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Datamonitor PLC (DTM)

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Monday 26 February, 2001

Datamonitor PLC

Final Results

Datamonitor PLC
26 February 2001

                                                            26 February 2001

                               Datamonitor plc

           Preliminary Results for the year ending 31 December 2000

Datamonitor, the global business information company


*    27% increase in revenue up to £31.2m (1999: £24.6m)

*    29% increase in gross profit (before sales and marketing costs) up to
     £20.0m (1999: £15.5m)

*    55% growth in premium services (subscriptions and custom solutions),
     up to £18.1m (1999: £11.7m) and now representing 58% (1999: 47%) of revenue

*    92% increase in deferred revenue from £5.0m to £9.6m

*    Positive operating cash flow, before exceptional items, of £0.6m

*    IPO on the London Stock Exchange successfully completed in November

*    Significant investment in infrastructure and staff for future
     development including internet delivery systems, management team, sales    
     staff and analysts

*    Loss before tax of £7.3m (1999: £2.6m), better than expectations,
     reflecting the investment made in infrastructure and staff and the one-off
     costs of  the IPO

Commenting on the results, Mike Danson, Chairman of Datamonitor, said,

'The success of our premium products justifies our strategy of moving our
business mix towards subscription information and advisory services. This year
we have invested in our management infrastructure, in our professional staff
and in the development of our research databases. The successful flotation of
the group was an important step in our corporate development and has given us
the resources to continue to grow the company.'


Datamonitor Plc                                Tel: 020 7675 7000
Mike Danson, Chairman
Tom Gardner, Chief Executive Officer
Ian Pratt, Chief Financial Officer

Hudson Sandler                                  Tel: 020 7796 4133
Nick Lyon/ Noemie de Andia

Note to Editors:

Datamonitor is a premium business information company specialising in industry
analysis. We help our clients, the world's leading 5000 companies, to address
complex strategic issues. Through our proprietary databases and wealth of
expertise, we provide clients with unbiased expert analysis and in depth
forecasts for six industry sectors: Automotive, Consumer Markets, Energy,
Financial Services, Healthcare and Technology.


                             CHAIRMAN'S STATEMENT


I am pleased to report that the financial year ended 31 December 2000 was one
in which significant progress was achieved in the development of your Group.


Group turnover increased by 27% to £31.2m from £24.6m in 1999. Gross profit
increased by 29% to £20.0m as we increased the level of Premium Services (our
subscription products). The Group generated positive operating cash flow,
before exceptional items, of £0.6m.

Over the last 3 years, we have invested heavily in recruiting industry
analysts and expanding research databases to provide the foundations for the
growth of our subscription based business model. This investment ensures that
each of our services is highly scalable.  Our results demonstrate we are
making rapid progress on our path to profitability and we are confident that
each of our business units is on target to achieve critical mass.

Our IPO was completed and trading of our shares on the London Stock Exchange
began on 29th November. This was accomplished in spite of exceptionally
difficult market conditions.  The flotation is a testament, I believe, not
only to Datamonitor's track record and growth strategy, but also to the
strength of our management team.

As a result of the investment and the one-off IPO costs, there was a loss
before tax of £7.3m, better than expectations, as the benefit of additional
revenue flowed largely through to our operating results.


Datamonitor's objective is to be the premier global research and analysis
company in each of the six industry sectors it covers: Automotive, Consumer
Markets, Energy, Financial Services, Healthcare and Technology.

The key elements of this strategy are:

  * To increase sales to the Group's existing customers and to expand the
    Group's customer base. On the basis that research and analysis have a high
    fixed cost element, the Group intends to grow sales rapidly to achieve
    economies of scale.

  * To expand internationally. Datamonitor believes that there are
    opportunities to expand geographically by using the global scope of the
    Group's databases, its industry experience, and the foreign language
    skills of its analysts and researchers.

  * To grow Datamonitor's intellectual property. The Group's strength is
    built on its proprietary research data combined with the skills of
    analysts and research professionals focused on specific industries. We
    will continue to exploit this strength.

