REG-Leadcom Integrated Solutions Ltd Leadcom Integrated Solutions Ltd. Reports Revenues of US$72.3 Million and Net Profit of US$0.9 Million for Q2 2008

Leadcom Integrated Solutions Ltd. Reports Revenues of US$72.3 Million and Net Profit of US$0.9 Million for Q2 2008

HOD HASHARON, Israel--(Business Wire)--

Leadcom Integrated Solutions Ltd.

Reports Revenues of US$72.3 Million and Net Profit of US$0.9 Million for Q2 2008

Hod Hasharon, Israel, August 27, 2008 - Leadcom Integrated Solutions Ltd.,
("Leadcom", or "the Company", AIM: LEAD), a leading international provider of
innovative telecommunication solutions, announced today results for the second
quarter and first half of 2008, ended June 30, 2008.

-0-
*T
6 months 6 months 3 months 3 months 3 months
ended ended ended ended ended
June 30 June 30 June 30 March 31 June 30
2008 2007 2008 2008 2007
-------------------------------------========-======== ========-======== ========
In US$ million
------------------------------------------------------ ----------------- --------
Revenues 128.0 72.4 72.3 55.7 40.3
------------------------------------------------------ ----------------- --------
Adjusted Gross profit (*) 28.1 20.7 16.3 11.8 11.2
------------------------------------------------------ ----------------- --------
Adjusted Gross profit margin(*) 22% 28.6% 22.6% 21.2% 27.8%
------------------------------------------------------ ----------------- --------
Adjusted Operating Profit(*) 4 8.6 3.0 1.0 4.7
------------------------------------------------------ ----------------- --------
Adjusted Operating Profit Margin* 3.1% 11.8% 4.1% 1.8% 11.6%
------------------------------------------------------ ----------------- --------
Profit (loss) before tax 1.6 7.2 2.3 (0.7) 4.3
------------------------------------------------------ ----------------- --------
Tax (1.3) (2.3) (0.7) (0.6) (1.4)
------------------------------------------------------ ----------------- --------
Profit (loss) from continuing
operations 0.3 4.9 1.6 (1.3) 3
------------------------------------------------------ ----------------- --------
Profit (loss) from discontinued
operations (0.7) 0.2 (0.7) - 0.06
------------------------------------------------------ ----------------- --------
Net Profit (loss) (0.4) 5.1 0.9 (1.3) 3
------------------------------------------------------ ----------------- --------
Adjusted Net Profit(*) 0.1 5.9 0.6 (0.5) 3.3
------------------------------------------------------ ----------------- --------
*T

* Adjusted gross, operating and net profit - excluding amortization and option
expenses

Financial and Business Highlights

-- Revenues: for Q2 2008 reached US$72.3 million, a 30% increase compared
to Q1 2008. Revenues for the six month period reached US$128 million, an
increase of 77% compared to the same period a year ago.

-- Adjusted Gross profit: for Q2 2008 reached US$16.3 million, a 38%
increase from US$11.8 million for Q1 2008. Adjusted Gross profit for the
six month period reached US$28.1 million, an increase of 36%.

-- Adjusted operating profit: for Q2 2008 reached US$3.0 million, up from
US$1.0 million for Q1 2008. Adjusted operating profit for the six month
period reached US$4.0 million, compared to US$8.6 million in the first
half of 2007.

-- Net profit from continued operations: for Q2 2008 was US$1.6 million
compared to a net loss of US$1.3 million for Q1 2008. Net profit from
continued operations for the first six months of 2008 was US$0.3
million, compared to a profit of US$4.9 million in the parallel period
in 2007.

-- Net cash generated from continuing operating activities: for Q2 2008
reached US$0.4 million, up from US$0.2 million for Q1 2008. Net cash
generated from continuing operating activities for the six month period
was US$0.6 million, compared to cash flow of US$4.7 million in the first
half of 2007.

