<DOCUMENT>
<TYPE>8-K/A
<SEQUENCE>1
<FILENAME>d8ka.txt
<DESCRIPTION>FORM 8-K/A
<TEXT>

<PAGE>




                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 8-K/A

                                 CURRENT REPORT

                       Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

         Date of Report (date of earliest event reported): April 6, 2001



                    SCHLUMBERGER N.V. (SCHLUMBERGER LIMITED)
             (Exact name of registrant as specified in its charter)



    Netherlands Antilles                  1-4601                 52-0684746
(State or other jurisdiction     (Commission File Number)       (IRS Employer
      of incorporation)                                      Identification No.)



        153 East 53rd Street, 57th Floor
               New York, New York                      10022-4624

             42, rue Saint-Dominique
                  Paris, France                           75007

                 Parkstraat 83,
                   The Hague,
                 The Netherlands                         2514 JG

  (Addresses of principal executive offices)      (Zip or Postal Codes)


          Registrant's telephone number in the United States, including
                           area code: (212) 350-9400


                    277 Park Avenue, New York, New York 10172
          (Former name or former address, if changed since last report)

<PAGE>

Item 2.    Acquisition or Disposition of Assets

     On April 6, 2001, Schlumberger Investments, a wholly owned subsidiary of
Schlumberger Limited, announced that its offer for the ordinary share capital of
Sema plc had been declared unconditional in all respects. As at 3:00 p.m.
(London time), 10:00 a.m. (New York City time), on April 6, 2001, valid
acceptances had been received in respect of 401,473,685 Sema shares and in
respect of 5,539,937 Sema American depositary shares, each representing two Sema
shares. These acceptances represent approximately 65.3% of the issued share
capital of Sema. In addition, Schlumberger Investments had acquired 122,869,697
Sema shares through market purchases, representing approximately 20.0% of the
issued share capital of Sema. Accordingly, as at 3:00 p.m. (London time), 10:00
a.m. (New York City time), on April 6, 2001, Schlumberger Investments had
acquired 524,343,382 Sema shares, representing approximately 85.2% of the issued
share capital of Sema.

     From April 6 to June 4, 2001, Schlumberger Investments acquired and paid
for all remaining issued Sema shares. The aggregate consideration for the
acquisition of 100% of the issued Sema shares is expected to be approximately
$5.0 billion in cash. The purchase price for Sema shares acquired in the offer
was determined following arm's length negotiations with Sema's management
regarding its recommendation of the offer.

     The acquisition of Sema is being financed through existing cash resources
of Schlumberger and from borrowings under Schlumberger's $3 billion credit
facility dated February 20, 2001 with JP Morgan Plc, BNP Paribas, Salomon
Brothers International Limited and Lehman Brothers International (Europe) (each
as arrangers), Citibank International Plc as facility agent, and The Chase
Manhattan Bank, BNP Paribas Citibank, N.A. and Lehman Commercial Paper Inc.

     Sema is an IT services company that provides its customers with the design,
implementation, operations and management of information systems and IT-related
consulting services. Among the industry sectors which Sema serves, Sema has
increasingly focused on the telecommunications and finance sectors, and provides
a range of its own software products specifically designed for these sectors in
addition to its IT services. Sema's customers include a wide variety of
businesses and governmental departments around the world. Sema's services and
product offerings include systems integration and consulting; software products
for the telecommunications, energy, transport and finance sectors; and
outsourcing.

     Except as described in this paragraph, it is currently expected that the
business and operations of Sema will continue to be conducted as they are
currently being conducted. Schlumberger will continue to evaluate all aspects of
the business, operations, capitalization, corporate and organizational
structure, and management of Sema and will take such further actions as it deems
appropriate under the circumstances then existing. Prior to the negotiations
that resulted in the offer, Schlumberger had no material relationship with Sema
or any substantial shareholder thereof.

     On February 16, 2001, Sema plc announced that profit before tax, minority
interest and goodwill/intangibles amortization for the year ended December 31,
2000, was (pound)92 million under UK Generally Accepted Accounting Principles
(GAAP). A reconciliation of this amount to amounts included elsewhere in this
Form 8-K/A is as follows:

<PAGE>

                                              (Amounts in millions of UK Pounds)

Actual income before amortization of goodwill/intangibles,
    tax and minority interest - UK GAAP                           (pound)    92
UK to US GAAP Adjustments                                                   (87)
Amortization of goodwill and intangibles                                   (214)
                                                                          -----
Actual (loss) before tax and minority interest - US GAAP                   (209)
LHS results - January 1, 2000 to July 31, 2000                               (6)
Amortization of goodwill and intangibles                                   (222)
                                                                          -----
Pro forma (loss) before tax and minority interest - US GAAP       (pound)  (437)
                                                                          =====

     UK to US GAAP adjustments comprise numerous items, including adjustments
pertaining to revenue recognition, contract accounting, employee stock options
and pension plan accounting. These items are not expected to recur in 2001.

Item 7.   Financial Statements and Exhibits

(a)    Financial Statements of Business Acquired.

     The following audited financial statements are filed with this report:

       . Sema plc, as of and for the year ended December 31, 2000, denominated
         in UK Pounds sterling and prepared in conformity with US GAAP.

(b)    Pro Forma Financial Information.

     The following unaudited pro forma financial statements are filed with this
report:

       . Schlumberger Pro Forma Consolidated Statement of Operations for the
         year ended December 31, 2000 as if the acquisition had taken place on
         January 1, 2000.

       . Schlumberger Pro Forma Consolidated Balance Sheet as at December 31,
         2000 as if the acquisition had taken place on that date.

       . Sema plc Pro Forma Statement of Operations for the year ended December
         31, 2000.

     The pro forma consolidated financial statements are presented for
informational purposes only and are not necessarily indicative of the financial
position or results of operations of Schlumberger that would have occurred had
the acquisition been consummated on the dates mentioned above. In addition, the
pro forma consolidated financial statements are not necessarily indicative of
the future financial condition or results of operations.

<PAGE>

     In preparing the pro forma financial statements included in this Form
8-K/A, the following criteria were used:

Sema Financial Statements
-------------------------

     The audited financial statements of Sema plc for the year ended December
31, 2000, have been prepared in conformity with US GAAP and are based on the
audited financial statements prepared in conformity with UK GAAP with the
required adjustments to conform with US GAAP. These statements were prepared in
UK Pounds and the following exchange rates have been used in translating to US
Dollars:

   Statement of Income for the year ended December 31, 2000  $1 = (pound)0.656
   Balance Sheet as of December 31, 2000                     $1 = (pound)0.675

     Sema plc acquired LHS on July 31, 2000 and accounted for this acquisition
under the purchase method of accounting. The operating results of LHS for the
period August 1, 2000 to December 31, 2000, are included in Sema's financial
statements. In arriving at the pro forma results of Sema for the year ended
December 31, 2000, the following adjustments have been made:

       .   The operating results of LHS for the period January 1, 2000 to
           July 31, 2000 are included.
       .   The amortization of goodwill and intangibles, arising as a result of
           the LHS acquisition, has been included for the period January 1, 2000
           to July 31, 2000.

Financing of the Acquisition of Sema plc
----------------------------------------

     Schlumberger estimates the cost of the acquisition to be $5.2 billion,
including expenses, which will be financed as follows:

       .   Use of existing Schlumberger funds      $2.2 billion
       .   External borrowing                      $3.0 billion

     In preparing the Schlumberger pro forma financial statements in this
Form 8-K/A, it has been assumed that the acquisition of Sema plc took place on
January 1, 2000. Consequently, adjustments have been made to the 2000 Statement
of Operations to reflect the reduced interest income and increased interest
expense resulting from the above internal and external financing. The interest
rates used in computing these adjustments are:

       .   Interest Income  5.50% (Schlumberger's yield on internal funds used)
       .   Interest Expense 5.40% (The estimated cost of the external borrowing)

     If the above interest expense rate were to vary by one eighth of a
percentage point, then pretax interest expense would change by $3.75 million.

<PAGE>

Goodwill and Identifiable Intangibles
-------------------------------------

     The goodwill and identifiable intangibles arising on the acquisition of
Sema plc are included as adjustments in preparing the Schlumberger Pro Forma
Consolidated Statement of Operations and Balance Sheet. Goodwill and
identifiable intangibles aggregate $5.03 billion and have a composite life of 28
years.

     The goodwill, identifiable intangibles and related amortization which are
included in the Sema plc pro forma Statement of Operations have been eliminated
(in adjustments) in preparing the Pro Forma Consolidated Statement of Operations
and Pro Forma Consolidated Balance Sheet in conjunction with the purchase
accounting adjustments recorded in connection with the acquisition of Sema, by
Schlumberger. The amount of goodwill and identifiable intangibles on the Sema
plc Balance Sheet at December 31, 2000, was $3.41 billion.

Purchase Accounting Adjustments
-------------------------------

     Under the purchase method of accounting, the estimated cost of
approximately $5.2 billion, including transaction costs, will be allocated to
the underlying net assets in proportion to their respective fair values. Any
excess of the purchase price over the estimated fair value of the tangible and
identifiable intangible assets acquired and the liabilities assumed will be
recorded as goodwill; at this time, the work needed to provide the basis for
estimating these fair values and related amortization periods has not been
completed. It is expected that the final allocation of the excess of purchase
price over the book value will not differ materially from the amounts reflected
herein.

     Purchase accounting adjustments consist primarily of severance costs ($81
million), facility reductions ($33 million), pension plan adjustments ($136
million) and tax restructuring costs ($50 million). Total purchase accounting
adjustments aggregate $342 million, pretax.

(c)  Exhibits.