  * To enhance the Group's Internet distribution. Datamonitor plans to
    continue to enhance its web sites to improve their functionality and ease
    of use, increase interactivity and to customise delivery.


Our customer research indicates that demand continues to grow for timely,
credible and prescriptive analysis which assists companies to respond to
market issues and enables them to maintain a competitive edge.  The global
market for market information services, product information and industry
specific news grew at approximately 8% last year. The Continuous Advisory
sector, which is the focus of the Group's premium services, grew at about 20%.

We believe that with the increasing globalisation of the economy and the
accelerating pace of technological change, companies are experiencing greater
competitive demands and facing increasingly complex strategic and operational
issues. Decision making in this rapidly changing environment requires access
to comprehensive and up-to-date market and industry information.

Management and Board Changes

Tom Gardner joined Datamonitor as chief executive officer in February 2000,
bringing prior experience as the CEO of publicly traded companies, and a
wealth of senior management experience from companies such as Dun &
Bradstreet, Simon & Schuster, and Johnson & Johnson.  We are very pleased to
welcome Tom to the Group and to the Board, and we look forward to the benefits
that his leadership will bring to us in 2001, and beyond.

It is also worth noting that during the year we decided to alter the
composition of our board of directors to make it an independent, principally
external board.  At present we have six directors, three of whom are
non-executive, and expect to appoint an additional non-executive director in
the near future.


The company has a clear strategy that differentiates us from our competitors
and provides a platform for sustainable growth. We are confident, given our
investment programme, that we are solidly on a path to sustained

The Board would like to take this opportunity to express sincere thanks to our
loyal customers, whom we strive to serve at the highest levels of performance.
We would also like to thank all of our Datamonitor Group colleagues for their
efforts during the year. They have worked together to achieve excellent
results in a challenging and ever changing marketplace.

Lastly, we want to thank our new public investors for their confidence in
Datamonitor and the support they have given the Group in 2000.

Mike Danson
Chairman and Chief Strategy Officer
26 February 2001


The year 2000 was a pivotal one for Datamonitor.  It was the last year of a
three-year investment programme in which our business model was transformed
from non-subscription report publishing to the provision of subscription-based
premium services. This provides us with the platform to deepen our
relationships with our customers, thereby increasing revenue per customer, and
consequently earnings growth. We are already reaping the benefits of this
strategy: in 2000, average customer revenue was £5,700 across all services
versus £3,900 in 1997.

We intend to become the premier global research and analysis company in our
six market sectors - Automotive, Consumer Markets, Energy, Financial Services,
Healthcare and Technology. The Group offers a variety of analysis products and
services across these industry sectors, presenting them to clients as premium
services (Strategic Planning Programmes, other subscription products or custom
solutions) or as other information products (Market Reports or eContent). All
of our premium services clients started their relationship with Datamonitor as
market report purchasers.

The main business developments of the past twelve months are highlighted

PREMIUM SERVICES- turnover £18.1m

Premium services represent 58% of our turnover and comprise Strategic Planning
Programmes (SPPs), other subscription products and custom solutions.

Strategic Planning Programmes and other subscription products

SPPs account for the majority of Premium Service revenue and are Datamonitor's
flagship subscription products. These programmes include research reports,
monthly briefings on topical issues, periodic seminars, industry forecast
presentations, and access to industry experts. Customers have a choice of 26
industry-specific research programmes across each of the six industry sectors
the Group covers, which are paid for by annual subscription.

In 2000 SPP customers increased from 260 to 460 and the average sales per SPP
customer increased from £24,100 to £26,400. This strong growth in our SPPs and
other subscription based products has resulted in 38% of our revenue sold as a
subscription this year.

It is important for Datamonitor to anticipate new issues and market
developments that might affect our customers. In 2000, these issues included
eCommerce, nutraceuticals, energy deregulation, and wealth management. We have
also initiated monthly editorial board meetings to ensure that we are flexible
in allocating appropriate resources to the development of intellectual
property that is current. This permits us to respond quickly to opportunities
in any of our sectors.

