Interim Results

Diagonal PLC
18 July 2002


                                  DIAGONAL PLC

                                INTERIM RESULTS

               FOR THE SIX MONTH PERIOD ENDED 31 MAY 2002

                                     18 July 2002


•        Turnover                                             £33.9m

•        Profit before tax*                                    £3.1m

•        Adjusted earnings per share*                          2.41p

•        Dividend                                               0.6p


*    all figures exclude goodwill amortisation.


Key highlights include:

•        Continued improvement in gross profit margins.

•        Strong SAP forward load, pipeline and contract wins.

•        Increased visibility of earnings in Secure Networks.

•        Strong balance sheet with over £12m cash.

•        Overseas offices performing in accordance with plan.


Mark Samuels, Chairman, commented:

'As expected, the results for the period under review have been affected by the
continuing challenging market conditions faced by our sector and by our
customers.  Nonetheless, at a time when many IT services companies are recording
poor financial performances, it is pleasing to report both improved margins and
strong cash flows.'

Enquiries:

Graham Creswick, Chief Executive                    Tel:  +44 (0)  1252 733 711
Steve Fleming, Finance Director
Ian Seaton, Bankside Consultants Limited            Tel:  [phone]


Notes to Editors

Diagonal PLC provides a broad range of IT consulting services.  The Consulting
Division is one of the UK's leading implementers of SAP systems and has been
awarded SAP Partner of Excellence on each occasion it has been presented.  It
also specialises in Enterprise Application Integration and e-commerce skills.
The Secure Networks Division provides network and remote access security and
consultancy.



                               INTERIM COMMENTARY


I am pleased to report that the Group has continued to improve overall gross
margins to 30%.  In particular the efforts made in the Secure Networks Division
have resulted in gross margins in excess of 40%. The interim dividend has been
maintained at 0.6p. The SAP Consulting Division forward load and sales pipeline
continues to be ahead of last year, day rates have remained strong and
utilisation has improved during the period.

Despite this, market sentiment continues to be uncertain and this is reflected
in both investor and customer confidence.  The Enterprise Application
Integration (EAI) business has been particularly affected by these factors.

The Secure Networks Division has also experienced client caution in committing
to new projects although it has continued its move to higher margin business
generating operating margins (before goodwill amortisation) of almost 11%. In
addition 25% of  the business is now in contracted support and maintenance work
which is ahead of plan. The Claritas consulting business, acquired last year,
has traded ahead of budget and adds further to the level of visibility of
earnings in this Division.

The Group continues to generate cash and has balances of over £12m at the period
end.

Management has taken steps, where appropriate, to align the cost base with
projected levels of activity and anticipates a satisfactory performance for the
financial year.  I am confident that the steps already taken and our plans for
the current half are positioning the Group well for 2003 and beyond.



Graham Creswick
Chief Executive Officer

18 July 2002


CONSOLIDATED PROFIT AND LOSS ACCOUNT


                                     Note                                 Half-year       Half-year        52 weeks
                                                                              ended           ended           ended
                                                                        31 May 2002     1 June 2001     30 Nov 2001
                                                                        (Unaudited)     (Unaudited)       (Audited)

                                                                             £'000s          £'000s          £'000s

TURNOVER                                2                                    33,902          44,955          82,182

COST OF SALES                                                              (23,634)        (32,026)        (58,580)

GROSS PROFIT                                                                 10,268          12,929          23,602

ADMINISTRATIVE EXPENSES

Amounts written off goodwill                                                (1,446)         (1,584)         (3,210)

Other administrative expenses                                               (7,346)         (8,601)        (16,490)

Total administrative expenses                                               (8,792)        (10,185)        (19,700)

OPERATING PROFIT                        2                                     1,476           2,744           3,902

Net Interest receivable                                                         131             176             354

PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION                                                               1,607           2,920           4,256

TAX ON PROFIT ON ORDINARY
ACTIVITIES                                                                    (920)         (1,413)         (2,278)

PROFIT ON ORDINARY ACTIVITIES AFTER
TAXATION                                                                        687           1,507           1,978
                                                                               
EQUITY DIVIDENDS                        4                                     (531)           (528)         (1,584)

RETAINED PROFIT FOR THE FINANCIAL
PERIOD                                                                          156             979           394

Earnings per Ordinary Share             3                                     0.78p           1.72p           2.26p

Adjusted earnings per Ordinary          3                                     2.41p           3.53p           5.93p
Share

