The Directors present their annual report and the audited financial statements for the year ended 30 September 2002.
Intec Telecom Systems develops and markets telecoms Operations Support Systems software (OSS) and provides related professional services such as implementation, consultancy and training, on a global basis. The Company also operates its software as an Application Service Provision (‘ASP’) or bureau service for a number of customers.
The Group intends to continue with its present business strategy of developing and selling software and services to telecom operators. A full review of the business can be found in the Chairman’s Statement and Chief Executive’s Review.
The results for the year are shown in the profit and loss account. A full review of the results for the year can be found in the Chief Executive’s Review and Finance Director’s Review. The Directors do not recommend the payment of a dividend (2001: £nil).
On 20 November 2002, the Company announced its intention to acquire Ericsson’s ‘Settler’ business unit for a sum of $5.1 million (£3.3 million). Further details are provided in the Finance Directors’ Review.
The Group commits substantial resources to research and development activities to ensure its products meet present and future market expectations. The Group expenses development expenditure as it is incurred. The development expenditure expensed at cost in the period was £8,026,000 (2001: £5,869,000).
Ceri James resigned as non-executive director on 5 September 2002 and was replaced on the Board by Roger McDowell.
None of the Directors had a material interest in any contract to which the parent company or any subsidiary was a party during the financial year. The interests of the Directors in the share capital of the Company are shown in Table B of the Report by the Board to shareholders on directors’ remuneration.
Details of the movements in share capital can be found in note 19. 270,000 ordinary 1p shares are held by Intec Employee Share Trust at a cost of £2.05 each. See note 12 for more details.
So far as the Company is aware, apart from certain Directors’ interests that are disclosed in Table B, the only holdings of 3% or more in the issued share capital of the Company at 30 September 2002 (being notifiable interests in accordance with Sections 198 to 208 of the Act) are Mican Limited 44.90% and Henderson Global Investors 10.98%.
Mican Limited has informed the Board that as a result of historic security arrangements over all the assets of Mican in connection with a loan from Investec Bank (Mauritius) Limited, a wholly owned subsidiary of Investec Bank Limited, of South Africa ('Investec') to Mican (the 'Mican Loan'), Investec appears to have an indirect interest in 44.9% of the Company's issued share capital which may be notifiable under Section 198 of the Companies Act 1985, although no such formal notification has been received. The Board understands that, following the significant fall in the Company's share price, in line with that of most other companies in the technology sector, since the time the Mican Loan was originally taken out and the consequent reduction in the value of the security held by Investec in respect of the Mican Loan, Mican has been and continues to be in breach of certain covenants under the Mican Loan. However, the Board has received confirmation from Investec that negotiations are on-going between Mican and Investec and that, whilst such negotiations continue, Investec does not intend taking any further action with respect to the Mican Loan.
It is the Group’s normal practice to make payments to suppliers in accordance with agreed terms provided that the supplier has performed in accordance with the relevant terms and conditions. Trade creditors at 30 September 2002 represented, on average 19 days’ purchases (2001: 22 days) for the group and 5 days’ purchases (2001: 13 days) for the Company.
The Group made charitable contributions of £14,657 during the year (2001: £1,631). Neither the Company nor any of its subsidiaries made any donation for political purposes in 2002 or 2001.
The Group operates in a number of countries, and continued the policy regarding the employment of disabled persons. It is Group policy to offer equal opportunities to disabled people, and to continue wherever possible the employment of staff who become disabled, and to offer retraining for purposes of career development to disabled staff.
The Group encourages all staff to share a commitment to the success of the business, and to its operation as a responsible and ethical organisation. The Group supports both formal and informal communication between Directors, managers and staff, through regular individual reviews, quarterly staff briefings, and monthly internal newsletters. An annual, confidential survey of staff opinions is also conducted, and Intec has also begun the process of setting up Employee Relations Forums consistent with the guidelines suggested by the EU. All new staff joining the company receive formal induction training, including awareness of their obligations as employees of a listed company. Staff training needs are reviewed regularly. A staff Share Options scheme is open to all employees, and a large proportion of staff are now shareholders.
It is the Group’s policy to support and encourage environmentally sound business operations. Recognising that the Group’s own operations have minimal direct environmental impact, our policy is to:
- Meet all statutory obligations placed on us.
- Where sensible, encourage working practices, such as teleconferencing, teleworking and electronic information exchange, that reduce environmental load.
- Re-cycle waste products wherever possible, encourage use of environmentally friendly materials, and dispose safely of any non-recyclable materials.
The Group has subsidiaries or offices in Australia, Brazil, France, Switzerland, Hong Kong, India, Italy, Lebanon, Malaysia, Mexico, Portugal, Spain, Taiwan, South Africa, and the USA.
The resolutions to be proposed at the annual general meeting, together with explanatory notes, appear in the separate Notice of Annual General Meeting sent to all shareholders. The proxy card for registered shareholders is distributed with the annual accounts.
Deloitte & Touche have expressed their willingness to continue in office as auditors and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting.
Approved by the Board of Directors, and signed on behalf of the Board. Jean Exelby FCCA
Secretary 2 December 2002
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