In 2001 we are continuing to concentrate on developing and increasing the
penetration of our existing programmes to take advantage of the operational
leverage in our business and make further progress on our path to

Custom Solutions

Datamonitor also undertakes discreet assignments on request from its customers
as extensions to its customer relationships.  We believe that all custom work
arises from our SPP relationships; as a result of working closely with a
client through syndicated services we gain their trust to become more deeply
involved with their work. Typically, custom work might be to design a market
entry or marketing strategy based on our forecasts - and would be
multi-national in scope.

This year revenue grew from £5.0m to £6.2m.


Other information products include market reports and eContent and represents
42% of revenue.


Our roots are in report publishing, and although our business focus has moved
away from this revenue stream, it is still important, financially and

The depth of our content, developed through our SPP research, allows us to
sell SPP components such as management reports, separately. These reports are
sold to an audience that needs information about multiple industries in
multiple countries, as opposed to deep knowledge of one sector. As this
audience's requirement for deeper knowledge develops, we are able to introduce
them to the appropriate SPP, and thereby increase sales per customer.

In 2000, we invested in a new Customer Relationship Management database which
helps us to understand and target this large market better. We also
successfully reformatted some of our German data into specific reports in
German for the German market. In addition, our report publishing arrangement
with Reuters - under the 'Reuters Business Insight' brand name - had a
successful second full year. Report revenue remained constant this year
reflecting our shift to premium services.

We have recently developed and launched a co-branded independent investor
research product on healthcare companies with Instinet, a wholly-owned
subsidiary of Reuters in the US. Instinet will sell these reports to
institutional investors as part of their 'soft dollar' programme, and
Datamonitor will sell the same reports through its own distribution channels.

In 2001 we will continue to pursue initiatives to broaden the audience for
market reports, consistent with our strategy, and to migrate market report
customers to premium services where demand exists.


Datamonitor's new eContent business unit, created mid-2000, produces a summary
of market analyses specially designed for electronic distribution. By
licensing these summaries to Internet sites, Datamonitor can reach a large new
audience for its market analysis. eContent not only generates revenues for the
Group, but also boosts brand awareness and provides leads for our advisory
services and market reports.

For example, in May 2000, Datamonitor's eContent business unit formed a
partnership with, a joint venture between Barclays Bank
plc and Freeserve plc. Clearlybusiness's aim is to provide a differentiated,
content-rich service to small to medium sized enterprises. By supplying
co-branded market profiles, Datamonitor provides a rich source of information
to the site's customer base.

We are also strengthening relationships with other media companies including
Reuters plc, Reed Elsevier plc and Thomson Financial Ltd.


Technology Platform

To continue to be successful we need to provide our clients not only with
quality data and expert analysis, but also with the technology to obtain
business information when and where they need it. To ensure this, we have made
significant investments in technology over the last three years to improve the
delivery of our products and services. Client-customised, password-protected
home pages, electronic news analysis wires, and web-based products are just
some examples of our internal initiatives.

We are also developing sector specific Internet communities which will enable
us to expand our customer base through new products & marketing techniques,
and reduce sales and marketing cost. Another project we are currently pursuing
is the development of a content management system to help us improve storage
and management of information.


We continue to strengthen the Group's organisation. A number of key
appointments were made in 2000.

Douglas Wilson was named Global Research Officer, while continuing as Managing
Director of the Technology business unit.  The Global Research Officer is a
new position, with the task of producing a range of products that cut across
the six industry sectors, focusing on issues that affect more than one

Stuart Butler-Smith was named Chief Human Resources and Communications
Officer.  Stuart is one of Datamonitor's most experienced line managers,
having been managing director of our Financial Services, Healthcare, and
Consumer Markets business units. As an intellectual property company,
dependent on our people, we place great importance on recruiting, retaining
and developing the best talent available. Our commitment to our people is
demonstrated by this appointment.

Four people were promoted to be Managing Directors of business units in 2000:
Cliff Barber, Financial Services; Mitchell Daitz, Healthcare; Mark
Stuart-Bourne, Consumer Markets; and Wayne Lloyd; eContent. All four are
proven line managers in Datamonitor and have previous experience in consulting
and fast-growth technology industries.