-- Continued implementation of corrective measures as part of the Company's
turnaround plan

-- Continued healthy organic growth, mainly in India and Africa

Financial Results

Revenues for the second quarter of 2008 reached US$72.3 million, a 79% increase
from US$40.3 million for the second quarter of 2007. The increase in second
quarter revenues is mainly attributed to increased activity in Africa and India,
which together contributed 68% of total revenues for the quarter. Revenues for
the six months ended June 30, 2008 were US$128 million, up 77% from US$72.4
million in the equivalent period in 2007. Excluding Ytelcom revenues which were
not included in Q1 and Q2 of 2007, revenue growth for the six month period was
43%.

Adjusted gross profit for the second quarter of 2008 reached US$16.3 million
(23% of revenues) compared to US$11.2 million (28% of revenues) in second
quarter of 2007. Adjusted gross profit for the first six months of 2008 was
US$28.1 million (22% of revenues) compared to US$20.7 million (29% of revenues)
in the comparable period of 2007. The decrease in adjusted gross margins for
both periods reflect in part changes in the geographic revenue mix, as the APAC
territory grew significantly as a percentage of Leadcom's total activity.

Selling and marketing expenses for the second quarter of 2008 reached US$3.1
million compared to US$2.2 million in the second quarter of 2007. Selling and
marketing costs for the first six months of 2008 were US$5.6 million (4% of
revenues), compared to US$4.6 million (6% of revenues) in the equivalent period
in 2007. The increase in selling and marketing expenses is mainly attributed to
the Middle-East and Africa territories, which grew significantly both in
revenues and in profit.

General and administrative expenses for the second quarter of 2008 reached
US$9.8 million compared to US$4.5 million in the second quarter of 2007. General
and administrative expenses for the first half of 2008 were US$18.6 million
compared to US$8.3 million in the parallel period in 2007. The increase is
mainly attributed to the inclusion of G&A expenses related to Ytelcom
(additional seven offices), establishment of new companies, increased operations
in India and expenses associated with the closing of certain subsidiaries.

Adjusted operating profit for the second quarter of 2008 reached US$3.0 million
compared to US$4.7 million for the second quarter in 2007. In contrary to the
usual trend, adjusted operating profit for this second quarter was lower than
the operating profit due to expenses associated with restricted share units
previously granted to employees, which were already charged during 2007 and were
reversed this quarter due to management's evaluation that the performance
criteria of the RSU's will not be met. Adjusted operating profit for the first
six months of 2008 was US$4 million (margin of 3%), compared with US$8.6 million
(12% margin) for the same period in 2007.

Financial expenses net for the second quarter of 2008 reached US$0.8 million
compared to US$0.1 million in the second quarter of 2007. Financial expenses net
for the first six months of 2008 were US$1.7 million, compared to US$0.6 million
in the parallel period in 2007. Since the fourth quarter of 2007 Leadcom has
revised its financial strategy to better control and anticipate financing
requirements. Hedging instruments were put in place to prevent the effect of
fluctuations of dollar exchange rates.

Net profit from continued operations for the second quarter of 2008 was US$1.6
million compared to a net profit of US$3.0 million in the second quarter of
2007. Net profit from continued operations for the first six months of 2008 was
US$0.3 million, compared to a net profit of US$4.9 million in the parallel
period in 2007.

Adjusted net profit for the second quarter of 2008 reached US$ 0.6 compared to
an adjusted net profit of US$3.3 million for the second quarter of 2007.
Adjusted net profit for the first six months of 2008 was US$0.1 compared to
US$5.9 million for the comparable period in 2007.

Cash flow from continuing operating activities for the first six months of 2008
was positive, and stood at US$0.6 million, compared to positive cash flow of
US$4.7 million in the equivalent period of 2007.

Balance Sheet

Trade receivables increased from US$70.1 million in March 31, 2008, to US$71.1
million on June 30, 2008.

