Company ULTIMA NETWORKS
TIDM UTN
Headline Final Results
Released    07:00 30-Apr-08
Number 3286

 
Ultima Networks plc
                                        
                           ('Ultima' or the 'Company')
                                        
                                        
                Full Results for the year ended 31 December 2007

30 April 2008

A Year of steady sales growth

Ultima  Networks plc, which provides software solutions to the legal  profession
through  its  IT  and  related services division and  merchandises  a  range  of
electric bicycles under its PowaCycle brand through its Green Technology Products Division,
announces  full results for the year ended 31 December 2007, which are presented
under IFRS. The Annual Report and Accounts for the year ended 31 December 2007 
will be posted to shareholders during the week commencing 5 May 2008.



Highlights
  
  *    Turnover up 12% to £1,564,000 (2006: £1,398,000)
  
  *    Operating profit before disposal of freehold property was £233,000 (2006:
       £225,000)

  *    Profit on ordinary activities before taxation was £276,000 (2006: £548,000,
       which includes a one-off profit of £462,000 on disposal of freehold property)
  
  *    Debt free with cash at bank of £1,026,000
  
  *    New product launches planned in the coming months for both divisions

  *    Continued success of PowaCycle branded range of electric bicycles
  
  *    Continuing to seek acquisitions in the Legal IT sector
  
  

Prof. Humayun Akhter Mughal, Chairman and CEO, Ultima Networks plc, commented:


'Our philosophy is based on the pursuit of low risk recurring revenues
complemented by a highly selective acquisitions policy. We maintain the view
that the sector for professional application software and services is highly
fragmented and that consolidation opportunities exist. Indeed, we are actively
seeking a number of targets.

We have invested in new technology for both operating divisions, which we
believe will augment our competitive position and increase sales. Further news
on the product launches will be announced in the coming months.'


Enquiries:


                                 
Ultima Networks:                     01279 821 200
                                     
Humayun  Mughal,  Chairman  and CEO  
Rob Piper, Finance Director          
                                     
Nexus Financial:                     020 7451 7068
                                     
Nicholas Nelson                      Nicholas.nelson@nexusgroup.co.uk
John Mundy                           
                                     
Blomfield Corporate Finance:         020 7512 0191

Alan MacKenzie
James Pinner


                                                                                
                                                                               
Annual performance history


                                            IFRS    IFRS      UK       UK       UK 
                                                            GAAP     GAAP     GAAP
                                            2007    2006    2005     2004     2003

Revenue £000                               1,564   1,398    1,074    1,659    1,770
Pre-tax profit/ (loss) £000                  276     548    (360)      313      185
Net assets/(liabilities) £000              1,168     903     388       836    (789)
Net assets/(liabilities) per share pence    0.57    0.44    0.19      0.41   (0.41)
Basic earnings/ (loss) per share pence      0.13    0.25   (0.20)     0.14     0.09
Dividends                                     -       -       -        -        -


Chairman's Statement

Introduction
The  Group  has  seen continued growth in 2007 with all parts  of  the  business
making positive profit contributions, which has resulted in an increase in Group
sales, operating profit before exceptional items and cash balances.

This  is the first set of full year results prepared under IFRS with comparisons
against  restated  2006 full year results. The adoption of  IFRS  represents  an
accounting change only and does not affect the operations or cash flows  of  the
Group.

IT and related services division
The IT and related services division made an operating profit of £148,000 (2006:
£126,000)  on  sales  of  £701,000 (2006: £778,000). This  division  principally
provides computer application software and related support and other services to
the   legal  profession  with  Cognito  Software  continuing  to  be  the  major
contributor.

The Group has invested in a new document production and management system, which
will be integrated with the existing Cognito Software products and on the market
this July targeting existing customers in the legal IT sector.  Additional staff
and other resources have been employed to ensure the efficient implementation of
this project. The system will also be available in a standalone version for sale
to all professional services firms.

On  1  March  2008  the  trade  of  Integrated Publishing  Systems  ('IPS')  was
transferred  to UTN Solutions (North) to reduce administration costs.  IPS  will
continue to be reported within the IT and related services division.

Green Technology Products Division
The  Green Technology Products Division contributed an operating profit of £85,000  (2006:
£5,000)  on  sales  of  £863,000  (2006:  £620,000).  This  division  has  found
continuing  success  with its competitively priced PowaCycle  branded  range  of
electric bicycles, which are refreshed by the regular introduction of new models
and  are  increasingly being sold through a growing number of appointed  dealers
throughout the UK, which totalled over 50 at the year end.

The  Group has invested in a completely new and premium priced Infineum  branded
range  of  electric bicycles, which will incorporate a new and unique  stackable
battery  giving  the rider a choice over battery weight and distance  travelled.
The  launch  in mid-2008 of this new range of electric bicycles is  expected  to
fully  complement the existing PowaCycle range and therefore increase sales  and
profits of the division.

Group results
In  the  year  ended  31  December 2007 the Group achieved  increased  sales  of
£1,564,000 (2006: £1,398,000) and an increased operating profit before  sale  of
freehold property of £233,000 (2006: £225,000).

The  pre-tax  profit  of the Group was £276,000 (2006: £548,000).  The  taxation
expense  was £11,000 (2006: £33,000) and therefore the profit for the  financial
year  after taxation was £265,000 (2006: £515,000). The profit for the financial
year  2006 of £515,000 included the one-off profit of £462,000 from the sale  of
the  freehold  investment property in Bradford in September 2006  and  therefore
without this would have been £53,000.

The  Group continues to operate debt free and had cash at bank of £1,026,000  at
31  December  2007. Any balance of cash funds not required for  working  capital
purposes is being placed on short term bank deposit to try and maximize interest
receivable.

Outlook
Our  philosophy  is  based  on  the  pursuit  of  low  risk  recurring  revenues
complemented  by  a highly selective acquisitions policy. We maintain  the  view
that  the  professional  services  sector is  highly  fragmented  and  therefore
opportunities for consolidation exist. Indeed, we are actively seeking a  number
of targets.

We  have  invested  in  new technology for both operating  divisions,  which  we
believe  will augment our competitive position and increase sales. Further  news
on the product launches will be announced in the coming months.





Prof. Humayun Akhter Mughal
Chairman and Chief Executive Officer
29 April 2008

Financial Highlights




 *    Group revenue was £1,564,000 (2006: £1,398,000)
 
 *    Gross margin for the year was 71% compared with 73% in 2006

 *    Group administration expenses were £883,000 (2006: £985,000)

 *    Operating profit before disposal of freehold property was £233,000 (2006:
      £225,000)
 
 *    Profit  on ordinary activities before taxation for the year was  £276,000
      (2006: £548,000, which includes a one-off profit of £462,000 on disposal of
      freehold property)
 
 *    Earnings per share was 0.13p (2006: 0.25p)

 *    Cash at bank at the year end was £1,026,000 (2006: £832,000)
 
 *    Consolidated balance sheet has increased net assets of £1,168,000  (2006:
      £903,000)





Report of the Directors

The  Directors present their annual report and audited financial statements  for
the year ended 31 December 2007.

BUSINESS REVIEW AND PRINCIPAL ACTIVITIES

The  principal  activities of the Group during the year were the  marketing  and
support   of  computer  application  software  and  the  wholesale  and   retail
merchandising of various products, but primarily electric bicycles.

There  have not been any significant changes in the Group's principal activities
in  the  year under review and the Directors are not aware at the date  of  this
report  of any likely major changes in the Group's activities in the next  year.
The UK market remains the principal area of operation for the Group.

The  Group achieved an operating profit of £233,000 (2006: £225,000) on turnover
of  £1,564,000  (2006: £1,398,000), with all of the Group's  subsidiaries  being
profitable for the year.

The  Group's  operations are managed in two divisions, being the IT and  related
services  division and the Green Technology Products Division. The IT and Related  Services
division  comprises  Cognito Software Limited and Integrated Publishing  Systems
Limited  that  are  involved in marketing and supporting  legal  and  publishing
application software respectively. This division had sales revenues of  £701,000
(2006:   £778,000)  producing  operating  profits  of  £148,000           (2006:
£126,000).  The Green Technology Products Division comprises UTN Solutions (North)  Limited
that  is  involved in merchandising electric bicycles, energy saving  lamps  and
educational electronic kits. This division had sales revenues of £863,000 (2006:
£620,000) producing operating profits of £85,000 (2006: £5,000).

Since the disposal of its investment property in September 2006, Ultima Networks
plc  has acted solely as a holding company recharging its overhead costs to  its
trading subsidiaries on an equitable basis.

In  the  IT  and  related services division, Cognito Software, the  provider  of
application  software  and  services to the  legal  profession,  was  the  major
contributor. Sales were lower than expected due to new business being  difficult
to  close. Therefore, costs were tightly controlled, but not to the detriment of
customer  service  and  support levels which remained strong  and  as  a  result
profitability increased.

The  Green Technology Products Division experienced strong growth with sales up by  39%  to
£863,000, the major increase being the sales of the PowaCycle branded  range  of
electric  bicycles through a growing base of dealerships and  as  a  consequence
profits increased strongly to £85,000.

The  Group balance sheet continues to be debt free and shows an increase in  net
assets  to £1,168,000 (2006: £903,000). The year end cash balance was £1,026,000
and  is  available  for working capital purposes and to fund investment  in  the
expansion of the Group.

RESULTS AND DIVIDENDS

The  Group  profit  for  the year before taxation amounted  to  £276,000  (2006:
£548,000).  There is a taxation expense for the year of £11,000 (2006: £33,000).
The  profit on ordinary activities after taxation was £265,000 (2006: £515,000).
The  profits for the previous year include an exceptional item, being the profit
on the sale of the freehold investment property in Bradford of £462,000 on which
no taxation was payable.

The  Directors do not recommend the payment of a dividend for 2007. No dividends
were paid or proposed to be paid in 2006.

KEY PERFORMANCE INDICATORS

The  aim  of the Group is to increase shareholder value through growth in  sales
revenues  and  operating  profitability.  Therefore,  these  are  the  two   key
performance  indicators  used by the directors to measure  performance  and  are
reported in the table below.

                               IFRS     IFRS     IFRS     UK GAAP 
                             Target     2007     2006     2005    
Key   performance indicator    £000     £000     £000     £000    
                                                      
Revenue                       1,475    1,564    1,398    1,074   
                                                      
Operating  profit / (loss)      205      233      225     (115)   

                                                      

The  increase  in  revenue in 2007 over both the target and  previous  year  was
primarily due to sales of the PowaCycle branded range of electric bicycles.


PRINCIPAL RISKS AND UNCERTAINTIES FACING THE GROUP

The businesses within the IT and related services division operate as very small
players  in  very crowded and competitive market sectors. Many of the  customers
are  small  businesses  that  are relatively slow to  change  and  update  their
business  systems, but are also, and more positively, reluctant to change  their
supplier.  Consolidation is occurring in the legal sector, both among  suppliers
and  users,  effectively  reducing the number  of  new  business  opportunities.
Against  this  backdrop  the Group has recognised the need  to  offer  excellent
levels  of customer service and support to maintain the existing customer  base,
which  it  has  successfully achieved and which must  be  continued.  Additional
features  and functionality for the existing software products will have  to  be
incorporated  and  released in a timely manner to ensure the  existing  products
remain  competitive and embrace the latest legislative changes. In addition  the
products  will  have to integrate easily with leading industry  office  software
such  as  Microsoft  Office products. Therefore, current  and  planned  software
development work is targeted to ensure the current software products maintain  a
modern look and feel by utilising the latest software tools and products and  to
enable   easier  integration  with  Microsoft  Office  products.  The  directors
recognise   that  organic  growth  will  be  slow  to  realise   and   therefore
complementary  acquisitions are being sought to increase sales revenues  and  to
grow the customer base.

