) plc and The Bank of New York, as depositary, and
    Owners and beneficial holders of American Depositary Receipts                                                                             
| | 2  | .3   |  | American Depositary Receipt of M (2003) plc (included in
    Exhibit 2.2)                                                                                                                                                                                           
| | 2  | .4 |  | Marconi Corporation plc and M (2003) plcs Proposals
    in Relation to Schemes of Arrangement under Section 425 of
    the UK Companies Act 1985, dated March 31, 2003 between
    Marconi Corporation plc, M (2003) plc and their respective
    scheme creditors.
| | 12 | .1*  |  | Certification required by Rule 13a-14(a) or
    Rule 15d-14(a), as adopted Pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002.                                                                                                                           
| | 12 | .2*  |  | Certification required by Rule 13a-14(a) or
    Rule 15d-14(a), as adopted Pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002.                                                                                                                           
| | 13 | .1*  |  | Certification pursuant to 18 U.S.C. Section 1350, as
    adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.                                                                                                                                     






| |    |                                                                                                                                         
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------
| | *  | Filed with this annual report.                                                                                                          
|
| | ** | Incorporated by reference to the Annual Report on
    Form 20-F (File
    No. 0-30294) filed with the SEC on September 28, 2001.        
|
| |   | Incorporated by reference to the Registration Statement on
    Form 20-F (File
    No. 0-30924) filed with the SEC on September 5, 2000.
|
| |  | Incorporated by reference to the Report under cover of
    Form 6-K (File No.
    0-30924) furnished to the SEC on March 31, 2003.      

19



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##### Table of Contents



SIGNATURES


20-F




| |             
| | ------------
| | M (2003) plc



| |     |                          
| | --- | -------------------------
| | By: | /s/
    Kevin David Smith

| |                          
| | -------------------------
| |                          
| | Name: Kevin David Smith  
| | Title:  Company Secretary
| | Date:  September 28, 2006

20



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##### Table of Contents



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


M (2003) plc and subsidiaries


Consolidated financial statements as of March 31, 2006
and 2005 and


for the three years ended March 31, 2006


|                                                                 |  |      |     | 
|---------------------------------------------------------------- |  | ---- | --- | 
|                                                                 |  | Page |    
|                                                                 |  |      |    
|Report of independent registered public
    accounting firm      |  |      | F-2 | 
|Consolidated balance sheets                                      |  |      | F-3 | 
|Consolidated statements of operations                            |  |      | F-4 | 
|Consolidated statements of cash flows                            |  |      | F-5 | 
|Consolidated statements of other
    comprehensive income/(loss) |  |      | F-7 | 
|Consolidated statements of
    shareholders equity/(deficit)    |  |      | F-8 | 
|Notes to consolidated financial
    statements                   |  |      | F-9 | 

F-1



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##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


















F-2



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##### Table of Contents



M (2003) plc and subsidiaries





CONSOLIDATED BALANCE SHEETS


|                                           |                                                                   |           |        |            |   |       |       |          |   |  |       |          |  
|------------------------------------------ | ----------------------------------------------------------------- | --------- | ------ | ---------- | - | ----- | ----- | -------- | - |  | ----- | -------- | -
|                                           |                                                                   | March 31,
|                                           |                                                                   | 2006      |        | 2006       |   | 2005 
|                                           |                                                                   | U.S.$000 |        | £000      |   | £000
|                                           |                                                                   |          
|ASSETS                                     |                                                                   |           |        |            |   |       |       |          |   |  |       |         
|Current assets                             |                                                                   |           |        |            |   |       |       |          |   |  |       |         
|                                           | Cash and cash equivalents                                         |           |        | 12,741     |   |       |       | 7,365    |   |  |       | 8,130    |  
|                                           | Prepaid expenses and other current assets                         |           |        | 557        |   |       |       | 322      |   |  |       | 136      |  
|                                           |                                                                   |          
|Total current assets                       |                                                                   |           | 13,298 |            |   |       | 7,687 |          |   |  | 8,266 |         
|                                           |                                                                   |          
|TOTAL ASSETS                               |                                                                   |           | 13,298 |            |   |       | 7,687 |          |   |  | 8,266 |         
|                                           |                                                                   |          
|LIABILITIES AND SHAREHOLDERS EQUITY       |                                                                   |           |        |            |   |       |       |          |   |  |       |         
|Current liabilities                        |                                                                   |           |        |            |   |       |       |          |   |  |       |         
|                                           | Accrued expenses and other current liabilities                    |           |        | 162        |   |       |       | 94       |   |  |       | 414      |  
|                                           |                                                                   |          
|Total current liabilities                  |                                                                   |           | 162    |            |   |       | 94    |          |   |  | 414   |         
|                                           |                                                                   |          
|Shareholders equity/(deficit)             |                                                                   |           |        |            |   |       |       |          |   |  |       |         
|                                           | Ordinary shares, £0.05 par value;                                 |           |        |            |   |       |       |          |   |  |       |          |  
|                                           | Authorized: 6,000,000,000 shares in 2006 and 2005;                |           |        |            |   |       |       |          |   |  |       |          |  
|                                           | Issued and outstanding: 2,793,011,951 shares in 2006 and
    2005 |           |        | 241,596    |   |       |       | 139,651  |   |  |       | 139,651  |  
|                                           | Additional paid-in capital                                        |           |        | 1,140,674  |   |       |       | 659,349  |   |  |       | 659,349  |  
|                                           | Accumulated deficit                                               |           |        | (1,369,134 | ) |       |       | (791,407 | ) |  |       | (791,148 | )
|                                           |                                                                   |          
|Total shareholders equity                 |                                                                   |           | 13,136 |            |   |       | 7,593 |          |   |  | 7,852 |         
|                                           |                                                                   |          
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |                                                                   |           | 13,298 |            |   |       | 7,687 |          |   |  | 8,266 |         
|                                           |                                                                   |          



F-3



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##### Table of Contents



M (2003) plc and subsidiaries





CONSOLIDATED STATEMENTS OF OPERATIONS


|                                  |                                                |                             |        |       |   |       |      |       |   |  |        |       |   |  |           |           |  
|--------------------------------- | ---------------------------------------------- | --------------------------- | ------ | ----- | - | ----- | ---- | ----- | - |  | ------ | ----- | - |  | --------- | --------- | -
|                                  |                                                | Fiscal Year Ended March 31,
|                                  |                                                | 2006                        |        | 2006  |   | 2005  |      | 2004 
|                                  |                                                | U.S.$000                   |        | £000 |   | £000 |      | £000
|                                  |                                                |                            
|Revenue:                          |                                                |                             |        |       |   |       |      |       |   |  |        |       |   |  |           |          
|                                  | Network equipment                              |                             |        |      |   |       |      |      |   |  |        |      |   |  |           | 100,000   |  
|                                  | Network services                               |                             |        |       |   |       |      |      |   |  |        |      |   |  |           | 68,000    |  
|                                  |                                                |                            
|Total Revenue                     |                                                |                             |       |       |   |       |     |       |   |  |       |       |   |  | 168,000   |          
|Direct costs                      |                                                |                             |       |       |   |       |     |       |   |  |       |       |   |  | 138,000   |          
|                                  |                                                |                            
|                                  | Gross margin                                   |                             |        |      |   |       |      |      |   |  |        |      |   |  |           | 30,000    |  
|Operating expenses:               |                                                |                             |        |       |   |       |      |       |   |  |        |       |   |  |           |          
|                                  | Selling, general and administrative            |                             |        | 1,076 |   |       |      | 622   |   |  |        | 1,284 |   |  |           | 49,000    |  
|                                  | Research and development                       |                             |        |      |   |       |      |      |   |  |        |      |   |  |           | 31,000    |  
|                                  | Amortization of goodwill and intangibles       |                             |        |      |   |       |      |      |   |  |        |      |   |  |           | 6,000     |  
|                                  | Business restructuring charges                 |                             |        |      |   |       |      |      |   |  |        |      |   |  |           | 2,000     |  
|                                  |                                                |                            
|Total operating expenses          |                                                |                             | 1,076  |       |   |       | 622  |       |   |  | 1,284  |       |   |  | 88,000    |          
|Operating loss                    |                                                |                             | (1,076 | )     |   |       | (622 | )     |   |  | (1,284 | )     |   |  | (58,000   | )        
|Other income:                     |                                                |                             |        |       |   |       |      |       |   |  |        |       |   |  |           |          
|                                  | Gain on financial restructuring                |                             |        |      |   |       |      |      |   |  |        |      |   |  |           | 2,183,000 |  
|                                  | Gain on settlement of equity forward contracts |                             |        |      |   |       |      |      |   |  |        |      |   |  |           | 123,000   |  
|                                  | Interest income                                |                             |        | 576   |   |       |      | 333   |   |  |        | 361   |   |  |           | 29,000    |  
|                                  | Interest expense                               |                             |        | (10   | ) |       |      | (6    | ) |  |        |      |   |  |           |          |  
|                                  |                                                |                            
|Income/(loss) before income taxes |                                                |                             | (510   | )     |   |       | (295 | )     |   |  | (923   | )     |   |  | 2,277,000 |          
|                                  |                                                |                            
|                                  | Income tax (charge)/credit                     |                             |        | 62    |   |       |      | 36    |   |  |        | (185  | ) |  |           | (1,000    | )
|                                  |                                                |                            
|Net income/(loss)                 |                                                |                             | (448   | )     |   |       | (259 | )     |   |  | (1,108 | )     |   |  | 2,276,000 |          
|                                  |                                                |                            
|Earnings per share  basic        |                                                |                             |        |       |   |       |      |       |   |  |        |       |   |  |           |          
|Net income/(loss)                 |                                                |                             |       |       |   |       |     |       |   |  |       |       |   |  | 0.92      |          
|Earnings per share  diluted      |                                                |                             |        |       |   |       |      |       |   |  |        |       |   |  |           |          
|Net income/(loss)                 |                                                |                             |       |       |   |       |     |       |   |  |       |       |   |  | 0.92      |          