International Development

In addition to strengthening the Group's organisation, we continued to invest
in international expansion in 2000. Our office in New York has been operating
since 1995 and our North American business now represents about 26% of total
revenue. Our Hong Kong office was opened in 1999 and is enjoying significant
growth. Over the long term, we expect our geographic business development will
mirror that of our global customers.

We expect that 2001 will bring Datamonitor further successes as we move along
our path to profitability. We have a sound growth strategy, talented and
dedicated people, and the capital resources needed to succeed.  We face the
challenges that lie ahead with confidence.

Thomas Gardner
Chief Executive Officer
26 February 2001

                               FINANCIAL REVIEW


*        27% increase in revenue up to £31.2m (1999: £24.6m)

*        29% increase in gross profit up to £20.0m (1999: £15.5m)

*        55% growth in premium services (subscriptions and custom solutions),
         up to £18.1m (1999: £11.7m) and now representing 58% (1999: 47%) of    

*        92% increase in deferred revenue from £5.0m to £9.6m

*        Positive operating cash flow, before exceptional items, of £0.6m

*        Loss before tax of £7.3m (1999: £2.6m), better than expectations,
         reflecting the investment made in infrastructure and staff and the one-
         off costs of  the IPO

The results for the year can be summarized as follows:

Statement of Operations                                      

                                                 2000    %      1999       %
                                                 £000           £000

Premium services                               18,105   58.1  11,698     47.5

Non-subscription information                   13,064   41.9  12,949     52.5

Total revenue                                  31,169  100.0  24,647    100.0  

Cost of Services                              (11,128) (35.7) (9,144)   (37.1)  
Gross profit                                   20,041   64.3  15,503     62.9  

Sales and marketing costs                     (13,061) (41.9)(10,029)   (40.7)  
General and administrative expenses           (11,491) (36.9) (7,545)   (30.6)

EBITDA                                        (4,511) (14.5)  (2,071)    (8.4)  
Depreciation & amortization                   (1,054)  (3.4)    (678)    (2.8)  

Operating loss before exceptional items       (5,565) (17.9)  (2,749)   (11.2)  
Exceptional items
IPO costs                                     (1,913)  (6.1)       -        -
Net interest received/(paid)                     154    0.5      153      0.6
Loss before taxation                          (7,324) (23.5)  (2,596)   (10.6)  

Gross profit in the financial review can be reconciled to gross profit in the
financial statements as follows:

                                                           2000          1999
                                                            £000          £000

Gross profit per financial review                        20,041       15,503
Sales and marketing costs                               (13,061)      (10,029)

Gross profit per financial statements                     6,980         5,474


IPO costs represent professional fees and other expenses incurred in relation
to the company's initial public offering which could not be deducted from the
share premium arising from the offering.


Revenue increased 27% from £24.6m in 1999 to £31.2m in 2000. The majority of
revenue in 2000 arose from premium services, which amounted to £18.1 million,
or 58% of the total. This compares to £11.7m in 1999 (48% of total revenue)
and represents a 55 per cent growth in premium services revenue in 2000. This
growth reflects an increase in the number of SPP contracts from 357 as at 31
December 1999 to 559 as at 31 December 2000 and an increase in average
contract value from £17,500 to £21,700.  Sales intake (the value of sales
before deferral of revenue) of SPP and other subscription products, at £15.6m,
exceeded our expectations at the beginning of the year and gave rise to an
increase in deferred revenue of £4.6m to £9.6m at 31 December, 2000 (£5.0m at
31 December, 1999). Revenue from other information products was broadly
static, as sales effort was focused on SPP products and reflects the movement
of customers from other information products to premium services.

Gross Profit

Gross profit was £20.0m or 64 per cent of revenue, in 2000, compared to £15.5m
or 63% of revenue in 1999. Datamonitor's cost of services have been increasing
at a lower rate than turnover demonstrating the operational leverage in the
business: we have been successful in increasing the sale of the Group's
existing SPPs and other products, the development costs of which have already
been expensed as well as leveraging its research and analysis knowledge across
a range of products and services.