Diluted earnings per Ordinary Share     3                                     0.77p           1.71p           2.26p

Adjusted diluted earnings per
Ordinary Share                          3                                     2.40p           3.51p           5.92p
                                        
Equity dividends per Ordinary Share     4                                   0.60p             0.60p         1.80p



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

                                                                             Half-year       Half-year     52 weeks
                                                                                 ended           ended        ended
                                                                           31 May 2002     1 June 2001  30 Nov 2001
                                                                           (Unaudited)     (Unaudited)    (Audited)
                                                                                £'000s          £'000s       £'000s

FIXED ASSETS

Intangible assets                                                               24,616          26,460       26,062
Tangible assets                                                                  2,221           2,731        2,508
Investments - own shares                                                         1,404             877          877

                                                                                28,241          30,068       29,447
CURRENT ASSETS

Stock                                                                                -             211            -
Debtors                                                                         21,521          25,797       22,234
Cash at bank and in hand                                                        12,248           9,182       10,155

                                                                                33,769          35,190       32,389
CREDITORS - AMOUNTS FALLING
   DUE WITHIN ONE YEAR                                                        (14,149)        (18,830)     (15,065)

NET CURRENT ASSETS                                                              19,620          16,360       17,324

TOTAL ASSETS LESS CURRENT LIABILITIES                                           47,861          46,428       46,771

CREDITORS - AMOUNTS FALLING
   DUE AFTER MORE THAN ONE YEAR                                                  (110)             (6)        (139)

PROVISIONS FOR LIABILITIES AND CHARGES                                               -            (58)            -


NET ASSETS                                                                     47,751           46,364     46,632


CAPITAL AND RESERVES
Called up share capital                                                          8,940           8,789        8,832
Share premium account                                                           29,496          27,831       28,503
Shares to be issued                                                                  -               -          138
Other reserves                                                                     600             600          600
Profit and loss account                                                          8,715           9,144        8,559

EQUITY SHAREHOLDERS' FUNDS                                                     47,751           46,364      46,632


RECONCILIATION OF MOVEMENTS
   IN SHAREHOLDERS' FUNDS
Profit for the financial period                                                    687           1,507        1,978
Equity dividends                                                                 (531)           (528)      (1,584)

                                                                                   156             979          394

Issues of shares                                                                   963             772        1,487
Shares to be issued                                                                  -               -          138
                                                                                     

Net additions to shareholders' funds                                             1,119           1,751        2,019
Opening shareholders' funds                                                     46,632          44,613       44,613

Closing shareholders' funds                                                    47,751           46,364     46,632



CONSOLIDATED CASH FLOW STATEMENT

                                                                             Half-year       Half-year     52 weeks
                                                                                 ended           ended        ended
                                                                           31 May 2002     1 June 2001  30 Nov 2001
                                                                           (Unaudited)     (Unaudited)    (Audited)
                                                                                £'000s          £'000s       £'000s

NET CASH INFLOW FROM
  OPERATING ACTIVITIES                                                           3,406           4,750        8,394

RETURNS ON INVESTMENTS
  AND SERVICING OF FINANCE                                                         132             175          354

TAXATION PAID                                                                    (628)         (1,327)      (3,745)

CAPITAL EXPENDITURE AND
   FINANCIAL INVESTMENT                                                          (155)           (520)        (657)

ACQUISITIONS AND DISPOSALS                                                           -             767          881

EQUITY DIVIDENDS PAID                                                          (1,057)           (874)      (1,401)

CASH INFLOW BEFORE FINANCING                                                     1,698           2,971        3,826

FINANCING
Issues of Ordinary share capital                                                   436             146          146
Net repayment of borrowings                                                       (41)            (56)           62

                                                                                   395              90          208

INCREASE IN CASH IN THE PERIOD                                                   2,093           3,061        4,034


RECONCILIATION OF OPERATING PROFIT
   TO NET CASH FLOW FROM OPERATING ACTIVITIES
Operating profit                                                                 1,476           2,744        3,902
Amortisation of goodwill                                                         1,446           1,584        3,210
Depreciation                                                                       497             479          968
(Profit)/loss on sales of tangible fixed assets                                   (56)               8         (73)
Loss on sale of investment                                                           -              12            -
Decrease in stock                                                                    -             122          333
Decrease/(increase) in debtors                                                     822         (3,036)          426
(Decrease)/increase in creditors                                                 (779)           2,837        (372)