     The following Exhibit is included in this report:

     Exhibit 23 - Consent of Independent Accountants

<PAGE>

                                  SCHLUMBERGER
                 PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                      For the Year Ended December 31, 2000
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                    (Amounts in thousands of US Dollars)


                                                            Historical      Pro Forma
                                                           Schlumberger       Sema       Adjustments         Pro Forma
                                                           ------------  -------------   -----------       -------------
<S>                                                        <C>           <C>             <C>               <C>
Revenue:
    Operating                                              $  9,611,462    $ 2,373,628     $      --         $11,985,090
    Interest and other income                                   423,255         14,634      (121,000)(1)         316,889
                                                           ------------  -------------   -----------       -------------
                                                             10,034,717      2,388,262      (121,000)         12,301,979
                                                           ------------  -------------   -----------       -------------
Expenses:
    Cost of goods sold and services                           7,371,542      2,438,110      (467,804)(2)       9,341,848
    Research & engineering                                      540,698         82,012            --             622,710
    Marketing                                                   437,128        150,457            --             587,585
    General                                                     448,587        374,695            --             823,282
    Interest                                                    276,081          9,451       162,000(3)          447,532
                                                           ------------  -------------   -----------       -------------
                                                              9,074,036      3,054,725      (305,804)         11,822,957
                                                           ------------  -------------   -----------       -------------
Income (loss) before taxes and minority interest                960,681       (666,463)      184,804             479,022
    Taxes on income                                             228,248        (38,354)      (14,347)(4)         175,547
                                                           ------------  -------------   -----------       -------------
Income (loss) before minority interest                          732,433       (628,109)      199,151             303,475
    Minority Interest                                             2,163           (457)           --               1,706
                                                           ------------  -------------   -----------       -------------
Net Income (loss)                                          $    734,596    $  (628,566)    $ 199,151         $   305,181
                                                           ============  =============   ===========       =============

Earnings Per Share:
    Basic                                                  $       1.29                                     $      0.54
                                                           ============                                    =============
    Diluted                                                $       1.27                                     $      0.53
                                                           ============                                    =============

Weighted Average Shares Outstanding:
    Basic                                                       570,028                                          570,028
                                                           ============                                    =============
    Diluted                                                     580,076                                          580,076
                                                           ============                                    =============
</TABLE>


<TABLE>
<CAPTION>

Adjustments:

<S>                                                                                            <C>
(1) Reduction in Schlumberger's interest income                                                $ (121,000)
                                                                                              ===========

(2) Reversal of Goodwill & Identifiable Intangibles amortization included in Sema's results    $ (664,024)
    Amortization of Goodwill and Identifiable Intangibles arising on acquisition of Sema          196,220
                                                                                              -----------
                                                                                               $ (467,804)

                                                                                              ===========

(3) Increase in Schlumberger's interest expense                                                $  162,000
                                                                                              ===========


(4) Reversal of tax on amortization of Identifiable Intangibles included in Sema's results     $   41,393
    Tax benefit on additional interest expense                                                    (36,990)
    Tax benefit on amortization of Goodwill and Identifiable Intangibles arising
            on Sema acquisition                                                                   (18,750)
                                                                                              -----------
                                                                                               $  (14,347)
                                                                                              ===========
</TABLE>

<PAGE>






                                  SCHLUMBERGER
                      PRO FORMA CONSOLIDATED BALANCE SHEET
                             As of December 31, 2000
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                      (Amounts in thousands of US Dollars)


                                                           Historical
                                                ---------------------------------
                                                 Schlumberger(*)          Sema         Adjustments             Pro Forma
                                                ----------------       ----------     --------------          ------------
   <S>                                         <C>                    <C>            <C>                     <C>
   Cash & Cash Equivalents                      $      3,040,150       $  256,148     $   (1,520,000) (1)     $  1,776,298
   Accounts Receivable                                 2,768,848          941,630                -               3,710,478
   Other Current Assets                                1,684,213           17,333             31,260  (2)        1,732,806
                                                ----------------       ----------     --------------          ------------
       Total Current Assets                            7,493,211        1,215,111         (1,488,740)            7,219,582
   Long-Term Investments, held to maturity             1,547,132           30,074           (680,000) (3)          897,206
   Investments in Affiliated Cos                         654,516            1,333                -                 655,849
   Property and Equipment, net                         4,394,514          237,037                -               4,631,551
   Multiclient Seismic Data                              975,775              -                  -                 975,775
   Goodwill and Identifiable Intangibles               1,716,427        3,411,111          1,769,105  (4)        6,896,643
   Other Assets                                          391,156          156,889                -                 548,045
                                                ----------------       ----------     --------------          ------------
   Total Assets                                 $     17,172,731       $5,051,555     $     (399,635)         $ 21,824,651
                                                ================       ==========     ==============          ============

   Current Liabilities                          $      3,990,905          944,147     $      341,900  (5)     $  5,276,952
   Long-Term Debt                                      3,573,047            5,185          3,000,000  (6)        6,578,232
   Postretirement Benefits                               476,380              -                  -                 476,380
   Minority Interest                                     605,313           20,741                -                 626,054
   Other Liabilities                                     231,870          430,963           (151,516) (7)          511,317
   Shareholders' Equity                                 8,295,216        3,650,519         (3,590,019) (8)        8,355,716
                                                ----------------       ----------     --------------          ------------
   Total Liabilities and Shareholders' Equity   $     17,172,731       $5,051,555     $     (399,635)         $ 21,824,651
                                                ================       ==========     ==============          ============

</TABLE>

<TABLE>
<CAPTION>

<S>                                                                                  <C>
    (*) Reclassified, in part, for comparative purposes.

   Adjustments:

   (1) Cash & Cash Equivalents used for purchase of Sema stock                        $   (1,520,000)
                                                                                      ==============

   (2) Deferred tax on purchase accounting adjustments                                $       31,260
                                                                                      ==============

   (3) Long-Term Investments used for purchase of Sema stock                          $     (680,000)
                                                                                      ==============

   (4) Elimination of Goodwill on Sema balance sheet                                  $   (3,411,111)
       Goodwill and Identifiable Intangibles arising on Sema acquisition                    5,180,216
                                                                                      --------------
                                                                                      $    1,769,105
                                                                                      ==============

   (5) Purchase accounting adjustments                                                $      341,900
                                                                                      ==============

   (6) Bank Loans for financing the purchase of Sema stock                            $    3,000,000
                                                                                      ==============

   (7) Elimination of deferred tax on intangibles on Sema balance sheet               $     (283,412)
       Elimination of deferred tax on pension on Sema balance sheet                          (28,474)
       Deferred tax arising from Goodwill and Identifiable Intangibles                       150,000
       Net change to deferred tax (re:Italy) on Sema balance sheet                            10,370
                                                                                      --------------
                                                                                      $     (151,516)
                                                                                      ==============

   (8) Elimination of Shareholders Equity on Sema balance sheet                       $   (3,650,519)
       Other adjustments                                                                      60,500
                                                                                      --------------
                                                                                      $   (3,590,019)
                                                                                      ==============
</TABLE>

<PAGE>



                                    SEMA PLC
                        PRO FORMA STATEMENT OF OPERATIONS
                      For the Year Ended December 31, 2000
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                        UK Pounds Sterling in Thousands                              US Dollars in
                                                                                                                     Thousands (a)
                                         -------------------------------------------------------------------------- ---------------
                                                        Historical                                    Pro Forma        Pro Forma
                                         -----------------------------------
                                                                LHS 7
                                               Sema            months to        Adjustments              Sema            Sema
                                                                July 31
                                         -----------------  ---------------   ---------------      ----------------   ------------
<S>                                      <C>                 <C>              <C>                  <C>                <C>
Revenue:
     Operating                           (pound) 1,480,500   (pound) 76,600        (pound) --      (pound)1,557,100   $  2,373,628
     Interest and other income                       4,000            5,600                --                 9,600         14,634
                                         -----------------   --------------   ---------------      ----------------   ------------
                                                 1,484,500           82,200                --             1,566,700      2,388,262
                                         -----------------   --------------   ---------------      ----------------   ------------

Expenses:
     Cost of goods sold and services             1,331,700           45,800           221,900  (1)        1,599,400      2,438,110
     Research & engineering                        40,000           13,800                 --                53,800         82,012
     Marketing                                      85,100           13,600                --                98,700        150,457
     General                                       230,400           15,400                --               245,800        374,695
     Interest                                        6,200               --                --                 6,200          9,451
                                         -----------------   --------------   ---------------      ----------------   ------------
                                                 1,693,400           88,600           221,900             2,003,900      3,054,725
                                         -----------------   --------------   ---------------      ----------------   ------------

Loss before taxes and minority interest           (208,900)          (6,400)         (221,900)             (437,200)      (666,463)
     Taxes on income                               (11,500)           1,400           (15,060) (2)          (25,160)       (38,354)
                                         -----------------   --------------   ---------------      ----------------   ------------
Loss before minority interest                     (197,400)          (7,800)         (206,840)             (412,040)      (628,109)
      Minority Interest                               (300)              --                --                  (300)          (457)
                                         -----------------   --------------   ---------------      ----------------   ------------
Net Loss                                  (pound) (197,700)  (pound) (7,800)  (pound)(206,840)      (pound)(412,340)    $ (628,566)
                                         =================   ==============   ===============      ================   ============

(a)  Translation rate :(pound)0.656 to $1.

Adjustments for LHS acquisition for the 7 months to July 31:
-----------------------------------------------------------
(1)   Amortization of Goodwill                                                 (pound)172,500
      Amortization of Identifiable Intangibles                                         49,400
                                                                               --------------
                                                                               (pound)221,900
                                                                               ==============

(2)   Tax benefit on Amortization of Identifiable Intangibles                  (pound)(15,060)
                                                                               ==============

</TABLE>

<PAGE>



                                    SEMA PLC

REPORT OF THE INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of SEMA plc:

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statement of income, statement of cash flows and consolidated
statement of stockholders' equity present fairly, in all material respects, the
financial position of SEMA plc and its subsidiaries at December 31, 2000, and
the results of its operations and its cash flows for the year ended December 31,
2000 in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

  /s/  PricewaterhouseCoopers
  ------------------------------

PricewaterhouseCoopers
London
20 March 2001 (except for Note 21 which is as of April 6, 2001)

<PAGE>


                                    SEMA PLC

                        CONSOLIDATED STATEMENT OF INCOME
                      FOR THE YEAR ENDED DECEMBER 31, 2000

                                                             (pound) millions
                                                         (except per share data)
   Revenue
      Operating                                                     1,480.5
      Interest income                                                   4.0
                                                               -----------------
                                                                    1,484.5
                                                               -----------------
   Operating Expenses
      Cost of products sold and services                           (1,331.7)
      Research and development                                        (40.0)
      Marketing                                                       (85.1)
      General                                                        (230.4)
      Interest                                                         (6.2)
                                                               -----------------
                                                                   (1,693.4)
                                                               -----------------

   Loss before taxes and minority interest                           (208.9)

      Taxes on loss                                                    11.5
                                                               -----------------

   Loss before minority interest                                     (197.4)

      Minority interest                                                (0.3)

                                                               -----------------
   Net loss                                                          (197.7)
                                                               -----------------

   Basic and diluted loss per share                                   (37.8)p

   Average shares outstanding                                   522,864,568





                  CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
                      FOR THE YEAR ENDED DECEMBER 31, 2000

                                                                (pound) millions

   Net loss                                                          (197.7)

   Other comprehensive loss:
      Foreign currency translation adjusted net of tax                  4.4
      Realized gain on sale of investments                            (16.5)
      Tax benefit on stock options                                      6.0

                                                               -----------------
   Comprehensive loss                                                (203.8)
                                                               -----------------


               The accompanying notes are an integral part of the
                       consolidated financial statements

                                                                               2

<PAGE>


                                    SEMA PLC

                           CONSOLIDATED BALANCE SHEET
                             AS AT DECEMBER 31, 2000
<TABLE>
<CAPTION>

                                                                (pound) millions

    <S>                                                         <C>
    ASSETS
    Current Assets
       Cash and cash equivalents                                          144.4
       Short-term investments                                              28.5
       Receivables                                                        635.6
       Stock                                                               11.7
                                                                     -----------
                                                                          820.2