F-4



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##### Table of Contents



M (2003) plc and subsidiaries





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                    |                                        |                             |        |       |   |       |      |       |   |  |        |     |   |  |            |         |  
|----------------------------------------------------------------------------------- | -------------------------------------- | --------------------------- | ------ | ----- | - | ----- | ---- | ----- | - |  | ------ | --- | - |  | ---------- | ------- | -
|                                                                                    |                                        | Fiscal year ended March 31,
|                                                                                    |                                        | 2006                        |        | 2006  |   | 2005  |      | 2004 
|                                                                                    |                                        | U.S.$000                   |        | £000 |   | £000 |      | £000
|                                                                                    |                                        |                            
|Cash flows from operating activities:                                               |                                        |                             |        |       |   |       |      |       |   |  |        |     |   |  |            |        
|Net income/(loss)                                                                   |                                        |                             | (448   | )     |   |       | (259 | )     |   |  | (1,108 | )   |   |  | 2,276,000  |        
|Cash paid on settlement of equity forward contracts                                 |                                        |                             |       |       |   |       |     |       |   |  |       |     |   |  | (35,000    | )      
|Gain on financial restructuring                                                     |                                        |                             |       |       |   |       |     |       |   |  |       |     |   |  | (2,183,000 | )      
|Gain on settlement of equity forward contracts                                      |                                        |                             |       |       |   |       |     |       |   |  |       |     |   |  | (123,000   | )      
|Stock compensation                                                                  |                                        |                             |       |       |   |       |     |       |   |  |       |     |   |  | 9,000      |        
|Depreciation and amortization                                                       |                                        |                             |       |       |   |       |     |       |   |  |       |     |   |  | 16,000     |        
|Cash paid for restructuring                                                         |                                        |                             |       |       |   |       |     |       |   |  |       |     |   |  | (20,000    | )      
|Net operating cash flow provided by discontinued operations                         |                                        |                             |       |       |   |       |     |       |   |  |       |     |   |  | 2,000      |        
|Changes in operating assets and liabilities, net of the effect
    of acquisitions: |                                        |                             |        |       |   |       |      |       |   |  |        |     |   |  |            |        
|                                                                                    | Accounts receivable                    |                             |        | (322  | ) |       |      | (186  | ) |  |        | (46 | ) |  |            | 100,000 |  
|                                                                                    | Inventories                            |                             |        |      |   |       |      |      |   |  |        |    |   |  |            | 1,000   |  
|                                                                                    | Accounts payable                       |                             |        |      |   |       |      |      |   |  |        |    |   |  |            | (26,000 | )
|                                                                                    | Accrued expenses and other liabilities |                             |        | (553  | ) |       |      | (320  | ) |  |        | 284 |   |  |            | (29,000 | )
|                                                                                    |                                        |                            
|Net cash used in operating activities                                               |                                        |                             | (1,323 | )     |   |       | (765 | )     |   |  | (870   | )   |   |  | (12,000    | )      
|                                                                                    |                                        |                            



F-5



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##### Table of Contents



|                                               |                                                               |                             |        |        |   |       |       |       |   |  |       |      |   |  |         |            |  
|---------------------------------------------- | ------------------------------------------------------------- | --------------------------- | ------ | ------ | - | ----- | ----- | ----- | - |  | ----- | ---- | - |  | ------- | ---------- | -
|                                               |                                                               | Fiscal year ended March 31,
|                                               |                                                               | 2006                        |        | 2006   |   | 2005  |       | 2004 
|                                               |                                                               | U.S.$000                   |        | £000  |   | £000 |       | £000
|                                               |                                                               |                            
|Cash flows from investing activities:          |                                                               |                             |        |        |   |       |       |       |   |  |       |      |   |  |         |           
|                                               | Maturities and sales of debt and marketable equity securities |                             |        |       |   |       |       |      |   |  |       |     |   |  |         | (209,000   | )
|                                               | Purchases of property, plant and equipment                    |                             |        |       |   |       |       |      |   |  |       |     |   |  |         | (5,000     | )
|                                               | Cash outflow from disposals                                   |                             |        |       |   |       |       |      |   |  |       |     |   |  |         | (568,000   | )
|                                               | Cash element of scheme consideration                          |                             |        |       |   |       |       |      |   |  |       |     |   |  |         | (333,000   | )
|                                               |                                                               |                            
|                                               | Net cash used in investing activities                         |                             |        |       |   |       |       |      |   |  |       |     |   |  |         | (1,115,000 | )
|                                               |                                                               |                            
|Cash flows from financing activities:          |                                                               |                             |        |        |   |       |       |       |   |  |       |      |   |  |         |           
|                                               | Short-term debt repayments, net                               |                             |        |       |   |       |       |      |   |  |       |     |   |  |         | (22,000    | )
|                                               | Term loan repayments, net                                     |                             |        |       |   |       |       |      |   |  |       |     |   |  |         | (1,000     | )
|                                               | Restricted cash transferred to secured accounts               |                             |        |       |   |       |       |      |   |  |       |     |   |  |         | 964,000    |  
|                                               |                                                               |                            
|                                               | Net cash from financing activities                            |                             |        |       |   |       |       |       |   |  |       |     |   |  |         | 941,000    |  
|                                               |                                                               |                            
|                                               | Net decrease in cash and cash equivalents                     |                             |        | (1,323 | ) |       |       | (765  | ) |  |       | (870 | ) |  |         | (186,000   | )
|Cash and cash equivalents, beginning of year   |                                                               |                             | 14,064 |        |   |       | 8,130 |       |   |  | 9,000 |      |   |  | 195,000 |           
|                                               |                                                               |                            
|Cash and cash equivalents, end of year         |                                                               |                             | 12,741 |        |   |       | 7,365 |       |   |  | 8,130 |      |   |  | 9,000   |           
|                                               |                                                               |                            
|Supplemental disclosure of cash flow activity: |                                                               |                             |        |        |   |       |       |       |   |  |       |      |   |  |         |           
|Cash receipts/(payments) for interest          |                                                               |                             | 566    |        |   |       | 327   |       |   |  | 363   |      |   |  | (1,000  | )         
|Cash payment for income taxes                  |                                                               |                             | (401   | )      |   |       | (232  | )     |   |  | (185  | )    |   |  | (1,000  | )         



