Interim Results

Diagonal PLC
17 July 2001





                          DIAGONAL - INTERIM RESULTS

                  FOR THE SIX MONTH PERIOD ENDED 1 JUNE 2001


17 July 2001

Turnover                                                  £45million      +20%
                                                                

Profit before tax*                                        £4.5million     +94%
                                                                

Adjusted earnings per share*                              3.53p           +74%

Dividend                                                  0.6p            +20%

* All figures are before amortisation of goodwill arising from
acquisitions

Key highlights include:

Success of strategic shift into quality higher margin business demonstrated

Acquisition of Claritas announced today

Strength of SAP product range confirmed

Secure Networks businesses developing in line with expectations


Enquiries:

Graham Creswick, Chief Executive
Alan Hunter, Finance Director
Tel: [phone]

Ian Seaton, Citigate Dewe Rogerson
Georgina Peiser
Tel: [phone]


Notes to Editors

Diagonal PLC provides a broad range of IT consulting services. The Consultancy
Division is one of the UK's leading implementers of SAP systems and is the
holder of the SAP Partner of Excellence Award. It also specialises in
Enterprise Application Integration and e-commerce skills. The Secure Networks

Division, formed last year with the amalgamation of three recent acquisitions,
provides network and remote access security. Finally, the Resourcing Division
specialises in the placement of IT personnel.




                             CHAIRMAN'S STATEMENT



I have pleasure in reporting our results for the six month period ended 1 June
2001.

Turnover at £45 million has increased by 20% over the equivalent period of the
prior year, while profit, before taxation and goodwill amortisation, has
increased by 94% to £4.5million. Adjusted earnings per share have increased by
74% to 3.53p.

In recognition of the improved performance of the Group the interim dividend
has been increased by 20% to 0.6p.

We have continued to implement the strategy adopted last year, of moving the
Group towards quality higher margin businesses and are pleased to announce the
acquisition of Claritas Information Security Limited, an IT consultancy
specialising in information security consultancy services.

In April the MAPP resourcing business was sold to the management team at book
value.

We note the general market sentiment towards the IT sector and while Diagonal
would not be immune to a widespread slowdown in IT services spending, the
second half has commenced satisfactorily. Staff utilisation in our Consultancy
businesses has been high and our positive view for the remainder of the year is
reinforced by a good order book and prospect list. The Secure Networks Division
does not have a long term order book, as has been the case historically.
However, sales for the month of June have been strong and we do not currently
see signs of a downturn in activity.


Based upon evidence to date we expect a satisfactory outcome for the full year.

Mark Samuels
Chairman


16 July 2001








CONSOLIDATED PROFIT AND LOSS ACCOUNT

                    Note                         Half -year  Half-year 53 Weeks
                         Continuing Discontinued      Ended      Ended    ended
                         Operations   Operations     1 June     28 May    1 Dec
                                                       2001       2000     2000
                             £'000s      £'000s (Unaudited) (Unaudited)(Audited)
                                                     £'000s     £'000s   £'000s

TURNOVER               2     42,264        2,691     44,955     37,555   82,735

COST OF SALES              (29,787)      (2,239)   (32,026)   (28,107) (59,641)


GROSS PROFIT                 12,477          452     12,929      9,448   23,094


ADMINISTRATIVE
EXPENSES

Amounts written             (1,584)            -    (1,584)      (579)  (2,661)
off goodwill

Other                       (8,149)        (452)    (8,601)    (7,142) (15,835)
administrative
expenses

                            (9,733)        (452)   (10,185)    (7,721) (18,496)


OPERATING PROFIT       2      2,744            -      2,744      1,727    4,598

Net Interest                                            176         18      242


PROFIT ON ORDINARY                                    2,920      1,745    4,840
ACTIVITES BEFORE
TAXATION


TAX ON PROFIT ON                                    (1,413)      (633)  (2,054)
ORDINARY
ACTIVITIES


PROFIT ON ORDINARY                                    1,507      1,112    2,786
ACTIVITIES AFTER
TAXATION


EQUITY DIVIDENDS       4                              (528)      (429)  (1,305)


RETAINED PROFIT                                         979        683    1,481
FOR THE FINANCIAL
PERIOD


Earnings per           3                              1.72p      1.33p    3.32p
Ordinary share

Adjusted earnings      3                              3.53p      2.03p    6.48p
per Ordinary share

Diluted earnings       3                              1.71p      1.32p    3.30p
per Ordinary share

Adjusted diluted       3                              3.51p      2.00p    6.44p
earnings per
Ordinary share


Equity dividends       4                              0.60p      0.50p    1.50p
per Ordinary share


There are no recognised gains or losses other than the profit for the current
and preceding financial periods. Accordingly, no statement of total recognised
gains and losses is given.