The  Green Technology Products Division has continued to seek niche market  opportunities
with  a  marketing led strategy for sales generation and making full use of  the
Internet.  Several product market trials have been made to fully understand  the
extent  of  the potential opportunities and currently the Group is concentrating
on  electric bicycles, energy saving lamps and educational electronic kits.  The
lamps  and  electronic kits markets are increasingly crowded  and  have  several
large  competitors, but the Group believes it can maintain and continue to  grow
its   business   by  being  extremely  cost  competitive  and  building   strong
relationships  with suppliers based in China. The PowaCycle  range  of  electric
bicycles  has  enjoyed  continuing success by offering a very  cost  competitive
product  range  and this growth is expected to be maintained by  increasing  the
number of independent UK retail dealers, which stood at over 50 at the year end.
The  Group has plans to further enhance turnover and profits by the introduction
of its new Infineum branded range of electric bicycles. This is a premium priced
range and will incorporate a new and unique stackable battery giving the rider a
choice over battery weight and distance travelled. This new range is expected to
complement the existing PowaCycle range and is being launched in mid-2008.


ENVIRONMENT

The  Group  complies with all legal requirements relating to the environment  in
all  areas  of  its  operations and therefore, has not  incurred  any  fines  or
penalties  or  been  investigated for any breach of  environmental  regulations.
Specifically,  the  requirements of the EC Directive  on  Waste  Electrical  and
Electronic  Equipment (WEEE) have been implemented resulting  in  UTN  Solutions
(North) Limited being registered with the appropriate WEEE compliance schemes to
deal  with  the  taking  back  and disposal of used equipment.  This  subsidiary
company  has  also  implemented the requirements of  the  EC  Directive  on  the
Restriction  of  the  use  of  Certain Hazardous Substances  in  Electrical  and
Electronic Equipment (RoHS). Compliance with RoHS is based on a self-declaration
and  involves  requesting  material declarations from  suppliers,  the  selected
analysis of products and holding a technical file on each product purchased  for
a minimum of four years.

RESEARCH AND DEVELOPMENT

The Group invests in the ongoing design and development of its PowaCycle and new
Infineum  branded  ranges of electric bicycles. These development  design  costs
have  been estimated by the Directors to have a useful economic life of 3  years
and  are  therefore capitalised and charged to the profit and  loss  account  in
equal  instalments over this period. The Group also invests in  the  maintenance
and development of its application software products for the legal profession to
ensure  they  retain  a  modern look and feel and remain  fully  compliant  with
current  legislation and practices. Unless certain conditions are met, all  such
expenditure on software products is charged to the profit and loss account as it
is incurred.

SUBSTANTIAL INTERESTS

At  the date of this report the following parties had notified the Company of  a
beneficial interest that represents 3% or more of the Company's issued  ordinary
share capital at that date:

                                                  Number of shares     % held
Akhter Group plc and related parties              100,075,176          48.9
Barclays Stockbrokers Ltd                         10,495,600           5.1

No nominee shareholder held 10% or more of the Company's issued share capital on
29 April 2008.

DIRECTORS AND DIRECTORS' INTERESTS

The Directors who served in office since the beginning of the financial year are
shown  on  page 2.  Mr R.M. Bearpark served since his appointment on  1  October
2007.   In addition, Mr P.Y. Thoms served until his resignation on 24 July 2007.
The emoluments, share interests and share options of the Directors are disclosed
in the Directors' Remuneration Report on pages 12 to 13.

EXECUTIVE DIRECTORS

Prof.  H.A.  Mughal, aged 54, is the co-founder of Akhter Group plc and  is  its
majority shareholder. He graduated in electronics from Liverpool University.  Mr
Mughal originally worked as a research engineer for ITT Components Group Limited
prior  to setting up Akhter Instruments Limited in 1979 and he continues  to  be
responsible for the overall control and direction of Akhter's business.  He  was
appointed in November 1998.

Mr  R.J.  Piper, aged 50, was appointed as Finance Director in October 2004.  He
previously  held the role of Financial Controller with the Company and  he  also
acts  as  Company  Secretary.  He is a fellow of the  Association  of  Chartered
Certified  Accountants  and is also Finance Director of  Akhter  Computers  plc.
During  the year he was appointed as Managing Director of Cognito Software  Ltd,
being in addition to his existing roles.

NON-EXECUTIVE DIRECTORS

Mr  P.J. Barron, aged 66, has extensive operations experience in the electronics
industry,  notably  with  Texas Instruments Inc in  the  USA  and  with  Systime
Computers  Limited and Chase Advanced Technologies Limited in  the  UK.  He  was
appointed in May 1992 and is Chairman of the remuneration and audit committees.

Mr  R.M.  Bearpark,  aged 58, has a significant entrepreneurial  and  management
experience gained over 38 years in the IT industry.  Over the last 18  years  he
has  been integral to the operations of 5 IT solution and services companies  as
either  Chief Executive or Managing Director.  The last company being AIM  Group
Holdings  Limited,  a company operating mainly in the legal IT  sector  offering
software  solutions to the legal profession.  He was appointed in  October  2007
and is a member of the remuneration and audit committees.

EMPLOYEES

It  is  Group  policy  that employees should be kept as  fully  informed  as  is
feasible  and practicable about the activities of the Group through consultative
meetings.  In  addition, managers hold regular meetings with representatives  of
their staff in order to encourage employees to make their views known on matters
that affect them.

PENSIONS

During  the year the Group contributed to the personal pension schemes  (defined
contribution) of certain employees. No contributions were paid in respect of the
Directors.

SHARE OPTION SCHEMES

Microvitec 1994 Inland Revenue Approved Executive Share Option Scheme
During the year ended 31 December 2007 the Company granted no options in respect
of the Microvitec 1994 Inland Revenue Approved Executive Share Option Scheme and
no  options  lapsed.  There were no options exercised during the  year.   On  31
December  2007 options were outstanding on 100,000 ordinary shares of 1p  (2006:
100,000).

Ultima Networks plc 2004 Share Option Scheme
This scheme was approved by the AGM held on 28 May 2004. No options to subscribe
for ordinary shares of 1p each have been granted to date.

CHARITABLE AND POLITICAL CONTRIBUTIONS

There  were  no  donations to UK charitable organisations  (2006:  nil)  and  no
political donations (2006: nil).

FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES

The Group's financial instruments comprise cash and various items, such as trade
debtors  and  creditors  that arise directly from its  operations.  The  Group's
exposures to its financial instruments are not material and therefore derivative
financial instruments are not used to manage them.

The main risks arising from the Group's financial instruments can be analysed as
follows:
     
Credit risk
The  Group's  credit  risk is primarily attributable to its  trade  receivables.
Exposures  to credit risk are minimised by employing effective credit management
policies  and  procedures. Only customers known to the Group are granted  credit
terms.  Annual fees for software licences and support agreements are payable  in
advance and require a uniquely numbered 'valid licence key' to operate.

Price risk
The  Group  does not hold any listed security investments and therefore  has  no
exposure to securities price risk.

Foreign currency risk
The  Group  is  not  exposed to transaction foreign currency  exchange  risk  in
respect of purchases from suppliers as this process is dealt with on the Group's
behalf  by Akhter Group plc. Therefore, any transactions of the Group in foreign
currencies are settled by Akhter Group plc and are converted to pounds  sterling
at  pre-agreed spot rates for reimbursement by the Group. Therefore,  the  Group
only holds any cash balances in pounds sterling.

Liquidity risk
The  Group  has  sufficient  cash resources available  to  meet  its  short-term
liabilities.

Cash flow interest rate risk
The Group has no borrowings and receives variable rate interest based on UK bank
base rates on cash balances and bank deposits.
    
PAYMENTS TO CREDITORS

The  Group does not follow any code or standard on payment practice as the terms
and  conditions  for  its  business  transactions  are  agreed  with  individual
suppliers.  Payment is then made in accordance with those terms, subject to  the
other terms and conditions being met by the supplier.  Creditor days at the  end
of the year for the Company were 30 days (2006: 30 days).

STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS

The  directors are responsible for preparing the Annual Report and the financial
statements in accordance with applicable law and regulations.

Company  law  requires the directors to prepare financial  statements  for  each
financial year. Under that law the directors have prepared the Group and Company
financial  statements  in  accordance  with  International  Financial  Reporting
Standards (IFRSs) as adopted by the European Union. In preparing these financial
statements, the directors have also elected to comply with IFRSs, issued by  the
International  Accounting Standards Board (IASB). The financial  statements  are
required  by  law to give a true and fair view of the state of  affairs  of  the
Company and the Group and of the profit or loss of the Group for that period.

In  preparing those financial statements, the directors are required to:  select
suitable  accounting policies and then apply them consistently; make  judgements
and  estimates  that  are  reasonable  and prudent;  state  that  the  financial
statements  comply with IFRSs as adopted by the European Union and IFRSs  issued
by IASB; and prepare the financial statements on the going concern basis, unless
it is inappropriate to presume that the Group will continue in business.

The  directors  confirm that they have complied with the above  requirements  in
preparing the financial statements.

The  directors  are  responsible  for keeping proper  accounting  records  which
disclose  with  reasonable accuracy at any time the financial  position  of  the
Company and the Group and to enable them to ensure that the financial statements
comply  with  the Companies Act 1985. They are also responsible for safeguarding
the  assets  of the Company and the Group and hence for taking reasonable  steps
for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate
and  financial  information on the Group's website. Legislation  in  the  United
Kingdom  governing the preparation and dissemination of the financial statements
and other information included in annual reports may differ from legislation  in
other jurisdictions.

DISCLOSURE OF INFORMATION TO AUDITORS

At the date of making this report each of the Company's directors, as set out on
page 2, confirm the following:

*   so  far as each director is aware, there is no relevant information needed
    by the Company's auditors in connection with preparing their report of which the
    Company's auditors are unaware, and

*   each  director has taken all the steps that he ought to have  taken  as  a
    director in order to make himself aware of any relevant information needed  by
    the  Company's  auditors  in connection with preparing  their  report  and  to
    establish that the Company's auditors are aware of that information.

AUDITORS

RSM  Robson Rhodes LLP ('Robson Rhodes') merged its audit practice with that  of
Grant Thornton UK LLP ('Grant Thornton') with effect from 2 July 2007, with  the
successor firm being Grant Thornton.  Robson Rhodes resigned as auditors  on  25
July  2007  creating  a  casual  vacancy, which the  directors  have  filled  by
appointing Grant Thornton.  A resolution to reappoint Grant Thornton as auditors
of the Group will be proposed at the forthcoming Annual General Meeting.

ANNUAL GENERAL MEETING

The  Annual General Meeting of the Company is to be held at Akhter House,  Perry
Road,  Harlow,  Essex  CM18 7PN on 29 May 2008 at 1pm.  An  explanation  of  the
resolutions  to be proposed as special business at that Meeting appears  in  the
Notice of Annual General Meeting provided with this Annual Report.

APPROVAL

The  report  of  the Directors was approved by the Board on 29  April  2008  and
signed on its behalf by:




Prof. Humayun Akhter Mughal
Chairman and Chief Executive Officer

Corporate Governance

As  a  Company  quoted on the Alternative Investment Market of The London  Stock
Exchange, the Company is not required to comply with the provisions of the  2006
Financial  Reporting  Council's revised Combined Code.  However,  the  Board  is
committed  to  ensuring  that proper standards of corporate  governance  operate
throughout  the Group and has therefore followed the principles of the  Code  so
far  as  is practicable and appropriate to the nature and size of the  Group.  A
statement  of  the  directors'  responsibilities in  respect  of  the  financial
statements is contained within the Report of the Directors above. The  statement
below  describes  the  role  of  the Board and its  committees,  followed  by  a
statement regarding the Group's system of internal controls.

