Final Results

MSW Technology PLC
14 July 2000


MSW Technology plc (MSW or 'the Company')

Preliminary Announcement of the Results for the Year Ended 31 May 2000

Circular to Shareholders convening an Extraordinary General Meeting to
disapply pre-emption rights in connection with a proposed placing of 1.24
million ordinary shares of 5p each at 40p per share and for the purposes of
Section 142 of the Companies Act 1985


PRELIMINARY ANNOUNCEMENT OF ANNUAL RESULTS FOR THE YEAR ENDED 31 MAY 2000

Set out below is the text of the preliminary announcement of the results of
the Company for the year ended 31 May 2000. 

CHAIRMAN'S STATEMENT

Summary

The results for the year to 31 May 2000 reflect a period of difficulty and
change for MSW, but do not, in my view, reflect the value of our MAPS product
and the Company.  Although the time it is taking to deliver substantial
increases in turnover is frustrating, the changes made and the opportunities
identified give cause for optimism and a determination to grow a successful
company.

Results

As I have already reported to you, in the first six months of the trading year
the Company made a loss of £1.77 million on turnover of £0.75 million.  In the
second six months, the loss reduced to £1.02 million, based on a 15% increase
in turnover to £0.86 million and a reduction in expenses by 31% to £1.68
million.  Third party costs and interest were £0.2 million, resulting in a
loss for the year as a whole of £2.79 million.  In the last three months of
the year, our expenses (excluding third party costs and interest) were running
at the reduced rate of £0.25 million per month.  Your Board had hoped that the
business would be trading profitably by the end of the year, but certain major
contracts have not yet been concluded.

Review

The year has seen major changes at Board level, in the Company's cost
structure and in the sales organisation  -  all aimed at delivering a
substantial improvement in the Company's performance.

In late 1999, a Board reorganisation resulted in the appointment of Philip
Morgan as Sales Director and the appointment of Robert Drummond (formerly
Non-Executive Chairman) as Managing Director.  Ross McBeath, Ray Ride and
Jayne McBeath resigned from the board.  I became Non-Executive Chairman and
Jack Debnam joined the Company as a Non-Executive Director.  Chris
Satterthwaite stepped down from the Board, but remains with the Company to
focus on running our successful Consultancy Division.  Earlier this year,
Roger Wakefield retired and we wish him well.  

The business organisation has been simplified, staff numbers reduced by a
third and tighter cost-controls imposed, resulting in a substantial reduction
in overall costs.  Some extra resources have been directed at sales and
marketing and more would have been invested if cash resources had allowed.

We have strengthened our sales organisation by external recruitment and
internal promotion, backed up by intensive sales training, new sales systems
and an attractive commission scheme.  

We have two teams focused on Shipping & Cruise Lines and UK & European
Defence, each led by an experienced salesman under Philip Morgan.  We also
have established partnership agreements which enable the Company to target the
US Defence sector and the IT departments of large UK companies.  

These efforts are beginning to show results. 
 
From the UK military, we have seen a steady flow of small orders, despite
changes caused by the MoD's review of software suppliers having removed some
of our competitive advantage.  In Europe, we have won a contract to supply our
software to the Belgian MoD and our software is now in use in NATO, the Royal
Fleet Auxiliary and the Military Police where it is enabling a significant
improvement in their level of management information.  In the USA, our partner
Calibre has been awarded a contract by a US defence agency to trial our
software. 

In shipping, our cruise line access control product, 'Souls on Board', is now
in operation with P&O.  Following a successful exhibition to the world cruise
industry at Seatrade in Florida, we have identified and are actively pursuing
many opportunities to sell this product and the Crew Administration system to
other shipping and cruise companies.  Our joint venture with Spring Group has
also resulted in exposure to many large corporate IT departments with a good
initial response.  

Our Consultancy Division has had an excellent year in both turnover and
profit.

Dividend

No dividend is proposed for this year.

Outlook

We have able and motivated sales teams focused on the military and maritime
markets.  We intend to recruit additional sales staff and invest in more
marketing, PR and pre-sales activity.  We expect a growing level of sales to
emerge from the partnership with Spring Group.  We intend to target the UK
professional services market through another partnership and I hope to be able
to announce more details about this in due course.  

We have given our Consultancy Division challenging targets and intend to
invest further in recruitment and marketing.

