Final Results

Synstar PLC
29 November 2001


29 November 2001

                                 Synstar Plc

      'A strong foundation and a clear strategy to drive future growth'


Preliminary results for the year ended 30 September 2001


Highlights


*    Results at top end of market forecasts

*    Revitalised management team
                                               
*    Transformation from country organisation into a genuine
     pan-European customer focused offering

*    New centres of excellence driving rollout of best
     practice services

*    Emphasis on profit and cash (rather than revenue) has
     driven exit from low margin contracts

*    Performance programmes in place to address loss making
     operations

*    70% of revenue from long term contracts

*    First phase of recovery plan delivered on time and
     within budget - second phase on track to deliver by summer 2002



Results


*    Turnover £238.2m  (2000:  £235.9m)

*    Operating profit before goodwill amortisation and
     exceptionals £4.6m (2000: £9.9m)

*    Ungeared at 30 September 2001 with net cash balances of
     £8.0m (2000: £6.1m)


Commenting on the results, Steve Vaughan, chief executive of Synstar Plc,
said:


'The last year has been about finding the things that weren't working, putting
them right or getting rid of them.   We have stabilised the ship and made good
progress on improvement and investment. There are some more tough decisions
ahead of us, but I think we now have a strong foundation in place.  Despite
the uncertain economic outlook, I believe that we are on the way to becoming a
world class Business Availability provider.'



Ends.


There will be a presentation for analysts at 9.30am this morning at GCI
Financial, 80 Cannon Street, EC4N 6ER. Please call Geoff Callow on 020 7398
0800 if you would like to attend.  The presentation slides will be available
on our website at www.synstar.com



For Further Information:

Synstar Plc:                                                 020 7398 0800
Steve Vaughan / Stephen Gleadle                    thereafter 01344 662700



GCI Financial:                                               020 7398 0829
Roger Leboff / Geoff Callow


Chairman's Statement


I am pleased to report results that begin to reflect the achievements of the
new management team in a challenging year.  Turnover for the period was 
£238.2million (2000: £235.9 million) and operating profit before amortisation
of goodwill and exceptionals was £4.6 million (2000: £9.9 million). Adjusted
basic earnings per share were 1.1p (2000: 3.1p).  While I do believe that
decisions made during the last 12 months will enable the Group to grow
steadily from here, these results do not yet fully reflect Synstar's
potential.


This year was an important turning point in a number of ways, most of which
relate to actions taken by our new chief executive, Steve Vaughan.  During
2000, the Board decided that a new approach and a new management team were
needed to help the Group to build on its strong foundations and to reach its
full potential as a world-class IT services provider. Indeed, Synstar has
always had strong foundations - a set of perennially valid services, excellent
customers and customer relationships, a high proportion of contracted business
and highly professional and committed staff.


Since his appointment in January 2001 as chief executive, Steve Vaughan has
made a strong and positive impact. In a short space of time, he has analysed
Synstar's strengths, addressed the challenges facing it and developed a robust
three-year plan for the transformation of the business.  Despite a challenging
business environment, the successful implementation of the first phase of this
plan has already been delivered, with a structure that is appropriate to
Synstar's size, geography and range of services, a blend of existing and new
first rate managers and a re-energised  organisation.


We continue to have a blue-chip set of customers and we value them very
highly.  Ranging across most sectors of the economy and most major countries
in Europe, our customers depend on the services we provide to them. If they
decide that we are the best at providing those services, we will get their
business. Satisfying their needs, therefore, is our prime objective and I am
proud that, time and again, Synstar is at the head of customer satisfaction
surveys.


That customer satisfaction is derived solely from the professional skills and
the commitment of our people. My pride in our customer satisfaction is really,
pride in them. As I meet our staff from all over Europe, I am always impressed
by their enthusiasm and by their desire to see Synstar win. I thank them for
all they have done for Synstar as we have gone through some challenging and
changing times.  I am confident they will give us the support we need as we
face up to the equally challenging times ahead.


I would also like to thank my colleagues on the Board.  We have an
exceptionally strong Board and their advice to me and to Steve has been of
inestimable value.


The Group now has in place a strong management team, an appropriate
organisation structure and an experienced Board.  I look forward to Synstar
starting to deliver results that fulfil its promise by fully meeting its
customers' needs, by offering rewarding careers to its staff and by providing
improved performance and returns to its shareholders.