THE BOARD

The activities of the Group are ultimately controlled by the Board of Directors,
which  at  the year-end consisted of a Chairman and Chief Executive  Officer,  a
Finance  Director and two non-executive Directors. Biographical details  of  all
four  Directors  are to be found within the Report of the Directors  above.  All
Directors  are equally accountable under law for the proper stewardship  of  the
Company's  affairs. The non-executive Directors have a particular responsibility
to  ensure  that  the strategies proposed by the Executive Directors  are  fully
discussed and critically examined.

The non-executive directors are Peter Barron (the senior non-executive director)
and Richard Bearpark and the Board considers both to be independent.

The  Board  meets  on  a  regular basis throughout the  year  reviewing  trading
performance, setting strategy, examining capital expenditure and acquisitions or
disposals, operating budgets and material contracts.

The two Executive Directors do not have service contracts and do not receive any
emoluments directly from the Company. Any director appointed during the year  is
required,  under the Company's Articles of Association, to retire and  seek  re-
election by the shareholders at the next Annual General Meeting and one third of
the  Board  is required to retire each year and seek re-election. The  Directors
are  able to take independent professional advice at the expense of the  Company
in the furtherance of their duties.

NOMINATIONS COMMITTEE

The  appointment of Directors is a matter for the Board as a whole and therefore
a  nominations committee is considered unnecessary given the present  number  of
Board members.

AUDIT COMMITTEE

The  Audit  Committee comprises both non-executive Directors and is  chaired  by
Peter  Barron.  This  committee assists the Board in its  duties  regarding  the
Group's  financial statements and the maintenance of adequate internal financial
controls.  The  Audit Committee's prime tasks are to receive  reports  from  the
Company's  auditors,  Grant Thornton UK LLP, and to review the  half-yearly  and
annual  accounts before they are presented to the Board, focusing in  particular
on  accounting  policies and compliance and areas of management  judgements  and
estimates.

There is no internal audit function for the Group, as the Board does not believe
that this is appropriate given the size of the business.

REMUNERATION COMMITTEE

The Remuneration Committee comprises both non-executive Directors and is chaired
by Peter Barron. Details of the executive remuneration policy are set out in the
separate Directors' Remuneration Report.


SHAREHOLDER RELATIONS

The  Board  has  a  policy  of  providing any  reasonably  requested  historical
information  and  explanations to shareholders on request.  The  Group's  annual
reports are sent to all shareholders. These reports are also available from  the
Company's  website  along with the Group's half yearly reports  and  all  public
announcements. All shareholders are encouraged to participate in  the  Company's
Annual General Meeting, which is attended by the Directors.

INTERNAL CONTROL AND FINANCIAL REPORTING

The Board is responsible for ensuring that there is a system of internal control
and for reviewing its effectiveness.  Such a system is designed to manage rather
than  eliminate the risk of failure to achieve business objectives and can  only
provide  reasonable and not absolute assurance against material misstatement  or
loss.  The  Audit Committee has been delegated responsibility by the  Board  for
discharging its internal control review responsibilities.

The  Board  has  established an organisational structure  with  clearly  defined
levels of responsibility and delegation of authority. Control procedures include
annual  budget approval and monitoring of actual performance. The Board approves
all  investment  and acquisition projects for all major acquisitions  and  major
capital expenditure.

The  Board has a clear responsibility for identifying risks facing each  of  the
businesses and for putting in place procedures to mitigate and monitor risks. As
part of the annual budgeting process risks are formally assessed by the Board.

There  is  a  system of financial reporting and budget planning.  On  a  monthly
basis,  actual results are reported and compared to budget with any  significant
adverse variances being examined and any remedial action taken as necessary.

The  Directors  believe that, taken as a whole, the systems of internal  control
are appropriate to the business for the year ended 31 December 2007.

GOING CONCERN

Having reviewed the future plans and projections for the business, the Directors
are  satisfied that the Group has adequate resources to continue to operate  for
the foreseeable future, a period of not less than twelve months from the date of
this  report. Also, the Directors have received a letter of support from  Akhter
Group  plc confirming their intention to continue to provide the staff services,
other  services  and  facilities, as disclosed in Note 24, for  the  foreseeable
future.  For  these reasons, they continue to adopt the going concern  basis  in
preparing the financial statements.




Directors' Remuneration Report

The  Directors present the Directors' Remuneration Report for the financial year
ended  31  December 2007. It should be noted that, as a Company  quoted  on  the
Alternative Investment Market of The London Stock Exchange, the Company  is  not
required  to comply with the Remuneration Report regulations and therefore,  not
all  elements of the regulations have been complied with. For example,  a  share
price graph has been omitted.

Remuneration Committee

The  Remuneration  Committee consists wholly of non-executive  directors,  Peter
Barron  and  Richard  Bearpark.   Peter  Barron  served  as  a  member  of   the
Remuneration  Committee  throughout the year and  in  the  period  to  29  April
2008.   Richard  Bearpark served as a member of the Remuneration Committee  from
his  appointment in October 2007.  In addition, Peter Thoms, previously  a  non-
executive  director,  was a member of the committee from the  beginning  of  the
period until his retirement on 24 July 2007.

The Remuneration Committee determines any remuneration and benefits packages  of
the  executive  directors and considers any service contracts,  salaries,  other
benefits,  including  bonuses and participation in the  Company's  share  option
plans,  and  any  other  terms  and  conditions  of  employment  including   any
compensation payments on termination of office.

Remuneration Policy

Any  basic salaries and benefits in kind are set to be comparable with those  of
peer  group  companies.  Any share options are granted to  strengthen  the  link
between  personal interests and those of the shareholders. A scheme was approved
by  the AGM held on 28 May 2004, being the Ultima Networks plc 2004 Share Option
Scheme,  but  no options to subscribe for ordinary shares of 1p each  have  been
granted  to  date.  No  director  has any options  outstanding  under  the  1994
Microvitec Inland Revenue Approved Executive Share Option Scheme.

Non-executive directors

The  non-executive  directors  do  not have contracts  for  services.  The  non-
executive  directors  have  letters  of appointment  concerning,  amongst  other
things,  the initial terms for which they are appointed, a general statement  of
their  role  and  duties,  the fees they will receive  as  a  director  and  any
supplementary  fees receivable for additional work, such as being  a  member  of
more  than  one  Board  committee.   The fees  of  non-executive  directors  are
determined  by  the full Board within the limits set out in the  Memorandum  and
Articles of Association.

Service Contracts and Letters of Appointment

The  Company  does  not  have  service contracts in  respect  of  the  Executive
Directors. The letters of appointment in respect of the non-executive  directors
who  served  during the year ended 31 December 2007 are for a rolling  12  month
period.  The  letters of appointment do not contain notice periods or  provision
for termination payments.

Directors' remuneration payable for the year to 31 December 2007 was as follows:

                                                         Pension       Pension
            Basic          Benefits   2007    2006 contributions contributions           
           Salary   Fees    in kind  Total   Total          2007          2006
             £000   £000       £000   £000    £000          £000          £000    
                                                             
Executive                                                 
H.A Mughal     -       -       -      -       -              -             -
R.J. Piper     -       -       -      -       -              -             -
Non-Executive                                                     
P.J. Barron    -       12      -      12      12             -             -
P.Y. Thoms     -       6       -      6       12             -             -
R.M. Bearpark  -       3       -      3       -              -             -
                                           
               -       21      -      21      24             -             -
                                                          
                                                          

H.A.  Mughal is a director of Akhter Group plc. No remuneration is paid directly
by  the Group for the services of the two Executive Directors. However, a charge
to  the  Company from Akhter Group plc of £56,000 (2006: £50,000) and to Cognito
Software  Limited  of  £9,000  (2006: nil) for  executive  management  services,
disclosed  in  Note 24 of the financial statements, is for the services  of  the
Company's  finance director and Akhter's marketing director. There is  currently
no  pension  provision  for any of the directors and  therefore  no  pension  is
accrued to them.
The  beneficial interests in the share capital of the Company of those  persons,
who  were  Directors at the year end, as recorded in the register of  Director's
interests, were as follows:

               31 December 2007           31 December  2006
                                                                 
               Ordinary     Ordinary      Ordinary     Ordinary
               shares       share         shares       share
               of 1p        options       of 1p        options
                                                    
H.A. Mughal*   100,075,176   -             100,075,176  -
R.J. Piper      -            -             -            -
P.J. Barron     -            -             -            -
P.Y. Thoms      -            -             -            -
R.M. Bearpark   -            -             -            -


*Prof.  H.A.  Mughal's holding includes 54,055,336 Ordinary Shares  beneficially
owned by Akhter Group plc, of which he is the majority shareholder and 6,013,360
Ordinary  Shares  beneficially owned by the trustees of  the  Akhter  Group  plc
Directors' SSAS Pension Fund, under which he is a beneficiary.

At  31  December  2007  no  options  were outstanding  over  shares  granted  to
directors. No director was granted or exercised any share options during this or
the previous year nor did any lapse.

No  director has any interest in the shares of any subsidiary of Ultima Networks
plc.

There  have been no changes in the above interests between 31 December 2007  and
29 April 2008.

Beneficial holdings include the directors' personal holdings and those of  their
spouse and children as well as holdings in family trusts of which the Director's
spouse or their children are beneficiaries or potential beneficiaries.

The market price at 31 December 2007 was 0.75p and the range during the year was
0.25p to 2.25p.

Approval

The  Directors' Remuneration Report was approved by the Board on 29  April  2008
and signed on its behalf by:





Peter Barron
Chairman, Remuneration Committee



Report of the Independent Auditor to the Members of Ultima Networks plc

We  have  audited  the  group  and  parent  company  financial  statements  (the
''financial statements'') of Ultima Networks plc for the year ended 31  December
2007  which  comprise the group income statement, the group and  parent  company
balance sheets, the group and parent company cash flow statements, the group and
parent  company statement of recognised income and expense and notes  1  to  26.
These financial statements have been prepared under the accounting policies  set
out therein.

This  report  is made solely to the company's members, as a body, in  accordance
with  Section 235 of the Companies Act 1985.  Our audit work has been undertaken
so that we might state to the company's members those matters we are required to
state  to them in an auditor's report and for no other purpose.  To the  fullest
extent  permitted  by law, we do not accept or assume responsibility  to  anyone
other  than the company and the company's members as a body, for our audit work,
for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

The  directors' responsibilities for preparing the Annual Report, the Directors'
Remuneration  Report and the financial statements in accordance with  applicable
law  and International Financial Reporting Standards (IFRSs) as adopted  by  the
European Union are set out in the Statement of Directors' Responsibilities.

Our  responsibility  is  to audit the financial statements  in  accordance  with
relevant  legal  and  regulatory  requirements and  International  Standards  on
Auditing (UK and Ireland).

We  report to you our opinion as to whether the financial statements give a true
and  fair  view and whether the financial statements have been properly prepared
in accordance with the Companies Act 1985.  We also report to you whether in our
opinion the information given in the Report of the Directors is consistent  with
the financial statements.

In addition we report to you if, in our opinion, the company has not kept proper
accounting records, if we have not received all the information and explanations
we  require  for  our  audit,  or  if information  specified  by  law  regarding
directors' remuneration and other transactions is not disclosed.

