Annual Report and Accounts 2007/08

Chairman’s message

Dear Shareholder

Performance

Against a background of changes in the market last year, driven by both technology and the broader impact of economic uncertainty, the continuing strength and resilience of our Telecoms & Internet Services business has balanced revenue weakness which adversely affected our Integration & Managed Services business. The Board has addressed the performance of I&MS, and with a new management team now in place in this part of the business, is fully committed to delivering value for shareholders from all the Group’s businesses.

People

At the half year, we announced the appointment of two new Board members, Mr Paul Renucci, who is the Executive Director responsible for our Affiniti business, and Mr Graham Holden, a Non-Executive Director who is also the Chief Executive of Marshalls PLC. As Paul Renucci and Graham Holden were appointed after the last Annual General Meeting (AGM), they will be standing for re-election by shareholders at this year’s AGM in July.

At the same time, we announced that Sean Christie and Peter Halls would be retiring from the Board. Having served on the Board for eight and three years respectively, we thank them for their contribution and commitment to the development of the Group.

I would like to take this opportunity to thank all of our colleagues around the business who are instrumental in delivering these results through their drive and commitment.

Prospects

Our T&IS business remains resilient with strong margins and predictable cash flows which, as demonstrated by these results, will continue to support our capacity to return value to our shareholders through increased dividends.

In the I&MS business, where substantial investment has been made in skills and capabilities over the last three years, we are now making progress towards achieving improved performance in line with our medium term targets.

Dividend

Consistent with our commitment to deliver value, at the time of our interim results, the Board put in place a dividend policy that significantly raised payout levels to shareholders. On the back of the Board’s confidence in our long term future and the strong performance from our T&IS business, the Board will be proposing to shareholders at our AGM in July, a 44.6 per cent increase in the final dividend to 1.88 pence per share.

We remain confident that the Group is well positioned for the future with current trading in line with expectations.

Michael Abrahams CBE DL

Chairman