John Leighfield
Chairman



Chief Executive's Review


Introduction

The Synstar that exists today is a very different company from the one I took
control of in January of this year. It retains all the same strengths - an
enviable customer list with probably the best customer satisfaction rating in
the industry, excellent staff and good geographical reach. The key difference
is a strategy with a clearer focus, and a plan and management team to execute
it. With a major change of pace, we are starting to see the fruits of the many
changes come through.


But there is much still to do and potential for further improvement.


My purpose in this review is to outline the considerable progress made to
date, and what there is still to come.


I make this statement against a background of market conditions that are tough
and likely to get tougher.  However Synstar is in a good position to
capitalise on these conditions. Although price and margin pressure can be
expected as business conditions become more difficult for our customers,
Synstar's offering of high quality services at a competitive price will become
more compelling. The market segments in which we operate continue to show
annual growth rates of around 8%, with some areas such as networking services
growing considerably faster. We aim to exploit this continued demand to offset
economic pressures.


Our financial performance during the second half to 30 September generally
exceeded all our expectations. Our prime focus is firmly upon profit and cash
rather than revenue, and this is reflected in the areas of best performance.
Our business has generated £1.8m of cash during the year despite having to
finance £5.5 m for the restructuring programme. Operating profit before
goodwill amortisation and exceptionals has also exceeded expectations with a
second half outcome of £4.3m compared to the first half of £0.3m.


Strategic Review - being clear about what we want to be

We are very clear about our vision in developing the business. Synstar aims to
become our customers' natural choice for business availability services. This
means that we will focus predominantly upon our considerable existing customer
base to expand our scope of delivery. Our service lines all relate to the
support of IT infrastructure for business critical applications, forming a
well-organised suite of offerings to our customers. It is the exploitation of
this opportunity that is central to our strategy.


Synstar has embarked upon a three-year plan to deliver this strategy. In
setting out our plan in June of this year, I defined three phases to separate
out the key areas of activity.

*    Phase 1 in the first six months up to June 2001, saw Synstar set out
     its new strategy, align the management structure to fit this strategy, and
     implement some major restructuring initiatives to start the change process.

*    Phase 2, which I expect to last for 12 months until June 2002, sees a
     period of stability designed to drive the benefits of the restructuring and
     focus upon delivery of the strategy to existing customers. During this 
     period, we intend to undertake a number of projects to improve performance,
     to be robust in cleaning up under-performing contracts or areas of 
     operation, and to invest in service line development.

*    Phase 3, up to the end of 2003, is expected to show the full benefits
     of restructuring, new strategy and service line investment coming through 
     in strong growth in earnings.



Phase 1 of our plan is completed

It was an aggressive plan to try to achieve a major restructuring of the
entire Group around a new structure in just six months. However this was
completed successfully, on time, within our budget of £8.5m, and achieved all
of its objectives, including an annual saving in overhead spend of £6m. Our
success is an enormous tribute to our staff, their willingness to accept
change and diligence in executing it.


This change was achieved without losing focus on our customers and maintaining
our service to them. Our customer satisfaction ratings, measured during June,
were as high as they always have been. As our results for the second half
show, it was also achieved whilst retaining a tight control on business
performance.


Phase 1 also included the important decision to dispose of our loss making
Italian subsidiary. Disposal was a crucial element, because of the release of
management time and cash, and the elimination of the volatility in results of
which it had so long been a cause. Our relationship with the new owners is now
well established, with several examples of reciprocal service provision
achieved.



Phase 2 is well under way

In the months since June, we have continued to make headway with our plans to
'stabilise, improve and invest' in the business. Our stated aim for this phase
was to return to acceptable financial performance. I believe that we have
already taken a number of important steps on the way to that goal:


1.    Deliver profitably
2.    Eliminate volatility
3.    Streamline the balance sheet
4.    Establish recovery plans for under performing businesses


It is in the nature of this phase of more measured progress that the emphasis
is upon sustained pressure to achieve long-term aims, rather than high profile
restructuring, disposals or acquisitions.

I am pleased to see progress on the many initiatives under way to bring this
phase to a successful conclusion in around June 2002.



The benefits of relationship management

The key change to our management structure is the creation of a 'relationship
manager' for each customer, who is now responsible for all aspects of our
service delivery, communication and long term growth. These new key managers
are entirely customer focused, and are measured by the profit delivered and
the growth they achieve within their portfolio of customers. This fosters a
different approach to our customer base - based on long term value creation
and improved performance. It is the key foundation for our strategy to become
the 'natural choice'.