There will be a launch of a range of new products in the autumn.  These
products will have new user interfaces, will be simpler to install, will be
web enabled and have Windows 2000 compatibility, and with the integration of
Microsoft VBA will be capable of a high degree of customisation and
integration with other systems.

Despite a recent poor financial performance, MSW is well placed in terms of
its products, its opportunities, its ability to implement, its low cost
structure and its dedicated staff.

I should therefore like to thank the Directors and all employees for their
efforts over this difficult period and look forward to working with them to
deliver the results desired by our shareholders, management and staff over the
coming months and years.

J. I. Lang
CHAIRMAN


MSW TECHNOLOGY PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT 
FOR THE YEAR ENDED 31 MAY 2000 


                                           Note          2000           1999 
                                                            £              £
                     
Turnover                                           1,611,619       1,896,518
                    
Cost of sales

- third party costs                                 (242,310)       -

- Selling and operational expenses                 (2,976,234)     (2,286,751)
                                                  -----------      -----------
Gross (loss)                                      (1,606,925)        (390,233)

Administrative expenses                           (1,129,251)      (1,230,666)
                                                  -----------      -----------
Operating (loss)                                  (2,736,176)      (1,620,899)
                     
Interest receivable                                    1,375           14,015 
                          
Interest payable                                     (56,066)         (34,638)
                                                  -----------      -----------
(Loss) on ordinary activities before 
taxation                                          (2,790,867)      (1,641,522)
                     
Taxation                                      2       -               140,927
                                                  -----------      -----------
(Loss) for the financial year after 
taxation                                          (2,790,867)      (1,500,595)
                     
Dividends                                     3       -              (61,508)
                                                 -----------       -----------
(Loss) for the financial 
year                                              (2,790,867)     (1,562,103)
                                                   ========          ========
                     
(Loss) per share                     

Basic                                         4   (28.36)p        (21.27)p
                                                    ======          ======
Diluted                                       4   (27.73)p        (20.86)p
                                                    ======          ======

There were no recognised gains or losses during this year and last year other
than the result for the financial year.




MSW TECHNOLOGY PLC
CONSOLIDATED BALANCE SHEET
AT 31 MAY 2000


                                             2000             1999
                                    £           £                £
                            
Tangible fixed assets                     165,814          182,930
                     
Fixed asset investments                     -                -
                                        -----------      -----------
                                          165,814           182,930
Current assets                                   
Stocks                                      -               119,920
Debtors                                   623,555         1,322,750
Cash at bank and in hand                      788            16,659
                                        -----------      -----------
                                          624,343         1,459,329
                     
Creditors: amounts falling due 
within one year                         (1,073,524)        (548,014)
                                        -----------      -----------
Net current (liabilities)/assets          (449,181)         911,315
                                        -----------      -----------
Total assets less current liabilities     (283,367)       1,094,245

Creditors:  amounts falling due after        
more than one year                         (23,932)         (60,839)
                                        -----------      -----------
Net (liabilities)/assets                  (307,299)       1,033,406
                                           ========       ========       
Capital and reserves                            
Called up share capital                     621,322       410,050
Share premium account                     3,075,012       1,836,122
Profit and loss account                  (4,003,633)     (1,212,766)
                                       -----------      -----------
Total shareholders' (deficit)/funds        (307,299)      1,033,406
(including non equity interests)           ========       ========            
 


MSW TECHNOLOGY PLC
NOTES AT 31 MAY 2000

1.       Basis of preparation

The financial information set out above does not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985.  

The results for the year ended 31 May 2000 and the balance sheet at that date
have  been extracted from the statutory accounts of the Group for that year,
upon which the Company's auditors, HLB Kidsons, have confirmed they will issue
an unqualified audit report under Section 235 of the Companies Act 1985.  The
accounts for the year ended 31 May 2000 will be filed with the Registrar of
Companies following the Annual General Meeting.  The financial information for
the year ended 31 May 2000 has been prepared on the basis of the accounting
policies set out in the accounts for the year ended 31 May 1999.

The comparative figures for the year ended 31 May 1999 have been extracted
from the statutory accounts of the Group for that year, filed with the
Registrar of Companies, which carried an unqualified audit report.  

2.       Taxation 

There is no tax charge for the year as there are sufficient tax losses to
extinguish any liability for the period.