CONSOLIDATED BALANCE SHEET


                                             As at          As at         As at
                                       1 June 2001    28 May 2000    1 Dec 2000
                                       (Unaudited)    (Unaudited)     (Audited)
                                            £'000s         £'000s        £'000s

FIXED ASSETS

Intangible assets                           26,460         30,801        28,783

Tangible assets                              2,731          4,753         2,772

Investments - own shares                       877              -           293
                                            30,068         35,554        31,848


CURRENT ASSETS

Stock                                          211              -           333

Debtors                                     25,797         23,650        23,315

Cash at bank in hand                         9,182          4,744         6,145

                                            35,190         28,394        29,793


CREDITORS-AMOUNTS FALLING                 (18,830)       (26,028)      (16,949)
DUE WITHIN ONE YEAR



NET CURRENT ASSETS                          16,360          2,366        12,844


TOTAL ASSETS LESS CURRENT LIABILITIES       46,428         37,920        44,692


CREDITORS-AMOUNTS FALLING                      (6)          (773)          (21)

DUE AFTER MORE THAN ONE YEAR

PROVISIONS FOR LIABILITES AND CAHRGES         (58)              -          (58)



NET ASSETS                                  46,374         37,147        44,613



CAPITAL AND RESERVES

Called up share capital                      8,789          8,459         8,475

Share Premium account                       27,831         20,721        21,782

Shares to be issued                              -              -         5,591

Other reserves                                 600            600           600

Profit and loss account                      9,144          7,367         8,165




EQUITY SHAREHOLDERS' FUNDS                  46,364         37,147        44,613


RECONCILATION OF MOVEMENTS

IN SHAREHOLDERS' FUNDS

Profit for the financial period              1,507          1,112         2,786

Equity dividends                             (528)          (429)       (1,305)

                                               979            683         1,481



Issues of shares                               772         16,930        18,007

Expenses of share issues                         -          (166)         (166)

Shares to be issued                              -              -         5,591


Net additions to shareholders' funds         1,751         17,447        24,913

Opening shareholders' funds                 44,613         19,700        19,700



Closing shareholders' funds                 46,364         37,147        44,613






CONSOLIDATION CASH FLOW STATEMENT


                                           Half-year    Half-year     53 weeks
                                               ended        ended        ended
                                         1 June 2001  28 May 2000   1 Dec 2000
                                         (Unaudited)  (Unaudited)    (Audited)
                                              £'000s       £'000s       £'000s

NET CASH FLOW FROM OPERATING ACTIVITIES        4,750        2,507        7,039


RETURNS ON INVESTMENTS AND SERVICING OF          175           20          242
FINANCE


TAXATION PAID                                (1,327)        (497)      (2,002)


CAPITAL EXPENDITURE AND FINANCIAL              (520)        (172)        1,365
INVESTMENT


ACQUISITIONS AND DISPOSALS                       767     (11,390)     (12,168)


EQUITY DIVIDENDS PAID                          (874)        (834)      (1,254)



CASH INFLOW/(OUTFLOW) BEFORE FINANCING         2,971     (10,366)      (6,778)



FINANCING

Issues of Ordinary share capital                 146       10,760       10,500

Expenses of share issues                           -        (166)        (166)

Net repayment of borrowings                     (56)        (560)      (2,169)
                                                  90       10,034        8,165


INCREASE/(DECREASE IN CASH IN THE              3,061        (332)        1,387
PERIOD



RECONCILATION OF OPERATING PROFIT

TO NET CASH FLOW FROM OPERATING
ACTIVITIES

Operating profit                               2,744        1,727        4,598

Amortisation of goodwill                       1,584          579        2,661

Depreciation                                     479          784        1,247

Loss on sales of tangible fixed assets             8            6           79

Loss on sale of investment                        12            -            -

Decrease/(increase) in stock                     122            -        (275)

Increase in debtors                          (3,036)      (1,059)      (1,081)

Increase/(decrease) in creditors               2,837          579        (108)

Decrease in provisions                             -        (109)         (82)