Sales and marketing costs

Sales and marketing costs were £13.0m for 2000, representing 42% of revenue,
compared to £10m or 41% of revenue in 1999. However, it is sales intake that
tends to drive sales and marketing costs; as a percentage of sales intake,
sales and marketing costs, fell to 37% in 2000 from 38% in 1999.

General and administrative costs and depreciation

General and administrative expenses were £11.5m or 37 % of revenue in 2000,
compared to £7.5m or 31% of revenue in 1999. This significant increase was
principally due to increased investment in the Group's management and
administrative functions in anticipation of becoming a publicly traded
company. This expansion included the recruitment of a new chief executive
officer and expenditure on back-office infrastructure. Depreciation expense
was £1.1m or 3.4 % of revenue, in 2000, compared to £0.7m or 2.8% of revenue
in 1999. This reflected higher capital expenditure, principally on technology
improvements, in the year.


The Group received a tax credit in the year of £172,000. This principally
represents the repayment of Advance Corporation Tax paid in earlier years,
which had not previously been treated as a receivable due to the uncertainty
of repayment. As a result of the losses incurred in the year there is no
charge for the year. The Group has tax losses of £9.8m carried forward at 31
December, 2000, which can be set against future trading profits, subject to
agreement with the Inland Revenue and other tax authorities.  These are not
carried on the balance sheet.

Cash flow and cash balances

The requirement to defer income is the principal reason for the difference
between operating losses and operating cash flow. Deferred income rose from £
5.0m at 31 December 1999 to £9.6m at 31 December 2000. Cash flow from
operations (after adjusting for IPO costs that have been expensed through the
Profit & Loss account) was £0.6m positive. Net cash used in capital
expenditure was £1.8m in 2000 and £1.3m in 1999. Capital expenditure in this
period was primarily on computer equipment. Net cash at 31 December 2000 stood
at £24.7m due mostly to the successful completion of our IPO in November.

Ian Pratt
Chief Financial Officer
26 February 2001

                             FINANCIAL HIGHLIGHTS

Consolidated profit and loss account
for the year ended 31 December 2000
                                           2000                 1999
                                           £000                 £000

Turnover                                   31,169               24,647

Cost of sales                             (24,189)             (19,173)

Gross profit                                6,980                5,474

Administrative expenses                   (12,545)              (8,223)
Exceptional item - IPO Costs               (1,913)                   -

Operating loss                             (7,478)              (2,749)

Interest receivable and                       170                  175
similar income
Interest payable and similar                  (16)                 (22)

Loss on ordinary activities                (7,324)              (2,596)
before taxation
Tax on loss on ordinary                       172                  (30)

Retained loss for the                      (7,152)              (2,626)
financial year

Basic loss per ordinary share              (13.13p)             (5.00p)

All results relate to continuing operations.

Statement of total recognised gains and losses
for the year ended 31 December 2000
                                                   2000             1999
                                                   £000             £000

Loss on ordinary activities after                  (7,152)          (2,626)

Exchange difference on retranslation                  (62)             (26)
of net assets of subsidiary

Total recognised gains and losses                  (7,214)          (2,652)
relating to the year

Prior year adjustments                                  -           (3,798)

Total gains and losses recognised                  (7,214)          (6,450)
since last annual report

Consolidated balance sheet
at 31 December 2000
                                 2000       2000        1999        1999
                                 £000       £000        £000        £000
Fixed assets
Tangible assets                             2,694                   1,950

Current assets
Stocks                           159                    183
Debtors                          8,626                  8,042
Cash at bank and in hand         24,731                 1,204

                                 33,516                 9,429
Creditors: amounts falling       (14,646)               (8,735)
due within one     year

Net current assets                          18,870                  694

Net assets                                  21,564                  2,644

Capital and reserves
Called up share capital                     7,016                   66
Share premium account                       27,944                  8,760
Profit and loss account                     (13,396)                (6,182)
Equity shareholders' funds                  21,564                  2,644

