Trading Statement

Synstar PLC
13 March 2001



Synstar Trading Update and Strategic Review

'Reorganisation to drive sales growth'


Trading Update

While contract signings in some of our key markets such as the UK, Belgium and
Germany are now starting to develop strongly this has taken longer to happen
than expected. At the same time, in other markets such as France, Switzerland
and Italy contract signings have been low although the sales pipelines remain
high.

Given the signing of first half new name and expansion business as well the
size of the current sales pipeline the second half is still forecast to show
year on year revenue growth. However the overall delay in signings and
therefore revenue and profit recognition will result in the Group's profits
falling below consensus market expectations for the year to 30th September
2001.

Strategic Review

The results will also be affected by the outputs of a Strategic Review being
carried out following the appointment of Steve Vaughan as CEO on 1st January
2001. To date, this review has confirmed Synstar's excellent technical
capabilities, pan-European presence and particularly the strong customer base
as the solid platform on which to develop the Group. However while the
business has excellent long-term client relationships, it could be better
structured to support the sale of additional services to its client base.
Better focus is also required to promote consistent acquisition of new
customers, particularly those requiring pan-European services. 

We are therefore restructuring our management team to allow the Group to
respond faster and more creatively to the needs of our existing client base,
and thereby enhance the flow of business from this source. The creation of new
Relationship Managers will provide a single point of contact for each
customer, with cross selling new services as a particular priority. The
strategic sales resources will be focused entirely on attracting new name
business and converting it faster. We are also creating 'Centres of
Excellence' to encourage better service delivery across Europe and to
implement new service lines more rapidly. 

This restructuring which involves both a redundancy and new hiring programme
will lead, together with the redundancy programme already implemented at the
start of the year, to exceptional full year costs of around £8.5m in the year
ended 30th September 2001. In addition to enhanced growth prospects,
annualised savings of around £6m are expected to result from this of which a
proportion will be re-invested back into the business to drive future growth. 

Further focused projects to improve business efficiency are also being
considered and it is expected that the Strategic Review will be completed in
time for the interim results announcement in early June. 

The Board believes that the management re-organisation will improve materially
the Group's ability to source and convert new business flows driving
underlying profit growth in future periods. 

For further information:

Synstar plc
Christine Jones,  Communications Manager                       [phone]
                              

GCI Financial
Roger Leboff / Nick Lambert                                    [phone]
                  
Citigate Technology
Natalie Prichard                                               [phone]