I have been pleased by the way in which this change is already generating
benefits. We have seen long term receivables brought under much better control
as a result of clearer ownership of this issue by the relationship managers.
We have begun to see an increase in the flow of cross selling opportunities,
and a number of important successes, such as the increase in networking
opportunities - increasing the contracted business pipeline in this service
line by eight fold in as many months. This bodes well for future order entry.


This approach is new for Synstar, and for the staff involved. The development
of the skills, processes and new relationships is taking place during Phase 2,
and is the crucial focus of our attention.



Centres of Excellence - fostering our service lines

Supporting relationship managers in their approach to our customers are the
newly created Centres of Excellence. The aim is to pool our key technical
resources in five such Centres of Excellence, each owning a key part of our
service capability. Computer services, networking, business continuity, data
management and service (including our mobile engineering and logistics
capabilities) are now fully set up as virtual teams. Many of our best
technical people are now available to a much wider range of customers as a
result.


Centres of Excellence are responsible for the development of our service
offerings. As Phase 2 of our plan develops, investment in new service
offerings is being channelled in this way. During the past few months we have
already completed the rollout of our first new service offering.  VIDA is the
name we use to describe our method for delivering a fully managed service to
desktop users. VIDA's combination of processes, tools and the right mix of
skills allows Synstar to manage the needs of a large number of desktop users
to very high service levels and considerable cost reductions. We already have
about 25,000 seats under VIDA management, an increase of 20% in the year. We
anticipate significant growth in this volume next year.


We have been prudent in our business continuity operations. Our investment in
fixed recovery centres and the computer assets to support all our business
continuity customers has increased considerably in the last few years. Our
focus is now on increasing the occupancy and utilisation rates of these
assets, rather than increasing the capacity. Although our sales teams have
been pursuing this objective diligently, we expect progress here to take some
time. I have been encouraged by some recent successes in Ireland, which have
increased use of assets in Dublin considerably. Progress in continental Europe
has been much slower, however.


Following the tragic events of September 11, our staff have worked tirelessly
to provide support to those of our customers who were affected, and we upheld
our unique record of always fulfilling our obligations to provide business
continuity. It remains to be seen what the longer-term implications of these
events will have on the market for these services in the future.



The Future - preparing for Phase 3

Our focus during the remainder of Phase 2 must be to successfully develop our
key customer relationships with cross selling. We are targeting an increase in
the proportion of customers where we deliver more than one service line, with
special emphasis on networking, desktop management and incremental services to
business continuity customers. Some reduction in the overall number of
customers will take place as we eliminate very small, loss making
relationships and focus on those with potential.


Our efforts to create an integrated service line portfolio will continue,
since this will provide us with the offerings to sell as second and third
entry services to our customers. The remainder of Phase 2 will therefore see
us investing in carefully selected services, such as remote network
management, a wider capability in data management project delivery and
enhancements to our VIDA offering. Investment in new services will focus on
those we can sell to our large existing customer bases, in business continuity
and computer services. Our sales effort will therefore concentrate on selling
from areas of strength into areas of investment.


Our growth during the next 12 months will come initially from these second and
third entry sales of existing services, albeit offset by the impact from
exiting some smaller customers. As a consequence, our revenue growth next year
may be below the growth of our market segment, yet it will provide for a much
more focused set of customer relationships. Margin improvement will be
assisted by a number of improvement programmes, including recovery plans for
the businesses in France and Switzerland. I make no apology for maintaining a
financial focus clearly on earnings and cash rather than revenue.


In the longer term, Synstar must be able to engage customers with multiple
service offerings from the outset. A business availability provider must be
able to win bigger, longer, more joined up deals, in addition to organic
growth of existing relationships. Phase 3 will therefore require us to develop
the capability to close larger deals, assessing more sophisticated commercial,
financial and risk sharing structures to complement our good position in
technical competence.


Whilst there is a need to take some more time over stabilisation in Phase 2,
acquisitions will play a part over time. When the time is right, these will
focus either upon building critical mass in mainland Europe, or the addition
of new service lines, which we can sell to our customer base.



Summary

We expect a difficult year ahead, but the strong foundations we have laid give
us grounds for optimism. There is good evidence that our strategy to sell more
value-added services to our existing customer base is the right approach.
Developing stronger, longer and wider relationships with key clients is our
best defence to increasing marketplace pressures. Our ability to execute a
successful, rapid restructuring programme gives a good insight into the
Group's ability to develop positively.


