Less Demand for Contractors

DIAGONAL PLC
18 October 1999


TRADING UPDATE

As indicated in our interim results announcement at the end of July, demand
for contract staff has softened considerably ahead of the millennium.  In
addition, in recent weeks, we have experienced a slowdown in the consulting
market as a significant percentage of established buyers reduce their activity
levels in order to focus on the potential problems associated with the year
end. 

This temporary pause in trading activity will impact our results in the final
quarter of 1999 and the early months of next year.  Consequently, our
performance in the second half of the year to the end of November is unlikely
to exceed that of the first half. 

The natural consequence of this enforced but justifiable period of caution is
a build up of demand for business critical I.T. solutions.  It is our strong
belief that demand will return at an increasing rate, early in the new year. 
We are also confident that demand for consultancy support of the SAP products
will continue to grow with more emphasis on the front office needs of existing
users. 

To meet the demands of the 21st century it is important to ensure that
consulting skills match the needs of the future marketplace and we are
committed to meeting the challenge.  We are already progressing several new
and exciting initiatives which will in the coming months clearly demonstrate
Diagonal's ability to recognise key areas of technical advance and to act
decisively to gain commercial advantage from them. 

We look forward to the new millennium with confidence. 


Enquiries:

Mark Samuels
Graham Creswick
DIAGONAL PLC

Tel: [phone]