Balance sheet
at 31 December 2000
                                2000        2000        1999        1999

                                £000        £000        £000        £000
Fixed assets
Tangible assets                             2,259                   1,736
Investments                                 -                       9

                                            2,259                   1,745
Current assets
Stocks                          119                     183
Debtors                         7,642                   7,340
Cash at bank and in hand        24,427                  837

                                32,188                  8,360
Creditors: amounts              (11,285)                (6,660)
falling due within one

Net current assets                          20,903                  1,700

Net assets                                  23,162                  3,445

Capital and reserves
Called up share capital                     7,016                   66
Share premium account                       27,944                  8,760
Profit and loss account                     (11,798)                (5,381)

Equity shareholders'                        23,162                  3,445

Consolidated cash flow statement
for the year ended 31 December 2000
                                                     2000          1999
                                                     £000          £000

Cash flow from operating                             (1,264)       (1,305)
Returns on investments and                           154           153
servicing of finance
Taxation                                             415           (79)
Capital expenditure and financial                    (1,780)       (1,336)

Cash (outflow) before financing                      (2,475)       (2,567)

Financing                                            26,082        (122)

Increase/(decrease) in cash in the                   23,607        (2,689)

Reconciliation of net cash flow
to movement in net funds

Increase/(decrease) in cash in the                   23,607        (2,689)

Cash outflow from decrease in debt                   52            122
and lease financing

Change in net debt resulting from                    23,659        (2,567)
cash flows
Exchange difference                                  (80)          4

Movement in net funds in the year                    23,579        (2,563)
Net funds at the start of the year                   1,152         3,715

Net funds at the end of the year                     24,731        1,152


Accounting policies and presentation

The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2000 or 1999.  Statutory
accounts for 1999 have been delivered to the registrar of companies, and those
for 2000 will be delivered following the company's annual general meeting.
The auditors have reported on those accounts; their reports were unqualified
and did not contain statements under section 237(2) or (3) of the Companies
Act 1985.

The following accounting policies have been applied consistently in dealing
with items which are considered material in relation to the group's financial

Basis of preparation

The financial statements have been prepared in accordance with the Companies
Act 1985 and applicable accounting standards using the historical cost basis
of accounting.

Two new accounting standards have become effective during the year and have
been adopted by the group: FRS 15 Tangible fixed assets and FRS 16 Current
tax.  Neither has had any significant impact on the results or net assets of
the group or company.

Basis of consolidation

The consolidated financial statements include the financial statements of the
Company and its subsidiary undertakings.

Tangible fixed assets and depreciation

Depreciation is provided to write off the cost less the estimated residual
value of tangible fixed assets by equal instalments over their estimated
useful economic lives as follows:

Leasehold improvements                       -           life of lease

Fixtures, fittings and equipment             -           20% per annum

Computer equipment                           -           33.33% per annum


The Group evaluates its fixed assets for impairment where events or
circumstances indicate that the carrying amount of such assets may not be
fully recoverable.  When such evaluations indicate that the carrying value of
an asset exceeds its recoverable value, impairment in value is recognised in
the profit and loss account.

Employee share options

Employee share options are accounted for in accordance with UITF No. 17:
Employee Share Schemes.  The difference between the exercise price and the
market value at date of grant is recognised as a charge in the profit and loss
on a straight-line basis over the vesting period.


The Group contributes to individual employees' personal pension schemes.  The
assets of the schemes are held separately from those of the Group in funds
administered by independent third parties.  The pension cost charge represents
contributions payable by the Group to the funds.

Foreign currencies

Transactions in foreign currencies are recorded using the rate of exchange
ruling at the date of the transaction.  Monetary assets and liabilities
denominated in foreign currencies are translated into pounds sterling using
the rate of exchange ruling at the balance sheet date and the gains or losses
on translation are included in the profit and loss account.