Overall, I am pleased to report that we have taken the first steps towards our
ambition to achieve world class status as a provider of business availability.
We face the future with increasing confidence.


Steve Vaughan
Chief Executive


Finance Director's Review


Introduction

The financial year ended 30 September 2001 was characterised by two very
different half-year outcomes. The first half, which followed the Y2K slowdown,
continued to be impacted by delays in contract start dates despite a growing
order book. In contrast, the second half has seen the benefits of these new
contracts together with the cost reductions from our restructuring programme
and the profit improvement of the disposal of our loss making Italian
subsidiary.


This is illustrated in the table below and discussed in the commentary.


£'m                                                        H1     H2      Full
                                                                          Year
Revenue
Continuing operations                                    108.5   116.0    224.5
Discontinued operations                                   11.8     1.9     13.7
Total revenue                                            120.3   117.9    238.2

Cost of sales                                            (89.9)  (86.3)  (176.2)

Gross Margin                                              30.4    31.6     62.0

Overheads                                                (30.1)  (27.3)   (57.4)

Operating profit before goodwill and exceptional items     0.3     4.3      4.6



Thus in summary we have reported operating profit (excluding amortisation of
goodwill and exceptional costs) of £0.3m (2000: £5.9m) and £4.3m. (2000: 
£4.0m) for the first and second halves respectively.



Revenue

Although revenues from continuing operations declined in the first half, they
recovered in the second half, growing by 6.9%. Year on year revenue from
continuing operations grew 4.3%. The driver of this growth was computer
services, which was ahead by 4.7%, while the performance from business
continuity was flat.


It is pleasing to note that the percentage of revenue represented by long term
contracts has remained around 70% and that mainland Europe is now showing a
stronger performance, with revenues from continuing operations up 7.5 %,
whilst the UK grew 2.5%.

Gross Margin

Gross margin recovered in the second half to reach 26.8%, from 25.3% in the
first half. The full year margin was 26.0% (2000: 27.9%).


Despite this recovery in gross margin, it is important to note that the
business remains subject to significant price pressure in each of our markets.
Gross margins for business continuity however, remain above 60%.



Operating Expenses

In previous reporting periods, including the first half of 2001, increases in
operating expenses were recorded.  These were driven in particular by the
leasing and depreciation costs associated with our investment in business
continuity centres.


As a result, although second half operating expenses actually fell by £2.8m,
(9.3%), comparable full year total operating expenses increased by  £ 1.5m
(2.7%).



Operating Profit

Annual operating profits before goodwill amortisation and exceptional items
fell by £5.3m to £4.6m. The operating profit margin, calculated on the same
basis, fell from 4.2% to 1.9%.


The main drivers of this fall originate in the first half which was impacted
by the year on year loss of highly profitable Y2K revenue, the incremental
costs associated with our new business recovery centres and underlying margin
decline.


This has been addressed by the programmes outlined in the chief executive's
review and, as indicated above, the Group traded in the second half at
significantly higher levels of margin and annualised profitability.



Exceptional Items

As reported at the half year a number of one-off items impacted the reported
results.



Restructuring provision

Following his appointment of as chief executive on 2 January 2001, Steve
Vaughan undertook a strategic review of the Group.  This led to a
restructuring programme designed to enable the Group to build on its existing
strengths and respond faster and more creatively to the needs of our
customers.


This restructuring programme, which focused on the overhead base, has resulted
in a net reduction in headcount together with a small number of key new hires.
This programme generated costs of £8.5m, which are considered exceptional to
the Group's main activities.


The restructuring programme is estimated to have delivered ongoing annual
benefits of some £6 million, of which a proportion will be re-invested in the
business in order to drive future growth.



Disposal of Italian business

On 8 May 2001 the Group disposed of the share capital of Synstar Computer
Services SpA and its other Italian subsidiaries to Gruppo ATR Srl of Brescia,
Italy. As a result, the sales and losses associated with these operations are
shown separately as discontinued activities. The loss on the sale of business
of £4.5m has been treated as an exceptional item.


Goodwill

As required by FRS 11 (Impairment of Fixed Assets and Goodwill), the Board has
reviewed the carrying value of goodwill for all of our subsidiaries. Taking
into account the expected cash flows that will be derived from these entities
and recent trading performance, it has been decided to write-off the remaining
goodwill of Lancare (£10.4m), CT Consulting (£1.0m) and Tecsys (£0.5m)


Notwithstanding the above, we continue to believe that there are excellent
prospects for developing these businesses within Synstar. However, this will
require further investment and integration into the core business.