We read other information contained in the Annual Report and consider whether it
is  consistent  with the audited financial statements.   The  other  information
comprises  only the Directors' Report, the Directors' Remuneration  Report,  the
Chairman's  Statement and the Financial Highlights and the Corporate  Governance
Statement.   We consider the implications for our report if we become  aware  of
any  apparent  misstatements  or  material inconsistencies  with  the  financial
statements.  Our responsibilities do not extend to any other information.

Basis of audit opinion

We  conducted our audit in accordance with International Standards  on  Auditing
(UK  and  Ireland)  issued by the Auditing Practices Board.  An  audit  includes
examination,  on  a  test  basis,  of  evidence  relevant  to  the  amounts  and
disclosures in the financial statements.  It also includes an assessment of  the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to  the group's and company's circumstances, consistently applied and adequately
disclosed.

We  planned  and  performed our audit so as to obtain all  the  information  and
explanations  which  we  considered  necessary  in  order  to  provide  us  with
sufficient  evidence to give reasonable assurance that the financial  statements
are   free  from  material  misstatement,  whether  caused  by  fraud  or  other
irregularity  or  error.  In forming our opinion we also evaluated  the  overall
adequacy of the presentation of information in the financial statements.

Opinion

In our opinion:
      
*    the  group  financial statements give a true and fair view, in accordance with 
     IFRSs as adopted by the European Union, of the state of the group's affairs
     as at 31 December 2007 and of its profit for the year then ended;

*    the  parent  company financial statements give a true and  fair  view,  in
     accordance with IFRSs as adopted by the European Union as applied in accordance
     with  the  provisions of the Companies Act 1985, of the state of  the  parent
     company's affairs as at 31 December 2007;

*    the financial statements have been properly prepared in accordance with the
     Companies Act 1985; and

*    the information given in the Report of the Directors is consistent with the
     financial statements.

Grant Thornton UK LLP
Chartered Accountants and Registered Auditors
Cambridge, England
29 April 2008
Consolidated income statement
for the year ended 31 December 2007

                                   Note  2007              2006
                                         £000              £000
                                                         
Revenue                              3  1,564             1,398
                                                         
Cost of sales                           (452)             (372)
                                                         
                                                        
Gross profit                            1,112             1,026
                                                         
Administration expenses                 (883)              (985)
                                                         
Other operating income               7    4                 184
                                                         
                                                        
Operating profit before disposal         233                225
of freehold property
                                                          
Disposal of freehold property        8     -                462
                                                         
                                                        
Operating profit                     5    233               687
                                                         
Finance income                       4     43                11
Finance costs                        4      -              (150)
                                                         
                                                        
Profit before taxation                    276               548
                                                         
Taxation expense                    10    (11)              (33)
                                                         
                                                        
Profit for the period attributable         265               515
to equity holders of the parent
                                                         
                                                                             
Basic and diluted earnings per                           
share - pence                           11 0.13              0.25
                                                         
                                                        
                                                        


All amounts relate to continuing activities.

Consolidated balance sheet
at 31 December 2007

                                   Note  2007              2006
                                         £000              £000
ASSETS                                                   
                                                         
Non current assets                                       
Property, plant and equipment      12a    120               127
Intangible assets - development    12b      6                 7
costs
Deferred tax asset                  19      5                 4
                                                         
                                                        
Total non current assets                  131               138
                                                         
                                                        
Current assets                                           
Inventories                         14    257               208
Trade and other receivables         15    284               234
Cash and cash equivalents           16  1,026             832
                                                         
                                                        
Total current assets                    1,567             1,274
                                                         
                                                        
Total assets                            1,698             1,412
                                                         
                                                        
LIABILITIES                                              
                                                         
Current liabilities                                      
Trade and other payables            17    97                139
Current tax liabilities                   98                 65
Accruals and deferred income             335                305
                                                         
                                                        
Total current liabilities                530                509
                                                         
                                                        
Total liabilities                        530                509
                                                         
                                                        
Net assets                             1,168                903
                                                         
                                                        
                                                        
EQUITY                                                   
                                                         
Capital and reserves attributable                        
to equity holders of the parent
Called up share capital             20  7,554             7,554
Share premium account                   5,602             5,602
Other reserves                              -             1,334
Retained earnings                     (11,988)          (13,587)
                                                         
                                                        
Total equity                            1,168               903
                                                         
                                                        
                                                        

These financial statements were approved by the board of directors on 29 April 2008
and were signed on its behalf by:



Prof. Humayun Akhter Mughal
Chairman and Chief Executive Officer
Company balance sheet
at 31 December 2007

                                   Note  2007              2006
                                     
                                         £000              £000
ASSETS                                                   
                                                         
Non current assets                                       
Property, plant and equipment      12a    107               112
Investments                         13    513               513
                                                         
                                                        
Total non current assets                  620               625
                                                         
                                                        
Current assets                                           
Trade and other receivables         15     22                43
Cash and cash equivalents           16  1,012               827
                                                         
                                                        
Total current assets                    1,034               870
                                                         
                                                        
Total assets                            1,654             1,495
                                                         
                                                        
LIABILITIES                                              
                                                         
Current liabilities                                      
Trade and other payables            17    961               860
Accruals and deferred income               44                28
                                                         
                                                        
Total current liabilities               1,005               888
                                                         
                                                        
Total liabilities                       1,005               888
                                                         
                                                        
Net assets                                649               607
                                                         
                                                        
                                                        
EQUITY                                                   
                                                         
Capital and reserves attributable                        
to equity holders of the parent
Called up share capital             20  7,554             7,554
Share premium account                   5,602             5,602
Other reserves                            202             5,618
Retained earnings                      (12,709)          (18,167)
                                                         
                                                        
Total equity                              649               607
                                                         
                                                        
                                                        

These financial statements were approved by the board of directors on 29 April 2008
and were signed on its behalf by:





Prof. Humayun Akhter Mughal
Chairman and Chief Executive Officer
Consolidated cash flow statement
for the year ended 31 December 2007


                                       2007              2006
                                       £000              £000
                                                         
Profit for the financial period        265               515
Taxation expense                       11                 33
Interest receivable                    (43)              (11)
Interest payable                       -                 150
Depreciation charges                   12                 96
Profit on disposal of property,        -                (462)
plant and equipment
Amortisation of intangibles            5                   3
                                                         
                                                        
Operating profit before changes in     250               324
working capital
                                                         
Increase in inventories                (49)              (94)
Increase in trade and other            (50)              (22)
receivables
Increase/ (decrease) in trade          9                 (49)
payables and other current
liabilities
                                                         
                                                        
Cash generated from operations         160               159
Taxation                               -                 -
                                                         
                                                        
Net cash generated from operating      160               159
activities
                                                         
                                                        
Cash flows from investing                                
activities
Purchase of property, plant and        (5)               (17)
equipment
Development expenditure                (4)               (10)
Proceeds from sale of property,         -               4,163
plant and equipment
                                                         
                                                        
Net cash used in investing             (9)              4,136
activities
                                                         
                                                        
Cash flows from financing                                
activities
Interest received                       43                11
Interest paid                           -               (226)
Repayment of borrowings                 -             (3,068)
                                                         
                                                        
Net cash used in financing              43             (3,283)
activities
                                                         
                                                        
Net increase in cash and cash          194               1,012
equivalents
                                                         
Cash and cash equivalents at           832               (180)
beginning of the period
                                                         
                                                        
Cash and cash equivalents at end       1,026             832
of the period
                                                         
                                                        
                                                        




Company cash flow statement
for the year ended 31 December 2007


                                       2007              2006
                                       £000              £000
                                                         
Profit for the financial period         42                226
Interest receivable                    (43)              (11)
Interest payable                         -                150
Depreciation charges                     5                 89
Profit on disposal of property,          -               (462)
plant and equipment
Impairment charges                       -                100
                                                         
                                                        
Operating profit before changes in       4                 92
working capital
                                                         
Decrease/ (increase) in trade and        21                (4)
other receivables
Increase in trade payables and           117               41
other current liabilities
                                                         
                                                        
Cash generated from operations           142               129
Taxation                                  -                 -
                                                         
                                                        
Net cash generated from operating        142               129
activities
                                                         
                                                        
Cash flows from investing                                
activities
Proceeds from sale of property,          -                 4,163
plant and equipment
                                                         
                                                        
Net cash used in investing               -                 4,163
activities
                                                         
                                                        
Cash flows from financing                                
activities
Interest received                       43                    11
Interest paid                           -                   (226)
Repayment of borrowings                 -                 (3,068)
                                                         
                                                        
Net cash used in financing              43                (3,283)
activities
                                                         
                                                        
Net increase in cash and cash          185                 1,009
equivalents
                                                         
Cash and cash equivalents at           827                  (182)
beginning of the period
                                                         
                                                        
Cash and cash equivalents at end       1,012                 827
of the period
                                                         
                                                        
                                                     

Consolidated statement of changes in equity


(i) Year ended 31 December 2007


                                 
                    Called up                
                        Share    Share  Revaluation   Other    Retained  Total 
                      capital  premium      reserve  reserve   earnings equity
                         £000     £000         £000     £000     £000     £000
                                                           
At 1 January 2007       7,554    5,602            -    1,334    (13,587)   903

Profit for the period      -        -             -        -        265    265

Transfer                   -        -             -    (1,334)    1,334      -
                                                           
                                                           
At 31 December 2007     7,554    5,602            -         -   (11,988) 1,168

                                                           
                                                           
                                                           
                                                           



Other reserve

The  balance of £1,334,000 on the other reserve at 1 January 2007 comprises  the
premium  on  shares issued as part of the consideration for the  acquisition  of
various  subsidiary undertakings less the expenses of issuing those shares,  the
costs  of  the  acquisitions  and  goodwill written  off.  Therefore,  as  those
subsidiary undertakings representing this balance on the other reserve have been
disposed of, it has been transferred to retained earnings.






(ii) Year ended 31 December 2006


                    Called up                
                        Share    Share  Revaluation   Other    Retained  Total 
                      capital  premium      reserve  reserve   earnings equity
                         £000     £000         £000     £000     £000     £000
                                                           
At 1 January 2006       7,554    5,602        2,071    1,334    (16,173)   388
Profit for the period       -        -            -        -        515    515
Sale of freehold property   -        -       (2,071)       -      2,071      -
                                       
At 31 December 2006      7,554    5,602           -     1,334    (13,587)  903

                                                           
                                                           
                                                           
                                                           


Company statement of changes in equity


(i) Year ended 31 December 2007


                    Called up                
                        Share    Share  Revaluation   Other   Retained  Total 
                      capital  premium      reserve  reserve  earnings equity
                         £000     £000         £000     £000      £000   £000
                                                           
At 1 January 2007       7,554    5,602            -    5,618   (18,167)   607
Profit for the period       -        -            -        -        42     42
Transfer                    -        -            -   (5,416)    5,416      -
                                                                                                          
At 31 December 2007      7,554    5,602           -      202   (12,709)   649

                                                           


Other reserve

The  balance of £5,618,000 on the other reserve at 1 January 2007 comprises  the
premium  on  shares issued as part of the consideration for the  acquisition  of
various  subsidiary undertakings less the expenses of issuing those  shares  and
the  costs  of  the  acquisitions. All but one of  the  subsidiary  undertakings
representing  this balance on the other reserve has either been disposed  of  or
the  carrying value of the investment in it has been impaired to nil, the amount
representing this has been transferred to retained earnings leaving the  balance
on the reserve to represent the remaining subsidiary.