NET CASH INFLOW FROM OPERATING                 4,750        2,507        7,039
ACTIVITIES



MOVEMENT IN NET FUNDS/(DEBT)

Opening balances

Cash                                           6,145        4,792         4792

Overdraft                                       (24)         (58)         (58)

Finance leases                                 (116)      (1,584)      (1,584)

                                               6,005        3,150        3,150

Movement in period

Cash                                           3,037         (48)        1,353

Overdraft                                         24        (285)           34

Finance lease repayments                          60          560        2,169

Leases acquired (non-cash)                         -         (82)         (83)

New Finance leases (non-cash)                      -        (526)        (618)

                                               3,121        (381)        2,855



Closing balances

Cash                                           9,182        4,744        6,145

Overdraft                                          -        (343)         (24)

Finance leases                                  (56)       1,632)        (116)

                                               9,126        2,769        6,005




NOTES

1.  The interim results, approved by the Board of Directors on 16 July
2001, have been prepared in accordance with applicable United Kingdom
Accounting Standards, using the historical cost convention. The financial
information for the six month periods ended 1 June 2001 and 28 May 2000 has
been neither audited nor reviewed and does not constitute statutory accounts as
defined in Section 240 of the Companies Act 1985. The results for the 53 weeks
to 1 December 2000 have been extracted from the Annual Report and Accounts
which received an unqualified auditors' report and have been delivered to the
Registrar of Companies.


 2. Analysis of turnover and operating profit by class of business



                             Turnover                          Opening
                                                            Profit (1)

                 Half-year  Half-year 53 weeks  Half-year    Half-year 53 weeks
                     Ended      ended    ended      ended        ended    ended
                    1 June     28 May    1 Dec     1 June  28 May 2000    1 Dec
                      2001       2000     2000       2001                  2000
                (Unaudited)(Unaudited)(Audited)(Unaudited)  (Unaudited)(Audited)
                    £'000s     £'000s   £'000s     £'000s       £'000s   £'000s

Class of
business

Continuing
operations

Consultancy         22,671     17,045   37,413      2,352          564    3,174

Secure Networks     12,302      8,386   20,327        213          720      817

Resourcing           7,291     12,124   24,995        179          443      607

                    42,264     37,555   82,735      2,744        1,727    4,598


Discontinued         2,691          -        -          -            -        -
operations

Resourcing


(1) Operating profit is stated after charging amortisation of goodwill.


 3. Earnings per share have been computed in accordance with Financial Reporting
    Standard 14 'Earnings per Share'.

Basic earnings per share are calculated by dividing the Profit on Ordinary
Activities after Tax by the weighted number of Ordinary Shares in issue during
the period. Diluted earnings per share are calculated to take account of the
potential issue of further Ordinary Shares. These arise under the employees'
Save-As-You-Earn Share Option Scheme, the Executive Share Option Plan and the
Long Term Incentive Plan, where the exercise price is less than the average
market price of the Company's Ordinary Shares during the relevant period.

A reconciliation of the earnings and weighted average number of shares used in
the calculation is set out below.

                                           Half-year     Half-year     53 weeks
                                               ended         ended        ended
                                         1 June 2001   28 May 2000   1 Dec 2000
                                         (Unaudited)   (Unaudited)    (Audited)
                                             £'000's       £'000's       £'000s

Profit on ordinary activities after            1,507         1,112        2,786
taxation

Amounts written off goodwill                   1,584           579        2,661

Adjusted profits                               3,091         1,691        5,447


                                              Number        Number       Number


Weighted average number of shares in      87,636,069    83,416,869   83,998,301
issure

Effect of options                            323,238     1,108,398      542,232


Total shares                              87,959,307    84,525,267   84,540,533


                                               Pence         Pence        Pence

Basic EPS

Unadjusted                                      1.72          1.33         3.32

Goodwill                                        1.81          0.70         3.16



Adjusted                                        3.53          2.03         6.48

Diluted EPS

Unadjusted                                      1.71          1.32         3.30

Goodwill                                        1.80          0.68         3.14

Adjusted                                        3.51          2.00         6.44


- The interim dividend will be paid on 1 October 2001 to shareholders on the
register at the close of business on 17 August 2001. The cost of the dividend
payable to Ordinary Shareholders is £528,000 (28 May 2000: £417,000; 1 December
2000: £873,000).

- The interim report will be mailed to shareholders and copies will be available
at the Company's registered office: Diagonal PLC, Wey Court, Farnham, Surrey
GU9 7PT.