Interest

Interest paid fell from £0.7m in 2000 to £0.6m in 2001. Further reductions are
likely in 2002 following the disposal of the Italian debt position and the
underlying cash generative nature of the Group's activities.



Taxation

The tax rate for the full year has fallen from 44% in 2000 to an on-going rate
of 38% in 2001. This latter rate reflects both the higher rates of tax
experienced in continental Europe and the fact that it has not been possible
to obtain tax relief on all losses incurred in continental Europe.


The tax position under FRS 19 (Accounting for Deferred Tax) has been reviewed
and there has been no impact on either the current or prior year as a result
of its implementation.

                             
Were France and Switzerland to move into profit, there is further scope for
reductions in rate.



Earnings per Share

Arising from the above, the basic earnings per share (adjusted for goodwill
amortisation and exceptional items) has decreased by 2.0p to 1.1p.



Cash Flow and Net Funds
Cash flow from the business remains strong.


Despite the lower levels of profit and the impact of restructuring, the Group
generated £1.8m of cash in the year compared to a usage of £4.7m in 2000. This
was driven by three main factors:


1.    reduced capital expenditure (2001:£11.5m, 2000:£20.5m), following the
      high levels of Business Continuity expenditure last year on the new       
      business recovery centres in Newbury and Brussels.

2.    a net inflow of funds (£2.3m) arising from the transfer of debt on the
      sale of our Italian subsidiary compared to an acquisition related outflow 
      last year (£3.1m).

3.    strong control over working capital (2001: £3.5m inflow, 2000: £1.4m
      outflow).


The business was ungeared at 30 September 2001 with net cash balances of £8.0m
(30 September 2000: £6.1m). However, it should be noted that the half-year and
full year cash balances are impacted by the timing of receipt of cash payments
from certain large customers. As indicated by the interest charge the Group
has an overall overdraft position throughout most of the year.



Summary

Following the decline in revenue post Y2K, much work has been done to enhance
the Group's ability to drive future earnings growth:

     -    the cost base has been addressed

     -    Italy, the largest loss making subsidiary, has been sold

     -    the reorganisation of the business enables it to better focus on
          cross-selling our product range to our blue chip customer base and    
          therefore drive revenue growth.

     -    there is now a stronger focus across the business on both profit and
          cash generation. Within working capital, the reduction of both debtor 
          and stock days have released cash.

     -    interest costs are being brought down and the tax rate reduced.


The challenge is now to build on this.


Stephen Gleadle
Finance Director


Consolidated Profit and Loss Account
For the year ended 30 September 2001

           Notes     Before Exceptional             Before  Exceptional
                exceptional     items          Exceptional    items    Restated
                      items  (Note 2)    Total       items  (Note 2)
                       2001     2001      2001        2000      2000       2000
                      £'000    £'000     £'000       £'000     £'000      £'000 
       
Turnover
Continuing                                         
operations          224,451        -   224,451     215,161         -    215,161 

Discontinued                                                 
operations           13,747        -    13,747      20,750         -     20,750

Total 
turnover      1     238,198        -   238,198     235,911         -    235,911


Cost of sales     (176,249)  (2,533) (178,782)   (170,212)   (3,500)  (173,712)

Gross profit         61,949  (2,533)    59,416      65,699   (3,500)     62,199 
   
Selling and        (16,430)        -  (16,430)    (15,583)         -   (15,583)
marketing                                    
costs                                                                      
Administration     (41,274) (17,898)  (59,172)    (40,923)         -   (40,923)
expenses
                                                                             

Operating profit
(loss) before
goodwill
Continuing            5,807  (8,538)   (2,731)      11,671   (3,048)      8,623
operations                                                                  
Discontinued        (1,202)        -   (1,202)     (1,810)     (452)    (2,262)
operations                                   


Operating profit
(loss) before                                                                   
goodwill              4,605  (8,538)   (3,933)       9,861   (3,500)      6,361
amortisation
Goodwill              (360)        -     (360)       (668)         -      (668)
amortisation                                 
                                                                             
Goodwill                  - (11,893)  (11,893)           -         -          -
impairment                                                                      
        


Operating
profit (loss)
Continuing            5,480 (20,431)  (14,951)      11,042   (3,048)      7,994
operations                                                                  
Discontinued        (1,235)        -   (1,235)     (1,849)     (452)    (2,301)
operations                                   