F-6



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##### Table of Contents



M (2003) plc and subsidiaries





CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE
INCOME/(LOSS)


|                                                             |                                                                                                   |                             |      |       |  |       |   |       |        |   |  |  |           |         |  
|------------------------------------------------------------ | ------------------------------------------------------------------------------------------------- | --------------------------- | ---- | ----- |  | ----- | - | ----- | ------ | - |  |  | --------- | ------- | -
|                                                             |                                                                                                   | Fiscal year ended March 31,
|                                                             |                                                                                                   | 2006                        |      | 2006  |  | 2005  |   | 2004 
|                                                             |                                                                                                   | U.S.$000                   |      | £000 |  | £000 |   | £000
|                                                             |                                                                                                   |                            
|Other comprehensive income:                                  |                                                                                                   |                             |      |       |  |       |   |       |        |   |  |  |           |        
|Net income/(loss)                                            |                                                                                                   |                             | (448 | )     |  | (259) |   |       | (1,108 | ) |  |  | 2,276,000 |        
|Other comprehensive income/(loss):                           |                                                                                                   |                             |      |       |  |       |   |       |        |   |  |  |           |        
|                                                             | Minimum pension liability, (net of income tax of £nil)                                            |                             |      |      |  |       |  |       |        |  |  |  |           | 295,000 |  
|                                                             |                                                                                                   |                            
|Other comprehensive income/(loss)                            |                                                                                                   |                             | (448 | )     |  | (259) |   |       | (1,108 | ) |  |  | 2,571,000 |        
|                                                             |                                                                                                   |                            
|Disclosure of tax and reclassification amounts:              |                                                                                                   |                             |      |       |  |       |   |       |        |   |  |  |           |        
|Unrealized gains on derivative instruments, net of tax of £1 |                                                                                                   |                             |     |       |  |      |   |       |       |   |  |  | 1,000     |        
|                                                             | Less: reclassification adjustment for loss included in net loss,
    net of tax of £nil           |                             |      |      |  |       |  |       |        |  |  |  |           | (1,000  | )
|                                                             |                                                                                                   |                            
|                                                             | Unrealized gains on derivative instruments                                                        |                             |      |      |  |       |  |       |        |  |  |  |           |        |  
|                                                             |                                                                                                   |                            
|                                                             | Accumulated translation adjustments, net of tax of £nil                                           |                             |      |      |  |       |  |       |        |  |  |  |           | (14,000 | )
|                                                             | Less: reclassification adjustment for gains included in net
    income/(loss), net of tax of £nil |                             |      |      |  |       |  |       |        |  |  |  |           | 14,000  |  
|                                                             |                                                                                                   |                            
|                                                             | Net translation adjustments                                                                       |                             |      |      |  |       |  |       |        |  |  |  |           |        |  
|                                                             |                                                                                                   |                            



F-7



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##### Table of Contents



M (2003) plc and subsidiaries





CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY/(DEFICIT)


|                                                  |  |                 |               |            |  |           |         |               |  |               |           |         |  |  |            |   |  |  |          |   |  |  |            |  
|------------------------------------------------- |  | --------------- | ------------- | ---------- |  | --------- | ------- | ------------- |  | ------------- | --------- | ------- |  |  | ---------- | - |  |  | -------- | - |  |  | ---------- | -
|                                                  |  |                 |               |            |  |           |         |               |  | Accumulated   |           |        
|                                                  |  |                 |               | Additional |  | Retained  |         | other         |  |              
|                                                  |  | Ordinary shares |               | paid-in    |  | earnings/ |         | comprehensive |  |              
|                                                  |  |                 |               | Amount     |  | capital   |         | (deficit)     |  | income/(loss) |           | Total  
|                                                  |  | Shares          |               | £,000s    |  | £,000s   |         | £,000s       |  | £,000s       |           | £,000s
|                                                  |  |                
|As of March 31, 2003                              |  |                 | 2,793,011,951 |            |  |           | 139,651 |               |  |               | 1,080,349 |         |  |  | (3,441,000 | ) |  |  | (282,000 | ) |  |  | (2,503,000 | )
|Net income                                        |  |                 |               |            |  |           |         |               |  |               |           |         |  |  | 2,275,960  |   |  |  |          |   |  |  | 2,275,960  |  
|Capital contribution for stock based compensation |  |                 |               |            |  |           |         |               |  |               | (46,000   | )       |  |  |            |   |  |  |          |   |  |  | (46,000    | )
|Transfer on Financial Restructuring               |  |                 |               |            |  |           |         |               |  |               | (375,000  | )       |  |  | 375,000    |   |  |  |          |   |  |  |            |  
|Translation adjustments                           |  |                 |               |            |  |           |         |               |  |               |           |         |  |  |            |   |  |  | (12,000  | ) |  |  | (12,000    | )
|Elimination upon financial restructuring          |  |                 |               |            |  |           |         |               |  |               |           |         |  |  |            |   |  |  | 294,000  |   |  |  | 294,000    |  
|                                                  |  |                
|As of March 31, 2004                              |  |                 | 2,793,011,951 |            |  |           | 139,651 |               |  |               | 659,349   |         |  |  | (790,040   | ) |  |  |         |   |  |  | 8,960      |  
|Net loss                                          |  |                 |               |            |  |           |         |               |  |               |           |         |  |  | (1,108     | ) |  |  |          |   |  |  | (1,108     | )
|                                                  |  |                
|As of March 31, 2005                              |  |                 | 2,793,011,951 |            |  |           | 139,651 |               |  |               | 659,349   |         |  |  | (791,148   | ) |  |  |         |   |  |  | 7,852      |  
|                                                  |  |                
|Net Loss                                          |  |                 |               |            |  |           |         |               |  |               |           |         |  |  | (259       | ) |  |  |          |   |  |  | (259       | )
|                                                  |  |                
|As of March 31, 2006                              |  |                 | 2,793,011,951 |            |  |           | 139,651 |               |  |               | 659,349   |         |  |  | (791,407   | ) |  |  |         |   |  |  | (7,593     | )
|                                                  |  |                



F-8



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##### Table of Contents



M (2003) plc and subsidiaries





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|   |                                             
|-- | --------------------------------------------
|1. | Nature of Business and basis of preparation:

Nature of business










Basis of preparation








F-9



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##### Table of Contents





|   |                                           
|-- | ------------------------------------------
|2. | Summary of significant accounting policies

Basis of consolidation




Use of estimates




Income taxes




Foreign currency






|            |  |                             |      |                 |  |      |      |      |  |      |      |  |  |  |      |  |  |  |      | 
|----------- |  | --------------------------- | ---- | --------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  |  | ---- |  |  |  | ---- | 
|            |  | Average rates               |      | Year-end rates 
|            |  | Fiscal year ended March 31, |      | As of March 31,
|            |  | 2006                        |      | 2005            |  | 2004 |      | 2006 |  | 2005
|            |  |                            
|U.S. Dollar |  |                             | 1.79 |                 |  |      | 1.84 |      |  |      | 1.70 |  |  |  | 1.73 |  |  |  | 1.89 | 
|Euro        |  |                             | 1.47 |                 |  |      | 1.47 |      |  |      | 1.44 |  |  |  | 1.43 |  |  |  | 1.45 | 



Revenue


F-10



---



##### Table of Contents





Accounting for
Performance of Construction-Type and certain Production-Type
Contracts 97-2, Software Revenue Recognition Revenue Recognition in Financial
Statements








percentage-of cost-to




Equity forward contracts










Fair value hedges






F-11



---



##### Table of Contents





Net investment hedges




Cash flow hedges








Pension and other post-retirement benefits




Employers Accounting for Pensions, Employers Accounting for
Post-retirement Benefits Other Than Pensions