Inventory increased from US$14.3 million in March 31, 2008, to US$15.2 million
at the end of June, 2008. This increase is mainly due to an increase in
inventory of finished goods at Ytelcom's assembly facility as well as growth in
activity in the MEA region and is intended for projects in the second half of
2008.

As already disclosed in the Company's financial statement for 2007, released on
February 25, 2008, the consolidation of Ytelcom into Leadcom's balance sheet,
along with the Company's 2007 net loss, resulted in a breach of one of its
financial covenants as of December 31st, 2007. As of June 30th, 2008 the Company
was in breach of another such covenant and this position continues as of today.
Accordingly, the financial statements for 2007 have been restated in order to
reflect, with retrospective effect, the classification of a loan as a current
liability rather than a non-current liability, due to the breach of the
covenants. The Company intends to work closely with the banks in order to amend
the covenants to better reflect the Company's financial position, following the
acquisition of Ytelcom.

Arik Alcalay, Leadcom's CEO, commented:

"Our second quarter of 2008 results reflect sequential growth in revenues along
with improvement in margins and operating profit".

"We are continuing to take measures across the company in order to cut down on
expenses, and to improve margins. The corrective measures taken include cost
cutting, phasing out from projects with low gross margins, structural changes,
and the implementation of new and improved means of control. The full effect of
these measures should become fully evident in the upcoming quarters".

"In the second quarter we experienced improvement in our ongoing operations,
especially in APAC and Africa. We are confident in our turnaround strategy and
in our ability to execute and improve profitability and margins. We have already
marked the way ahead of us and even though we have not yet reached our full
goals, we have confidence that we are on the right track. "

"As we have already mentioned we plan to list our shares and debentures on the
Tel Aviv Stock Exchange (TASE). Therefore, we are filing today our draft
prospectus together with the applications necessary for the listing of our
shares and debentures, with the Israeli Securities Authority and with the TASE
".

Outlook

Management expects to report revenues of between US$275 million and US$285
million for the full year of 2008. The underlying industry demand for our
services remains robust and our order book and framework agreements give us
confidence as to the ongoing strong performance of the business.

Web cast

Leadcom Integrated Solutions Ltd. will hold a live webcast with Arik Alcalay,
CEO; Eytan Mucznik, CFO and Ayelet Shaked, Director of Corporate Communications,
to review and discuss the Company's financial and operational results for Q2
2008, ended June 30, 2008. The web cast will take place on August 27, 2008 at
5.00 PM (Israel), 3.00 PM (UK), 10.00 AM (US Eastern).

To access, please visit our website at www.leadcom-is.com.

A replay of the web cast will be available on the same web site for a 90 day
period.

Enquiries:

-0-
*T
Ayelet Shaked - Leadcom
Tel: +972 9 7697100

Andrew Godber - Panmure Gordon
Direct: +44 (0) 20 7614 8385
*T

Important Notice

This press release contains historical information and forward-looking
statements with respect to the business, financial condition and results of
operations of Leadcom Integrated Solutions Ltd. The words "believe," "expect,"
"intend," "plan," "should" and similar expressions are intended to identify
forward-looking statements. Such statements reflect the current views,
assumptions and expectations of the Company with respect to future events and
are subject to risks and uncertainties. Many factors could cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements that may be expressed or
implied by such forward-looking statements, including, among others, changes in
the telecommunications market and in general economic and business conditions,
loss of key customers and unpredictable sales cycles, competitive pressures,
market acceptance of new products, inability to meet efficiency and cost
reduction objectives, changes in business strategy and various other factors,
both referenced and not referenced in this press release. Various risks and
uncertainties may affect the Company and its results of operations. Should one
or more of these or other risks or uncertainties materialize, or should any
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated, expected, intended,
planned or projected. The Company does not intend or assume any obligation to
update these forward-looking statements.