Total            1    4,245 (20,431)  (16,186)       9,193   (3,500)      5,693
operating                                                                    
profit (loss)

Loss on          2        -  (4,514)   (4,514)           -         -          -
disposal of                                                                     
discontinued                                                                 
operations

Profit (loss)
on ordinary
activities            4,245 (24,945)  (20,700)       9,193   (3,500)      5,693
before
interest

Interest                225        -       225         241         -        241
receivable and                                                                  
similar income
Interest              (821)        -     (821)       (980)         -      (980)
payable and
similar
charges

Profit (loss) on      3,649 (24,945)  (21,296)       8,454   (3,500)      4,954
ordinary activities                                                             
before taxation
Tax on profit    3  (2,272)    1,193   (1,079)     (4,014)         -    (4,014)
on ordinary                              
activities                                                                   

Profit for the        1,377 (23,752)  (22,375)       4,440   (3,500)        940
financial year                                                                 

Earnings /       4
(loss) per
share
Adjusted basic                            1.1p                              3.1p
Basic                                  (13.8p)                              0.6p
Diluted                                (13.8p)                              0.6p



Adjusted basic earnings per share has been calculated before exceptional
items, net of taxation and goodwill amortisation.

The accompanying notes are an integral part of this consolidated profit and
loss account.

Consolidated Statement of Total Recognised Gains and Losses

For the year ended 30 September 2001


                                                Notes       2001           2000
                                                           £'000          £'000

(Loss) profit for the financial year                    (22,375)            940
Currency translation differences on foreign
currency net investments                                   (221)        (1,585)

Total recognised losses relating to the year
and since the last annual report and accounts            (22,596)          (645)






Consolidated Balance Sheet

30 September 2001


                                                                       Restated
                                                                       (Note 3)
                                                           2001            2000
                                                          £'000           £'000
Fixed assets
Intangible assets                                             -          13,252
                                                              
Tangible assets                                          36,910          44,768

                                                         36,910          58,020

Current assets
Stocks                                                    2,988           4,274
                                                                          
Debtors                                                  48,158          65,148
Cash at bank and in hand                                 12,993          12,975

                                                         64,139          82,397

Creditors: Amounts falling due within one year         (66,250)        (82,202)

Net current (liabilities) assets                        (2,111)             195
                                                                            

Total assets less current liabilities                    34,799          58,215

Creditors: Amounts falling due after more than                -           (820)
one year                                                      

Net assets                                               34,799          57,395

Capital and reserves
Called-up share capital                                   1,625           1,625
                                                                          
Share premium account                                    94,578          94,578
Profit and loss account                                (61,404)        (38,808)

Total shareholders' funds - all equity                   34,799          57,395



Consolidated Cash Flow Statement

For the year ended 30 September 2001


                                                            2001          2000
                                               Notes       £'000         £'000

Net cash inflow from operating activities        5        14,711        23,362
Returns on investments and servicing of                    (596)         (739)
finance
Taxation                                                 (3,233)       (3,817)
Capital expenditure                                     (11,459)      (20,461)
Acquisitions and disposals                                 2,338       (3,071)

Net cash inflow (outflow) before financing                 1,761       (4,726)

Financing                                                (1,368)         (791)

Increase (decrease) in cash in the year                      393       (5,517)






Statement of accounting policies



The accounting policies adopted are consistent with those in the most recently
published set of annual financial statements, with the exception of the
adoption of FRS19, Deferred tax (see note 3).



The financial information set out above does not comprise the company's
statutory accounts. Statutory accounts for the previous financial year ended
30 September 2000, have been delivered to the Registrar of Companies. The
auditors' report on those accounts was unqualified and did not contain any
statement under section 237(2) or (3) of the Companies Act 1985.



The directors of Synstar Plc are responsible in accordance with the Listing
Rules of the Financial Services Authority and applicable United Kingdom
Accounting standards for preparing and issuing this preliminary announcement.
Arthur Andersen have given an unqualified opinion on the accounts for the year
ended 30 September 2001, which will be delivered to the Registrar of Companies
following the annual general meeting.






1.       Segmental analysis

All turnover, profit before tax and net assets were attributable to the
Group's principal activities and to Group companies located, and operating,
within Europe.