F-12



---



##### Table of Contents









Product warranty




Stock based compensation


Accounting for Stock Issued to Employees. re-measured








F-13



---



##### Table of Contents



Other comprehensive income/(loss)






|                                            |  |                |   |             |  |                |         |            |  |               |        |   |  |  |          |   |  |  |          |  
|------------------------------------------- |  | -------------- | - | ----------- |  | -------------- | ------- | ---------- |  | ------------- | ------ | - |  |  | -------- | - |  |  | -------- | -
|                                            |  |                |   |             |  | Net unrealized |         | Minimum    |  | Accumulated  
|                                            |  | Net unrealized |   | Accumulated |  | gains/(losses) |         | pension    |  | other        
|                                            |  | gains/(losses) |   | translation |  | on derivative  |         | liability  |  | comprehensive
|                                            |  | on investments |   | adjustments |  | instruments    |         | adjustment |  | income/(loss)
|                                            |  | £000          |   | £000       |  | £000          |         | £000      |  | £000        
|                                            |  |               
|As of March 31, 2003                        |  |                |  |             |  |                | 14,000  |            |  |               | (1,000 | ) |  |  | (295,000 | ) |  |  | (282,000 | )
|Movement for the year                       |  |                |  |             |  |                | (12,000 | )          |  |               |       |   |  |  |         |   |  |  | (12,000  | )
|Transfer on financial restructuring         |  |                |  |             |  |                | (2,000  | )          |  |               | 1,000  |   |  |  | 295,000  |   |  |  | 294,000  |  
|Balance at March 31, 2004 and 2005 and 2006 |  |                |  |             |  |                |        |            |  |               |       |   |  |  |         |   |  |  |         |  

Earnings per share






| |                                                              
| | -------------------------------------------------------------
| | Recently issued accounting pronouncements not yet
    adopted





| |                       
| | ----------------------
| | Non-statutory accounts





3.   Financial restructuring






F-14



---



##### Table of Contents











|                                                                |                                                |       |            |         |  
|--------------------------------------------------------------- | ---------------------------------------------- | ----- | ---------- | ------- | -
|                                                                |                                                | £000
|                                                                |                                                |      
|Net (liabilities)/ assets sold                                  |                                                |       |            |        
|Tangible fixed assets                                           |                                                |       | 251,000    |        
|Investments in joint ventures, affiliates and other investments |                                                |       | 35,000     |        
|Goodwill                                                        |                                                |       | 645,000    |        
|Intangibles, net                                                |                                                |       | 95,000     |        
|Inventory                                                       |                                                |       | 237,000    |        
|Debtors                                                         |                                                |       | 526,000    |        
|Net cash/ (overdrafts)                                          |                                                |       | 1,117,000  |        
|Borrowings (excluding overdrafts)                               |                                                |       | (4,770,000 | )      
|Accounts payable and other liabilities                          |                                                |       | (1,081,000 | )      
|Capital lease obligations                                       |                                                |       | (5,000     | )      
|Finance lease creditors                                         |                                                |       | (3,000     | )      
|Minority Interests                                              |                                                |       | (3,000     | )      
|Retirement benefit deficit                                      |                                                |       | (334,000   | )      
|                                                                |                                                |       |            |        
|                                                                |                                                |       | (3,281,000 | )      
|Accounted for by:                                               |                                                |       |            |        
|Amounts waived on Scheme of Arrangement                         |                                                |       | 804,000    |        
|Elimination of amounts included in shareholders equity         |                                                |       |            |        
|                                                                | Minimum pension liability                      |       |            | 295,000 |  
|                                                                | Accumulated translation adjustments            |       |            | (2,000  | )
|                                                                | Net unrealised gains on derivative instruments |       |            | 1,000   |  
|                                                                |                                                |       |            |        
|Gain on Financial Restructuring                                 |                                                |       | 2,183,000  |        
|                                                                |                                                |       |            |        







F-15



---



##### Table of Contents









4.   Balance sheet information


|                                                |                                |           |  |       |     |  |  |     |     | 
|----------------------------------------------- | ------------------------------ | --------- |  | ----- | --- |  |  | --- | --- | 
|                                                |                                | March 31,
|                                                |                                | 2006      |  | 2005 
|                                                |                                | £000     |  | £000
|                                                |                                |          
|Accounts receivable, net:                       |                                |           |  |       |     |  |  |    
|                                                | Accounts receivable            |           |  | 322   |     |  |  | 136 |    
|                                                |                                |          
|                                                |                                | Total     |  |       | 322 |  |  |     | 136 | 
|                                                |                                |          
|Accrued expenses and other current liabilities: |                                |           |  |       |     |  |  |    
|                                                | Accrued income and other taxes |           |  |      |     |  |  | 185 |    
|                                                | Accrued expenses               |           |  | 94    |     |  |  | 229 |    
|                                                |                                |          
|                                                |                                | Total     |  |       | 94  |  |  |     | 414 | 
|                                                |                                |          





5.   Business restructuring charges






F-16



---



##### Table of Contents







|                                                |  |            |        |            |  |                 |        |            |  |           |         |   |  |  |         |   |  |  |   | 
|----------------------------------------------- |  | ---------- | ------ | ---------- |  | --------------- | ------ | ---------- |  | --------- | ------- | - |  |  | ------- | - |  |  | - | 
|                                                |  |            |        | Charged/   |  |                 |        |           
|                                                |  |            |        | (credited) |  | Utilized during |        |           
|                                                |  | Balance at |        | during     |  | fiscal 2004     |        | Balance at
|                                                |  | March 31,  |        | fiscal     |  | Net cash        |        | Non cash   |  | March 31,
|                                                |  | 2003       |        | 2004       |  | payments        |        | movement   |  | 2004     
|                                                |  | £000      |        | £000      |  | £000           |        | £000      |  | £000    
|                                                |  |           
|Direct costs:                                   |  |            |        |            |  |                 |        |            |  |           |         |   |  |  |         |   |  |  |   | 
|Manufacturing outsourcing                       |  |            | 8,000  |            |  |                 | (1,000 | )          |  |           |        |   |  |  | (7,000  | ) |  |  |  | 
|Onerous contracts                               |  |            | 6,000  |            |  |                 | (2,000 | )          |  |           |        |   |  |  | (4,000  | ) |  |  |  | 
|                                                |  |           
|                                                |  |            | 14,000 |            |  |                 | (3,000 | )          |  |           |        |   |  |  | (11,000 | ) |  |  |  | 
|                                                |  |           
|Business restructuring costs:                   |  |            |        |            |  |                 |        |            |  |           |         |   |  |  |         |   |  |  |   | 
|Employee severance                              |  |            | 10,000 |            |  |                 | 4,000  |            |  |           | (12,000 | ) |  |  | (2,000  | ) |  |  |  | 
|Site rationalization                            |  |            | 46,000 |            |  |                 | 1,000  |            |  |           | (2,000  | ) |  |  | (45,000 | ) |  |  |  | 
|Contractual commitments and other restructuring |  |            | 3,000  |            |  |                 |       |            |  |           |        |   |  |  | (3,000  | ) |  |  |  | 
|Advisor fees                                    |  |            | 10,000 |            |  |                 |       |            |  |           | (6,000  | ) |  |  | (4,000  | ) |  |  |  | 
|                                                |  |           
|                                                |  |            | 69,000 |            |  |                 | 5,000  |            |  |           | (20,000 | ) |  |  | (54,000 | ) |  |  |  | 
|                                                |  |           
|Total                                           |  |            | 83,000 |            |  |                 | 2,000  |            |  |           | (20,000 | ) |  |  | (65,000 | ) |  |  |  | 
|                                                |  |           



| |                          
| | -------------------------
| | Manufacturing outsourcing





| |                  
| | -----------------
| | Onerous contracts





| |                   
| | ------------------
| | Employee severance





| |                     
| | --------------------
| | Site rationalization



F-17



---



##### Table of Contents





| |                                                
| | -----------------------------------------------
| | Contractual commitments and other restructuring





| |             
| | ------------
| | Advisor fees





|   |                  
|-- | -----------------
|6. | Intangible assets





|   |                                              
|-- | ---------------------------------------------
|7. | Pension plans and other post-retirement plans