-0-
*T
LEADCOM INTEGRATED SOLUTIONS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2008

30 June 31 December
---------------
2008 2007 2007
------- ------- -----------
$ in thousands
---------------------------
A s s e t s (Unaudited) (Audited)
--------------- -----------
CURRENT ASSETS:
Cash and cash equivalents 27,826 12,622 22,665
Financial assets at fair value through profit or
loss 14,670 24,193 13,398
Accounts receivable and accruals:
Trade 71,096 59,308 73,458
Other 13,700 13,163 12,212
======= ======= ===========

Balances associated with discontinued operations 4,080 - 11,650
Inventories 15,211 3,911 12,404
------- ------- -----------
T o t a l current assets 146,583 113,197 145,787
------- ------- -----------
NON-CURRENT ASSETS:
Deposits with severance pay funds 1,924 *1,067 1,159
Deferred income tax assets 1,688 1,409 1,688
Investment in associate 728 - 680
Property and equipment 12,942 7,625 12,960
Intangible assets 8,125 600 8,703
------- ------- -----------
T o t a l non-current assets 25,407 10,701 25,190
------- ------- -----------
T o t a l assets 171,990 123,898 170,977
======= ======= ===========

* Reclassified.

*T

-0-
*T
LEADCOM INTEGRATED SOLUTIONS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2008

30 June 31 December
-----------------
2008 2007 2007
-------- -------- -----------
$ in thousands
-----------------------------
(Unaudited) (Audited)
----------------- -----------
Liabilities and equity

CURRENT LIABILITIES:
Loans from banks and current maturities of long-
term loans and debentures 30,818 6,493 **25,831
Accounts payable and accruals:
Trade 28,727 17,701 31,545
Other 35,667 17,368 32,881
Balances associated with discontinued
operations 744 - 5,705
Current income tax liability 1,124 2,967 1,560
-------- -------- -----------
T o t a l current liabilities 97,080 44,529 97,522
-------- -------- -----------
NON-CURRENT LIABILITIES:
Unsecured debentures 35,158 29,127 33,036
Loans from banks (net of current portion) 432 77 **306
Deferred tax liabilities 241 - 367
Severance pay obligations 2,634 *2,113 2,497
-------- -------- -----------
T o t a l non-current liabilities 38,465 31,317 36,206
-------- -------- -----------
T o t a l liabilities 135,545 75,846 133,728
-------- -------- -----------
EQUITY:
Capital and reserves attributable to the equity
holders of the Company:
Share capital 26 26 26
Share premium 36,690 35,731 36,453
Capital reserve 3,886 3,731 4,458
Currency translation reserve (635) 558 (544)
Retained earnings (accumulated losses) (3,529) 7,991 (3,153)
-------- -------- -----------
36,438 48,037 37,240
MINORITY INTEREST 7 15 9
-------- -------- -----------
T o t a l equity 36,445 48,052 37,249
-------- -------- -----------
T o t a l liabilities and equity 171,990 123,898 170,977
======== ======== ===========

* Reclassified.
** Restated, see also note 3.

*T

-0-
*T
LEADCOM INTEGRATED SOLUTIONS LTD.
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE, 2008

6 months ended Year ended
30 June 31 December
------------------
2008 2007 2007
--------- -------- -----------
$ in thousands
------------------------------
(Unaudited) (Audited)
------------------ -----------
CONTINUING OPERATIONS:
Revenue 128,007 72,417 201,793
Cost of sales (100,552) (51,854) (155,152)
--------- -------- -----------
Gross profit 27,455 20,563 46,641
Selling and marketing costs (5,554) (4,557) (8,442)
Administrative and general expenses (18,602) (8,260) (28,929)
Other gains - net 28 15 82
--------- -------- -----------
Operating profit 3,327 7,761 9,352
Interest income 8,369 813 3,290
Finance costs (10,092) (1,408) (7,442)
--------- -------- -----------
Finance cost - net (1,723) (595) (4,152)
Share of profit of an associated company - - 168
--------- -------- -----------
Profit before income tax 1,604 7,166 5,368
Income tax expenses (1,298) (2,276) (1,481)
--------- -------- -----------

PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS 306 4,890 3,887

PROFIT (LOSS) FOR THE PERIOD FROM DISCONTINUED
OPERATIONS (684) 183 (9,964)
--------- -------- -----------
PROFIT (LOSS) FOR THE PERIOD (378) 5,073 (6,077)
========= ======== ===========
ATTRIBUTABLE TO:
Equity holders of the Company (376) 5,075 (6,069)
Minority interest (2) (2) (8)
--------- -------- -----------
(378) 5,073 (6,077)
========= ======== ===========

$
------------------------------

EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO THE
EQUITY HOLDERS OF THE COMPANY DURING THE
PERIOD:
FROM CONTINUING OPERATIONS:
Basic 0.003 0.041 0.032
========= ======== ===========
Diluted 0.003 0.040 0.031
========= ======== ===========
FROM DISCONTINUED OPERATION:
Basic (0.006) 0.002 (0.083)
========= ======== ===========
Diluted (0.006) 0.001 (0.080)
========= ======== ===========

*T

-0-
*T
LEADCOM INTEGRATED SOLUTIONS LTD.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2008

Attributable to equity holders of the Company
-------------------------------------------------------------
Retained
Currency earnings
Number of Share Share Capital translation (accumulated Minority Total
shares capital premium reserve reserve losses) interest equity
----------- ------- ------- ------- ----------- ------------ -------- -------
$ in thousands
-----------------------------------------------------------------
BALANCE AT 1 JANUARY 2008 (audited) 120,221,700 26 36,453 4,458 (544) (3,153) 9 37,249
CHANGES DURING THE 6 MONTHS ENDED 30 JUNE
2008:
Currency translation differences - - - - (91) - - (91)
Profit for the period - - - - - (376) (2) (378)
----------- ------- ------- ------- ----------- ------------ -------- -------
Total recognized Profit for 6 months
ended 30 June 2008 - - - - (91) (376) (2) (469)
Employee share purchase plan:
Value of employee services - - - (493) - - - (493)
Proceeds from shares issued 167,500 * 237 (79) - - - 158
----------- ------- ------- ------- ----------- ------------ -------- -------
BALANCE AT 30 JUNE 2008 (unaudited) 120,389,200 26 36,690 3,886 (635) (3,529) 7 36,445
=========== ======= ======= ======= =========== ============ ======== =======
BALANCE AT 1 JANUARY 2007 (audited) 119,026,650 26 35,731 2,946 361 5,402 17 44,483
CHANGES DURING THE 6 MONTHS ENDED 30 JUNE
2007:
Currency translation differences - - - - 197 - - 197
Profit for the period - - - - - 5,075 (2) 5,073
----------- ------- ------- ------- ----------- ------------ -------- -------
Total recognized Profit for 6 months
ended 30 June 2007 - - - - 197 5,075 (2) 5,270
Employee share purchase plan:
Value of employee services - - - 785 - - - 785
Proceeds from shares issued 940,050 * * * - - - -
Cash dividend ($0.02 per share) - - - - - (2,486) - (2,486)
----------- ------- ------- ------- ----------- ------------ -------- -------
BALANCE AT 30 JUNE 2007 (unaudited) 119,966,700 26 35,731 3,731 558 7,991 15 48,052
=========== ======= ======= ======= =========== ============ ======== =======
BALANCE AT 1 JANUARY 2007 (audited) 119,026,650 26 35,731 2,946 361 5,402 17 44,483
CHANGES DURING THE YEAR ENDED 31 DECEMBER
2007:
Currency translation differences - - - - (905) - - (905)
Loss for the year - - - - - (6,069) (8) (6,077)
----------- ------- ------- ------- ----------- ------------ -------- -------
Total recognized loss for 2007 - - - - (905) (6,069) (8) (6,982)
Employee share option plan:
Value of employee services - - - 2,133 - - - 2,133
Proceeds from shares issued 1,195,050 * 722 (621) - - - 101
Cash dividend ($0.02 per share) - - - - - (2,486) - (2,486)
----------- ------- ------- ------- ----------- ------------ -------- -------
BALANCE AT 31 DECEMBER 2007 (audited) 120,221,700 26 36,453 4,458 (544) (3,153) 9 37,249
=========== ======= ======= ======= =========== ============ ======== =======