    Long-term investments, held to maturity                                20.3
    Investments in affiliated companies                                     0.9
    Fixed assets less accumulated depreciation                            160.0
    Goodwill and other intangibles, net                                 2,302.5
    Deferred taxes on income                                               43.7
    Other assets                                                           62.2
                                                                     -----------
                                                                        3,409.8
                                                                     -----------

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities
       Accounts payable and accrued liabilities                           571.7
       Income tax liability                                                25.0
       Bank overdrafts                                                     40.3
       Long-term debt due within one year                                   0.3
                                                                     -----------
                                                                          637.3

    Long-term debt                                                          3.5
    Deferred tax                                                          219.5
    Other liabilities                                                      71.4
                                                                     -----------
                                                                          931.7
                                                                     -----------

    Minority Interest                                                      14.0

    Stockholders' Equity
     Common stock (800,000 ordinary shares authorized at 10p each,
     614,088,332 allotted, called-up and fully paid at 10p each)           61.4
       Additional paid-in capital                                       2,414.1
       Retained earnings                                                   30.4
       Treasury stock at cost                                             (24.5)
       Other comprehensive income                                         (17.3)
                                                                     -----------
                                                                        2,464.1
                                                                     -----------

                                                                     -----------
                                                                        3,409.8
                                                                     -----------
</TABLE>


              The accompanying notes are an integral part of the
                       consolidated financial statements

                                                                               3

<PAGE>

                                    SEMA PLC

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 2000
<TABLE>
<CAPTION>

                                                                (pound) millions

 <S>                                                            <C>
 Cash flows from operating activities:
    Net loss                                                           (197.7)
    Adjustments to reconcile net loss to net cash provided by
    operating activities:
       Gain on sale of investments                                      (17.8)
       Loss on sale of fixed assets                                       0.3
       Depreciation and amortization                                    280.1
       Stock compensation expense                                        13.9
       Amounts written off investments                                    4.4
     Change in operating assets and liabilities:
       Increase in receivables                                         (105.1)
       Increase in inventories                                           (4.4)
       Increase in provisions                                            44.5
       Increase in accounts payable and accrued liabilities              68.6
       Decrease in liability for interest                                (2.2)
       Decrease increase in estimated liability for taxes               (35.2)
       Foreign exchange loss                                              3.6

                                                                   -------------
 NET CASH PROVIDED BY OPERATING ACTIVITIES                               53.0
                                                                   -------------

 Cash flows from investing activities:
    Purchases of fixed assets                                           (62.1)
    Acquisition of investments in SG share capital                       (4.4)
    Purchases of intangible assets                                      (14.7)
    Stamp duty paid                                                      (1.7)
    Payment of deferred consideration                                    (6.5)
    Sales of fixed assets & other                                         0.2
    Net cash received on acquisitions                                    78.2
    Sale of investments                                                  18.3

                                                                   -------------
 NET CASH PROVIDED BY INVESTING ACTIVITIES                                7.3
                                                                   -------------

 Cash flows from financing activities:
    Dividends paid                                                      (16.5)
    Sale of corporate bonds and treasury bills                            8.9
    Proceeds from issuance or ordinary shares                             2.6
    Payments on principal of capital leases                              (9.9)
    Proceeds from issuance of long-term debt                              2.2
    Payment of principal on long-term debt                               (0.9)
    Increase in cash overdrafts                                          23.2

                                                                   -------------
 NET CASH PROVIDED BY FINANCING ACTIVITIES                                9.6
                                                                   -------------

 Effects of foreign exchange on cash and cash equivalents                (1.2)
 Net increase in cash and cash equivalents                               69.9
 Cash and cash equivalents, beginning of year                            75.7

                                                                   -------------
 CASH AND CASH EQUIVALENTS, END OF YEAR                                 144.4
                                                                   -------------
</TABLE>


              The accompanying notes are an integral part of the
                       consolidated financial statements

                                                                               4

<PAGE>

                                    SEMA PLC

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>


                                                     Common Stock
                                ------------------------------------------------------------
                                                  Issued
                                -----------------------------------                             Accumulated
                                      Par Value          Premium          In Treasury               other
                                ----------------------- ----------- ------------------------   comprehensive    Income
                                   Shares       Amount     Amount       Shares      Amount          loss       Retained      Total
                                ------------- --------- ----------- ------------- ----------  -------------- ---------- -----------
                                                (pound)     (pound)                 pound)         (pound)      (pound)    (pound)
                                   Number      millions     millions    Number    (millions        millions    millions    millions
<S>                              <C>           <C>          <C>         <C>       <C>          <C>             <C>         <C>
Balance, December 31, 1999       463,412,109      46.3       114.0                                   (2.4)       244.1        402.0

Translation adjustment                                                                                1.6                       1.6

Realized gain on sales of
investments                                                                                         (16.5)                    (16.5)

Sales of treasury stock upon
exercise of options                                                      27,896        0.4                                      0.4

Employee share compensation                                   13.9                                                             13.9

Purchase of treasury stock                                           (1,920,315)     (24.9)                                   (24.9)

New share capital subscribed     150,676,223      15.1     2,280.2                                                          2,295.3

Net loss                                                                                                        (197.7)      (197.7)


Dividends declared                                                                                               (16.0)       (16.0)


Tax benefit on stock options                                   6.0                                                              6.0

                                ------------- --------- ----------- ------------- ----------   -------------- ---------- -----------
Balance, December 31, 2000       614,088,332      61.4     2,414.1   (1,892,419)     (24.5)         (17.3)       30.4       2,464.1
                                ------------- --------- ----------- ------------- ----------   -------------- ---------- -----------
</TABLE>

              The accompanying notes are an integral part of the
                       consolidated financial statements

                                                                               6

<PAGE>


                                    SEMA PLC
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   DESCRIPTION OF BUSINESS

Sema plc is an information technology, or IT, services company which provides
its customers with the design, implementation, operation and management of
information systems and IT-related consulting services. Among the industry
sectors Sema plc serves, Sema plc has increasingly focused on the
telecommunications and finance sectors, and provides a range of its own software
products specifically designed for these sectors in addition to its IT services.
Sema plc's customers include a wide variety of businesses and government
departments located in over 70 countries around the world.

Sema plc's services and product offerings include: (1) systems integration; (2)
software products, principally for the telecommunications and finance sectors;
and (3) outsourcing. Each of these service lines includes a consulting
component.

2.   SUMMARY OF ACCOUNTING POLICIES

The Consolidated Financial Statements of Sema plc and its subsidiaries ("the
Group") have been prepared in accordance with accounting principles generally
accepted in the United States of America.

PRINCIPLES OF CONSOLIDATION

The Consolidated Financial Statements include the accounts of majority-owned
subsidiaries. Significant 20% - 50% owned companies over which the Group
exercises significant influence are accounted for using the equity method and
classified in Investments in Affiliated Companies within the consolidated
balance sheet.

Investments where the Group has less than 20% of the voting rights and over
which the Group does not exercise significant influence are accounted for at
cost, and are included in long-term investments, held to maturity on the
consolidated balance sheet.

CASH AND CASH EQUIVALENTS

Short-term marketable debt securities with maturities of three months or less
are included within cash on the consolidated balance sheet.

INVESTMENTS

Investments in listed companies are accounted for as available-for-sale
securities under SFAS No. 115 "Accounting for Certain Investments in Debt and
Equity Securities", whereby any increases/decreases in market value, which are
considered temporary, are reflected in other comprehensive income.

For purposes of the Consolidated Statement of Cash Flows, the Group does not
consider short-term investments to be cash equivalents as they generally have
original maturities in excess of three months.

Investments in the Group's own shares is considered treasury stock and is
included as a reduction to shareholders' equity.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. While actual results could differ from these estimates, management
believes that the estimates are reasonable.

                                                                               7

<PAGE>

REVENUE RECOGNITION

Systems integration turnover is recognized on a percentage of completion basis
for fixed price contracts and as the services are delivered for time and
materials contracts. All turnover is recorded on a gross basis. Losses on fixed
price contracts are recognized in the first period as they are incurred or
foreseen.

Outsourcing turnover is recognized as services are delivered and earned.

The Group's product revenue is derived from the sale of licenses for its
software, maintenance and related services, which include installation,
consulting and training services. If services are essential to the functionality
of the software, revenue derived from the contract is recognized based on the
percentage of completion of the services provided during the period compared to
the total estimated services provided over the entire contract.

If services are not essential to the functionality of the software, the revenue
for each element of the contract is recognized separately based on its
respective vendor specific objective evidence of fair value when all of the
following conditions are met: a signed contract is obtained, delivery has
occurred, fee is fixed and determinable and collectibility is probable. Vendor
specific objective evidence of fair value is determined as being the price for
the element when sold separately. If an ongoing vendor obligation exists under
the license arrangement, or if any uncertainties with regard to customer
acceptance are significant, turnover for the related element is deferred based
on its vendor specific objective evidence of fair value. If vendor specific
objective evidence of fair value does not exist for all undelivered elements,
all revenue is deferred until sufficient evidence exists or all elements have
been delivered.

Payments received in advance of revenue recognition are recorded as deferred
revenue. Revenue from annual maintenance and support are deferred and recognized
ratably over the term of the contract. Revenue from consulting and training are
deferred and recognized when the services are performed and collectibility is
deemed probable.

If a discount is offered in a multiple-element arrangement, a proportionate
amount of that discount is applied to each element included in the arrangement
based on each element's fair value without regard to the discount, except that
no discount is allocated to any upgrade rights.

FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION

Assets and liabilities denominated in foreign currencies are translated into
Sterling at the rate ruling at the balance sheet date. Transactions are recorded
at the rate prevailing at the date of the transaction or at the rate of any
related forward contract. Exchange differences arising are dealt with through
the profit and loss account.

The revenues, expenses, gains and losses of overseas Affiliated companies are
translated into Sterling at the weighted average rate for the year and their
assets and liabilities at the exchange rate as of the balance sheet date. The
cumulative translation adjustment is recorded as a separate component of
shareholders' equity.

FINANCIAL INSTRUMENTS

Derivative instruments utilized by the Group are forward exchange contracts and
interest rate swaps. The Group only utilizes derivative instruments for hedging
purposes.

A derivative instrument is considered to be used for hedging purposes when it
relates directly to an existing underlying exposure and it reduces the risk to
the Group.

Gains or losses arising on forward foreign exchange contracts are only
recognized when the underlying transaction, which is being hedged, is settled.

Interest differentials on interest rate swaps are recognized by adjusting net
interest expense.

                                                                               8

<PAGE>

INVENTORIES

Inventory is stated at the lower of cost and net realizable value, which
approximates market. The cost is determined using the First-In-First-Out (FIFO)
method. Costs include all costs incurred in bringing each product to its present
location and condition. Inventory consists of raw materials and consumables,
work in progress, and finished goods.

Work is undertaken for customers either on the basis that time and materials are
billed as incurred or according to the terms of fixed or limited-price contracts
(which are substantially long-term). With respect to the former, revenues and
expenses are recognized according to time worked. With respect to fixed or
limited-price contracts, revenue is recognized according to the percentage of
the estimated total contract value completed. All losses are fully recognized as
soon as incurred or foreseen.