| |              
| | -------------
| | Pension plans





|                              |                                       |                  |  |   |                  |  |  |      |  |  |      |     |  |      |  |   |      |  |  |   |  |  |  |     | 
|----------------------------- | ------------------------------------- | ---------------- |  | - | ---------------- |  |  | ---- |  |  | ---- | --- |  | ---- |  | - | ---- |  |  | - |  |  |  | --- | 
|                              |                                       | Pension benefits |  |   | Pension benefits | 
|                              |                                       | U.K. plans       |  |   | Overseas plans   | 
|                              |                                       | 2006             |  |   | 2005             |  |  | 2004 |  |  | 2006 |     |  | 2005 |  |   | 2004 | 
|                              |                                       | %                |  |   | %                |  |  | %    |  |  | %    |     |  | %    |  |   | %    | 
|                              |                                       |                  | 
|Weighted average assumptions: |                                       |                  |  |   |                  |  |  |      |  |  |      |     |  |      |  |   |      |  |  |   |  |  |  |    
|                              | Discount rate for pension expense     |                  |  |  |                  |  |  |     |  |  |      | 5.3 |  |      |  |  |      |  |  |  |  |  |  | 6.7 | 
|                              | Discount rate for year end disclosure |                  |  |  |                  |  |  |     |  |  |      | 5.3 |  |      |  |  |      |  |  |  |  |  |  | 6.0 | 
|                              | Expected return on plan assets        |                  |  |  |                  |  |  |     |  |  |      | 5.7 |  |      |  |  |      |  |  |  |  |  |  | 8.5 | 
|                              | Rate of compensation increases        |                  |  |  |                  |  |  |     |  |  |      | 4.5 |  |      |  |  |      |  |  |  |  |  |  | 4.4 | 
|                              | Rate of pension increases             |                  |  |  |                  |  |  |     |  |  |      | 2.5 |  |      |  |  |      |  |  |  |  |  |  | 0.5 | 



|                                                      |                                                   |                  |   |   |                  |  |   |       |  |  |       |       |  |       |   |   |       |  |   |   |  |  |   |   | 
|----------------------------------------------------- | ------------------------------------------------- | ---------------- | - | - | ---------------- |  | - | ----- |  |  | ----- | ----- |  | ----- | - | - | ----- |  | - | - |  |  | - | - | 
|                                                      |                                                   | Pension benefits |   |   | Pension benefits | 
|                                                      |                                                   | U.K. plans       |   |   | Overseas plans   | 
|                                                      |                                                   | 2006             |   |   | 2005             |  |   | 2004  |  |  | 2006  |       |  | 2005  |   |   | 2004  | 
|                                                      |                                                   | £000            |   |   | £000            |  |   | £000 |  |  | £000 |       |  | £000 |   |   | £000 | 
|                                                      |                                                   |                  |  
|Components of net periodic benefit expense/(income):  |                                                   |                  |   |   |                  |  |   |       |  |  |       |       |  |       |   |   |       |  |   |   |  |  |   |  
|                                                      | Service cost                                      |                  |   |  |                  |  |   |      |  |  |       | 4,000 |  |       |   |  |       |  |   |  |  |  |   |  | 
|                                                      | Interest cost                                     |                  |   |  |                  |  |   |      |  |  |       | 1,000 |  |       |   |  |       |  |   |  |  |  |   |  | 
|                                                      | Expected return on plan assets                    |                  |   |  |                  |  |   |      |  |  |       |      |  |       |   |  |       |  |   |  |  |  |   |  | 
|                                                      | Amortization of unrecognized transition liability |                  |   |  |                  |  |   |      |  |  |       |      |  |       |   |  |       |  |   |  |  |  |   |  | 
|Net periodic benefit expense of defined benefit plans |                                                   |                  |  |   |                  |  |  |       |  |  | 5,000 |       |  |       |  |   |       |  |  |   |  |  |  |  
|Net curtailment loss                                  |                                                   |                  |  |   |                  |  |  |       |  |  |      |       |  |       |  |   |       |  |  |   |  |  |  |  
|Net periodic benefit expense                          |                                                   |                  |  |   |                  |  |  |       |  |  | 5,000 |       |  |       |  |   |       |  |  |   |  |  |  |  

F-18



---



##### Table of Contents





| |                           
| | --------------------------
| | Defined contribution plans





|   |                                            
|-- | -------------------------------------------
|8. | Segment and related information disclosures





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Network Equipment segment developed, manufactured, sold and
    supported optical networks, transmission systems and network
    management software for customers in the carrier network market.
    It also provided to customers in the carrier network market a
    broad range of access products. In addition, it supplied
    customers in both the carrier and the enterprise network markets
    a broad range of high-performance, high-capacity broadband
    switches, which select paths for sending large amounts of voice
    and data traffic through a network.
|
| |  | The Network Services segment provided a broad range of support
    services to the communications industry worldwide tailored to
    suit customers needs. It supported both the Companys
    products and those of other network equipment manufacturers.                                                                                                                                                                                                                                                                                                                        
|
| |  | The Other segment contains the Companys other investments
    and businesses not included in other segments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       





| |                      
| | ---------------------
| | Segmental performance









F-19



---



##### Table of Contents







| |                                            
| | -------------------------------------------
| | Analysis of reportable segments (U.K. GAAP)

|                                       |  |          |   |               |  |          |      |   |  |  |   | 
|-------------------------------------- |  | -------- | - | ------------- |  | -------- | ---- | - |  |  | - | 
|                                       |  |          |   | Segment       |  |         
|                                       |  |          |   | operating     |  | Capital 
|As of and For the Year Ended           |  | Revenues |   | (loss)/profit |  | employed
|March 31, 2006                         |  | £000    |   | £000         |  | £000   
|                                       |  |         
|Other (including intra activity sales) |  |          |  |               |  |          | (361 | ) |  |  |  | 
|                                       |  |         
|Segment total  U.K. GAAP              |  |          |  |               |  |          | (361 | ) |  |  |  | 
|                                       |  |         

|                                       |  |          |   |               |  |          |      |   |  |  |   | 
|-------------------------------------- |  | -------- | - | ------------- |  | -------- | ---- | - |  |  | - | 
|                                       |  |          |   | Segment       |  |         
|                                       |  |          |   | operating     |  | Capital 
|As of and For the Year Ended           |  | Revenues |   | (loss)/profit |  | employed
|March 31, 2005                         |  | £000    |   | £000         |  | £000   
|                                       |  |         
|Other (including intra activity sales) |  |          |  |               |  |          | (226 | ) |  |  |  | 
|                                       |  |         
|Segment total  U.K. GAAP              |  |          |  |               |  |          | (226 | ) |  |  |  | 
|                                       |  |         

|                                       |  |          |         |               |  |          |         |   |  |  |   | 
|-------------------------------------- |  | -------- | ------- | ------------- |  | -------- | ------- | - |  |  | - | 
|                                       |  |          |         | Segment       |  |         
|                                       |  |          |         | operating     |  | Capital 
|As of and For the Year Ended           |  | Revenues |         | (loss)/profit |  | employed
|March 31, 2004                         |  | £000    |         | £000         |  | £000   
|                                       |  |         
|Network equipment                      |  |          | 100,000 |               |  |          | (28,000 | ) |  |  |  | 
|Network services                       |  |          | 68,000  |               |  |          | 4,000   |   |  |  |  | 
|Other (including intra activity sales) |  |          |        |               |  |          | (14,000 | ) |  |  |  | 
|                                       |  |         
|Segment total  U.K. GAAP              |  |          | 168,000 |               |  |          | (38,000 | ) |  |  |  | 
|                                       |  |         