(ii) Year ended 31 December 2006


                      Called up                
                          Share    Share  Revaluation   Other   Retained  Total 
                        capital  premium      reserve  reserve  earnings equity
                           £000     £000         £000     £000      £000   £000
                                                           
At 1 January 2006         7,554    5,602        2,071    5,618   (20,464)    381
Profit for the period         -        -            -        -       226     226
Sale of freehold property     -        -       (2,071)       -     2,071       -
                                        
At 31 December 2006       7,554    5,602            -    5,618   (18,167)    607

                                                           
                                                           
                                                           
                                                           

1    GENERAL INFORMATION
     Ultima  Networks  plc ('the Company') and its subsidiaries  (together  'the
     Group')  are  involved in the marketing and support of computer application
     software  and the merchandising of various products, but primarily electric
     bicycles.
     
     The Company is a public limited company, which is quoted on the Alternative
     Investment  Market  of The London Stock Exchange and  is  incorporated  and
     domiciled in the UK.  The address of its registered office is Akhter House,
     Perry Road, Harlow CM18 7PN.
     
     The registered number of the Company is 1435584.



2    ACCOUNTING POLICIES

     Authorisation  of  financial statements and statement  of  compliance  with
     IFRS:
     The  Group's  and  Company's financial statements for  the  year  ended  31
     December  2007  were authorised for issue by the Board of Directors  on  29
     April  2008  and  the balance sheets were signed on the Board's  behalf  by
     Prof. Humayun Akhter Mughal.
     
     The  Group's  financial statements have been prepared  in  accordance  with
     International  Financial  Reporting Standards  ('IFRS')  and  International
     Financial Reporting Interpretations Committee ('IFRIC') interpretations  as
     endorsed  by the European Union, and with those parts of the Companies  Act
     1985  applicable to companies reporting under IFRS. The Company's financial
     statements have been prepared on the same basis and as permitted by Section
     230(3) of the Companies Act 1985, no income statement is presented for  the
     Company.  Within  the  consolidated profit,  a  profit  of  £42,000  (2006:
     £226,000) is dealt with in the financial statements of the parent Company.
     
     Basis of preparation:
     These  are  the  Group's and Company's first financial statements  prepared
     under  IFRS  and  IFRS  1  'First Time Adoption of International  Financial
     Reporting Standards' has been applied. The last financial statements  under
     UK  Generally Accepted Accounting Principles ('UK GAAP') were for the  year
     to  31 December 2006 and the comparatives have been restated to comply with
     IFRS. The transition from UK GAAP to IFRS is explained in note 25.
     
     The  financial statements are presented in pounds sterling and  all  values
     are  rounded  to  the nearest thousand pounds (£000) except when  otherwise
     indicated.
     
     The  accounting  policies  have been applied consistently  to  all  periods
     presented  in  these consolidated financial statements and in preparing  an
     opening balance sheet at 1 January 2006, being the date of transition,  for
     the purposes of transition to IFRS unless otherwise stated.
     
     Basis of consolidation:
     The  consolidated  financial statements incorporate  the  results  and  net
     assets  of  Ultima  Networks plc and its subsidiary undertakings  (together
     referred  to  as  the  `Group') for the year  ended  31  December  2007.  A
     subsidiary  is an entity over which the Group has the power to  govern  the
     financial  and operating policies generally accompanying a shareholding  of
     more  than  50%  of the voting rights. The results of each  subsidiary  are
     included  from  the  date that control transferred to  the  Group  and  are
     adjusted to align accounting policies with the Group's accounting policies.
     Subsidiaries are no longer consolidated from the date that control  ceases.
     All intercompany balances and transactions are eliminated in full.
     
     Company investment in subsidiaries:
     In its separate financial statements the Company recognises its investments
     in  subsidiaries at cost. Income is recognised from these investments  only
     in relation to distributions received from post acquisition profits.
     
     Share-based payments:
     All share-based payment arrangements granted after 7 November 2002 that
     had not vested prior to 1 January 2006 are recognised in the financial
     statements.
     
     All  goods and services received in exchange for the grant of any  share-
     based  payment  are measured at their fair values.  Where  employees  are
     rewarded  using  share-based  payments, the  fair  values  of  employee's
     services are determined indirectly by reference to the fair value of  the
     instrument granted to the employee.  This fair value is appraised at  the
     grant date and excludes the impact of non-market vesting conditions  (for
     example,  profitability  and  sales growth targets).  All  equity-settled
     share-based  payments  are ultimately recognised as  an  expense  in  the
     income statement with a corresponding credit to reserves.
     
     If  vesting  periods  or other non-market vesting conditions  apply;  the
     expense is allocated over the vesting period, based on the best available
     estimate of the number of share options expected to vest.   Estimates are
     subsequently revised if there is any indication that the number of  share
     options expected to vest differs from previous estimates.  Any cumulative
     adjustment  prior  to vesting is recognised in the  current  period.   No
     adjustment  is made to any expense recognised in prior periods  if  share
     options ultimately exercised are different to that estimated on vesting.
     Upon  exercise  of share options the proceeds received net of  attributable
     transaction  costs  are  credited to share capital, and  where  appropriate
     share premium.
     
     
     Goodwill:
     Goodwill  on  acquisitions comprises the excess of the fair  value  of  the
     purchase  consideration  over the fair value  of  identifiable  assets  and
     liabilities  acquired. Goodwill is recognised as an asset  on  the  Group's
     balance sheet in the year in which it arises. Goodwill is not amortised and
     is tested for impairment at least annually and more frequently if events or
     changes indicate that the carrying value may be impaired and is carried  at
     cost  less  accumulated  impairment losses. For the purpose  of  impairment
     testing,  goodwill is allocated to the cash generating units  on  which  it
     arose.  Any impairment is recognised immediately in the consolidated income
     statement and is not subsequently reversed.
     
     The  Group  has  elected  to  take  the  exemption  not  to  apply  IFRS  3
     retrospectively to business combinations occurring prior  to  the  date  of
     transition to IFRS.  Under IFRS 3 any goodwill arising on such acquisitions
     is not amortised, but is subject to impairment reviews.
     
     Revenue recognition:
     Revenue  is recognised to the extent that it is probable that the  economic
     benefits  will flow to the Group and the revenue can be reliably  measured.
     Revenue  consists  of  the  fair  value (excluding  VAT)  of  consideration
     received for goods and services supplied to third parties.
     
     Revenue  from  the sale of software product licences is recognised  at  the
     time  the  software licence is granted. Revenue relating  to  hardware  and
     software  support is recognised proportionally over the period to which  it
     relates.  Revenue  from the sale of other products is recognised  when  the
     Group  has  delivered  the products and there is no unfulfilled  obligation
     that could affect the customer's acceptance of the products.
     
     Research and development:
     All  research  expenditure  is written off in  the  year  in  which  it  is
     incurred. Unless certain conditions are met, all development expenditure is
     also written off in the year in which it is incurred.
     
     The  Group incurs development costs that are design costs relating  to  the
     production  of new or substantially improved devices and products  for  the
     Groups   `PowaCycle'  and  `Infineum'  ranges  of  electric  bicycles   and
     development  costs  that relate to the production of new  or  substantially
     improved application software products for the legal profession.
     
     Development costs are capitalised only if the following conditions are met:
     A  new  or  substantially improved asset is created  that  can  be  clearly
     identified;  it  is  probable that the asset created will  generate  future
     economic  benefits and the development cost of the asset  can  be  measured
     reliably.  If all these conditions are met then the associated  development
     costs  are amortised on a straight line basis over the useful life  of  the
     asset, which is estimated to be 3 years.
     
     Segment reporting:
     A business segment is a group of assets and operations engaged in providing
     products  or  services  that  are subject to risks  and  returns  that  are
     different from those of other business segments and whose operating results
     are reviewed on a regular basis by the Group's board and for which discrete
     financial  information is available. A geographical segment is  engaged  in
     providing  products  or services within a particular  economic  environment
     that  is  subject  to risks and returns that are different  from  those  of
     segments operating in other economic environments.
     
     Property, plant and equipment:
     Property,  plant  and  equipment  is carried  at  cost  or  valuation  less
     accumulated  depreciation  and any recognised  impairment  in  value.  Cost
     comprises the aggregate amount paid to acquire the asset and includes costs
     directly attributable to making the asset capable of operating as intended.
     
     All land and buildings are included at valuation. Valuations are kept up-to-
     date through periodic valuations carried out by external valuers.
     
     Depreciation   is   provided  evenly  on  the  cost  (or  valuation   where
     appropriate) of the assets, to write them down to their estimated  residual
     values  over  their expected useful lives. No depreciation is  provided  on
     freehold land. The principal annual rates used for other assets are:
     
     Freehold buildings       - 25 to 50 years
     Office equipment         - 5 years
     Motor vans               - 4 years
     Computer equipment       - 3 years
     
     The  assets' residual values, useful lives and methods of depreciation  are
     reviewed,  and  adjusted  if appropriate on an annual  basis.  An  item  of
     property,  plant  and equipment is derecognised upon disposal  or  when  no
     future economic benefits are expected from its use or disposal. Any gain or
     loss  arising  on derecognition of the asset (calculated as the  difference
     between the net disposal proceeds and the carrying amount of the asset)  is
     included   in  the  income  statement  in  the  year  that  the  asset   is
     derecognised.
    
     
     Impairment of assets:
     At  each balance sheet date, the Group reviews the carrying amounts of  its
     property,  plant  and equipment and intangible assets to determine  whether
     there is any indication that these assets have suffered an impairment loss.
     If  any such indication exists, the recoverable amount of the asset,  which
     is the higher of its fair value less costs to sell and its value in use, is
     estimated  in order to determine the extent of the impairment  loss.  Where
     the  asset  does  not generate cash flows that are independent  from  other
     assets,  the  Group estimates the recoverable amount of the cash-generating
     unit to which the asset belongs.
     
     An  impairment charge is recognised in the income statement in the year  in
     which it occurs. When an impairment loss, other than an impairment loss  on
     goodwill,  subsequently reverses due to a change in its original  estimate,
     the  carrying amount of the asset is increased to the revised  estimate  of
     its  recoverable  amount. The increased amount cannot exceed  the  carrying
     amount  that  would  have  been determined, net  of  depreciation,  had  no
     impairment loss been recognised for the asset in prior years.
     
     Inventories:
     Inventories are valued at the lower of cost and net realisable value.  Cost
     of  raw  materials, consumables and goods purchased for resale means actual
     purchase  price,  including transport and handling and is determined  using
     the  FIFO  method. Net realisable value means estimated net  selling  price
     less estimated costs of disposal.
     
     Trade and other receivables:
     Trade receivables do not carry any interest and are recognised and carried
     at  the  lower  of  their original invoiced value and recoverable  amount.
     Provision  against  trade  receivables is made  when  there  is  objective
     evidence that the Group will not be able to collect all amounts due to  it
     in accordance with the original terms of those receivables.  The amount of
     the  write-down  is  determined  as the  difference  between  the  asset's
     carrying amount and the present value of estimated future cash flows.
     
     Cash and cash equivalents:
     Cash and cash equivalents includes cash in hand, deposits held at call with
     banks,  other short-term highly liquid investments with original maturities
     of  three  months or less, and bank overdrafts. Bank overdrafts  are  shown
     within financial liabilities in current liabilities on the balance sheet.
     
     Trade and other payables:
     Trade  payables are not interest bearing and are stated at their fair value
     and  then  subsequently  measured at amortised  cost  using  the  effective
     interest method.
     
     Provisions:
     Provisions  are  recognised when there is a present legal  or  constructive
     obligation  as  a result of past events, for which it is probable  that  an
     outflow of economic benefit will be required to settle the obligation,  and
     where the amount of the obligation can be reliably measured.
     
     Foreign currencies:
     The Group does not carry investments, assets or liabilities denominated  in
     foreign  currencies or hold derivative instruments. Transactions in foreign
     currencies  are  dealt  with on the Group's behalf  by  Akhter  Group  plc.
     Therefore, any transactions of the Group in foreign currencies are  settled
     by Akhter Group plc and are converted to pounds sterling at pre-agreed spot
     rates for reimbursement by the Group.
     