GOODWILL

Goodwill arising on the acquisition of Affiliated companies, representing the
excess of consideration given over the fair value of net assets acquired, is
recorded as an intangible asset. Goodwill is amortized on a straight-line basis
in the profit and loss account over the estimated useful life of the asset
ranging from 5 to 10 years, the Directors estimate of the economic life of the
assets.

OTHER INTANGIBLE ASSETS

Other intangible assets, representing separately identifiable assets from an
acquisition or purchased software licenses are capitalized at fair value or
cost, respectively. Separately identified intangible assets from an acquisition
are amortized over their useful lives. These consist mainly of customer
contracts and are amortized over a period of 5-10 years.

Software license costs are amortized over the period of the license or the term
of the sales contract, whichever is shorter. Amortization is charged from the
commencement of the license's deployment.

SOFTWARE DEVELOPMENT COSTS

The Group capitalizes all internal and external costs directly associated with
the development of software for internal use under AICPA Statement of Position
98-1 (SOP 98-1) "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use". These costs include designing, configuration,
coding, installation, and testing.

Costs associated with the development of software to be sold or otherwise
marketed are capitalized subsequent to the establishment of technological
feasibility up to the product's general release under SFAS No. 86 "Accounting
for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed".
These costs are amortized over the estimated economic life of the software
product. To date, the period between achieving technological feasibility, which
the Group has defined as the establishment of a working model, and the general
availability of such software has been short and software development costs
qualifying for capitalization have not been significant. Accordingly, the Group
has not capitalized any software development costs, including software developed
for internal use and for sale to third parties, in the year ended December 31,
2000.

RESEARCH AND DEVELOPMENT

Expenditure on research and development is charged against the income of the
period in which it is incurred, except to the extent that such expenditure is
recoverable from third parties.

                                                                               9

<PAGE>

PENSIONS

Defined benefit schemes

The expected cost of providing pension benefits to employees is charged to the
profit and loss account accruing in the period as determined by SFAS No. 87
"Employers' Accounting for Pensions". This requires readjustment of the
significant actuarial assumptions annually to reflect current market and
economic conditions.

Defined contribution schemes

Pension costs charged to the consolidated profit and loss account represent the
amount of the contribution payable to the scheme in respect of the accounting
period.

FIXED ASSETS AND DEPRECIATION

Fixed assets are stated at cost less accumulated depreciation, which is provided
for by charges to income over the estimated useful lives of the assets using the
straight-line method. Fixed assets include land and buildings, computer
equipment and software licenses, office furniture, cars and equipment.
Expenditures for maintenance and repairs are charged to expense as incurred.
Additions and major replacements or betterments that increase capacity or extend
useful lives are added to the cost of the asset. Upon sale or other disposition,
the applicable amounts of asset cost and accumulated depreciation are removed
from the accounts and the net amount, less proceeds from disposal, is charged or
credited to income.

The estimated useful lives of fixed assets are as follows:
- Buildings: between 20 and 50 years, or the period of any leasehold
- Software licenses: 5 years
- Computer equipment: between 1 and 4 years or life of the related facilities
  management contracts
- Office furniture and equipment: between 5 and 20 years
- Motor cars: 3 years
- Freehold land is not depreciated.

LEASING

The Group follows the reporting requirements of SFAS No. 13 "Accounting for
Leases". Leases classified as capital leases are recognized as assets and
liabilities in the balance sheet at amounts equal to the fair value of the
leased property at the inception of the lease or, if lower, at the present value
of the minimum lease payments. Lease payments are apportioned between imputed
finance charge and the reduction of the outstanding liability. The lease asset
is depreciated during the period of expected use on a systematic basis
consistent with the depreciation policy for depreciable assets that are owned.
The amounts paid under operating leases are charged to the consolidated profit
and loss account as incurred.

IMPAIRMENT OF LONG-LIVED ASSETS

The Group reviews the carrying value of its long-lived assets, including
goodwill, whenever events or changes in circumstances indicate that the
historical cost-carrying value of an asset may no longer be appropriate in
accordance with SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" ("SFAS No.121"). The Group assesses
recoverability of the carrying value of the asset by estimating the future net
cash flows expected to result from the asset, including eventual disposition. If
the future net cash flows are less than the carrying value of the asset, an
impairment loss is recorded equal to the difference between the asset's carrying
value and fair value. The Group has determined that no impairments would have
been recognized under SFAS No. 121.

                                                                              10

<PAGE>

STOCK COMPENSATION COSTS

The Group follows SFAS No.123 "Accounting for Stock-Based Compensation" whereby
compensation cost represents the difference between the estimated fair value of
the option at the date of grant using an option pricing model and the exercise
price. This model considers the stock price at grant date, the exercise price
and expected life of the option, expected volatility, expected dividend yield
and a risk-free interest rate. This difference is amortized over the expected
performance period or vesting period of the applicable options. See note 18 for
a description of the Group's stock option plans.

Tax credits obtained from the deduction of the Group's contribution to the
Qualified Employee Share Trust (QUEST) are accounted for as a credit to
shareholders' funds.

DIVIDENDS

Dividends are recorded as a reduction to shareholders' equity only when they
have been formally declared. Formal declaration requires approval by the Board
of Directors and the shareholders.

EARNINGS PER SHARE

Basic earnings/(loss) per share is calculated by dividing net income/(loss) by
the weighted average number of common shares outstanding during the year.
Diluted earnings/(loss) per share is calculated by dividing net income/(loss) by
the weighted average number of common shares outstanding assuming dilution, the
calculation of which assumes that all stock options and potentially dilutive
securities, such as convertible loans, were converted to shares as of the
beginning of the year or at the time of issuance, if later.

TAXES ON INCOME

The Group uses the liability method of accounting for income taxes, wherein
deferred tax assets and liabilities are recognized for future tax consequences
attributable to temporary differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to reverse. The effect of a change in tax rates on deferred tax assets
and liabilities is recognized in income in the period that includes the
enactment date. Deferred tax assets are reduced by a valuation allowance if,
based on the weight of the available evidence, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. As changes
in tax laws or rates are enacted, deferred tax assets and liabilities are
adjusted through income tax expense.

                                                                              11

<PAGE>


3.   SEGMENTAL ANALYSIS



The analyses of turnover, profit before tax, and net assets by country and by
activity are as follows:

<TABLE>
<CAPTION>
                                   Turnover       Turnover   (Loss)/profit
                                by destination   by origin     before tax     Net assets

                                   (pound)m       (pound)m      (pound)m       (pound)m
<S>                             <C>              <C>         <C>             <C>
By Geography
  UK                                  522.8         586.5         6.9          170.0
  France                              278.6         289.1        (1.4)          94.1
  Sweden                              165.8         148.7        (8.8)          28.2
  Spain                                92.8         108.8        13.2           24.9
  Italy                               106.2         127.4         4.2           53.1
  Germany                              41.5          57.5       (52.9)         580.0
  North America                        33.9          27.3      (168.0)       1,503.9
  Other                               238.9         135.2        (2.1)          23.9
                                ---------------- ----------- -------------- -------------

Total continuing activities         1,480.5       1,480.5      (208.9)       2,478.1
                                ---------------- ----------- -------------- -------------

Inter-segmental turnover                             64.1
                                                 -----------
                                                  1,544.6
                                                 -----------
</TABLE>

The inter-segmental turnover disclosed above is derived from the following
geographic regions:

                                                               (pound)m

By Geography

  UK                                                             16.5
  France                                                         29.1
  Sweden                                                          0.2
  Spain                                                           8.0
  Italy                                                           0.4
  Germany                                                         1.1
  North America                                                   3.1
  Other                                                           5.7
                                                       -------------------------

Total continuing activities                                      64.1
                                                       -------------------------

                                                                              12

<PAGE>




                                      Turnover     (Loss)/profit
                                     by origin       before tax     Net assets
                                      (pound)m        (pound)m       (pound)m

By Activity

  Systems integration                   604.1           (40.8)         135.6
  Outsourcing                           463.2            24.9           91.7
  Products                              231.6          (127.3)       1,577.6
  Managed services                      135.2            12.2           26.8
  Business continuity                    46.4             5.0           15.9
Adjustments                                --           (82.9)         630.5
                                   --------------- -------------- -------------

Total continuing activities           1,480.5          (208.9)       2,478.1
                                   --------------- -------------- -------------

The results for acquisitions are included within the products segment in the
table above.

Net assets is calculated by taking total assets of (pound)3,409.8m and reducing
it for liabilities of (pound)931.7m. This is a measurement of financial position
used by management in their review of segment results.

The Group has made certain adjustments to the management accounts in order to
reconcile the segment information to the consolidated financial statements.

Amounts for acquisitions during the year primarily comprise the results of LHS
Group Inc. The acquisition was completed on July 29, 2000. Further details
regarding acquisitions are included in note 11.

Description of activities:

 .    Systems Integration - the process of designing, implementing and
     integrating IT systems, including proprietary and third party software,
     with existing IT systems.

 .    Software Products - the sale of products including installation and
     consulting with an up-front license, followed by annual maintenance fees.
     The IPRs are owned by Sema.

 .    Outsourcing - the use, by companies and governments, of third parties such
     as Sema to manage and operate all or part of their information systems.

 .    Managed Services - the provision of outsourcing services of a non-IT nature
     to companies and governments.

 .    Business Continuity - the provision of business continuity and disaster
     recovery services to customers to allow them to continue working at an
     alternative location should their own location become unavailable due to
     power outages, accidents, natural disasters or terrorist activity.

4. RESEARCH AND DEVELOPMENT

The Group expenses all research and development costs as incurred. The research
and development costs incurred for the year ended December 31, 2000 were
(pound)40.0m.

5. EARNINGS PER SHARE

Basic EPS is computed by dividing income available to common shareholders by the
weighted average number of common shares outstanding for the year.

6. PENSION ARRANGEMENTS

                                                                              13

<PAGE>

The Group operates a number of defined contribution and defined benefit pension
schemes in Europe and the Asia-Pacific region. The total cost for the Group for
these schemes was (pound)3.0 million.

In France, Belgium, Germany, Italy, Singapore and Sweden, the contributions are
mainly invested in national schemes managed by government or external agencies,
and to this extent the amounts are included in the figures disclosed under
social security costs.

DEFINED CONTRIBUTION SCHEMES

Pension costs of (pound)1.9m charged to the consolidated statement of income
represents the amount of the contribution expense to the schemes for the year
ended December 31, 2000.

DEFINED BENEFIT SCHEMES

The principal defined benefit schemes in the Group are in the UK. Pension costs
of (pound)1.1m is charged to the consolidated statement of income on a
systematic basis over the service lives of the eligible employees based upon
payroll and actuarial methods, assumptions and advice in accordance with the
reports of qualified independent actuaries. This is in accordance with SFAS
No. 87, which requires readjustment of the significant actuarial assumptions
annually to reflect current market and economic conditions. In addition, SFAS
No. 132 also required disclosure of the components of the net periodic pension
cost and the funded status of the pension plans. The prepaid benefit cost
amounts to (pound)63.5m.