Analysis of revenue by product (U.K. GAAP)


|                        |       |                                                       |   |   |       |  |   |       |   |  |         |         |         | 
|----------------------- | ----- | ----------------------------------------------------- | - | - | ----- |  | - | ----- | - |  | ------- | ------- | ------- | 
|                        |       | 2006                                                  |   |   | 2005  |  |   | 2004  |  
|                        |       | £000                                                 |   |   | £000 |  |   | £000 |  
|                        |       |                                                       |  
|Network Equipment:      |       |                                                       |   |   |       |  |   |       |   |  |         |        
|Optical Networks        |       |                                                       |  |   |       |  |  |       |   |  | 35,000  |        
|BBRS                    |       |                                                       |  |   |       |  |  |       |   |  | 9,000   |        
|European Access         |       |                                                       |  |   |       |  |  |       |   |  | 19,000  |        
|North American Access   |       |                                                       |  |   |       |  |  |       |   |  | 13,000  |        
|Outside Plant & Power   |       |                                                       |  |   |       |  |  |       |   |  | 18,000  |        
|Other Network Equipment |       |                                                       |  |   |       |  |  |       |   |  | 6,000   |        
|                        |       |                                                      
|                        | Total |                                                       |   |  |       |  |   |      |   |  |         | 100,000 |        
|Network Services:       |       |                                                       |   |   |       |  |   |       |   |  |         |        
|IC&M                    |       |                                                       |  |   |       |  |  |       |   |  | 35,000  |        
|VAS                     |       |                                                       |  |   |       |  |  |       |   |  | 33,000  |        
|                        |       |                                                      
|                        | Total |                                                       |   |  |       |  |   |      |   |  |         | 68,000  |        
|                        |       |                                                      
|                        |       | Total Network Equipment and Network Services revenues |   |   |      |  |   |       |  |  |         |         | 168,000 | 
|                        |       |                                                      
|Total capital revenue   |       |                                                       |  |   |       |  |  |       |   |  |        |        
|Total discontinued      |       |                                                       |  |   |       |  |  |       |   |  |        |        
|                        |       |                                                      
|Total revenues          |       |                                                       |  |   |       |  |  |       |   |  | 168,000 |        
|                        |       |                                                      

F-20



---



##### Table of Contents





| |                                                                   
| | ------------------------------------------------------------------
| | Reconciliation of U.K. GAAP segmental information to
    U.S. GAAP

Revenue




Operating (loss)/income


|                                                                                                                                                              |                                                                   |       |      |       |   |       |        |        |   |  |           |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ----- | ---- | ----- | - | ----- | ------ | ------ | - |  | --------- | --------- | -
|                                                                                                                                                              |                                                                   | 2006  |      | 2005  |   | 2004 
|                                                                                                                                                              |                                                                   | £000 |      | £000 |   | £000
|                                                                                                                                                              |                                                                   |      
|Segmental operating loss per U.K. GAAP                                                                                                                        |                                                                   |       | (361 | )     |   |       | (226   | )      |   |  | (38,000   | )        
|                                                                                                                                                              | Amortization expense                                              |       |      |       |   |       |        |       |   |  |           | (13,000   | )
|                                                                                                                                                              | Operating exceptional items                                       |       |      |       |   |       |        |       |   |  |           | (2,000    | )
|                                                                                                                                                              |                                                                   |      
|U.K. GAAP operating loss                                                                                                                                      |                                                                   |       | (361 | )     |   |       | (226   | )      |   |  | (53,000   | )        
|U.S. GAAP adjustments:                                                                                                                                        |                                                                   |       |      |       |   |       |        |        |   |  |           |          
|                                                                                                                                                              | Share option plans                                                |       |      |      |   |       |        |       |   |  |           | (9,000    | )
|                                                                                                                                                              | Pension and other post-retirement benefits                        |       |      |      |   |       |        |       |   |  |           | (3,000    | )
|                                                                                                                                                              | Goodwill and intangible asset amortization and impairment charges |       |      |      |   |       |        |       |   |  |           | 7,000     |  
|                                                                                                                                                              | Other                                                             |       |      | (261  | ) |       |        | (1,058 | ) |  |           |          |  
|                                                                                                                                                              |                                                                   |      
|U.S. GAAP operating loss                                                                                                                                      |                                                                   |       | (622 | )     |   |       | (1,284 | )      |   |  | (58,000   | )        
|                                                                                                                                                              | Gain on financial restructuring                                   |       |      |       |   |       |        |       |   |  |           | 2,183,000 |  
|                                                                                                                                                              | Gain on settlement of equity forward contracts                    |       |      |       |   |       |        |       |   |  |           | 123,000   |  
|                                                                                                                                                              | Interest income                                                   |       |      | 333   |   |       |        | 361    |   |  |           | 29,000    |  
|                                                                                                                                                              | Interest expense                                                  |       |      | (6    | ) |       |        |       |   |  |           |          |  
|                                                                                                                                                              |                                                                   |      
|U.S. GAAP income/(loss) from continuing operations before
    income taxes, minority interests and cumulative effects of
    changes in accounting principles |                                                                   |       | (295 | )     |   |       | (923   | )      |   |  | 2,277,000 |          
|                                                                                                                                                              |                                                                   |      

Capital employed/total assets


|                                         |                                                                             |       |       |       |  |  |       |       | 
|---------------------------------------- | --------------------------------------------------------------------------- | ----- | ----- | ----- |  |  | ----- | ----- | 
|                                         |                                                                             | 2006  |       | 2005 
|                                         |                                                                             | £000 |       | £000
|                                         |                                                                             |      
|Total U.K. GAAP segment capital employed |                                                                             |       |      |       |  |  |      |      
|U.K. GAAP capital employed               |                                                                             |       |      |       |  |  |      |      
|U.S. GAAP adjustments:                   |                                                                             |       |       |       |  |  |       |      
|                                         | Provisions for restructuring not included in U.S. GAAP
    capital employed |       |       | 7,593 |  |  |       | 7,852 | 
|                                         |                                                                             |      
|Total U.S. GAAP assets                   |                                                                             |       | 7,593 |       |  |  | 7,852 |      
|                                         |                                                                             |      



| |                             
| | ----------------------------
| | U.K.  U.S. GAAP adjustments





| |   |                                           
| | - | ------------------------------------------
| |  | Pension and other post-retirement benefits



F-21



---



##### Table of Contents





| |   |            
| | - | -----------
| |  | Derivatives



Revenue by geography (U.S. GAAP)




|                                     |                                          |            |   |       |  |       |   |   |  |  |        |         | 
|------------------------------------ | ---------------------------------------- | ---------- | - | ----- |  | ----- | - | - |  |  | ------ | ------- | 
|                                     |                                          | Year ended
|                                     |                                          | March 31, 
|                                     |                                          | 2006       |   | 2005  |  | 2004 
|                                     |                                          | £000      |   | £000 |  | £000
|                                     |                                          |           
|Revenue by territory of destination: |                                          |            |   |       |  |       |   |   |  |  |        |        
|United Kingdom                       |                                          |            |  |       |  |       |  |   |  |  | 42,000 |        
|Other                                |                                          |            |  |       |  |       |  |   |  |  | 58,000 |        
|                                     |                                          |           
|                                     | Total Europe, Middle East, Africa (EMEA) |            |   |      |  |       |   |  |  |  |        | 100,000 | 
|                                     |                                          |           
|United States                        |                                          |            |  |       |  |       |  |   |  |  | 50,000 |        
|Central and Latin America (CALA)     |                                          |            |  |       |  |       |  |   |  |  | 5,000  |        
|Other                                |                                          |            |  |       |  |       |  |   |  |  |       |        
|                                     |                                          |           
|                                     | Total the Americas                       |            |   |      |  |       |   |  |  |  |        | 55,000  | 
|                                     |                                          |           
|Asia Pacific (APAC)                  |                                          |            |  |       |  |       |  |   |  |  | 13,000 |        
|                                     |                                          |           
|                                     | Total external revenue                   |            |   |      |  |       |   |  |  |  |        | 168,000 | 
|                                     |                                          |           

|                                 |                                          |                      |   |       |  |       |   |   |  |  |        |         | 
|-------------------------------- | ---------------------------------------- | -------------------- | - | ----- |  | ----- | - | - |  |  | ------ | ------- | 
|                                 |                                          | Year ended March 31,
|                                 |                                          | 2006                 |   | 2005  |  | 2004 
|                                 |                                          | £000                |   | £000 |  | £000
|                                 |                                          |                     
|Revenue by territory of origin:  |                                          |                      |   |       |  |       |   |   |  |  |        |        
|United Kingdom                   |                                          |                      |  |       |  |       |  |   |  |  | 58,000 |        
|Italy                            |                                          |                      |  |       |  |       |  |   |  |  | 19,000 |        
|Other                            |                                          |                      |  |       |  |       |  |   |  |  | 21,000 |        
|                                 |                                          |                     
|                                 | Total Europe, Middle East, Africa (EMEA) |                      |   |      |  |       |   |  |  |  |        | 98,000  | 
|                                 |                                          |                     
|United States                    |                                          |                      |  |       |  |       |  |   |  |  | 58,000 |        
|Central and Latin America (CALA) |                                          |                      |  |       |  |       |  |   |  |  | 4,000  |        
|Other                            |                                          |                      |  |       |  |       |  |   |  |  |       |        
|                                 |                                          |                     
|                                 | Total the Americas                       |                      |   |      |  |       |   |  |  |  |        | 62,000  | 
|                                 |                                          |                     
|Asia Pacific (APAC)              |                                          |                      |  |       |  |       |  |   |  |  | 8,000  |        
|                                 |                                          |                     
|                                 | Total external revenue                   |                      |   |      |  |       |   |  |  |  |        | 168,000 | 
|                                 |                                          |                     