Exchange differences arising from the retranslation of opening net assets are
recorded as movement on reserves as are differences on foreign currency
borrowings, to the extent that they are used to finance or provide a hedge
against foreign equity investments, together with the exchange differences on
the carrying amount of the related investments.


Assets acquired under finance leases are capitalised and the outstanding
future lease obligations are shown in creditors net of finance costs allocated
to future periods.   Operating lease rentals are charged to the profit and
loss account on a straight-line basis over the period of the lease.


Stocks are stated at the lower of cost and net realisable value.  In
determining the cost of raw materials, consumables and goods purchased for
resale, the FIFO method is used.  For finished goods, cost is taken as
production cost, which includes an appropriate proportion of attributable

Product development

All costs associated with the development of new products and services are
expensed as incurred.


The charge for taxation is based on the results for the period and takes into
account deferred taxation arising as a result of timing differences between
the treatment of certain items for taxation and accounting purposes.
Provision is made for deferred tax only to the extent that it is probable that
an actual liability will crystallise.


Turnover represents the amounts earned in the period excluding value added tax
derived from the provision of goods and services to third party customers.

Certain subscription services are invoiced annually in advance and are
provided to customers over the course of the year.  The resulting deferred
turnover is spread evenly over the remaining contract term.

Cash and liquid resources

Cash, for the purpose of the cash flow statement, comprises cash in hand and
deposits repayable on demand, less overdrafts payable on demand.

Liquid resources are current asset investments which are disposable without
curtailing or disrupting the business and are either readily convertible into
known amounts of cash at or close to their carrying values or traded in an
active market.  Liquid resources comprise term deposits of less than one year
(other than cash), government securities and investments in money market
managed funds.

Derivatives and other financial instruments

The Group's financial instruments, other than derivatives, comprise
borrowings, some cash and various items, such as trade debtors, trade
creditors, other debtors and other creditors that arise directly from its
operations. The main purpose of these financial instruments is to raise
finance for the Group's operations. The Group also enters into forward foreign
currency contracts. The purpose of such transactions is to manage the currency
risks arising from the Group's operations and its sources of finance.

It is, and has been throughout the year under review, the Group's policy that
no trading in financial instruments shall be undertaken.

The main risk arising from the Group's financial instruments is foreign
currency risk. The Board reviews and agrees policies to managing this risk on
a transaction by transaction basis.

Currency rate fluctuations

The Group receives payments from its customers primarily in pounds sterling,
and US dollars. For the year ended 31 December 2000, 52 percent of the Group's
turnover was generated in pounds sterling, 47 percent was generated in US
dollars and 1 per cent was generated in Euros. For the same period, 78 percent
of the Group's expenses was incurred in pounds sterling and 22 percent was
incurred in US dollars. As a result, the Group is exposed to fluctuations in
exchange rates for foreign currencies against the pound sterling, particularly
the rate between the pound sterling and the US dollar. We estimate that if the
average exchange rate for the US dollar had declined by 1 per cent against the
pound sterling in 2000, the Group's operating loss would have increased by
approximately £85,000. Since the year end we have entered into hedging
arrangements that will protect the group's net US dollar cash flows and fix
the rate at which our US subsidiary's results are translated into pounds
sterling. Around 70 per cent of the Group's US dollar cashflows in 2001 will
be hedged in this way.

Forward foreign currency contracts

The group considers its derivative instruments qualify for hedge accounting
when certain criteria are met. The criteria for forward currency contracts

*        The instrument must be related to a foreign currency asset or
         liability that is probable and whose characteristics have been         

*        It must involve the same currency as the hedged item; and

*        It must reduce the risk of foreign currency exchange movements on the
         group's operations.

The rates under such contracts are used to record the hedged item. As a
result, gains and losses are offset against the foreign exchange gains and
losses on the related financial assets and liabilities, or where the
instrument is used to hedge a committed, or probable, future transaction, are
deferred until the transaction occurs.

Dividends and dividend policy

We anticipate that we will retain future earnings to fund the development and
growth of the Group's business and, as a result, we do not anticipate paying
cash dividends in the foreseeable future.