The aggregate pension disclosure for the Sema Pension Scheme, the Sema CS
Pension Scheme and the Shares Cost Section of the BRBS Scheme in accordance with
SFAS No. 132 is as follows:

                                                        (pound)m

Components of pension expense:

Net service cost                                          16.0
Interest cost                                             20.5
Expected return on plan assets                           (31.5)
Recognized net actuarial loss                             (1.2)
Amortization of transitional asset                        (0.9)
Recognition of curtailment gain                           (1.8)
                                                    -----------
Net periodic benefit cost                                  1.1
                                                    -----------

                                                                              14

<PAGE>

The following table sets forth the funded status of the UK plans:

                                                       (pound)m

Funded status                                             50.8
Unrecognized net actuarial loss                           15.6
Unrecognized transitional asset                           (2.9)
                                                    -----------
Prepaid benefit cost                                      63.5
                                                    -----------

Change in benefit obligation during the year:         (pound)m

Benefit obligation at January 1, 2000                    301.1
Effect of remeasurement                                   26.4
Service cost                                              16.0
Interest cost                                             20.5
Contributions by plan participants                         6.3
Actuarial gains                                          (13.2)
Benefits paid                                            (13.1)
Transfers in                                               0.4
Curtailment gain                                          (1.6)
Acquisition                                                5.9
                                                    -----------
Benefit obligation at December 31, 2000                  348.7
                                                    -----------

Change in plan assets during the year:                (pound)m

Fair value of plan assets at January 1, 2000             394.0
Actual return on plan assets                              (7.5)
Employer contribution                                     14.0
Contributions by plan participants                         6.3
Acquisition                                                5.4
Transfers in                                               0.4
Benefits paid                                            (13.1)
                                                    -----------
Fair value of plan assets at December 31, 2000           399.5
                                                    -----------


Plan assets are held in separately administered trusts and consist principally
of listed debt and equity securities.

Assumptions used to determine the pension cost for the plans:

Rate of return on assets                                   8.0%
Discount rate                                              6.0%
Salary growth                                              3.5%
Inflation                                                  2.5%
Future working lifetime (1)                              15 years

(1) The future working lifetime for the shared cost section BRBS Scheme is 10
years in 2000.

                                                                              15

<PAGE>

7. OTHER EXPENSES

                                                        (pound)m

Recognized within operating expenses:
Profit on disposal of investment                          17.8
Restructuring costs                                     (13.3)
Amounts written off investments                          (4.4)


During the year the Group sold its remaining interest in Openwave.com Inc.
(formerly Phone.com Inc.), a US company.  336,688 shares were sold resulting in
cash proceeds of(pound)18.3m and a profit of(pound)17.8m.

The restructuring costs of (pound)13.3m paid in the year related to the
fundamental restructuring of the Group's outsourcing activities, intended to
improve the Group's competitive position in this market.

The results for the year include a write down of (pound)4.4m in the value of
Sema's investment portfolio following a Directors' valuation at December 31,
2000. This item had no cash effect in the year.

The net tax expense on the above items is (pound)1.1m.

8. TAXATION

                                                      (pound)m

United Kingdom Corporation Tax
At 30%
   Current                                              15.3
   Prior year                                             --
   Deferred                                              3.0
                                                    ----------
                                                        18.3

Overseas taxation
   Current                                               9.1
   Prior year                                            0.1
   Deferred                                            (39.1)
                                                    ----------
                                                       (29.9)

Associated undertakings                                  0.1
                                                    ----------
Tax on credit or loss on ordinary activities           (11.5)
                                                    ----------

In 2000 and in prior years, the Group has taken advantage of group relief
provisions for tax purposes where appropriate.

As of December 31, 2000 the Group has a payable for income taxes of
(pound)25.0m.

                                                                              16

<PAGE>

Deferred taxes result from temporary differences in the recognition of income
and expenses for financial reporting purposes and for tax purposes. Components
of the Group's net deferred tax liability are as follows:

                                                      (pound)m

Deferred tax liabilities - non current:
   Accelerated depreciation                              2.9
   Provision for tax on Swedish accruals                 3.9
   Other                                                 2.1
   Pension                                              19.2
   Intangibles                                         191.4
                                                    ----------
Total deferred tax liabilities - non current           219.5
                                                    ----------
Deferred tax assets - non current:
   Book over tax depreciation                           14.3
   Provisions on acquisition                             0.2
   Provisions                                           26.8
   Net operating loss carry forwards                    44.9
                                                    ----------
Total deferred tax assets - non current                 86.2
Valuation allowance                                    (42.5)
                                                    ----------
Net deferred tax assets - non-current                   43.7
                                                    ----------
Net deferred tax liability provided                    175.8
                                                    ----------

Net tax losses carried forward at December 31, 2000 amounted to (pound)44.6m.

The Group does not have any current deferred tax assets or liabilities, as all
temporary differences are non-current.

Reconciliation of tax charge to statutory rate on profits follows:

                                                      (pound)m

Profit before tax on ordinary activities              (208.9)
                                                    ----------
Expected tax effect at 30% for 2000                    (62.7)
Actual tax credit                                       11.5
                                                    ----------
Difference to reconcile                                (51.2)
                                                    ----------
Permanent differences:
   Goodwill amortization                               (50.8)
   Stock option compensation                            (4.2)
Effect of tax rate change                                3.6
Trading losses unrecognized                             (7.6)
Valuation on provisions made in the year                (0.1)
Brought forward tax losses utilized                      7.7
Other                                                    0.2
                                                    ----------
Total difference reconciled                            (51.2)
                                                    ----------

The activity in the Group's valuation allowance for deferred tax assets consists
of the following:

                                                      (pound)m

Balance at January 1, 2000                               2.9
Additions in the year due to loss carry forwards        39.6
                                                    ----------
Balance at December 31, 2000                            42.5
                                                    ----------

                                                                              17

<PAGE>

The valuation allowance allocated by tax jurisdiction is as follows at December
31, 2000:

                                                      (pound)m
UK                                                        --
Other                                                   42.5
                                                    ----------
                                                        42.5
                                                    ----------

9. INTANGIBLE ASSETS

                                                             Other
                                            Goodwill   Intangibles        Total
                                            (pound)m      (pound)m     (pound)m
COST
At January 1, 2000                             254.7          43.0        297.7
Additions (note 11)                          1,687.6         674.6      2,362.2
On acquisition of affiliated companies            --           1.5          1.5
Disposals                                       (0.4)           --         (0.4)
Foreign exchange                                 0.6          (0.1)         0.5
                                        ------------- ------------- ------------

AT DECEMBER 31, 2000                         1,942.5         719.0      2,661.5

AMORTISATION
At January 1, 2000                             124.5          19.6        144.1
Charge for the year                            168.9          44.7        213.6
Write off of IPR & D (see note 11)                --           0.6          0.6
On acquisition of affiliated companies            --           0.6          0.6
Foreign exchange                                 0.1            --          0.1
                                        ------------- ------------- ------------

AT DECEMBER 31, 2000                           293.5          65.5        359.0

NET BOOK AMOUNT DECEMBER 31, 2000            1,649.0         653.5      2,302.5
                                        ------------- ------------- ------------
Net book amount December 31, 1999              130.2          23.4        153.6
                                        ------------- ------------- ------------

The goodwill arising on acquisitions made in 2000 of Affiliate companies is
being amortized on a straight-line basis over 5-10 years from the date of
acquisition, depending on the circumstances and nature of the business acquired.

The goodwill arising on the acquisition of LHS Group Inc. during the year is
being amortized over five years, which is the period the Directors estimate that
the values of the businesses acquired are expected to exceed the value of the
underlying assets.

Other intangibles consist of software licenses acquired, customer contracts,
assembled workforce and trademarks. These are being amortized over a period of
5-15 years, depending on management's estimate of their useful lives.

                                                                              18

<PAGE>

10. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>

                                                                  Computer
                                                                 equipment       Office
                                                       Land            and     furniture
                                                        and       software      cars and
                                                  buildings       licenses     equipment        Total
                                                   (pound)m       (pound)m      (pound)m     (pound)m
<S>                                               <C>            <C>    <C>    <C>           <C>
COST
At January 1, 2000                                     37.2          272.5          70.3        380.0
On acquisition of affiliated companies                  0.6           21.2          12.6         34.4
Additions                                               3.7           38.4          22.0         64.1
Disposals                                              (1.4)         (10.6)         (9.3)       (21.3)
Foreign exchange adjustment                             0.2            2.4           2.4          5.0

                                               ------------- -------------- ------------- --------------
AT DECEMBER 31, 2000                                   40.3          323.9          98.0        462.2
                                               ------------- -------------- ------------- --------------

DEPRECIATION
At January 1, 2000                                     11.6          189.9          35.5        237.0
On acquisition of affiliated companies                  -             12.0           4.9         16.9
Charge for the year                                     2.7           46.5          16.7         65.9
On disposals                                           (0.1)         (10.3)         (9.3)       (19.7)
Foreign exchange adjustment                            (1.0)           1.8           1.3          2.1

                                               ------------- -------------- ------------- --------------
AT DECEMBER 31, 2000                                   13.2          239.9          49.1        302.2
                                               ------------- -------------- ------------- --------------

NET BOOK AMOUNT                                        27.1           84.0          48.9        160.0
DECEMBER 31, 2000
                                               ------------- -------------- ------------- --------------
</TABLE>


The cost and accumulated depreciation of tangible fixed assets held under
capital leases were:

<TABLE>
<CAPTION>


<S>                                                     <C>           <C>            <C>         <C>
AT DECEMBER 31, 2000
Cost                                                    1.8           45.3           3.2         50.3
Accumulated depreciation                                0.3           39.4           2.8         42.5
</TABLE>

                                                                              19

<PAGE>

The depreciation charge for the year includes amounts in respect of tangible
fixed assets held under capital leases of:
<TABLE>
<CAPTION>
                                                                    Computer
                                                                   equipment          Office
                                                         Land            and       Furniture
                                                          And       software        cars and
                                                    Buildings       licenses       Equipment           Total
                                                     (pound)m       (pound)m        (pound)m        (pound)m
<S>                                                 <C>            <C>             <C>              <C>
FOR THE YEAR ENDED
DECEMBER 31, 2000                                        0.1           8.9             0.5              9.5
                                                 ------------- -------------- --------------- ---------------
</TABLE>

The net book amount of land and buildings comprises freeholds of (pound)14.2m
and leaseholds of (pound)12.9m. At December 31, 2000, the Group had contracted
for capital expenditure, for which no provision has been made in these accounts,
of (pound)1.6m.

The Company had no capital commitments at the end of 2000.