     Income taxes:
     Current  income  tax  assets and liabilities are  measured  at  the  amount
     expected to be recovered or paid to the taxation authorities, based on  tax
     rates  and  laws that are enacted or substantively enacted by  the  balance
     sheet date.
     
     Deferred income tax is recognised using the balance sheet liability method,
     providing  for  temporary  differences  between  the  tax  bases  and   the
     accounting  bases  of  assets  and  liabilities.  Deferred  income  tax  is
     calculated  on an undiscounted basis at the tax rates that are expected  to
     apply in the period when the liability is settled or the asset is realised,
     based on tax rates and laws enacted or substantively enacted at the balance
     sheet date.
     
     Deferred   income  tax  liabilities  are  recognised  for   all   temporary
     differences,  except  where  the deferred income  tax  liability  from  the
     initial  recognition  of  goodwill  or  of  an  asset  or  liability  in  a
     transaction  that  is not a business combination and at  the  time  of  the
     transaction,  affects neither the accounting profit nor taxable  profit  or
     loss.
     
     Deferred income tax is charged or credited to the income statement,  except
     when  it relates to items charged or credited directly to equity, in  which
     case  the  deferred tax is also dealt with in equity. Deferred  income  tax
     assets  and liabilities are offset against each other only when  the  Group
     has a legally enforceable right to do so.
     
     Deferred  income tax assets are recognised only to the extent  that  it  is
     probable  that future taxable profits will be available against  which  the
     deductible temporary differences can be utilised.
     
     Pensions:
     The  Group does not operate any pension schemes, but does contribute to the
     personal  pension plans of certain staff. The contributions are charged  as
     an  expense as they fall due. Any contributions unpaid at the balance sheet
     date  are  included  as an accrual at that date. The Group  has  no  future
     payment obligations once the contributions have been paid.
     
     Leased assets - Group as lessee:
     Leases  are  classified  as finance leases when  the  terms  of  the  lease
     transfer substantially all the risks and rewards of ownership to the Group.
     All other leases are classified as operating leases.
     
     Assets leased under operating leases are not recorded on the balance sheet.
     Rentals  payable  are  charged  direct  to  the  income  statement.   Lease
     incentives,  for example, up-front cash payments or rent-free periods,  are
     capitalised and spread over the period of the lease term.  Payments made to
     acquire  operating  leases  are  treated  as  prepaid  lease  expenses  and
     amortised over the life of the lease.
     
     Leased assets - Group as lessor:
     Assets  leased  out under operating leases are included in property,  plant
     and  equipment  and  depreciated over their useful  lives.  Rental  income,
     including the effect of lease incentives, is recognised on a straight  line
     basis over the lease term.
     
     Use of assumptions and estimates:
     The  Group  makes  judgements, estimates and assumptions  that  affect  the
     application  of  policies and reported amounts of assets  and  liabilities,
     income  and  expenses. The resulting accounting estimates calculated  using
     these  judgements  and assumptions will, by definition,  seldom  equal  the
     related  actual  results  but  are  based  on  historical  experience   and
     expectations of future events. The estimates and underlying assumptions are
     reviewed  on  an  ongoing  basis. Revisions  to  accounting  estimates  are
     recognised  in the period in which the estimate is revised if the  revision
     effects  only that period, or in the period of revision and future  periods
     if the revision affects both current and future periods.
     
     The estimates and assumptions that have a significant effect on the
     amounts recognised in the financial statements are:

      *    establishing depreciation and amortisation periods for the Group;
      *    estimates in relation to future cash flows and discount rates utilised in
           impairment testing;
      *    whether development costs meet the capitalisation criteria in IAS 38;
      *    the recognition and quantification of provisions under IAS 37;
      *    changes in estimates under IAS 8;
      *    fair-values in share-based payments under IFRS 2;
      *    estimates of net realisable values of inventories under IAS 2; and
      *    management intentions for realisation of tax assets and liabilities under
           IAS 12.
     
     Standards issued by the International Accounting Standards Board (IASB) not
     yet effective for the current year and not adopted by the Group:
     The  following standards and interpretations have been issued by the  IASB.
     They  become  effective  after the current year and  have  not  been  early
     adopted by the Group and Company:
     
                                                             To be
                                                        adopted by
                                                         the Group
     International Financial Reporting       Effective         and
     Standards (IFRS)                             date     Company
                                                            during
                                                             years
                                                        commencing
                                                                
     IFRS 2 Amendment - Share-based Payment  01.01.2009 01.01.2009
            Vesting Conditions and        
            Cancellations

     IFRS 8 Operating Segments               01.01.2009 01.01.2009
                                                 
     IFRS 3 Business  Combinations (revised  01.01.2009 01.01.2010
            2008)                                 
 
     IAS 1  Presentation of Financial        01.01.2009 01.01.2009
            Statements (revised 2007)  
            
     IAS 23 Amendment - Borrowing Costs      01.01.2009 01.01.2009
                                                 
     IAS 27 Consolidated and Separate        01.01.2009 01.01.2010
            Financial Statements (revised        
            2008)

     IAS 32 Amendment  - Puttable Financial  01.01.2009 01.01.2009
            Instruments   and   Obligations        
            Arising on Liquidation
                                                                
     International Financial Reporting Interpretations Committee (IFRIC)                    
     
                                                                
     IFRIC 11 IFRS 2 - Group and Treasury   01.03.2007 01.01.2008
              Share Transactions                     

     IFRIC 12 Service Concession Arrangements01.01.2008 01.01.2008                                       

     IFRIC 13 Customer Loyalty Programmes    01.07.2008 01.01.2009
                                              

     IFRIC  IAS 19 - The Limit on a Defined  01.01.2008 01.01.2008
     14     Benefit  Asset, Minimum Funding        
            Requirements and their
            Interaction
     
     The  impact  on  the  Group's and Company's financial statements  from  the
     adoption of these new financial reporting standards is not expected  to  be
     material.
     
     

3    SEGMENTAL REPORTING

     The  Group operates wholly within the United Kingdom and therefore  has  no
     separate geographical segments of operation.
     
     At  31  December  2007, the Group is organised into two principal  business
     segments:
     
     -  IT  and related services (comprising legal and publishing application
        software)
     -  Other products (comprising electric bicycles, energy saving lamps and
        educational electronic kits)

     
     The segmental results for the year ended 31 December 2007 are as follows:

                                 IT and   Other             
                                related  products  Unallocated  Group
                               services          
                                   £000      £000         £000   £000
                                                          
     Revenue                        701       863           -   1,564
                                                          
     Operating profit               148        85           -     233
     Finance income                                                43
                                                          
                                                          
     Profit before                                                276
     taxation
                                                          
     Depreciation                    4          3          5       12
     Amortisation                    -          5          -       5


     The segment results for the year ended 31 December 2006 are as follows:

                                 IT and   Other             
                                related  products Unallocated  Group
                               services     
                                   £000     £000         £000   £000
                                                          
     Revenue                        778      620            -   1,398
                                                          
     Operating profit               126        5           556    687
     Finance costs - net                                         (139)
                                                          
     Profit before                                                548
     taxation
                                                          
     Depreciation                   3          4           89      96
     Amortisation                   -          3            -       3
     
     
     The  unallocated  operating  profit in 2006  of  £556,000  relates  to  the
     activities of the Company and includes rent receivable of £180,000 from the
     freehold investment property in Bradford and the profit of £462,000 on  the
     sale  of  this  property  in September 2006. Since  the  disposal  of  this
     property, the Company has acted solely as a holding company recharging  its
     administration costs to its trading subsidiaries on an equitable basis.
     
     The  assets and liabilities of the Group cannot be allocated to  the  above
     segments.  Entity balance sheets are not split into segments  for  internal
     reporting purposes.
     
     

4    FINANCE INCOME AND COSTS
                                            2007      2006
                                            £000      £000
     Interest expense:                                
      - Interest payable on bank loans and    -         84
        overdrafts
      - Interest payable on other loans       -         35
     (  Akhter Group plc)
      - Interest payable on unsecured 8%      -         31
        loan notes
                                                      
                                                      
     Finance costs                            -         150
                                                      
     Finance income:                                  
      - Bank interest receivable             (43)       (11)
                                                      
                                                      
     Net finance (income)/ costs             (43)       139
                                                      
                                                      


5    OPERATING PROFIT
                                            2007      2006
                                            £000      £000
     Operating profit is stated after                  
     charging:
                                                      
     Depreciation and other amounts written  12        96
     off property, plant and equipment
     Amortisation of intangible               5         2
     development costs
     Operating leases - rent of buildings    49        34
                                                      
                                                      
                                                      



6    AUDITOR REMUNERATION
     
     Services provided by the Company's auditor and its associates
     
     During  the  year  the  Group  obtained the  following  services  from  the
     Company's auditor and its associates:
     
     
                                            2007      2006
                                            £000      £000
     Group                                             
                                                      
     Fees payable to the Company's auditor             
     for the audit of the Company and         11        7
     consolidated financial statements
     Fees payable to the Company's auditor            
     and its associates for other
     services:
   - The audit of Company's                   7         7
     subsidiaries pursuant to legislation
                                                      
                                                      
                                             18        14
                                                      
                                                      
                                                      



7    OTHER OPERATING INCOME
                                            2007      2006
                                            £000      £000
                                                      
     Rent receivable from freehold          -         180
     property
     Royalty receivable from sale of        4         4
     subsidiary
                                                      
                                                      
                                            4         184
                                                      

8    DISPOSAL OF FREEHOLD PROPERTY
                                            2007      2006
                                            £000      £000
                                                      
     Valuation                              -         3,900
     Accumulated depreciation               -         (199)
                                                      
                                                      
     Net book value                         -         3,701
     Costs of disposal                      -         37
     Profit on disposal                     -         462
                                                      
                                                      
     Cash consideration                     -         4,200
                                                      
                                                      
                                                      
    
     On  29  September  2006  the Company completed the  sale  of  its  freehold
     investment property in Bradford to an unconnected third party. The sale did
     not give rise to a charge to corporation tax. Therefore, the balance on the
     revaluation  reserve  was  realised and  transferred  to  profit  and  loss
     account.
    

9    EMPLOYEES
                                            2007      2006
                                            £000      £000
     Employees costs including executive              
     directors during the year amounted
     to:
     Wages and salaries                     461       499
     Social security costs                   45        47
     Other pension costs                      3         3
                                                      
                                            509       549
                                                      

                                                      
                                            Number of employees
                                            2007       2006
     The average number of persons                    
     employed during the year
     including executive directors
     analysed by category was made up as
     follows:

     Production                               2         2
     Sales and marketing                      2         4
     Product development and support          8         8
     Administration                           9         10
                                                      
                                                      
                                              21        24
                                                      
                                                      
                                                      
                                                      
     The Company has no employees and no              
     staff costs.
                                                      
                                            2007      2006
                                            £000      £000
     The total remuneration of Directors              
     was as follows:
     Fees of non-executives                   21        24
     Remuneration as executives (including    -         -
     benefits in kind)
     Pension contributions                    -         -
                                                      
                                              21        24
                                                      
                                                      
                                                      
     
    No  remuneration is paid directly by the Group for the services of  the  two
    Executive Directors. However, a charge to the Company from Akhter Group  plc
    of  £56,000  (2006: £50,000) and Cognito Software Limited of  £9,000  (2006:
    nil)  for  executive  management services,  disclosed  in  Note  24  of  the
    financial statements, is for the services of the Company's finance  director
    and  Akhter's  marketing director. There is currently no  pension  provision
    for any of the directors and therefore no pension is accrued to them.
     