F-22



---



##### Table of Contents



Revenue by product (U.S. GAAP)




|                   |                                             |                      |   |       |  |       |   |   |  |  |         |         | 
|------------------ | ------------------------------------------- | -------------------- | - | ----- |  | ----- | - | - |  |  | ------- | ------- | 
|                   |                                             | Year ended March 31,
|                   |                                             | 2006                 |   | 2005  |  | 2004 
|                   |                                             | £000                |   | £000 |  | £000
|                   |                                             |                     
|                   | Optical networks                            |                      |   |      |  |       |   |  |  |  |         | 35,000  | 
|                   | Access systems                              |                      |   |      |  |       |   |  |  |  |         | 50,000  | 
|                   | Broadband routing and switching             |                      |   |      |  |       |   |  |  |  |         | 9,000   | 
|                   | Other network equipment                     |                      |   |      |  |       |   |  |  |  |         | 6,000   | 
|                   |                                             |                     
|Network Equipment  |                                             |                      |  |       |  |       |  |   |  |  | 100,000 |        
|                   |                                             |                     
|                   | Value-added services                        |                      |   |      |  |       |   |  |  |  |         | 33,000  | 
|                   | Installation, commissioning and maintenance |                      |   |      |  |       |   |  |  |  |         | 35,000  | 
|                   |                                             |                     
|Network Services   |                                             |                      |  |       |  |       |  |   |  |  | 68,000  |        
|                   |                                             |                     
|                   | Total Core revenues                         |                      |   |      |  |       |   |  |  |  |         | 168,000 | 
|Capital businesses |                                             |                      |  |       |  |       |  |   |  |  |        |        
|                   |                                             |                     
|                   | Total external revenue                      |                      |   |      |  |       |   |  |  |  |         | 168,000 | 
|                   |                                             |                     



|   |                              
|-- | -----------------------------
|9. | Commitments and contingencies

Legal proceedings








|    |                          
|--- | -------------------------
|10. | Investments in affiliates

Fiscal 2004






|    |                         
|--- | ------------------------
|11. | Investment in securities





|    |                     
|--- | --------------------
|12. | Shareholders equity



F-23



---



##### Table of Contents





|    |                            
|--- | ---------------------------
|13. | Employee stock option plans









Non-savings related plans


The Marconi Launch Share Plan




Metapath Software Corporation Amended and Restated 1995 Stock
Option Plan, the Metapath Software International, Inc. Amended
and Restated 1999 Stock Option Plan, and the Mobile Systems
International Holdings Limited Share Option Plan.




F-24



---



##### Table of Contents









| |                                                       
| | ------------------------------------------------------
| | Mariposa Technology, Inc. 1998 Employee Incentive Plan







| |                                     
| | ------------------------------------
| | The Marconi Long Term Incentive Plan



Additional plans at March 31, 2003:




Savings related plans




| |                                
| | -------------------------------
| | The Marconi U.K. Sharesave Plan

F-25



---



##### Table of Contents





| |                                         
| | ----------------------------------------
| | The Marconi International Sharesave Plan



| |                                                                
| | ---------------------------------------------------------------
| | The Marconi International Sharesave Plan  Italian
    Appendix



| |                                                                            
| | ---------------------------------------------------------------------------
| | The Marconi Employee Stock Purchase Plan for Employees in North
    America

Non-savings related plans




| |                                   
| | ----------------------------------
| | The Marconi 1999 Share Option Plan



| |                                
| | -------------------------------
| | The Marconi Phantom Option Plan



| |                              
| | -----------------------------
| | Marconi Restricted Share Plan



| |                                                   
| | --------------------------------------------------
| | The Marconi Associated Companies Share Option Plan



| |                                
| | -------------------------------
| | Existing GEC share option plans



| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| | The 1998 Equity Participation Plan of Reltec Corporation, the
    Amended and Restated 1995 Stock

| |                                                                                     
| | ------------------------------------------------------------------------------------
| | Purchase and Option Plan for Employees of Reltec Holdings, Inc.
    and Subsidiaries



| |                                                  
| | -------------------------------------------------
| | The Northwood Technologies Inc. Stock Option Plan



|                           |           |           |             |              |   |  |      |      | 
|-------------------------- | --------- | --------- | ----------- | ------------ | - |  | ---- | ---- | 
|                           |           |           |             | Weighted    
|                           |           |           |             | average     
|                           |           | Number of |             | exercise    
|                           |           | shares    |             | price       
|                           |           |          
|Outstanding March 31, 2003 |           |           | 197,121,951 |              |   |  | 3.24 |     
|                           | Granted   |           |             |             |   |  |      |     | 
|                           | Lapsed    |           |             | (174,063,851 | ) |  |      | 3.61 | 
|                           | Exercised |           |             |             |   |  |      |     | 
|                           |           |          
|Outstanding March 31, 2004 |           |           | 23,058,100  |              |   |  | 0.43 |     
|                           |           |          
|                           | Granted   |           |             |             |   |  |      |     | 
|                           | Lapsed    |           |             |             |   |  |      |     | 
|                           | Exercised |           |             |             |   |  |      |     | 
|                           |           |          
|Outstanding March 31, 2005 |           |           | 23,058,100  |              |   |  | 0.43 |     
|                           |           |          
|                           | Granted   |           |             |             |   |  |      |     | 
|                           | Lapsed    |           |             |             |   |  |      |     | 
|                           | Exercised |           |             |             |   |  |      |     | 
|                           |           |          
|Outstanding March 31, 2006 |           |           | 23,058,100  |              |   |  | 0.43 |     
|                           |           |          



F-26



---



##### Table of Contents







|    |                                     
|--- | ------------------------------------
|14. | Fair values of financial instruments





| |                         
| | ------------------------
| | Equity forward contracts





|    |                                  
|--- | ---------------------------------
|15. | Valuation and qualifying accounts



|                                |  |           |         |            |  |                |        |               |  |             |          |           |  |  |   |  |  |  |        |   |  |  |   | 
|------------------------------- |  | --------- | ------- | ---------- |  | -------------- | ------ | ------------- |  | ----------- | -------- | --------- |  |  | - |  |  |  | ------ | - |  |  | - | 
|                                |  |           |         |            |  | Net effect of  |        | Effect of     |  |             |          |          
|                                |  | March 31, |         | Additions/ |  | acquisitions   |        | exchange rate |  |             |          | March 31,
|Description                     |  | 2003      |         | (release)  |  | less disposals |        | changes       |  | Utilization |          | 2004     
|                                |  | £         |         | £          |  | £              |        | £             |  | £           |          | £        
|                                |  |          
|Allowance for doubtful accounts |  |           | 78,000  |            |  |                | (2,000 | )             |  |             | (76,000  | )         |  |  |  |  |  |  |       |   |  |  |  | 
|Warranty reserve                |  |           | 43,000  |            |  |                | 2,000  |               |  |             | (43,000  | )         |  |  |  |  |  |  | (2,000 | ) |  |  |  | 
|                                |  |          
|Total                           |  |           | 121,000 |            |  |                |       |               |  |             | (119,000 | )         |  |  |  |  |  |  | (2,000 | ) |  |  |  | 
|                                |  |          