3.       Dividends 

No dividend has been paid during the year ended 31 May 2000. An equity
dividend of 0.75p per Ordinary Share was paid in the year ended 31 May 1999 on
8,201,000 Shares.


4.       Loss per share 

                                                       2000            1999
         Loss for the financial year              £2,790,867      £1,500,595  
           
         Weighted average number of ordinary shares:

         For basic loss per share                  9,840,377       7,054,053  
           
         For diluted loss per share               10,065,376       7,192,800
       
A copy of the Annual Report and Accounts will be sent to all shareholders. A
copy of this preliminary announcement is available from the Company's
registered office, 33 Bedford Place, London WC1B 5JU.


MSW TECHNOLOGY PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MAY 2000


                                          Note        2000            1999
                                                         £               £
                            
Net cash outflow from operating 
activities                                 5.   (1,457,459)       (951,324)
                            
Returns on investments and servicing                             
of finance                            
                            
Interest received                                    1,375          14,015
Interest paid                                      (45,529)        (28,750)
Interest element of finance lease payments         (10,537)         (5,888)
                                                 ----------       ----------- 
     
                                                   (54,691)        (20,623)




Taxation                            
                            
UK corporation tax paid                              -             (41,500)
                            
Capital expenditure and financial investment                                  
              
Payments to acquire tangible fixed assets          (34,861)        (55,650)
                            
Equity dividends paid                                -            (227,508)
                                                 -----------      -----------
Cash outflow before financing                    (1,547,011)     (1,296,605)
                            
Financing                            
                            
Issue of ordinary shares                          1,690,174       2,510,996
Expenses of share issue                            (240,012)       (542,136)
Redemption of preference shares                       -            (100,000)
Capital element of finance leases                   (41,055)        (21,362)
                                                 -----------      ----------- 
                                                  1,409,107       1,847,498
                                                 -----------      -----------
(Decrease)/Increase in cash in 
the year                               6. & 7.    (137,904)         550,893
                                                   ========         ========
 
MSW TECHNOLOGY PLC
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MAY 2000



5.    Reconciliation of operating loss to net cash flow from operating        
      activities


                                                   2000              1999
                                                      £                 £
                     
       Operating (loss)                      (2,736,176)       (1,620,899)
       Depreciation and amortisation charges     70,118            40,344
       Loss on disposal of fixed assets          11,133              -
       Decrease in debtors                      699,195           585,579
       Decrease in work in progress             119,920             8,483
       Increase in creditors                    378,351            35,169
                                            -----------        -----------
       Net cash outflow from operating       
       activities                            (1,457,459)         (951,324)
                                               ========           ========
       
              
6.     Reconciliation of net cash flow to movement in net (debt)/funds        
     
                     
       (Decrease)/increase in cash in the year (137,904)          550,893
       Cash outflow from decrease in debt 
       and finance leases                        41,055            21,362
                                           -------------       -------------
       Change in net debt resulting from 
       cash flows                               (96,849)          572,255
       New finance leases                       (24,461)         (117,036)
                                           -------------       -------------
       Movement in net funds in the year       (121,310)          455,219
       Net debt at beginning of the year        (88,945)         (544,164)
                                           -------------       -------------
       Net debt at end of the year                 (210,255)          (88,945)
                                               ========           ========
       
                     
7.     Analysis of change in net (debt)/funds 
             
                                        At                             At     
                               1 June 1999     Cash flows     31 May 2000 
                                        £               £               £
                            
       Cash at bank and in hand    16,659         (15,871)            788
       Bank overdraft              (9,930)       (122,033)       (131,963)
       Finance leases             (95,674)         16,594         (79,080)
                               -----------      -----------     ----------
       Total                      (88,945)       (121,310)       (210,255)
                                  ========       ========        ========


LETTER FROM THE CHAIRMAN OF MSW TECHNOLOGY PLC

Introduction

Earlier today the Board issued the preliminary announcement of results for the
year ended 31 May 2000. In my statement accompanying the announcement, I refer
to the fact that the cost saving programme has been highly successful, but
that the Company is not currently trading profitably.  Accordingly, the
Directors have continued to review alternative sources of finance for the
Company. 

