Trading Update & Acquisition News

Diagonal PLC
13 April 2000


TRADING UPDATE
ACQUISITION
BOARDROOM CHANGES


TRADING UPDATE

The Annual General Meeting of IT Consultants DIAGONAL, to be held this morning
will include the following trading update by Mark Samuels, Executive Chairman.

The slowdown in the IT Services sector surrounding the year-end has been well
documented and requires no further comment.  Our first quarter which included
December has clearly been affected but I am pleased to confirm that sales in
recent weeks have bounced back sharply. Since the beginning of the year we
have won six important new SAP implementation contracts with an initial
combined value in excess of £10 million.  Interest in new SAP functionality is
gathering momentum, particularly in the areas of Business Warehouse and
Customer Relationship Management. 

In 1999 we started the process of creating an entirely new revenue stream with
the acquisition of several product-led consultancy businesses.  To date these
include Document Management, Networks and Internet Security.  We plan to bring
these companies together during this year under the banner of DIAGONAL
SOLUTIONS LTD.  All of the acquired businesses have settled in well and
continue to grow impressively.  We have isolated several other compatible
businesses and expect this new group to contribute significantly in 2001. 

Diagonal will continue to seek profitable new revenue streams in the months
ahead to complement our existing businesses.  Every indication in our market
place suggests a number of years of high activity and we are determined to be
in the right place at the right time. 

ACQUISITION

DIAGONAL today announces the acquisition of INTEROP TECHNOLOGIES LIMITED. 

Interop commenced trading in 1995 and is now recognised as one of the UK's
leading providers of secure remote access technology.  Products are sourced
from a number of market-leading suppliers, in particular, 3Com and RSA
Security.  Interop is a 3Com remote access 'master' partner, one of only 4
such partners in the UK, and their extensive client list includes Barclays
Bank, NatWest, Telewest, News International, Thus, Barnados and CCTA.

Audited accounts for the year ended 31 May 1999 show a profit before tax of
£501,000 on revenue of £2.8 million.  At completion, Interop had net assets of
approximately £500,000. The initial consideration amounts to £7.27 million of
which £5.5 million was paid in cash from the Group's own resources with the
balance satisfied by the issue of new Diagonal ordinary shares.  A deferred
consideration will be satisfied by a further issue of shares up to a maximum
value of £4 million subject to Interop meeting demanding profitability targets
in the period up to 30 November 2000. 

CHRIS GLOSSOP - MD of Interop commented:

We have been approached by a number of interested parties in recent months but
DIAGONAL was the obvious choice.  Had we been in a position to acquire
companies ourselves we would have followed a very similar approach to DIAGONAL
SOLUTIONS.  We are looking forward to a challenging and successful future as
part of the DIAGONAL Group. 

MARK SAMUELS - Executive Chairman of DIAGONAL commented:

Interop Technologies becomes the fourth member of our new product-led
Consulting Group, DIAGONAL SOLUTIONS.  They have already worked closely with
our previous acquisition, CENTURYCOM and we look forward to a further period
of strong growth.  We welcome Chris and his staff to the Group.  

BOARDROOM CHANGES:

It is announced today that Graham Creswick, Finance Director, has been
appointed Chief Executive.  The role of Finance Director is being actively
considered and a further announcement can be expected shortly.  Mark Samuels
will continue as Executive Chairman. 

Colin Burnside has been asked to extend his consulting assignment at SAP UK
LTD.  In order to avoid a perceived conflict of interest, Colin has today
resigned his directorship of the Company but remains a full time employee of
DIAGONAL.