TOTEM COMMUNICATIONS LTD ANNOUNCES RESTRUCTURING AND NEW BUSINESS STRATEGY

Manchester, UK 16 January 2004 - Totem Communications Ltd, the leading provider of tailored inbound and outbound call solutions for business, today announced its new business strategy and the implications for its future relationships with channel partners and direct customers. Over the past 12 months Totem has seen tremendous growth through the channel, which has generated 70 per cent of revenues. Based on these results, the management team has realigned resources to increase focus on all channel partners and resellers.

"Thanks to our new channel strategy, we are looking to grow annual turnover to £50m over three years", said Andrew Cannon, Finance Director at Totem. "Rapid growth since the start of last year has seen net revenues double compared to the previous financial year."

The restructuring has meant having to realign the sales force and other resources internally in order to provide resellers and direct clients with greater support. Chris Brassington, CEO of Totem, said: "Our new strategy moving forward will focus predominately on the channel and on selected direct customers. This will allow us to have greater visibility of customers' and resellers' needs across all levels and by all functions, enabling reduced timescales for pricing/bespoke requests, greater access to the people who can action immediately, improved communication channels and tailored support."

Annualised revenues have grown strongly, almost doubling between February and November 2003, during which time a significant, robust pipeline has been built. The focus continues to be upon managed revenue and margin growth through the acquisition of key corporate customers, coupled with the development of carefully selected and managed indirect channel partners, aligned to Totem's target segments and aspirations.

Brassington concluded: "We believe the Non-Geographic-Numbers (NGN) market has massive potential. We recognise this and will continue to invest in new products and services."