                                     2001                              
                                    £'000                             
                               Continuing     Discontinued Exceptional     Total
  
1a Turnover by Destination
UK and Ireland                    141,284                -           -   141,284
France                             16,377                -           -    16,377
Germany                            27,400                -           -    27,400
Italy                                   -           13,747           -    13,747
Other                              39,390                -           -    39,390
                                  224,451           13,747           -   238,198
1b Class of business
Turnover

Computer services                 205,187           13,747           -   218,934
Business continuity                19,264                -           -    19,264
                                  224,451           13,747           -   238,198
Operating profit

Computer services                   6,475          (1,235)     (6,610)   (1,370)
Business continuity                 2,005                -       (697)     1,308
Central expenditure               (3,000)                -    (13,124)  (16,124)
                                    5,480          (1,235)    (20,431)  (16,186)
Net Assets

Computer services                                                         26,986
Business continuity                                                        3,966
Unallocated                                                                3,847
                                                                          34,799
          
1c Geographical segment
Turnover

UK and Ireland                    141,179                -           -   141,179
Rest of Europe                     83,272           13,747           -    97,019
                                  224,451           13,747           -   238,198
Operating profit

UK and Ireland                      7,119                -     (1,519)     5,600
Rest of Europe                      1,361          (1,235)     (5,788)   (5,662)
Central                           (3,000)                -    (13,124)  (16,124)
                                    5,480          (1,235)    (20,431)  (16,186)
Net assets

UK and Ireland                                                            21,392
Rest of Europe                                                             9,560
Unallocated                                                                3,847
                                                                          34,799



                                     2000                              
                                    £'000                             
                               Continuing     Discontinued Exceptional     Total
1a Turnover by Destination
UK and Ireland                    137,814                -           -   137,814
France                             14,968                -           -    14,968
Germany                            25,027                -           -    25,027
Italy                                   -           20,750           -    20,750
Other                              37,352                -           -    37,352
                                  215,161           20,750           -   235,911

1b Class of business
Turnover

Computer services                 195,877           20,750           -   216,627
Business continuity                19,284                -           -    19,284
                                  215,161           20,750           -   235,911

Operating profit

Computer services                   9,991          (1,849)     (3,500)     4,642
Business continuity                 3,841                -           -     3,841
Central expenditure               (2,790)                -           -   (2,790)
                                   11,042          (1,849)     (3,500)     5,693

Net Assets

Computer services                                                         50,048
Business continuity                                                        4,787
Unallocated                                                                2,560
                                                                          57,395

1c Geographical segment
Turnover

UK and Ireland                    137,671                -           -   137,671
Rest of Europe                     77,490           20,750           -    98,240
                                  215,161           20,750           -   235,911

Operating profit

UK and Ireland                     11,098                -     (2,165)     8,933
Rest of Europe                      2,734          (1,849)     (1,335)     (450)
Central                           (2,790)                -           -   (2,790)
                                   11,042          (1,849)     (3,500)     5,693

Net assets

UK and Ireland                                                            34,872
Rest of Europe                                                            19,963
Unallocated                                                                2,560
                                                                          57,395


Unallocated net assets consist of cash, tax payable, and other centrally held
or managed assets and liabilities.



In relation to the discontinued operations, the profit and loss account
includes cost of sales of £11,889,000 (2000 - £17,831,000), gross profit of 
£1,858,000 (2000 - £2,919,000), sales and marketing costs of £1,121,000 (2000 -
£1,550,000) and administration expenses of £1,972,000 (2000 - £3,218,000).


2. Exceptional items
                                                          2001            2000
                                                         £'000           £'000

Stock provision                                              -           3,500
                                                             
Restructuring                                            2,533               -
                                                                             

Total operating items charged to cost of                 2,533           3,500
sales

Restructuring                                            6,005               -
                                                                             
Impairment of goodwill                                  11,893               -
                                                                             

Total operating items charged to                        17,898               -
administration expenses                                                      


Total operating exceptional items                       20,431           3,500

Loss on disposal of discontinued                         4,514               -
operations                                                                   


Total exceptional Items before tax                      24,945           3,500





The group has undertaken a strategic review, which has led to a restructuring
programme to enable the group to respond faster and more creatively to the
needs of customers.  This restructuring programme involves both a redundancy
and new hiring programme and is considered exceptional to the group's main
activities.  The tax effect of the restructuring charge is a credit of £1.2m.
The tax credit in respect of exceptional items is low, primarily as a
substantial part of the exceptional item arose in countries, which were
already in a tax loss position.