     Details  of  Directors'  interests in the  share  capital  of  the  Company
     together  with further details of the Directors' remuneration are contained
     in the Remuneration Report on pages 12 to 13.
   
   

10   TAXATION ON PROFIT
                                                      
     (a) Analysis of charge in the year     2007      2006
                                            £000      £000
     Current taxation                                 
     UK corporation tax on profits for the    29        17
     year
     Adjustments in respect of previous      (17)      -
     periods
                                                      
                                                      
     Total current taxation                   12        17
                                                      
     Deferred taxation                                
     Origination and reversal of temporary    (1)       16
     differences (note 19)
                                                      
                                                      
     Taxation expense                         11        33
                                                      
                                                      
                                                      
     (b) Factors affecting charge in the              
     year
                                                      
     Profit on ordinary activities before    276       548
     taxation
                                                      
                                                      
                                                      
     Tax at UK corporation tax rate 20%      55        104
     (2006: 19%)
                                                      
     Effect of:                                       
      Profit on sale of property not         -         (88)
     taxable
      Expenditure not tax deductible         -         17
      Utilisation of tax losses not         (27)        -
     recognised for deferred taxation
      Adjustments in respect of previous    (17)        -
     periods
                                                      
     Taxation expense                       11         33
                                                      
                                                      
                                                      
     The corporation tax rate has been changed from the rate of 19% applied in
     the prior year to reflect the actual rate applicable to the current year of
     20%.
     
     The  Group has tax losses to carry forward of £5,760,000 (2006: £5,978,000)
     which may be available for offset against future trading profits.
     


11   EARNINGS PER SHARE
                                           2007        2006
                                           Number      Number
                                                      
     Weighted average ordinary shares in   204,747,964 204,747,964
     issue during the year                          
     Potentially dilutive share options    -           -
     under the Group's share option
     schemes
                                                      
     Weighted average ordinary shares for  204,747,964 204,747,964
     diluted earnings per share                      
                                                      
                                           £'s        £'s
     Earnings/ (loss) attributable to                 
     shareholders:
      Continuing operations                265,000    515,000
      Discontinued operations              -          -
     
     The  calculation of earnings per ordinary share is based on the profit  for
     the  period  attributable to equity holders of the parent and the  weighted
     average number of ordinary shares in issue during the year.


12a  PROPERTY, PLANT AND EQUIPMENT



     At 31 December 2007
                           Freehold    Office and            
                           land and      computer            
                          buildings     equipment            
                                              and     Total
                                       motor vans
     GROUP                    £000           £000      £000
                                                  
     Cost or valuation                                     
     At beginning of year      120             30       150
     Additions                   -              5         5
                                                  
     At end of year            120             35       155
                                                  
     Depreciation                                 
     At beginning of year        8             15         23
     Charge for year             5              7         12

     At end of year             13             22         35
                                                  
     Net book value                               
     At end of year            107             13         120
                                                  
     At beginning of year      112             15         127
                                                  

     At 31 December 2006
                           Freehold    Office and            
                           land and      computer            
                          buildings     equipment            
                                              and   Total
                                       motor vans
     GROUP                     £000          £000    £000
                                                  
     Cost or                                      
     valuation
     At beginning of year     4,020           118    4,138
     Additions                    -            17       17
     Disposals               (3,900)         (105)  (4,005)
                                                  
     At end of year             120            30      150
                                                  
                                                  
                                                  
     Depreciation                                 
     At beginning of year      118            113      231
     Charge for year            89              7       96
     Disposals                (199)          (105)    (304)
                                                  
     At end of year              8             15       23
                                                  
     Net book value                               
     At end of year            112             15      127
                                                  
                                                  
                                                  
     At beginning of year    3,902              5     3,907
  
    
12a  PROPERTY, PLANT AND EQUIPMENT continued


                               
                       At 31 December At 31 December 
                                 2007           2006
                                                 
                        Freehold land  Freehold land
                        and buildings  and buildings
     COMPANY                     £000           £000
                                      
     Valuation                       
     At beginning of year        120           4,020
     Disposals                     -          (3,900)
                                     
     At end of year              120             120
                                     
     Depreciation                    
     At beginning of year          8             118
     Charge for year               5              89
     Disposals                     -            (199)
                                     
     At end of year                13              8

     Net book value                  
     At end of year                107           112
                                     
                                     
                                     
     At beginning of year          112          3,902


     
     The  aggregate amounts at which freehold land and buildings would have been
     shown  in  the  financial  statements had they not  been  revalued  are  as
     follows:

     GROUP AND         2007          2006
     COMPANY
                       £000          £000
                                     
     Cost              120           120
     Depreciation      (13)          (8)
                                     
                                     
                       107           112
                                     
                                     
                                     
     Freehold  land and buildings include depreciable assets of £108,000  (2006:
     £108,000).
     
     The  freehold  land  and  buildings owned by the  Company  and  located  in
     Crediton, Devon was revalued on the basis of market value and rental value.
     The  valuation report, dated 20 September 2004, quotes a market value  that
     agrees to the original cost of £120,000. The directors do not consider this
     valuation  to be materially different as at 31 December 2007 and  therefore
     that the carrying value is not materially different from the fair value.
     


12b  INTANGIBLE ASSETS
                              At 31         At 31
                           December      December
                               2007          2006
                                                 
     GROUP              Development   Development
                              costs         costs
                               £000          £000
     Cost                            
     At beginning of year        10             -
     Additions                    4            10
                                                     
     At end of year              14            10
                                      
     Amortisation                    
     At beginning of year         3             -
     Charge for year              5             3
                                      
     At end of year               8             3
                                     
     Net book value                  
     At end of year               6             7
                                          
     At beginning of year         7             -
     
                                     
13   INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
                                   
                              At 31
                           December
                               2007
     COMPANY           
                               £000
     Cost              
     At beginning of year     6,066
     Adjustment *            (3,538)
                                
     At end of year           2,528
                      
     Provision         
     At beginning and         5,553
     end of year
     Adjustment *            (3,538)
                       
                      
     At end of year           2,015
                      
                      
     Net book value    
     At end of year             513
                       

     At beginning of year       513
                       
                      
                      
     
     * The adjustment is in respect of disposals made in prior periods.
     
     
     The  principal subsidiary undertakings are all wholly owned by the Company,
     are consolidated and include the following:

     Subsidiary              Principal activity
     undertakings

     UTN  Solutions (North)  Merchandising of electric  bicycles
     Limited                 and other products

     Integrated  Publishing  Support of computer  application
     Systems Limited         software

     Cognito Software        Marketing and support of  computer
     Limited                 application software
                             
     All  Companies were incorporated in England and  Wales  and
     trade in the UK.

14   INVENTORY
                               Group             Company
                          2007       2006      2007      2006
                          £000       £000      £000      £000
                                                         
     Finished goods        257        208          -         -
                                                         
                                                        
                           257        208          -         -
                                                         


15   TRADE AND OTHER RECEIVABLES


                               Group              Company
                          2007       2006      2007     2006
                          £000       £000      £000     £000
                                                        
    Trade receivables     162        134          -        -
    Less: provision for     -          -          -        -
     impairment
                                                        
                                                       
    Trade receivables -   162        134          -        -
     net 
    Owed by related        23         -           -        -
     party (see note 24)
    Other receivables      15         15         15       15
    Tax recoverable         7         16          7       12
    Prepayments and        77         69          -       16
     accrued income
                                                        
                          284        234         22       43
                                                        
                                                       
                                                       
     
     The  directors do not consider there to be any material difference  between
     the fair values of trade and other receivables and the amounts shown above.
     The  trade  and  other receivables of the Company and  the  Group  are  all
     denominated  in  pounds sterling. The Group's main credit risk  relates  to
     trade  receivables.  No  collateral  is  held  as  security  against  these
     receivables and the carrying value approximates to the fair value.
     
     Trade  receivables  that  are  less than three  months  past  due  are  not
     considered impaired.  As of 31 December 2007, trade receivables  of  £2,000
     (2006:  nil) were past due but not impaired.  These relate to a  number  of
     independent  customers for whom there is no recent history of default.  The
     ageing analysis of these trade receivables is as follows:
     
                                Group              Company
                          2007       2006      2007     2006
                          £000       £000      £000     £000
                                                        
    Up to 3 months           2          -         -        -
    3 to 6 months            -          -         -        -
                                                        
                             2          -         -        -
                                                        
                                                       
                                                       
     As  of  31  December  2007, trade receivables of £3,000  (2006:  nil)  were
     impaired,  but not provided for as the directors considered the amounts  to
     be immaterial. The ageing of these receivables is as follows:
     
                               Group              Company
                          2007       2006      2007     2006
                          £000       £000      £000     £000
                                                        
    Up to 3 months        -             -         -        -
    3 to 6 months         3             -         -        -
                                                       
                          3             -         -        -
                                                        
                                                       
     
16   CASH AND CASH EQUIVALENTS
                               Group              Company
                          2007       2006      2007     2006
                          £000       £000      £000     £000
                                                        
     Cash at bank and on    76         832       62       827
     hand
     Short-term bank       950          -       950        -
     deposits                                                       
                          1,026      832       1,012    827
                                                        
       
     

17   TRADE AND OTHER PAYABLES
                                Group              Company
                           2007      2006      2007     2006
                           £000      £000      £000     £000
                                                        
     Trade payables         50        71        6        12
     Amounts due to Group   -         -         927      798
     undertakings
     Owed to related        47        68        28       50
     party (see note 24)

                            97        139       961      860
                                                        
                                                       
                                                       

      The directors consider that the carrying value of trade and other payables
approximates to their fair value.


18   FINANCIAL INSTRUMENTS

     The   Group's   principal  financial  instruments,  from  which   financial
     instrument   risk  arises,  comprise  cash  and  cash  equivalents,   trade
     receivables and trade payables that arise directly from its operations. The
     main  financial  instrument  risks  arising  from,  and  impacted  by,  the
     financial  assets and liabilities of the Group are credit risk,  cash  flow
     interest  rate  risk  and  liquidity risk. The  Board  reviews  and  agrees
     policies for managing these risks and they are summarised below.
     
     The  Group does not hold any derivative financial instruments. The  Group's
     financial assets and liabilities are measured at amortised cost.
     
     The  principal financial assets of the Group are trade receivables and cash
     at  bank.  Cash  is held in Sterling only in either current account  or  on
     short-term deposit. The amounts being as follows:
     
     Current financial assets             2007             2006
                                          £000             £000
                                                           
     Trade receivables                    165              134
     Cash and cash equivalents            1,026            832
                                                           
                                                          
                                          1,191            966
                                                           
                                                          
     
     Trade receivables arise directly from the Group's operations and do not
     carry any interest. All cash balances attract interest at floating rates
     that vary with UK bank base rates. The Group does not have any undrawn
     borrowing facilities.
     
     The  principal  financial liabilities of the Group are trade  payable,  the
     amounts being as follows:
     
     Current financial liabilities        2007             2006
                                          £000             £000
                                                           
     Trade payables                       50               71
                                                           
                                                          
     
     Trade  payables  arise  directly from the Group's operations  and  are  not
     interest bearing.
     
     
     Credit risk
     The Group's credit risk is primarily attributable to its trade receivables.
     Exposures  to  credit  risk  are minimised by  employing  effective  credit
     management policies and procedures. Only customers known to the  Group  are
     granted  credit  terms.  Annual  fees for  software  licences  and  support
     agreements  are  payable in advance and require a uniquely numbered  'valid
     licence key' to operate.
     