11. AFFILIATED COMPANIES

The principal Affiliated companies at December 31, 2000, which were fully
consolidated in the year, and which are engaged in the provision of information
technology services, were as follows (all holdings were in ordinary shares):

<TABLE>
<CAPTION>
                                                   Immediate holding company (%)           Country of incorporation and
                                                                                                              operation
<S>                                                <C>                                     <C>
DIRECT AFFILIATED COMPANIES
Sema SA                                                                     99.9                                 France
Sema UK Limited                                                              100                                England
INDIRECT AFFILIATED COMPANIES
Sema Group GmbH                                                              100                                Germany
Sema Group SA*                                                               100                                  Spain
Sema Sweden AB                                                               100                                 Sweden
Sema Telecom SA                                                              100                                 France
Sema Outsourcing SA                                                          100                                 France
Sema SpA                                                                     100                                  Italy
Sema Canada Limited                                                          100                         England/Canada
Sema Pte Limited                                                             100                              Singapore
Sema Global Recovery Services Limited                                        100                                England
LHS Group Inc                                                               89.4                                    USA
Sema Group Inc                                                               100                                    USA
LHS Verwaltungs GmbH & Co. Projekt KG zur Durchfuhrung Von                   100                                Germany
Softwareprojekten
</TABLE>

Since the year-end, several of the entities listed above changed their names by
the removal of the word "Group". These changes were implemented so that
subsidiary names remained uniform with Sema plc (formerly SEMA Group plc, having
changed its name on December 1, 2000). In the case of the former Sema Group
Recovery Services companies, they are now known as Sema Global Recovery
Services.

                                                                              20

<PAGE>

ACQUISITIONS

LHS Group Inc

On July 29, 2000 the Group acquired 84.9% of the outstanding equity in LHS Group
Inc ("LHS") and an option to acquire the remaining 15.1% by June 30, 2004. The
Group's current holding entitles it to 99% of the shareholder votes and full
authority to manage LHS in any way it deems appropriate . LHS is a leading
global provider of billing and operations support software and services to the
communications industry.

The consideration for the acquisition of LHS was (pound)2,159.9m, including
costs. The terms of the sale provided for one LHS ordinary share to be converted
into 2.6 Sema ordinary shares. As of July 29, 2000 LHS had 59,444,836 ordinary
shares outstanding, of which 50,535,665 became convertible into 131,392,728 Sema
ordinary shares immediately on acquisition. The balance of 8,909,171 LHS shares
are convertible at a future date. As a result, under US GAAP a minority interest
of 15% is recorded. Subsequent to July 29, 2000 certain of the shares
representing this minority interest were converted into Sema plc ordinary
shares. This gave rise to additional goodwill of approximately (pound)265
million.

The price of (pound)14.86 per share was calculated based on the average closing
price of the Sema ordinary shares on the five days prior and subsequent to the
day the merger was announced, which was March 15, 2000.

Also included in the consideration is the fair value of the outstanding options
which vest on the date of the merger held by LHS stockholders on March 15, 2000
(7.4 million options). The fair value of those options has been determined
consistent with the methodology prescribed under SFAS No. 123, "Accounting for
Stock-Based Compensation". The fair value was estimated using the Black-Scholes
option method with the following assumptions: risk free interest rate, 6.0%;
dividend yield, 0.29%; expected volatility, 60.86%; expected life, 1 year. The
weighted-average grant fair value of each LHS option which vests on the date of
the merger is (pound)10.44.

The cost of acquisition has been determined as follows

<TABLE>
<CAPTION>
                                                                                     (pound)m
<S>                                                                                  <C>
Issue of 131.4 million Sema ordinary shares at(pound)14.86 ($23.99) per share        1,951.9
Fair value of options which vest at date of merger                                     190.1
                                                                                  ---------------
                                                                                     2,142.0
Merger fees and expenses                                                                17.9
                                                                                  ---------------
                                                                                     2,159.9
                                                                                  ---------------
</TABLE>

The total estimated purchase price of the merger has been allocated to assets
and liabilities based on management's estimate of their fair values. The excess
of the purchase price over the fair value of the net assets acquired, including
identifiable intangible assets, has been allocated to goodwill.

                                                                              21

<PAGE>

The table below sets out the details of the acquisition of LHS Inc. which was
completed on July 29, 2000.

                                                         Fair Value
                                                           (pound)m

Fixed assets                                                  15.7
Goodwill                                                   1,402.6
Intangibles
   Customer lists                                            444.7
   Tradenames                                                 18.0
   Assembled workforce                                        27.7
   Developed technology                                      169.0
   In-process research and development                         0.6
Investments                                                    9.8
Debtors                                                       60.8
Stock                                                          8.6
Marketable debt securities                                    34.5
Deferred Tax                                                   2.4
Cash                                                          48.6
Minority Interest                                            (17.4)
Creditors, accruals and provisions                           (65.7)

                                                        -----------
Net assets acquired                                        2,159.9
                                                        -----------

Consideration and related costs:
Sema ordinary shares                                       1,951.9
LHS outstanding options                                      190.1
Acquisition costs                                             17.9

                                                        -----------
Total                                                      2,159.9
                                                        -----------


The acquisition has been accounted for under the purchase method from the
effective date of acquisition and the goodwill arising (note 9) has been
capitalized as an intangible asset.

The amount allocated to in-process research and development of (pound)0.6m was
written off by the Group immediately subsequent to the acquisition.

                                                                              22

<PAGE>

Pre-acquisition results of LHS Inc.

The summarized profit and loss account and statement of total recognized gains
and losses of LHS, prepared under US GAAP for the 7 months ended July 31, 2000,
and translated at the average exchange rate for the period of (pound)1 = $1.562
is given below.

                                                               7 months ended
                                                                 31 July 2000
                                                                     (pound)m

         Revenue                                                        82.1
         Expenses                                                      (88.5)
                                                          --------------------
         Loss before taxes                                              (6.4)
         Taxes                                                          (1.4)
                                                          --------------------
         Net loss                                                       (7.8)
                                                          --------------------


The unaudited condensed pro forma profit and loss account for the Group,
combined as if the acquisition of LHS took place on January 1, 2000 for the year
ended December 31, 2000 is as follows:

                                                       (pound)m, except per

                                                                 share data

         Revenue                                                    1,566.6
         Expenses                                                  (2,003.8)
                                                          ------------------
         Loss before taxes and minority interest                     (437.2)
         Taxes                                                         10.1
         Minority interest                                             (0.3)
                                                          ------------------
         Net loss                                                    (427.4)
                                                          ------------------

         Basic earnings per share                                     (81.7)
                                                          ------------------


In management's opinion, these unaudited pro forma results are not necessarily
indicative of what the actual combined results might have been if the
acquisition had been effective at January 1, 2000 for the year ended December
31, 2000.

The principal acquisition during the year of LHS had the following impact on the
Consolidated Cash Flow Statement for the five months ended December 31, 2000:

                                                                    (pound)m

Net cash outflow from operating activities                           (4.7)
Returns on investment and servicing of finance                        1.5
Investing activities                                                 (4.2)
Financing and management of liquid resources                          2.7
                                                               ---------------
                                                                     (4.7)
                                                               ---------------

                                                                              23

<PAGE>


12. AFFILIATED COMPANIES AND INVESTMENTS
<TABLE>
<CAPTION>

                                                          Investments          Affiliated companies        Group
                                                                               --------------------
                                                                                           Share of        Total
                                                                           Shares   profit/(losses)
                                                        ---------------------------------------------------------
                                                             (pound)m    (pound)m          (pound)m     (pound)m
<S>                                                          <C>         <C>        <C>                 <C>
COST
At January 1, 2000                                                5.0         0.8              0.6            6.4
Share of retained profits less losses                              --          --              0.1            0.1
As part of acquisitions in the year                              10.1          --               --           10.1
Disposals                                                        (0.6)       (0.3)              --           (0.9)
Reclassification to short term marketable debt                   (2.2)         --               --           (2.2)
securities
Additions                                                        12.4         0.1               --           12.5
                                                        ---------------------------------------------------------

AT DECEMBER 31, 2000                                             24.7         0.6              0.7           26.0
                                                        ---------------------------------------------------------

AMOUNTS PROVIDED
At January 1, 2000                                                 --        (0.1)            (0.1)          (0.2)
Amounts provided in year                                         (4.4)         --             (0.2)          (4.6)

AT DECEMBER 31, 2000                                             (4.4)       (0.1)            (0.3)          (4.8)
                                                        ---------------------------------------------------------

NET BOOK AMOUNT DECEMBER 31, 2000                                20.3         0.5              0.4           21.2
                                                        ---------------------------------------------------------
</TABLE>

Associated Undertakings

The principal associated undertaking at December 31, 2000, which is engaged in
the provision of information technology services, is Pareli SA incorporated in
France. The proportion of shares held and the voting rights in this company are
49%.

Investments

During the year the Group disposed of its remaining investment in Openwave.com
Inc. (formerly Phone.com Inc.), a company incorporated in the USA specializing
in interactive solutions for mobile telephony and internet applications.  The
sale is summarised as follows:

                                                                 (pound)m

Proceeds from sale                                                   18.3
Cost of investment disposed                                          (0.5)
                                                           ---------------

Gain on sale of investment                                           17.8
                                                           ---------------

The current year's net investment of (pound)20.3m related principally to the
Group's 11% investment in Athene Software, Inc and long term marketable
securities acquired on the acquisition of Group undertakings and a 10%
investment in Mirror Image Communications Limited. Athene Software Inc. is a USA
based company which provides customer focused intelligent Customer Relationship
Management software for communications and e-commerce industries including
Wireless and Wireline service providers, Cable TV and Direct Broadcast Satellite
providers. Mirror Image Communications Limited is a UK based company which
intends to develop a business to business supply chain integration hotel booking
systems. Other additions to investments in the year included (pound)2m
additional capital contribution in Convergence Partners II L.P. and an initial
investment of (pound)0.1m in Portview Communications Partners LP. Portview
Communications Partners LP is a venture capitalist entity which intends to
invest in telecommunications technology companies.

                                                                              24

<PAGE>

13. STOCK

                                                                     2000
                                                                 (pounds)m

Raw materials and consumables                                         3.3
Work in progress                                                      1.9
Finished goods                                                        6.5
                                                           ---------------

                                                                     11.7
                                                           ---------------

14. ACCOUNTS RECEIVABLE

                                                                     2000
                                                                  (pound)m

Trade accounts receivable                                           367.7
Amounts recoverable on contracts                                    143.9
Other accounts receivable                                            66.7
Prepayments and accrued income                                       57.3
                                                           ---------------

                                                                    635.6
                                                           ---------------

Amounts falling due after more than one year included in amounts recoverable on
contracts above are (pound)0.3m and included within other accounts receivable
above are (pound)1.0m.