On 8th May 2001, the group disposed of the share capital of Synstar Computer
Services SpA and its other Italian subsidiaries to Gruppo ATR Srl of Brescia,
Italy.  This has resulted in an exceptional loss on disposal of £4.5m.   The
results of the Italian subsidiaries have been disclosed as discontinued
activities.  The group has also guaranteed that at least £5.8m of the £12.8m
outstanding trade debtor balance is recoverable. The tax effect of the loss on
disposal is £Nil.



An impairment review has been conducted of the carrying value of goodwill
within the group.  Whilst there are excellent prospects for developing the
Networking Centre of Excellence as one of the group's core activities, through
further investment, the directors believe that the goodwill which can be
attributed to the existing Lancare business is permanently impaired.
Consequently there has been an exceptional write down in goodwill of £10.4m.
In addition, due to the current and historical trading performance in
Switzerland and Luxembourg a full write down of the £1m goodwill on CT
Consulting AG and £0.5m on Tecsys has also been made.  Therefore the total
exceptional write down of goodwill in the period is £11.9m.  The tax effect is
£Nil.



The exceptional charge of £3.5m in the year to 30 September 2000 relates to a
change in the method by which stock provisions are calculated by the group.
Previously the group had recognised a value for older stock lines relating to
customers' legacy systems.  However, due to the ongoing pace of technological
changes and the difficulty of placing value on older little used stock lines,
such items were written off.  The tax effect is £Nil.




3. Taxation



The decrease in the ongoing taxation rate before exceptional items reflects
the changing mix of performance between the various European subsidiaries.



The group's policy for accounting for deferred tax has changed to comply with
Financial Reporting Standard 19, Deferred tax. Previously, deferred tax was
only provided to the extent that timing differences were expected to reverse
in the future without being replaced. Deferred tax is now provided in respect
of all timing differences that have originated but not reversed at the balance
sheet date where transactions or events that result in an obligation to pay
more tax in the future or a right to pay less tax in the future have occurred
at the balance sheet date. The change in accounting policy has had no effect
on the profits reported for the year ended 30 September 2001, or the year
ended 30 September 2000, or the balance sheet at those dates.





4. Earnings (loss) per share



Basic earnings (loss) per share are calculated in accordance with FRS14
Earnings per Share, based on loss after tax of £22,375,000 (2000 - £940,000
profit) and 162,500,000  (2000 - 162,500,000) ordinary shares, being the
weighted average in issue during the year.



Fully diluted earnings per share is the basic earnings per share after
allowing for the dilutive effect of options in issue.  The number of shares
used for the fully diluted calculation is 162,500,000 (2000 - 163,074,658).



The adjusted basic earnings per share information has been calculated before
exceptional costs, net of taxation and goodwill. The Directors believe this
additional measure provides a better indication of the underlying trends in
the business.



The calculations of the adjusted earnings per share are based on the following
profits:


                                                           2001            2000
                                                          £'000           £'000

Profit for the year for basic earnings per share       (22,375)             940
Exceptional items                                        24,945           3,500
Tax credit on exceptional items                         (1,193)               -
                                                                              
Amortisation of goodwill                                    360             668

Profit for the year for adjusted basic earnings           1,737           5,108
per share

Weighted average number of shares in issue:
                                                           2001            2000
                                                         Number          Number
                                                           '000            '000

For basic earnings per share                            162,500         162,500
Exercise of options                                           -             575
                                                              

For fully diluted earnings per share                    162,500         163,075





5. Reconciliation of operating profit to net cash inflow from operating
activities


                                                            2001           2000
                                                           £'000          £'000

Operating (Loss) Profit                                 (16,186)          5,693
                                                                          
Exceptional stock
provision                                                      -          3,500
Depreciation charges                                      15,104         14,899
                                                                         
Goodwill amortisation                                     12,253            668
and impairment                                                              
Decrease in stocks                                           982            432
                                                             
Decrease (Increase) in                                     1,629        (5,400)
debtors                                                    
Increase in creditors                                        929          3,570
                                                             

                                                          14,711         23,362
                                                                         


6. Analysis of net funds
                              Cash at
                                 bank    Overdraft         Loans          Total
                                £'000        £'000         £'000          £'000

Balance at 1 October           12,975      (3,731)       (3,106)          6,138
2000                                                                
Cash flows during year          (195)          588         1,368          1,761
                                               
Foreign exchange                  213         (94)             -            119
                                                            

Balance at 30 September        12,993      (3,237)       (1,738)          8,018
2001