Proposed placing of new ordinary shares

The Company has conditionally agreed to place 1,037,500 ordinary shares of 5p
each in the Company ('Ordinary Shares') at 40p per share with institutional
and private investors.  In addition, the Non-Executive Directors of the
Company have conditionally agreed to subscribe for a further 187,500 Ordinary
Shares at 40p per share; and Robert Drummond has conditionally agreed to
subscribe for a further 15,000 Ordinary Shares at 40p per share.  These
arrangements (together, the 'Placing') are conditional upon approval by the
Company in general meeting, the admission of the new Ordinary Shares to the
Official List of the UK Listing Authority and the admission of the new
Ordinary Shares to trading by the London Stock Exchange.

The Placing will raise £496,000 before expenses.  The issue will be at a small
discount to the middle market quotation for Ordinary Shares of 41.5p as
derived from the Daily Official List of the London Stock Exchange on 11 July
2000, being the latest practical dealing date prior to the publication of this
announcement.  In those circumstances, your Board considers the Placing to be
an efficient method of raising funds. The issue will represent approximately
9.99% of the issued share capital of the Company at the date of this
announcement and as such will exceed the pre-emption guidelines monitored by
the Investor Committees of the Association of British Insurers and the
National Association of Pension Funds (which expect listed companies to
observe a cumulative limit of no more than 7.5% of issued ordinary share
capital being issued by way of non pre-emptive issue for cash in any rolling
three year period).  Shareholder approval is therefore being sought at the
Extraordinary General Meeting convened for 10.30am on 7 August 2000.

The Directors have sufficient authority to allot Ordinary Shares pursuant to
the Placing by virtue of the ordinary resolution passed at the Extraordinary
General Meeting of the Company held on 16 December 1999.  The Directors do
not, however, have power to allot such Ordinary Shares pursuant to section 95
of the Companies Act 1985 on a non pre-emptive basis and accordingly a Special
Resolution will be put to the Extraordinary General Meeting in order to give
the Directors that power.  If the Placing does not proceed the Company would
be in serious financial difficulty and the Directors would need to consider
alternative sources of funds for the Company which may not be available to it.
 In the absence of an alternative source of funds the Company will not avoid
insolvent liquidation.

Application will be made for the new Ordinary Shares to be issued pursuant to
the Placing to be admitted to the Official List of the UK Listing Authority
and to be admitted to trading on the London Stock Exchange.  It is expected
that the new Ordinary Shares will be admitted to the Official List and
dealings will commence on 8 August 2000.  The new Ordinary Shares will rank
pari passu with the existing Ordinary Shares.

Extraordinary General Meeting

A notice convening an Extraordinary General Meeting of the Company to be held
at the offices of the Company at 10.30 a.m. on 7 August 2000 has been sent to
shareholders today.  

At this meeting, the shareholders will be asked to consider, for the purpose
of Section 142 of the Companies Act 1985, whether any, and if so what, steps
should be taken to deal with the Company's net assets being less than half of
its called-up share capital.  The only proposal which the Directors have at
this time is the placing of the new Ordinary Shares as set out in this
announcement.

A resolution (which is a Special Resolution) will also be proposed to give the
Directors authority pursuant to Section 95 of the Companies Act 1985 ('the
Act') to disapply the statutory pre-emption rights contained in Section 89 of
the Act for the purposes of the Placing, for the purposes of any rights issue,
or generally up to an aggregate nominal value not exceeding £34,166
(representing approximately 5% of the issued share capital of the Company
immediately following the Placing). 

The Directors have no present intention of issuing any of such authorised but
unissued share capital other than in connection with the Placing or with
options granted under the Company's Approved Executive Share Option Scheme or
its Unapproved Share Option Scheme.

Recommendation

The Directors unanimously recommend that the shareholders vote in favour of
the Resolution to be proposed at the Extraordinary General Meeting which they
consider to be in the best interests of the Company and Shareholders as a
whole. The aggregate beneficial holdings of the Non-Executive Directors and
Robert Drummond amount to 992,650 Ordinary Shares (representing 7.99% of the
existing issued ordinary share capital of the Company).  The Non-Executive
Directors and Robert Drummond intend to abstain from voting in relation to the
Special Resolution set out in the Notice of Extraordinary General Meeting,
which relates to the Placing, because of their participation therein.  The
aggregate beneficial holdings of the remaining Directors amount to 170,896
Ordinary Shares currently representing approximately 1.38% of the existing
issued share capital of the Company.  The remaining Directors intend to vote
in favour of the Special Resolution.

J. I. Lang
CHAIRMAN


ENe
FR UOABRRARBAAR