INTEGRATED RESEARCH LIMITED — Annual Report 2007

Aug 13, 2007

Integrated Research Limited FY2007 financial results

ABN: 76 003 588 449 August 2007

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2007 Full year results
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	30 June 2007 A$000’s	30 June 2006 A$000’s	% change
Licence fees	19,517	18,633	5%
Maintenance fees	15,856	15,467	3%
Other	1,004	423	137%
Total revenue	36,377	34,523	5%
R&D expenses	6,369	6,687	(5%)
Gross R&D spending	7,831	7,348	7%
SG&A expenses	23,026	20,279	14%
Interest Income	471	365	29%
PBT	7,453	7,922	(6%)
PAT	5,433	*6,975	(22%)
EPS (cents)	3.3	4.2
Dividends for the year (cents)	3.0	2.5

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Balance sheet
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Key balance sheet items

	30 June 2007 A$000’s	30 June 2006 A$000’s
Cash at bank	13,286	10,736
Receivables	11,301	13,615
Development cap.	11,365	9,567
Deferred Revenue	10,279	10,163
Net assets	24,513	23,208

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Gross Revenue (billings) by Segment
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	80% 4,343 7,807 IP Telephony By Geographic region: (1%) 26,065 25,816 NonStop (22%) 4,460 3,476 WUL 6% 34,868 37,099 Total ($A) By Product Line ($A): 6% 34,868 37,099 Total ($A) 36% 5,961 8,134 Asia Pacific ($A) (19%) 3,504 2,836 Europe (GBP) 13% 15,363 17,329 Americas ($US) % change 30 June 2006 $000’s 30 June 2007 $000’s

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Gross Revenue (billings) by Segment - USD
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	92% 3,230 6,196 IP Telephony By Product Type: 4% 19,502 20,273 NonStop (17%) 3,338 2,758 WUL 12% 26,070 29,227 Total By Product Line: 12% 26,070 29,227 Total 12% 12,172 13,610 Maintenance 12% 13,898 15,617 New Licence % change 30 June 2006 $US 000’s 30 June 2007 $US 000’s

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Review of operations
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• Regional sales:

• Europe down 19%, US up 13%, AsiaPac up 36%

• Improved consistency of IP telephony revenues

• 92% growth in real terms

• Improved channel reach

• Growth in repeat business

• Strong recurring revenue (Maintenance) growth:

• Maintenance renewals

• IPT maintenance customers

• Growth in AsiaPacific and US regions:

• Vodacom (South Africa) and Woolworths (Australia)

• USA grew NonStop 4% and IP telephony 112%

• Non Stop business remains healthy

• Focus on debtors yielded excellent results

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IP Telephony (VoIP)
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• Prognosis now managing approx. 1 million endpoints:

• Nearest 3[rd] party vendor is 425,000

• Further accelerate leadership position:

• Additional market coverage (Direct, Channel, OEM)

• More products increases addressable market

• Market continues to offer excellent growth opportunities

• Most customers placed repeat orders

• MSP market expanding

• Prognosis continues to demonstrate technical leadership

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Sales by region - FY 2003 – 2007
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Americas – US$ millions

UK/Europe – GBP millions

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Americas Europe
10.0 2.5
9.0
8.0 2.0
7.0
6.0 1.5
5.0
4.0 1.0
3.0
2.0 0.5
1.0
0.0 0.0
2003 2004 2005 2006 2007 2003 2004 2005 2006 2007
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Asia Pacific – US$ millions

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Asia Pacific
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2003 2004 2005 2006 2007
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10-year revenue history
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10-year revenue history – A$ millions

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Ten-year Revenue History - A$ Millions
$40.0
$35.0
Other Revenue
$30.0 Licence Fees
Maintenance
$25.0
$20.0
$15.0
$10.0
$5.0
$0.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
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10-year revenue history
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10-year revenue history – US$ millions

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35
30
25 Other Revenue
Licence Fees
Maintenance
20
15
10
5
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
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FY2003 affected by Iraq war

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Cashflow
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• Cashflow from Operating Activities was A$7.7m (2006: A$5.1m)

• Capex for 2007 was A$2.1m (2006: A$0.2m)

• A$1.8m on Sydney office fitout / relocation

• Focus on improving receivable days outstanding paying off

• DSO of 81 days (2006: 96 days)

• % greater than 120 days of 11% (2006: 13%)

• Low bad debt experience

• Blue chip customers

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R&D spending
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	30 June 2007 A$000’s	30 June 2006 A$000’s	% change
Gross spending	7,831	7,348	7%
Development – Cap.	5,454	4,657	17%
Capitalised %	70%	63%
Amortised	3,992	3,996	-
Net Expense	6,369	6,687	(5%)
% of revenue	18%	19%

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Income Statement – Normalised for tax
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	23.8% 22.4% Tax expense % - normalised 806 - FDT credit 1,893 1,667 Tax expense - normalised 140 - Belonging to prior year(s) 6,029 5,786 Profit after tax – normalised - (353) Belonging to prior year(s) Prior year adjustments : 947 2,020 Tax expense – per accounts 7,922 7,453 Profit before tax 30 June 2006 $000’s 30 June 2007 $000’s

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