15. ACCOUNTS PAYABLE: AMOUNTS FALLING DUE WITHIN ONE YEAR

                                                                 (pound)m

Payments received on account                                        66.6
Trade accounts payable                                             189.6
Value added tax                                                     32.2
Other taxation and social security payable                          44.9
Capital lease commitments                                           11.0
Other accounts payable                                              64.0
Accruals and deferred income                                       163.4
                                                           ---------------

                                                                   571.7
                                                           ---------------

16. ACCOUNTS PAYABLE: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

                                                                  (pound)m

Other accruals                                                       49.3
Capital lease commitments                                            12.2
Other accounts payable                                                9.9
                                                           ---------------

                                                                     71.4
                                                           ---------------

                                                                              25

<PAGE>


Other accruals

The balance of other accruals at December 31, 2000 relates principally to
accruals for dilapidations on leasehold properties, accruals for onerous
contracts and an accrual for a dispute with a customer that has progressed to
arbitration. The accrual for dilapidations represents the Group's obligation
under certain operating lease agreements to reinstate the property to its former
condition at the expiration of the lease term. The accrual for dilapidations is
payable within five years. The accruals for onerous contracts and a customer
dispute will be payable within eight years and one year, respectively.

17. LONG-TERM DEBT

Borrowings are repayable by installments as follows:

                                         Bank         Capital lease
                                        loans           commitments        Total
                                     (pound)m              (pound)m     (pound)m

Within one year                           0.3                  11.0         11.3

Between one and two years                 3.3                   3.2          6.5
Between two and three years               0.2                   6.9          7.1
Between three and four years               --                    --           --
Between four and five years                --                    --           --
After five years                           --                   2.1          2.1
                                     -------------------------------------------

                                          3.8                  23.2         27.0
                                     -------------------------------------------

Other bank loans are repayable in installments over five years at interest rates
ranging from 1.85% to 10%. The amounts owed under capital lease commitments are
repayable in installments at interest rates ranging from 2% to 21%.

Facilities committed by banks amounted to (pound)130.0m, of which (pound)6.6m
was utilized at December 31, 2000.

18.  SHAREHOLDERS' EQUITY

Treasury Stock

The Group established two employee share ownership trusts during the period.

On March 17, 2000, the group allotted 1,455,315 of shares to the Sema QUEST at
(pound)13.97 per share, representing the deemed market price at this date. The
Company established the QUEST during the year to acquire new shares in the
Company for the benefit of employees and Directors of the group. On March 17,
2000, the Company provided (pound)20.3m by way of a gift for this purpose. On
the same date, the QUEST subscribed at market value for 1,455,315 of the
Company's 10p ordinary shares. The shares rank pari passu in all respects with
the existing ordinary shares. These shares are being used to satisfy the awards
made under the Save As You Earn (SAYE) scheme which have an exercise price of
(pound)6.38 per share. The cost of the gift has been transferred by the Company
directly to the profit and loss account reserve. The excess of the subscription
price over the nominal value of the shares issued, which amounts to
(pound)20.2m, has been taken to the share premium account.

The shares held by the QUEST at December 31, 2000 have been included in the
Group balance sheet, as treasury stock, at a value of (pound)9.3m, which is
equivalent to the amounts receivable from employees on exercise of their
options.

During the year 27,896 shares held by the Sema QUEST were allocated to employees
exercising their options under the SAYE scheme.

                                                                              26

<PAGE>

The Sema Group Employee Benefit Trust purchased 465,000 shares in the market at
(pound)9.30 per share, using funds contributed by the respective Group employer
companies. These shares will be used to satisfy the awards made under the
Executive Share Option Scheme.

At December 31, 2000, the total number of shares held by Trusts was 1,892,419 of
10p each, of which all shares are under option or rights. The net recoverable
amount of these shares has been assumed to be the exercise price of future
employee share options. The difference between the purchase price and the
exercise price has been written off to reserves. The market value of own shares
at December 31, 2000 was (pound)5,563,712 and represents 0.3% of the issued
capital of the company. Pursuant to the Trust deeds, the right to receive
dividends has been waived until the shares vest unconditionally with the
employees.

Share options

During the year, executive share options in respect of 867,704 ordinary shares
of 10p each were exercised at prices ranging between (pound)1.4248 and
(pound)4.80. Under the SAYE scheme a total of 32,726 share options and share
appreciation rights were exercised at (pound)6.38 for ordinary shares of 10p
each to employees leaving the scheme early.

As part of the consideration for the acquisition of LHS Inc on July 29, 2000, a
total of 131,392,728 ordinary shares at 10p each were issued to LHS Inc
shareholders. This represented 2.6 Sema shares for each LHS share held. The
market value of Sema shares at the date of acquisition was (pound)10.49 per
share. LHS options in respect of 10,094,505 ordinary Sema shares of 10p each
were exercised at prices ranging from (pound)0.26 to (pound)4.85.

The Company uses the fair value method of accounting in accordance with SFAS No.
123 in determining the cost of benefits arising from employee stock compensation
plans.

Options granted under the Company's Employee Option Schemes are exercisable at
the fair market value of the Company's ordinary shares at the date of grant and
are subject to performance criteria, between 3 and 10 years from the date of
grant. Options granted since April 1994 may only be exercised where the
percentage growth in adjusted earnings per share of the Company during a
continuous period of three financial years has exceeded the percentage growth in
the UK Retail Price Index during the same period by at least two per cent per
annum. Options granted prior to April 1994 are not subject to performance
criteria.

All shares shown below have been adjusted for the three for one capitalization
issue which was approved by shareholders on May 27, 1998. Activity with respect
to the share option schemes is as follows:

<TABLE>
<CAPTION>
                                                         Number of options       Weighted average
                                                                                   Exercise price
                                                                                           (pound)
<S>                                                      <C>                     <C>
Options outstanding at January 1, 2000                          11,686,955                   5.01
Options granted                                                 15,568,854                   9.54
Options exercised                                                (900,430)                   3.55
Options cancelled                                              (1,777,257)                   9.30
                                                        ------------------------------------------
Options outstanding at December 31, 2000                        24,578,122                   7.66
</TABLE>

As of December 31, 2000 1,564,636 options were exercisable, with a weighted
average exercise price of (pound)1.97.

                                                                              27

<PAGE>

For options outstanding at December 31, 2000:
<TABLE>
<CAPTION>
  Range of exercise prices           Number     Weighted average       Weighted average
                   (pound)      outstanding       remaining life         exercise price
                                                                                 (pound)
 <S>                            <C>             <C>                    <C>
             0.5441-0.9954          226,996                 1.85                   0.73
                    1.4248          717,640                 5.18                   1.42
              3.0688 - 4.8        4,729,651                 7.66                   4.65
                      6.38        3,607,856                 3.33                   6.38
               6.95 - 7.63        2,277,109                 9.21                   7.34
               9.30 - 9.42       10,631,100                 9.51                   9.41
                     10.19        1,826,870                 2.75                  10.19
             11.21 - 13.79          560,900                 9.55                  11.95
</TABLE>

In addition, the Group acquired 7,754,399 options of LHS on July 28, 2000 which
are convertible on exercise into 2.6 Sema shares. Activity with respect to these
LHS options is as follows:

<TABLE>
<CAPTION>
                                                            Number of Sema          Weighted average
                                                                    shares  exercise price per share
                                                                                              (pound)
<S>                                                         <C>             <C>
LHS options acquired on July 28, 2000                           20,161,437                      7.64
LHS options exercised                                         (10,094,505)                      6.56
                                                        ---------------------------------------------
LHS options outstanding at December 31, 2000                    10,066,932                      9.02

</TABLE>

Compensation expense for the Company's share option and loan schemes has been
determined based upon fair value at the grant date for awards under these plans
consistent with the methodology prescribed under SFAS No. 123, "Accounting for
Stock-Based Compensation". The Company's net loss includes stock based
compensation of (pound)13.9 m for the year ended December 31, 2000. The unearned
compensation at the end of the 2000 financial year was (pound)63.7m. The
weighted-average grant-date fair value of options granted during 2000 was
(pound)3.965. The fair value of the options and loan stock granted were
estimated using the Black-Scholes option method with the following assumptions:

               Assumptions            2000

Dividend yield                       0.29%
Risk free investment rate             6.0%
Expected volatility          44.2% - 71.3%
Expected life (1)               4.25 years



19. RELATED PARTY TRANSACTIONS

France Telecom, by virtue of its holding in the Company during the year, is
considered a related party. The Group provides information technology and
related services to France Telecom and certain of its subsidiaries, in
particular for outsourcing services by Sema Group Outsourcing SA, and for other
services by Sema Group Telecoms SA. The amounts billed during 2000 were
(pound)11.3m for outsourcing services and (pound)72.4m for systems integration.
The net amount due from France Telecom at the end of 2000 was (pound)20.5m.

                                                                              28

<PAGE>

During the period prior to the acquisition of LHS and pursuant to the
acquisition agreement dated March 14, 2000, the Group incurred interest payable
of (pound)3.1m on a promissory note payable to LHS of (pound)257.9m. The
promissory note was consideration for the exercise of an option to subscribe for
10,386,091 new shares of LHS at a price per share of (pound)24.84, an investment
of (pound)258.0m. This represented 14.9 percent of LHS' share capital subsequent
to the exercise. The promissory note was denominated in Sterling, matured in one
year after the exercise of the option, interest was payable quarterly at the
prime rate as reported in The Wall Street Journal, and was secured by the shares
of LHS common stock for which it was issued. The promissory note was
subsequently cancelled upon the acquisition of LHS on July 29, 2000.

In the prior year, Sir Julian Oswald, Chairman of the Board, held a consultancy
contract with an Affiliated company which caused him to be treated as a related
party for the amounts received under the contract. This contract expired on his
appointment as Chairman of the Board on April 14, 1999. The amount payable in
1999 was (pound)11,000 and the balance due to him at the beginning and the end
of the year was nil.

20. COMMITMENTS AND CONTINGENCIES

The Group has in the ordinary course of business provided or requested banks to
provide performance and advance payment guarantees to customers.

During the year the group invested (pound)2.0m in Convergence Partners II L.P.
The Group is committed to contribute up to $5m ((pound)3.1m), over ten years to
the partnership which intends to invest in information technology related
companies.

The Group invested (pound)0.1m in Portview Communications LP. The Group is
committed to contribute up to $1m ((pound)0.7m) over ten years.

The Company is involved in a dispute with a third party licensor in respect of
licensing rights for a particular item of software. Claims have been issued by
the licensor and the Company has issued counter-claims against the licensor. The
Company believes it has meritorious defenses to the licensor's claims and
reasonable grounds for the assertion of its counterclaims. The Company intends
to vigorously defend the claims and prosecute the counterclaims. The matter will
probably be heard later this year. It is not possible to quantify, with any real
certainty, the amount of any liabilities or assets under these claims and
counterclaims. Accordingly, no such assets or liabilities have been reflected in
the financial statements. Further details regarding this dispute have not been
disclosed as they may be prejudicial to the outcome.

