Vocalis Group plc
Business update
Board changes
New contracts
New Sales Director

The Board of Vocalis Group plc ("Vocalis"), the international speech technology group, made the following statement today.

Current trading

In our trading statement of 31 January 2001, we stated that there were several potential sales contracts that remained outstanding and that if these orders were not received by 31 March 2001, the Company would report results below expectations. We are pleased to report that one of these orders has been secured which is a £500,000 order to supply Telenor Mobil, the mobile communications network provider in Norway, with further upgrades to its SPEECHtel platform. The remaining contracts are likely to be concluded in the following trading period.

In addition, there has been a slow down in demand for the Group's Internet products and services in the key US market. It is therefore expected that the contribution to overall revenues from this side of the business will be lower than anticipated.

Vocalis will therefore be reporting results materially below expectations when it announces its results for the year ended 31 March 2001.

Cash balances as at 21 March 2001 were £3.8m.

Review of operations

The Board has evaluated several strategic options to enhance the future performance of the Group and is implementing changes in both the structure and management of the Group.

Since the creation of the Internet services business, Vocalis has invested in the development and delivery of leading edge technology designed at enabling use of the Internet through speech. An element of this business has been the provision of SpeechMail and SpeecHTML both as a Vocalis managed service in the UK and US and a systems solution sale worldwide.

The Board has concluded that the provision of the business-to-consumer managed services are unlikely to generate the level of returns required to justify further investment in this area by the Company. Consequently, the Group will not pursue the further development of the managed services business. However, Vocalis will continue to offer SpeechMail and SpeecHTML as applications to be incorporated into the Company's range of Speech Recognition Systems.

The Group will therefore focus on the provision of its core technology, SpeechWare and the Speech solutions on which it is based. The Board is pleased to report that the major development work has been completed, with the products now being deployed in the field. Focus and investment will therefore be directed at sales and marketing. The Group expects significant growth in technology licences for SpeechWare in the coming financial year.

In addition, the Board is pleased to announce the appointment of a new sales director of Vocalis Limited, Ian Cockerill. Ian will take responsibility for world-wide sales and partnerships and will play a key role in business development and marketing. He has many years experience at senior level within the IT industry operating within complex multinational and technology led sales environments. Ian was most recently at SAP where he developed a new business model and 'go to market strategy' to enable SAP to operate successfully within the UK Public Sector.

Board changes

As part of the overall restructuring of the business, the Company will also be making changes to the Board to reflect its ambitions for the future. Vocalis is therefore pleased to announce the following non-executive appointments to the Board.

Colin Garrett was formerly Head of Plc advisory at PricewaterhouseCoopers in the Midlands region and a corporate finance director at Albert E Sharp. He has considerable experience of working with quoted and private technology companies. He is currently a non-executive Director of Cadcentre Group plc, Recognition Systems Group plc and of a number of private companies.

Stephen Lawrenson is currently the Managing Director of the Commercial Division and a Main Board Director of the Met Office, responsible for 2,200 people in 84 locations. Previously the Head of Commercial Development at Canon Research Centre Europe, Stephen was responsible for the development of the world's first speech controlled fax and Handy terminals, launched by Canon in Japan. Before joining Canon, Stephen was Head of Commercial Development Worldwide at News Datacom (now NDS Ltd), the technology arm of News Corporation. Stephen has previously held a number of non-executive interests.

Roy Cotterill has been on the Board of Vocalis since 1994 during which time he was Chairman until December 2000 and has provided valuable advice and direction throughout this time. After several years, Roy has decided to step down from the Board at the July AGM as part of his retirement plans in order to devote more time to his own personal and business interests. The Board would like to take this opportunity to thank Roy for his commitment to the Company whilst being Chairman at Vocalis.

Robert Hook, who has been a non-executive Director since 1993, will retire from the Board at the AGM in July 2001. He played a major role in the Group's development and transition to a public Company.

Michael Williams, who was appointed to the Board in December 1998, has decided to pursue other opportunities and has confirmed his intention to resign from the Board.

The Board would like to thank Robert and Michael for their contribution to the Group and wishes them every success for the future.

Outlook

Significant growth is predicted in the Speech Recognition Market. The Board believes that the move away from offering managed services is an important strategic step, enabling the Company to focus its financial and management resources on maximising the potential of its core speech recognition technology. With the addition of high calibre individuals at both the board and operational level, the Board believes the Company is well positioned for the future.