NET CASH INFLOW FROM
   OPERATING ACTIVITIES                                                        3,406             4,750      8,394

MOVEMENT IN NET FUNDS/(DEBT)
Opening balances
   Cash                                                                         10,155           6,145        6,145
   Overdraft                                                                         -            (24)         (24)
   Finance leases                                                                (214)           (116)        (116)

                                                                                 9,941           6,005        6,005
Movement in period
   Cash                                                                          2,093           3,037        4,010
   Overdraft                                                                         -              24           24
   Finance lease repayments                                                         41              60         (62)
   Leases acquired (non-cash)                                                        -               -         (36)

                                                                                 2,134           3,121        3,936
Closing balances
    Cash                                                                        12,248           9,182       10,155
   Overdraft                                                                         -               -            -
   Finance leases                                                                (173)            (56)        (214)

                                                                                12,075           9,126        9,941



NOTES

1.  The interim results, approved by the Board of Directors on 18 July 2002, 
    have been prepared in accordance with applicable United Kingdom Accounting 
    Standards, using the historical cost convention.  The interim results have
    been prepared on the basis of accounting policies consistent with those 
    applied in the 2001 Annual Report and Accounts, with the exception of the 
    implementation of FRS 19 Deferred Tax.  This has had no effect on reported
    profits and has not given rise to any restatement of figures reported for 
    the prior period.  The financial information for the six month periods ended 
    31 May 2002 and 1 June 2001 have not been audited and do not constitute 
    statutory accounts as defined in Section 240 of the Companies Act 1985.  The 
    results for the 52 weeks to 30 November 2001 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                                    Operating profit (1)

                  Half-year ended Half-year ended  52 weeks ended Half-year ended Half-year ended  52 weeks ended
                      31 May 2002     1 June 2001     30 Nov 2001     31 May 2002     1 June 2001     30 Nov 2001
                      (Unaudited)     (Unaudited)       (Audited)     (Unaudited)     (Unaudited)       (Audited)
                           £'000s          £'000s          £'000s          £'000s          £'000s          £'000s
Class of business
Continuing
operations
  Consulting               25,527          29,962          58,036           1,903           2,531           4,382
  Secure Networks           8,375          12,302          21,445           (427)             213           (457)
                           33,902          42,264        79,481             1,476           2,744         3,925

Discontinued
operations
  Consulting                    -           2,691          2,701                -               -           (23)


      (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 ended Half-year ended  52 weeks ended
                                                                      31 May 2002     1 June 2001     30 Nov 2001
                                                                      (Unaudited)     (Unaudited)       (Audited)
                                                                           £'000s          £'000s          £'000s

Profit on ordinary activities after taxation                                  687           1,507           1,978
Amounts written off goodwill                                                1,446           1,584           3,210

Adjusted profits                                                            2,133           3,091          5,188


                                                                           Number          Number          Number

Weighted average number of shares in issue                             88,499,269      87,636,069      87,466,859
Effect of options                                                         235,218         323,238         122,693

Total Shares                                                          88,734,487       87,959,307     87,589,552


                                                                            Pence           Pence           Pence
Basic EPS
Unadjusted                                                                   0.78            1.72            2.26
Goodwill                                                                     1.63            1.81            3.67

Adjusted                                                                     2.41            3.53            5.93
                                                                            
Diluted EPS
Unadjusted                                                                   0.77            1.71            2.26
Goodwill                                                                     1.63            1.80            3.66
                                                                           
Adjusted                                                                     2.40           3.51p            5.92
                                                                          

4.   The interim dividend will be paid on 1 October 2002 to shareholders on the 
     register at the close of business of 16 August 2002.  The cost of the 
     dividend payable to Ordinary Shareholders is £531,000 (1 June 2001: £528,000;
     30 November 2001: £1,056,000).

5.   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.



INDEPENDENT REVIEW REPORT TO DIAGONAL PLC

Introduction



We have been instructed by the company to review the financial information for
the six months ended 31 May 2002 which comprises the profit and loss account,
the balance sheet, the cash flow statement and related notes 1 to 5.  We have
read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information.


Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors.  The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.



Review work performed

We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom.  A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed.  A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions.  It is substantially less in scope than an audit
performed in accordance with United Kingdom auditing standards and therefore
provides a lower level of assurance than an audit.  Accordingly, we do not
express an audit opinion on the financial information.



Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 May 2002.



Deloitte & Touche
Chartered Accountants
Hill House
1, Little New Street
London EC4A 3TR


18 July 2002



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