* Represents an amount less than $1,000.

*T

-0-
*T
LEADCOM INTEGRATED SOLUTIONS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2008

6 months ended Year ended
30 June 31 December
----------------
2008 2007 2007
------- -------- -----------
$ in thousands
----------------------------
(Unaudited) (Audited)
---------------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit (loss) for the period (378) 5,073 (6,077)
Adjustments required to reflect the cash flows
from operating activity (see appendix) 2,979 *(1,844) * 9,084
------- -------- -----------
Net cash generated from operating activities 2,601 3,229 3,007
------- -------- -----------

Net cash generated from continuing operating
activities 634 4,695 10,096
Net cash used in discontinued operating
activities 1,967 (1,466) (7,089)
------- -------- -----------
Net cash generated from (used in) operating
activities 2,601 3,229 3,007
------- -------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of subsidiary, net of cash acquired (643) - (10,533)
Sale (acquisition) of financial assets at fair
value through profit or loss 6,657 (24,358) (12,184)
Purchases of property and equipment (2,321) (2,895) (6,199)
Purchases of software and licenses - (19) (663)
Proceeds from sale of property and equipment 205 47 197
Contribution to severance pay assets (603) (277) (518)
------- -------- -----------
Net cash generated from (used in) investing
activities 3,295 (27,502) (29,900)
------- -------- -----------
Net cash generated from (used in) used in
continuing operating investing activities 3,295 (27,502) (29,551)

Cash used in an investing activity relating to
discontinued operation - - (349)
------- -------- -----------
Net cash used in investing activities 3,295 (27,502) (29,900)
------- -------- -----------
CASH FLOWS FROM CONTINUING FINANCING ACTIVITIES:
Proceed from employee share options exercised 158 - 108
Dividend paid - (2,486) (2,486)
Short-term loans - net (129) 4,796 4,566
Receipt of long-term loans - - 12,715
Repayments of long-term loans (320) (477) (724)
------- -------- -----------
Net cash generated from (used in) continuing
financing activities (291) 1,833 14,179
------- -------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 5,605 (22,440) (12,714)
Cash and cash equivalents at beginning of the
year 22,665 34,884 34,884
Exchange gains (losses) on cash and cash
equivalents (444) 178 495
------- -------- -----------

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 27,826 12,622 22,665
======= ======== ===========

* Reclassified

*T

-0-
*T
LEADCOM INTEGRATED SOLUTIONS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2008

6 months ended Year ended
30 June 31 December
---------------
2008 2007 2007
------- ------- -----------
(Unaudited) (Audited)
--------------- -----------
$ in thousands
---------------------------
Appendix

Adjustments required to reflect the cash flows
from operating activities:
Income and expenses not involving cash flows:
Depreciation and amortization 3,561 990 4,212
Net movements in severance pay obligations (238) 680 980
Changes in long-term liabilities from banks
and finance companies 1,778 126 876
Fair value (gains)/losses on financial assets
at fair value through profit or loss (2,567) (237) 7
Income tax expenses (1,236) 562 (686)
Amounts charged in respect of options granted
to Employees (493) 785 2,133
Gains on sale of property and equipment (61) (44) (5)
Share of profit of an associate - - (168)
Fair value losses (gains) on severance pay
assets 133 (174) (122)
------- ------- -----------
877 2,688 7,227
------- ------- -----------
Changes in operating asset and liability items:
Decrease (increase) in accounts receivable:
Trade 10,227 (4,908) (8,637)
Other 617 (4,706) (785)
Increase (decrease) in accounts payable:
Trade (5,555) 2,793 10,465
Other (1,240) 3,218 2,644
Increase in inventories (1,947) (929) (1,830)
------- ------- -----------
2,102 (4,532) 1,857
------- ------- -----------
Cash generated from (used in) operations 2,979 (1,844) 9,084
======= ======= ===========