|    |                   
|--- | ------------------
|16. | Earnings per share



|                                            |                                                         |           |         |         |  |       |         |         |  |  |           |         | 
|------------------------------------------- | ------------------------------------------------------- | --------- | ------- | ------- |  | ----- | ------- | ------- |  |  | --------- | ------- | 
|                                            |                                                         | March 31,
|                                            |                                                         | 2006      |         | 2005    |  | 2004 
|                                            |                                                         | £000     |         | £000   |  | £000
|                                            |                                                         |          
|Net (loss)/income                           |                                                         |           | (259    | )       |  |       | (1,108  | )       |  |  | 2,276,000 |        
|Basic (loss)/earnings per ordinary share:   |                                                         |           |         |         |  |       |         |         |  |  |           |        
|                                            | Weighted average ordinary shares outstanding (millions) |           |         | 2,793.0 |  |       |         | 2,793.0 |  |  |           | 2,793.0 | 
|                                            | Basic (loss)/earnings per ordinary share                |           |         |        |  |       |         |        |  |  |           | 0.92    | 
|Diluted (loss)/earnings per ordinary share: |                                                         |           |         |         |  |       |         |         |  |  |           |        
|                                            | Weighted average ordinary shares outstanding (millions) |           |         | 2,793.0 |  |       |         | 2,793.0 |  |  |           | 2,793.0 | 
|                                            | Effect of dilutive options                              |           |         |        |  |       |         |        |  |  |           |        | 
|                                            |                                                         |           | 2,793.0 |         |  |       | 2,793.0 |         |  |  | 2,793.0   |        
|                                            | Diluted (loss)/earnings per ordinary share              |           |         |        |  |       |         |        |  |  |           | 0.92    | 



F-27



---



##### Table of Contents





|    |             
|--- | ------------
|17. | Income taxes



|                   |  |           |      |       |  |       |      |   |  |  |           |  
|------------------ |  | --------- | ---- | ----- |  | ----- | ---- | - |  |  | --------- | -
|                   |  | March 31,
|                   |  | 2006      |      | 2005  |  | 2004 
|                   |  | £000     |      | £000 |  | £000
|                   |  |          
|United Kingdom     |  |           | (259 | )     |  |       | (923 | ) |  |  | 2,304,000 |  
|Non-United Kingdom |  |           |     |       |  |       |     |   |  |  | (27,000   | )
|                   |  |          
|Total              |  |           | (259 | )     |  |       | (923 | ) |  |  | 2,277,000 |  
|                   |  |          



|                      |                    |                      |  |       |    |       |  |      |      |   |  |        |        |  
|--------------------- | ------------------ | -------------------- |  | ----- | -- | ----- |  | ---- | ---- | - |  | ------ | ------ | -
|                      |                    | March 31,           
|                      |                    | 2006                 |  | 2005  |    | 2004 
|                      |                    | £000                |  | £000 |    | £000
|                      |                    |                     
|Current income taxes  |                    |                      |  |       |    |       |  |      |      |   |  |       
|                      | United Kingdom     |                      |  | 36    |    |       |  | (185 | )    |   |  |       |       
|                      | Non-United Kingdom |                      |  |      |    |       |  |     |      |   |  | (1,000 | )     
|                      |                    |                     
|                      |                    | Total current taxes  |  |       | 36 |       |  |      | (185 | ) |  |        | (1,000 | )
|                      |                    |                     
|Deferred income taxes |                    |                      |  |       |    |       |  |      |      |   |  |       
|                      | United Kingdom     |                      |  |      |    |       |  |     |      |   |  |       |       
|                      | Non-United Kingdom |                      |  |      |    |       |  |     |      |   |  |       |       
|                      |                    |                     
|                      |                    | Total deferred taxes |  |       |   |       |  |      |     |   |  |        |       |  
|                      |                    |                     
|                      |                    | Total income taxes   |  |       | 36 |       |  |      | (185 | ) |  |        | (1,000 | )
|                      |                    |                     



|                                                                |  |           |      |       |  |       |      |   |  |  |          |  
|--------------------------------------------------------------- |  | --------- | ---- | ----- |  | ----- | ---- | - |  |  | -------- | -
|                                                                |  | March 31,
|                                                                |  | 2006      |      | 2005  |  | 2004 
|                                                                |  | £000     |      | £000 |  | £000
|                                                                |  |          
|Taxes computed at the statutory rate: (30% 2006, 2005 and 2004) |  |           | (78  | )     |  |       | (277 | ) |  |  | 683,000  |  
|Non-deductible/(non-taxable) items                              |  |           | 108  |       |  |       | 462  |   |  |  | (682,000 | )
|Over provision in prior years                                   |  |           | (100 | )     |  |       |     |   |  |  |         |  
|Other, net                                                      |  |           | 34   |       |  |       |     |   |  |  |         |  
|                                                                |  |          
|Income tax (benefit)/provision                                  |  |           | (36  | )     |  |       | 185  |   |  |  | 1,000    |  
|                                                                |  |          
|Effective tax rate                                              |  |           | 14   | %     |  |       | 20   | % |  |  | 0        | %







|    |                           
|--- | --------------------------
|18. | Related party transactions



F-28



---



##### Table of Contents





|                         |  |                |       | 
|------------------------ |  | -------------- | ----- | 
|                         |  | Year ended    
|                         |  | March 31, 2004
|                         |  | £000         
|                         |  |               
|Statement of operations: |  |                |       | 
|Net sales                |  |                | 4,000 | 





| |                                           
| | ------------------------------------------
| | Atlantic Telecommunications Limited/ GaMMa



CosmoCom






| |                           
| | --------------------------
| | Marconi (Malaysia) SDN BHD





| |          
| | ---------
| | Ultramast



F-29



---



##### Table of Contents



Confirmant




Easynet Group plc








|    |                                                   
|--- | --------------------------------------------------
|19. | Subsidiary company and equity investee information



|                               |                                                                         |                   |                                                                                                                        
|------------------------------ | ----------------------------------------------------------------------- | ----------------- | -----------------------------------------------------------------------------------------------------------------------
|Name                           |                                                                         | Registered Office
|                               |                                                                         |                  
|Network Equipment and Services |                                                                         |                  
|                               | Marconi Communications Limited                                          |                   | New Century Park, PO Box 53, Coventry CV3 1HJ, England                                                                 
|                               | Marconi Communications S.p.A.                                           |                   | Via Ludovico Calda 5, 16153 Genoa, Italy                                                                               
|                               | Marconi Communications, Inc.                                            |                   | c/o The Corporation Trust Company, Corporation Trust Center,
    1209 Orange Street, Wilmington, Delaware, 19801, U.S.A
|                               | Marconi Communications GmbH                                             |                   | Gerberstrasse 33, D 71522 Backnang, Germany                                                                            
|Other Associated Companies     |                                                                         |                  
|                               | Easynet Group plc (72.7% group equity share; 49.9% voting
    share)(1) |                   | 44-46 Whitfield Street, London W1T 2RJ, England                                                                        



| |     |                                        
| | --- | ---------------------------------------
| | (1) | See note 10, Investments in affiliates.

F-30



---



##### Table of Contents





|                   |  |                   |  |             |  |             |      | 
|------------------ |  | ----------------- |  | ----------- |  | ----------- | ---- | 
|                   |  |                   |  |             |  | Class and  
|                   |  |                   |  |             |  | percentage 
|                   |  | Country of        |  | Principal   |  | of ordinary
|Undertakings       |  | incorporation     |  | activity    |  | shares held
|                   |  |                  
|Ancrane            |  | England and Wales |  | Non trading |  |             | 100% | 
|M Ansty Limited    |  | England and Wales |  | Dormant     |  |             | 100% | 
|M Nominees Limited |  | England and Wales |  | Dormant     |  |             | 100% | 
|Photoniqa Limited  |  | England and Wales |  | Dormant     |  |             | 100% | 
|Yeslink Unlimited* |  | England and Wales |  | Dormant     |  |             | 100% | 



| |   |                                                        
| | - | -------------------------------------------------------
| | * | Yeslink Unlimited is a subsidiary of Photoniqa Limited.



F-31