TTP Communications plc - Second Half 2005/06 - Trading Update

CAMBRIDGE, UK 22 March 2006 - TTP Communications plc (LSE:TTC) today announces an update on contract negotiations and trading for the six months to 31st March 2006 in respect of its subsidiary TTPCom Limited ('TTPCom').

In announcing our interim results for the six months ending 30th September on November 2nd last year, we indicated that, with the successful outcome of the major contract which was under discussion, together with a modest increase in software royalties and the anticipated booking of new 3G contracts, the company would be operating close to breakeven in the 2H, before restructuring provisions. We are therefore updating shareholders on progress in relation to the major contract negotiations and trading during the 2H.

We have made considerable progress in advancing the negotiations on the major contract, but it is now clear that this agreement cannot be fully completed before March 31st. Although we are disappointed with this timing the Board is confident that this deal should complete in the first quarter of the next financial year.

Underlying sales revenues have increased in the 2H but progress in 3G continues to be slower than we would like and is likely to remain that way until handsets using our technology find their way into shops as planned mid way through this year. On AJAR, we continue to focus on the Tier 1 accounts.

As a consequence, TTPCom sales revenues for the 2H are expected to be approx £17m to £18m and the operating loss between £14m and £15m inclusive of bad debt provisions £3m, but before restructuring charges of approx £1m. Group cash balances are expected to be approx £4m to £5m reflecting a cash outflow in the 2H of £10m to £11m compared with the expected cash neutral position had the major contract completed as anticipated before March 31st.

In the light of the timing for completion of the major contract and the current trading environment, the Board is reviewing the strategic options available to ensure that TTPCom is able effectively to exploit market opportunities.

Looking to the future, we believe that our AJAR technology provides the company with a unique platform from which to achieve a market leading position in applications software for 2G and 3G feature and low cost phones. We expect volume deployment by our lead customers in the second half of next financial year. In Protocol Stacks and Silicon (our Modem technologies), we expect to see in the coming financial year the results of our re-alignment of the business to focus on a more broadly based approach to distribution. We remain confident that our position in both 2G and 3G and our technology portfolio will create significant value for shareholders going forward.