*T

-- Income tax paid for the 6 months period ended 30 June 2008 and 2007 were
1,968 thousands $ and 1,793 thousands $ respectively, for the year ended
31 December 2007 - 2,167 thousands $.

-- Interest paid for the 6 months period ended 30 June 2008 and 2007 were
2,953 thousands $ and 1,016 thousands $ respectively, for the year ended
31 December 2007 - 3,774 thousands $.

-- Interest received for the 6 months period ended 30 June 2008 and 2007
were 335 thousands $ and 474 thousands $ respectively, for the year
ended 31 December 2007 - 937 thousands $.

-0-
*T
LEADCOM INTEGRATED SOLUTIONS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
*T

NOTE 1 - GENERAL

The interim financial statements as of 30 June 2008 and for the six-month period
then ended (hereafter - the interim statements) have been prepared in condensed
form in accordance with IAS 34 - "Interim Financial Reporting".

The interim condensed financial report should be read in conjunction with the
annual financial statements for the year ended 31 December 2007.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied are consistent with those of the annual
financial statements for the year ended 31 December 2007, as described in those
annual financial statements.

The following new standards, amendments to standards and interpretations have
been issued but are not effective for the financial year beginning 1 January
2008 and have not been early adopted:

-- IFRIC 16 - Hedges of a net investment in a foreign operation, effective
for periods beginning on or after 1 October 2008 with earlier
application permitted. The management is currently assessing the impact
of IFRIC 16 on the Company's operations.

-- Improvements to IFRS - In May 2008 the IFRS issued amendments to certain
IFRSs. Part of the changes result in accounting changes for
presentation, recognition or measurement purposes and part of the
changes contain amendments that are terminology or editorial changes
only. These amendments are effective for periods starting on or after 1
January 2009. Management is currently assessing the impact of these
amendments.

NOTE 3 - RESTATEMENT:

In December 2006, the Company signed new credit agreements with Israeli banks.
According to these agreements, it was determined - among other things - that the
charges on Company's assets will be eliminated, and that the Company would
comply with certain financial covenants. As of 30 June, 2008 and 31 December,
2007 the company is not complying with two of the financial covenants. Unless a
waiver is obtained from the banks pertaining to such breach, or, if such waiver
is not obtained and such breach is not cured within 30 days from a written
notice of the bank regarding such breach, the banks shall be entitled to demand
the immediate repayment of the balance of the unpaid sums due to it by Leadcom.

Accordingly, the financial statements for 2007 have been restated in order to
reflect, with retrospective effect, the classification of a loan (12,399$ in
thousands) taken by a subsidiary of the Company, as a current liability rather
than a non-current liability, due to the breach of the covenants. As of 30 June,
2008 the loan is still classified as a current liability.

-0-
*T
LEADCOM INTEGRATED SOLUTIONS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
*T

NOTE 4 - EMPLOYEE INCENTIVE PLAN:

-0-
*T
a. On 26 May, 2008, the Company granted 1,470,000 share options to certain
managers and employees of the Company. Each granted option can be exercised
to purchase one ordinary share of the Company at the exercise price of
£0.18. The options vest over a period of three years commencing from the
grant date (33.33% each year). The contractual term of the options is 6
years.