     Cash flow interest rate risk
    The  Group  is cash positive and places its balances on short-term  deposits
    with  Lloyds TSB Bank plc. Variable rate interest receivable is based on  UK
    bank  base  rates  and therefore changes in interest rates will  affect  the
    return  on  cash  balances.  No interest is received on any of  the  Group's
    other  assets  or  receivables.  The Group does not  have  any  loans,  bank
    borrowings or other interest bearing payables.
    
     Liquidity risk
    It  is the Group's policy to maintain sufficient cash resources to meet  its
    short-term liabilities
    
     Foreign currency risk
     The  Group is not exposed to transaction foreign currency exchange risk  in
     respect  of purchases from suppliers as this process is dealt with  on  the
     Group's  behalf  by  Akhter Group plc. Therefore, any transactions  of  the
     Group  in  foreign  currencies are settled by  Akhter  Group  plc  and  are
     converted to pounds sterling at pre-agreed spot rates for reimbursement  by
     the  Group.  Therefore, the Group only holds any cash  balances  in  pounds
     sterling.

     Price risk
     The  Group does not hold any listed security investments and therefore  has
     no exposure to securities price risk.
     
     Capital risk management
     The Group considers its capital to comprise its ordinary and deferred share
     capital, share premium account and accumulated retained losses.
     
     The  Group's objectives when managing capital are to safeguard the  Group's
     ability  to  continue  as a going concern in order to provide  returns  for
     shareholders and benefits for other stakeholders and to maintain an optimal
     capital  structure to reduce the cost of capital. In order to  maintain  or
     adjust  the capital structure, the Group may adjust the amount of dividends
     paid  to shareholders, return capital to shareholders, issue new shares  or
     sell assets to reduce debt.
     
     The  Group considers equity funding as the most appropriate form of capital
     for  the Group, but keeps this under review taking into account the  risks,
     costs and benefits to equity shareholders of introducing debt.
     

19   DEFERRED TAXATION
                                                Group    Company
                                                £'000     £'000
     Deferred tax asset at 1 January 2007           4        -
     Credited to income statement in the            1        -
     year
                                                       
     Deferred tax asset at 31 December 2007         5        -
                                                       
                                                       
                                                       
     GROUP                    Provided        Not provided
                          2007      2006      2007     2006
                          £000      £000      £000     £000
                                                       
     Accelerated capital  (5)       (4)       -        -
     allowances
     Losses                -         -         (1,152)  (1,136)
                                                       
                          (5)       (4)        (1,152)  (1,136)
                                                       
                                                       
                                                       
     COMPANY                  Provided     Not provided
                           2007      2006      2007     2006
                           £000      £000      £000     £000
                                                       
     Losses                   -         -      (974)    (951)
                                                       
                              -         -      (974)    (951)
                                                       
                                                       
                                                       
     
     The  Group  has  tax  losses of £5,760,000 as at 31  December  2007  (2006:
     £5,978,000)  which have not been recognised for deferred  tax  purposes  as
     these  may only be set against certain profits arising in future accounting
     periods.



20   CALLED UP SHARE CAPITAL
                                           2007      2006
                                           £000      £000
Authorised                                           
449,302,276 ordinary shares of 1p each     4,493     4,493
137,674,431 deferred shares of 4p each     5,507     5,507
                                                     
                                                     
                                           10,000    10,000
                                                     
                                                     
                                                     
Allotted, called up and fully paid up                
204,747,964 ordinary shares of 1p each     2,047     2,047
137,674,431 deferred shares of 4p each     5,507     5,507
                                                     
                                                     
                                           7,554     7,554
                                                     
                                                     
                                                     
     
     The  deferred shares have no right to dividends nor do the holders  thereof
     have  the  right to receive notice of or to attend or vote at  any  General
     Meeting  of  the Company.  On a return of capital on a winding  up  of  the
     Company  the  holders  of the deferred shares shall  only  be  entitled  to
     receive the amount paid up on such shares after the holders of the ordinary
     shares have received the sum of £1,000,000 for each ordinary share held  by
     them.
     
     Ultima Networks plc 2004 Share Option Scheme
     This  scheme  was approved by the AGM held on 28 May 2004.  No  options  to
     subscribe  for  ordinary  shares of 1p each have been  granted  under  this
     scheme.
     
     Executive Share Option Schemes
     Options  to  subscribe for ordinary shares of 1p each  are  exercisable  in
     accordance with the 1994 Microvitec Inland Revenue Approved Executive Share
     Option  Scheme.  During the year ended 31 December  2007  no  options  were
     granted,  no  options were exercised and no options lapsed. At 31  December
     2007 options were outstanding on 100,000 (2006: 100,000) ordinary shares as
     follows:

     Dates exercisable                   No. of    Price
                                          shares
     16 April 2003 - 15 April 2010       100,000    7.5p
     



21   CAPITAL COMMITMENTS
                                 Group              Company
                            2007      2006      2007      2006
                            £000      £000      £000      £000
                                                          
     Contracted capital     -         -         -         -
     expenditure
                                                          
                                                         
                                                         
     
     

22   FUTURE OPERATING LEASE COMMITMENTS
 
    There  are  no operating lease commitments at the balance sheet date  (2006:
     nil).



23   PENSIONS

     During  the  year  the  Group contributed to the personal  pension  schemes
     (defined contribution) of certain employees. No contributions were paid  in
     respect  of the Directors. No amounts were accrued or prepaid at  the  year
     end (2006: nil).



24   RELATED PARTY TRANSACTIONS
     
     The  Chairman,  Prof.  H.A. Mughal, is the majority shareholder  of  Akhter
     Group  plc.  Akhter  Group plc and related parties hold 100,075,176  shares
     representing 48.9% of the Company's issued ordinary share capital.
     
     During  the  year the Group made purchases from Akhter Group plc  totalling
     £164,000 (2006: £150,000) and, of this amount, £47,000 (2006: £68,000)  was
     payable  to Akhter Group plc as at 31 December 2007. The purchases  can  be
     analysed as follows:
     
                        2007     2006     
     Group company      £000     £000     Description of
                                          purchases
                                           
     Ultima Networks    56       50       Executive management
                                          services ('EMS')
     UTN Solutions      74       67       Rent and carriage costs
     (North)
     Integrated         20       24       Rent
     Publishing
     Systems
     Cognito Software   14       9        Computer equipment and
                                          EMS
                                          
    Total               164      150      
                                          
                                          
                                 
     
     The  charge  to  the  Company of £56,000 (2006:  £50,000)  and  to  Cognito
     Software  of  £9,000  (2006:  nil)  from Akhter  Group  plc  for  executive
     management services, disclosed above, is for the services of the  Company's
     finance  director  and  Akhter's marketing  director  and  is  based  on  a
     proportion of their time.
     
     In  addition to the purchases detailed above, the Group is provided with  a
     number of staff services, other services and facilities by Akhter Group plc
     for  which a fee is not paid. These comprise accounting, treasury,  foreign
     exchange,    credit    control,   purchasing,    marketing,    warehousing,
     administration and office and computing facilities.
     
     As stated above the treasury function is performed on behalf of the Company
     by  Akhter Group plc and will always try to make the most beneficial use of
     available  cash  resources. During the year no monies were  loaned  by  the
     Company to Akhter Group plc (2006: £200,000) and no monies were borrowed by
     the Company from Akhter Group plc (2006: maximum £120,000).
     
     On  disposal of its freehold property in September 2006, the Company repaid
     its  term loan balance of £830,000, which was secured on the property,  and
     outstanding unsecured 8% loan notes of £517,000 to Akhter Group plc.
     
     The  Chairman, Prof. H.A. Mughal, owed the Company nil at 31 December  2007
     (2006:  £17,000)  in  respect of purchases made on an  arm's  length  basis
     during  the  year ended 31 December 2004. On 30 March 2007  this  debt  was
     settled by Akhter Computers plc.
     
     The Chairman's son, Mr W. Mughal, who is a shareholder of the Company, owed
     a  subsidiary company nil at 31 December 2007 (2006: £15,000) in respect of
     an  unsecured employee loan provided on an interest free basis. On 20 March
     2007 this debt was settled by Akhter Computers plc.
     
     
     During  the year the Group made sales to Akhter Group plc totalling £20,000
     (2006:  nil) and, of this amount, £23,000 (2006: nil) was payable by Akhter
     Group plc as at 31 December 2007. The sales can be analysed as follows:
     
                        2007     2006     
     Group company      £000     £000     Description of sales
                                           
     Integrated           20       -      IT staff and support
     Publishing                           services
     Systems
                                          
     Total                20       -        
                                          
                                          
                                 
     
     
     During  the year the Company recharged its administration expenses  to  all
     its subsidiaries based on their profits before tax as detailed below:
     
                        2007     2006     
     Group company      £000     £000     Description
                                           
     Ultima Networks    (192)    (157)    Group recharge
                                          (receivable)
     UTN Solutions        70        5     Group recharge payable
     (North)
     Integrated           13       32     Group recharge payable
     Publishing
     Systems
     Cognito Software    109      120     Group recharge payable
                                          
     Total                 -        -        
                                          
                                          
                                 
     
     Any  surplus  cash balances held by any of the subsidiaries are transferred
     to the Company where they are pooled and placed on short-term deposits with
     Lloyds TSB Bank to maximise interest receivable.
     
     

25   THE EFFECTS OF THE TRANSITION TO IFRS
     
     In  implementing  the  transition  to IFRS,  the  Group  has  followed  the
     requirements  of  IFRS  1  'First Time Adoption of International  Financial
     Reporting Standards', which in general requires IFRS accounting policies to
     be  applied fully retrospectively in deriving the opening balance sheet  at
     the  date  of transition. IFRS 1 contains certain mandatory exceptions  and
     some  optional  exemptions to this principle of retrospective  application.
     Where the Group has taken advantage of the exemptions they are noted below.
     
     It  should  be noted that reconciliations to previously presented financial
     statements are not required as there are no adjustments necessary to any of
     the  figures  in  these financial statements arising from the  adoption  of
     IFRS.
     
     Goodwill and Business Combinations (IFRS 3)
     The  Group  has  elected  to  take  the  exemption  not  to  apply  IFRS  3
     retrospectively to business combinations occurring prior  to  the  date  of
     transition  to IFRS. Under IFRS 3 any goodwill arising on such acquisitions
     is  not  amortised, but is subject to impairment reviews. However,  as  the
     Group had no goodwill recognised under UK GAAP at 1 January 2006 there  are
     no adjustments necessary.
     
     Intangible Assets - capitalisation of development costs (IAS 38)
     Under  UK  GAAP  all development expenditure was capitalised and  amortised
     over a period of three years in equal instalments since most of the benefit
     of  the  expenditure  was expected to fall into this period.  There  is  no
     change  to  this existing policy under IAS 38 required and therefore  there
     are no adjustments necessary.
     
     Income Taxes (IAS 12)
     IAS  12  looks at 'temporary differences' between tax and book  values  for
     deferred  tax whereas UK GAAP assesses 'permanent' and 'timing differences'
     reversing  in  future periods. However, as there is no impact arising  from
     this  on  either  the  income  statement or  balance  sheet  there  are  no
     adjustments necessary.
     
     

26   POST BALANCE SHEET EVENTS
     
     With  effect from 1 March 2008 the directors have transferred the trade  of
     Integrated  Publishing Systems Limited to UTN Solutions (North) Limited  to
     reduce administration costs.
     
     On  10  March 2008 the Company purchased the software intellectual property
     rights  to use, modify and sell a document production and management system
     for  sale to professional services firms on an exclusive basis. The  agreed
     purchase  consideration totals £50,000 comprising of an initial payment  of
     £30,000  and two further payments of £10,000 each, but based on the  number
     of sales of the system.