IPO costs

IPO costs represent professional fees and other expenses incurred in relation
to the Company's initial public offering which could not be deducted from the
share premium arising from the offering.

Segmental information

To date, the Group has viewed its operations and managed its business as
principally one segment, research and analysis.  As a result, the financial
information disclosed herein materially represents all of the financial
information related to the Group's principal operating segment.
                                                            2000     1999
                                                            £000     £000
USA                                                         7,952    6,525
Europe                                                      23,217   18,122
                                                            31,169   24,647

Operating (loss)/profit
USA                                                         (735)    96
Europe                                                      (6,743)  (2,845)
                                                            (7,478)  (2,749)
Net interest                                                154      153
Loss on ordinary activities before taxation                 (7,324)  (2,596)
Net assets/(liabilities)
USA                                                         (1,598)  (775)
Europe                                                      23,162   3,419
Total net assets                                            21,564   2,644

Group turnover is allocated to geographic segments based on the location of
the customers.  Group operating profit/(loss) and net assets/(liabilities) are
allocated to the locations which give rise to the result for the period and
net asset/(liability) position.

Net interest arose in Europe.


                                              2000             1999
                                              £000             £000

UK Corporation Tax at     30 % (1999   :      -                -
Adjustments to prior years' UK Corporation    (168)            -
Foreign tax at 31% (1999 : 31%)               -                30
Adjustments to prior years' foreign tax       (4)              -

Tax on (loss)/profit on ordinary activities   (172)            30

Loss per share

                                            2000              1999
                                            £000              £000

Loss for the period attributable to         (7,152)           (2,626)

Weighted average number of shares in issue  54,452,167        52,473,200

Basic loss per ordinary share               (13.13p)              (5.00p)

The weighted number of shares in issue for 1999 has been adjusted to take into
account a bonus issue of 19 ordinary shares for each ordinary share held on 13
April 2000 and a bonus issue of 3 ordinary shares for each ordinary share held
on 6 October 2000. Diluted earnings per share is not disclosed as its
computation results in an anti-dilutive effect.

Four year summary

Years ended 31 December                2000       1999       1998       1997
                                    £000       £000       £000       £000

Turnover                            31,169     24,647     18,858     15,739

Operating (loss)/profit             (7,478)    (2,749)    (1,143)    441

Net interest                        154        153        312        (94)

(Loss)/profit on ordinary           (7,324)    (2,596)    (831)      347
activities before taxation
Tax on (loss)/profit on             172        (30)       (350)      (370)
ordinary activities
Dividends                           -          -          (700)      (1,480)

Retained loss for the               (7,152)    (2,626)    (1,881)    (1,503)
financial year

Loss per share                      (13.13p)   (5.00p)    (2.31p)    (0.06p)
Dividends per share                 -          -          1.37p      3.70p
Group operating margin (%)          (24.0)     (11.2)     (6.1)      2.8

All results relate to continuing operations.

Four year summary

 At 31 December                      2000       1999       1998       1997
                                  £000       £000       £000       £000
 Employment of Group
 Fixed assets                     2,694      1,950      1,286      715
 Net current assets/              18,870     694        4,059      (2,133)
                                  21,564     2,644      5,345      (1,418)

 Group capital employed
 Creditors falling due            -          -          49         181
 after more than one year
 Capital and reserves             21,564     2,644      5,296      (1,599)

                                  21,564     2,644      5,345      (1,418)
 Shareholders' funds
 Equity                           21,564     2,644      5,296      (1,599)

 Net funds/(debt)
 Cash at bank and in hand         657        1,204      3,889      312
 Bank overdraft                   -          -          -          (154)
 Short term deposits              24,074     -          -          -
 Loans                            -          -          -          (1,510)
 Finance leases                   -          (52)       (174)      (293)

                                  24,731     1,152      3,715      (1,645)

Copies of the annual report and accounts will be posted in due course to all
shareholders on the register at 26 February 2001 and will be available from
the company at Charles House, 108 - 110 Finchley Road, London NW3 5JJ or via
our web site

a d v e r t i s e m e n t