The fair value of the options is $244,775. The significant inputs into the
model were share price of £0.175 at the grant date, the exercise price
mentioned above, dividend yield of 0%, standard deviation of expected share
price returns of 61.2% and annual risk-free interest rate of 4.5%. The
volatility measured at the standard deviation of expected share price
returns is based on the historical volatility of similar listed entities.

b. At the same date, the Company decided upon a re-pricing of 1,570,000 share
options granted in the past to the Company's managers and employees (except
the executive directors). The new exercise price for such options is £0.18.

As the re-pricing is subject to the Israeli Tax Authority's approval the
company has not yet announced the re-pricing to the relevant employees.

c. On 4 August 2008, the shareholders of the Company approved the appointment
and remuneration of Mr. Isaac Angel as director of the company and on 25
August 2008 the board of directors appointed Mr. Angel as executive
chairman. The chairman's remuneration is comprised of the following terms
(a) gross annual compensation of US$100,000, plus applicable VAT; (b) a
grant of an option to purchase up to 2.75% of the Company's issued and
outstanding share capital as of 27 May 2008, the date on which the chairman
was appointed by the Board as a director of the Company, with an exercise
price of £0.18. The option shall vest with respect to 33.33% of the Ordinary
Shares underlying the Option on each of the first, second and third
anniversaries of the foregoing date provided that (i) if there is a change
in control of the Company during the first 6 months following the date of
grant of the option, the vesting of the option shall accelerate immediately
with respect to 33.33% of the option, and (ii) if there is a change in
control of the Company at any time after the first 6 months following the
date of grant of the option, the vesting of the option shall accelerate
immediately in its entirety.

d. During August 2008 the Company granted 725,000 share options to a director,
certain managers and employees of the Company. Each granted option can be
exercised to purchase one ordinary share of the Company at the exercise
price of £0.18. The options vest over a period of three years commencing
from the grant date (33.33% each year). The contractual term of the options
is 6 years

e. During the period 167,500 options were exercised to ordinary shares.
*T

-0-
*T
LEADCOM INTEGRATED SOLUTIONS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
*T

NOTE 5 - SEGMENT INFORMATION:

Geographical Segment Data:

-0-
*T
AMERICAS MEA Europe APAC Other* Eliminations Consolidated
-------- -------- ------- ------ -------- ------------ ------------
$ in thousands
-------------------------------------------------------------------
6 months ended 30 June 2008 (unaudited):
Revenues:
Total Revenues 16,473 83,746 7,095 22,055 (51) (1,311) 128,007
Intersegment - (1,311) - - - 1,311 -
-------- -------- ------- ------ -------- ------------ ------------
From external customers 16,473 82,435 7,095 22,055 (51) - 128,007
======== ======== ======= ====== ======== ============ ============
Segment results-operating profit 692 5,147 (116) 3,007 (5,403) - 3,327
======== ======== ======= ====== ======== ============ ============

6 months ended 30 June 2007 (unaudited):
Revenues:
Total Revenues 11,241 49,388 5,768 7,304 - (1,284) 72,417
Intersegment - (1,284) - - 1,284 -
-------- -------- ------- ------ -------- ------------ ------------
From external customers 11,241 48,104 5,768 7,304 - - 72,417
======== ======== ======= ====== ======== ============ ============
Segment results-operating profit 1,381 8,124 379 1,069 (3,192) - 7,761
======== ======== ======= ====== ======== ============ ============

Year ended 31 December 2007 (audited):
Revenues:
Total Revenues 28,149 143,057 12,687 22,841 (158) (4,783) 201,793
Intersegment - (4,696) (87) - - 4,783 -
-------- -------- ------- ------ -------- ------------ ------------
From external customers 28,149 138,361 12,600 22,841 (158) - 201,793
======== ======== ======= ====== ======== ============ ============
Segment results-operating profit 1,380 14,887 332 2,795 (10,042) - 9,352
======== ======== ======= ====== ======== ============ ============

* Unallocated expenses and amortization
*T

Leadcom Integrated Solutions Ltd

Copyright Business Wire 2008