LEASE COMMITMENTS

The following is a summary, by year, of future gross minimum rental payments for
all leases with terms greater than one year:

                                                   Operating          Capital
                                                    (pound)m         (pound)m
Fiscal year ending December 31:

   2001                                                 38.2             10.5
   2002                                                 27.8              5.4
   2003                                                 23.5              5.6
   2004                                                 18.3              1.3
   2005                                                 16.6              1.2
   Thereafter                                          114.0              1.0
                                             ---------------------------------
Total minimum lease payments                           238.4             25.0
Less amount representing interest                                        (1.8)
                                                              ----------------
Present value of net minimum lease payments                              23.2
Less current maturities                                                 (11.0)
                                                              ----------------
Long-term obligation                                                     12.2
                                                              ----------------
The Company enters lease agreements as part of the ordinary course of its
business. Capital leases relate primarily to computer equipment rental, whilst
operating leases primarily relate to the rental of office space. The average

                                                                              29

<PAGE>

remaining term of these leases is five years or less. The exception is an
operating lease on a UK property rental which expires in 2017.

21. SUBSEQUENT EVENTS

On February 12, 2001, the Boards of Sema and Schlumberger Investments announced
that they had reached agreement on the terms of a recommended cash offer for the
entire issued, and to be issued, share capital of Sema. The offer is on the
basis of 560p for every Sema share and 1,120p for every Sema ADS.

On April 6, 2001, Schlumberger Investments amounted that its offer for the
ordinary share capital of Sema plc had been declared unconditional in all
respects. The offer remains open for acceptance until further notice, and
withdrawal rights of holders of Sema shares have terminated.

As a result of acceptances since April 6, 2001, Schlumberger Investments has
received valid acceptances of the offer in respect of or otherwise acquired 90%
or more in value of the Sema shares. As anticipated in its offer document dated
February 21, 2001, Schlumberger Investments will seek to acquire compulsorily
the remaining Sema shares pursuant to sections 428 to 430F of the UK Companies
Act 1985. The aggregate consideration for the acquisition of 100% of the issued
Sema shares is expected to be approximately $5.2 billion in cash (including
expenses of the transaction). The purchase price for Sema shares acquired in the
offer was determined following arm's length negotiations with Sema's management
regarding its recommendation of the offer.

Except as described in this paragraph, it is currently expected that the
business and operations of Sema will continue to be conducted as they are
currently being conducted. Schlumberger will continue to evaluate all aspects of
the business, operations, capitalization, corporate and organizational
structure, and management of Sema and will take such further actions as it deems
appropriate under the circumstances then existing.

On March 9, 2001, Sema Global Recovery Services Ltd entered into a 17 1/2 year
lease contract on a building in London for use principally in its business
continuity activity. A bank guarantee was issued on the same day in favor of the
landlord in respect of rental payments in an initial amount of (pound)60m,
declining to zero over seven years. The issuing banks are indemnified by Sema
plc.

22. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Overview of Treasury Objectives

The Group is involved in the provision of information technology related
services that are largely cash generative and financed out of working capital.
The Group's outsourcing activity, however, is more capital intensive and can
involve investment in substantial amounts of tangible fixed assets that are used
as the basis for the provision of services to clients.

The principal financing and treasury exposures faced by the Group relate to
working capital management, the financing of acquisitions and tangible fixed
assets, the ongoing funding structure of subsidiaries, the management of
interest rate and currency positions, and the investment of surplus cash.

The Group has generally followed a policy of avoiding long-term borrowing. The
acquisition of LHS in 2000 was effected by means of a share exchange and over
the last ten years the Group has financed all of its other acquisitions out of
its own cash resources with the sole exception of one capital increase which
raised (pound)99m and which took place in 1996.

Written policies and procedures exist for the conduct, control and recording of
treasury and foreign exchange transactions. All material new treasury
instruments are approved and controlled by Group financial management on a
centralised basis and the treasury impact of bids for new business is reviewed
in detail as part of the bid and contract approval process prior to the
signature of any contract.

                                                                              30

<PAGE>

The principal derivative financial instruments held by the Group are forward
foreign exchange contracts relating to the hedging of normal receivables and
payables denominated in foreign currency. Due to the nature of the Group's
activities which, apart from Telecoms and Major Events, tends to be domestic,
the value and the volume of these instruments is not greatly significant
relative to the size of the Group's business. It is Group policy that no
speculative trading in financial instruments be undertaken.

The Group also has financial instruments in the form of short-term debtors and
creditors which arise in the normal course of business and are not discounted,
securitised or pledged in any way. Short-term debtors and creditors have been
excluded from the disclosures which follow, other than the currency risk
disclosure.

Foreign currency

Transactional

As referred to above, the Group does hedge a proportion of its transactional
exposures by taking out forward foreign exchange contracts to cover the relevant
sales and purchase transactions. This is to minimize the effects of movements in
international currency markets. At December 31, 2000, of the total known and
anticipated net transactional exposures, (pound)48.8m had been hedged. When
those contracts are revalued at the relevant forward rate applicable at the
year-end, this results in a (pound)1.4m unrealised loss. This was due to a
significant proportion of the Group's hedging being in respect of future US
Dollar denominated receivables and the relative strengthening of the US Dollar
against the Euro during the year.

Translational

The Group's reporting currency is Sterling and it therefore faces currency
exposures on the translation of profits earned in overseas currencies, and of
the retranslation of their net assets from year to year. The Group policy is not
to hedge its profit or net asset translation exposures as these represent an
accounting rather than a cash exposure, and as average exchange rates are used
to translate the foreign currency profits, the exchange effect is reduced. The
Group considers itself to be hedged through the geographic span of its overseas
operations.

Between January 1, 1990 and December 31, 1999 the cumulative translational
exchange loss was (pound)18.9m. In 2000 this decreased by (pound)1.6m mainly due
to the effect of a strong US Dollar on the translation of the Group's US assets.

As at the balance sheet date the Group had not entered into any interest rate
swaps or any other interest rate hedging instruments.

Fixed rate financial liabilities are comprised mainly of finance leases.

The floating rate financial liabilities largely comprise bank overdrafts which
bear interest at the respective country's market rate, and finance leases and
deferred acquisition consideration, both of which bear interest at variable
rates. Financial liabilities on which no interest is paid mainly consist of
deferred acquisition consideration.

The Group's benchmark rates for determining interest rate payments for its
floating rate financial liabilities are based on inter-bank lending rates in the
relevant country of operation.

The above table evidences the Group's policy of not having long term borrowing
as only (pound)9.2m of the Group total financial liabilities mature more than
two years from the balance sheet date.

Other financial liabilities consist solely of deferred acquisition consideration
which is reported in the balance sheet, within other creditors in creditors:
amounts falling due within one year and creditors: amounts falling due after
more than one year.

                                                                              31

<PAGE>

Currency exposure of the Group's total assets by currency

The currency exposure (i.e. those transactional exposures that give rise to the
net currency gains and losses recognized in the profit and loss account) of the
Group's monetary assets/(liabilities) is shown below. Such exposures comprise
the monetary assets and monetary liabilities of the Group that are not
denominated in the operating (or functional) currency of the operating unit
involved.

As explained above, it is the Group's policy to hedge a proportion of its
exposures to foreign exchange rate fluctuation. The amounts below take into
account the effect of this hedging.

As at December 31, 2000:

<TABLE>
<CAPTION>

Functional currency of Group              Net foreign currency monetary assets/(liabilities) ((pound)m)
operations

                                              STG          Euro         US        SEK           Other
<S>                                         <C>           <C>          <C>       <C>           <C>
Sterling                                       --           9.6         3.8        --            0.1
  Euro                                       (3.3)          0.1         8.0        --            0.8
   US$                                        2.7          (2.5)         --        --           (0.1)
   SEK                                         --           3.1          --        --             --
 Other                                       (3.0)          3.4         0.1        --           (3.2)

</TABLE>

Fair values of financial instruments

Set out below is a comparison between book value and fair value of all the
Group's financial assets and liabilities:

<TABLE>
<CAPTION>
                                                                                  Book Value   Fair Value
                                                                                    (pound)m     (pound)m
<S>                                                                               <C>          <C>
Primary financial instruments held or issued to finance the
Group's operations:
Short-term borrowings                                                                 (40.6)      (40.6)
Long-term borrowings                                                                  (26.7)      (27.0)
Other financial liabilities                                                           (24.7)      (24.7)
Investments                                                                             18.8        18.8
Long and short-term marketable debt securities                                          29.7        29.7
Short-term deposits                                                                     13.8        13.8
Cash at bank and in hand                                                               130.6       130.6

Derivative financial instruments held to manage the currency profile:

Foreign exchange forward contracts                                                        --        (1.4)

</TABLE>

The fair values of the Group's short-term borrowings, short-term deposits and
cash at bank and in hand which, on the whole bear interest at variable rates,
are equivalent to their book values. The book values of the investments which
are in unquoted companies reflect a directors' valuations and are deemed to be
equal to their fair values. The book values of the short term marketable debt
securities have been compared to their market values to which, in aggregate,
they are equivalent. For finance leases, included in long-term borrowings, the
rate implicit in the lease is compared to the market interest rates at December
31, 2000 for the period until maturity of the lease, resulting in a fair value
difference of (pound)0.3m. The difference between the fair values and book
values of long-term bank borrowings, which are at fixed interest rates, is not
material. Other financial liabilities, comprising of deferred acquisition
consideration, are subject to market rates of interest or do not bear interest.
Their fair values are equivalent to their book values.

                                                                              32

<PAGE>

The estimated fair value of derivatives generally reflects the estimated amounts
the Group would receive or pay to terminate the contracts at the reporting date.

Hedging

During the year ended December 31, 2000, the Group had a loss from hedge
instruments of (pound)0.1m included in loss for the period. At December 31,
2000, unrecognized gains and (losses), respectively, are (pound)0.1m and
(pound)(0.3)m arising in previous years and (pound)0.4m and (pound)(1.6)m
arising between January 1, 2000 and December 31, 2000. Gains and (losses)
expected to be included in December 31, 2001 income are (pound)0.1m and
(pound)(0.6)m, respectively. Gains and (losses) expected to be included in
income for the year ended December 31, 2002 or later are (pound)0.4m and
(pound)(1.3)m, respectively.

23.  RECENTLY ISSUED ACCOUNTING STANDARDS

In 1998, the FSAB issued SFAS No, 133, "Accounting for Derivative Instruments
and Hedging Activities", which is effective for the Company's 2001 fiscal year.

SFAS No. 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives), and for hedging activities.
It requires that entities recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. The Company is currently reviewing the likely impact in adopting
this Statement on the level of disclosure currently provided in its financial
statements.

On December 3, 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"). SAB 101 summarizes certain areas of the
Staff's views in applying generally accepted accounting principles to revenue
recognition in financial statements. SAB 101, as amended by SAB 101A and SAB
101B, is effective commencing in the final fiscal quarter of the first fiscal
year beginning after December 15, 1999. The Company has adopted SAB 101 in these
financial statements. The adoption of SAB101 has not had a material impact on
results.

                                                                              33

<PAGE>

                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                          SCHLUMBERGER N.V.
                                          (SCHLUMBERGER LIMITED)


                                 By:   /s/  Jean-Marc Perraud
                                       -----------------------------------------
                                            Jean-Marc Perraud
                                            Controller, Chief Accounting Officer

Date: June 15, 2001

</TEXT>
</DOCUMENT>
