Final Results

Harrier Group PLC
8 March 2001

                              HARRIER GROUP PLC


           PRELIMINARY ANNOUNCEMENT FOR YEAR ENDED 31 DECEMBER 2000

CHAIRMAN'S STATEMENT


Introduction

I am delighted with the progress that we have made over the past twelve
months, a period of considerable change in the IT industry, with the Group in
a position of strength for the immediate and long term future.


Financial


Our turnover for the year ended 31 December 2000 increased by 105% to £
11,163,749 (1999: £5,437,201). This increase reflects the inclusion of Zeuros
Limited, which was acquired with effect from 12 May 2000. In the six months
since our interim results, the gross margin of the business has increased from
40% to 44%, a significant improvement reflecting the increase in the levels of
our service related business.


We have invested considerably in resources and facilities to support the
increasing customer facing requirements of the company. A dedicated training
centre has been established in Reading, a primary managed services centre in
Hook, Hampshire and a new facility is to be opened during March in Leeds.
Reflecting these investments the operating loss before exceptional severance
costs and goodwill amortisation was £526,708 (1999: £61,638 profit).


Operations


We have completed the integration of the acquired businesses of ReNet and
Zeuros into a single operating company, Harrier Zeuros, which along with the
implementation of more automated internal processes and systems has enabled us
to make significant cost savings in the business. We have reduced the levels
of non-revenue earning staff, successfully recruiting revenue-earning
professionals to replace them and to fulfil customer contract requirements.
The number of staff employed by the company at 31 December was 79 (1999: 43)
with excellent staff retention throughout the year. We are continuing to
recruit, specifically to supplement our professional services team.


In November, David Cheesman was appointed to lead the executive Board, as
Chief Executive Officer. Managing Director, Terry Radford resigned in late
November, following a period of sustained ill health. The Board wishes Terry a
swift recovery, every success in the future and thanks him for his commitment,
support and service to the growth of the Group during his four years in
office.


We have further developed the model of the company with a primary focus on
professional and secure managed services. We are also working with third party
organisations to provide services that are outside of our field of expertise
or geographic coverage. Additionally we have retained the status of being
leading solutions providers for leading security technology partners RSA
Security and AXENT (now Symantec), as well as being one of ten Cisco Advanced
Security Partners.


I am indebted to the support of the Board and the employees of Harrier, who
make the company what it is and who have a genuine passion for the industry
and our company. The technologies and services that we continue to provide are
exciting and continually changing and we are well positioned with an excellent
team in place determined to drive the business forward.


Current Trading and Prospects


Current trading is in line with expectation and with an ever increasing
pipeline of prospective new business we look forward to the future with
confidence.


A L R Morton

Chairman

March 2001


CONSOLIDATED PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 DECEMBER 2000



                                                     2000                  1999
                                                        £                     £

Turnover                                       11,163,749             5,437,201

Cost of sales                                 (6,274,993)           (3,146,552)

Gross profit                                    4,888,756             2,290,649

Administration expenses                       (5,415,464)           (2,229,011)

Operating (loss)/profit before goodwill
                                                (526,708)                61,638
amortisation and exceptional severance costs

Exceptional severance costs                     (275,622)                     -
Amortisation of goodwill                        (635,007)                     -

Operating (loss)/profit                       (1,437,337)                61,638

Interest receivable                               646,602                14,832
Interest payable                                (534,788)             (229,148)

Loss on ordinary activities before taxation   (1,325,523)             (152,678)

Taxation                                                -                     -

Loss on ordinary activities after taxation    (1,325,523)             (152,678)

Additional finance costs of non-equity                 -                (1,851)
                                                        
Minority interest

Loss for the financial year                   (1,325,523)             (154,529)

Basic loss per share                              (5.16p)               (0.50p)

Diluted loss per share                            (4.76p)               (0.49p)

IIMR 'headline' loss per share                    (2.69p)                     -


There is no material difference between the result as disclosed in the profit
and loss account and the result on an unmodified historical cost basis. All of
the Group's activities are classed as continuing and include acquisitions
during the year. There are no gains and losses other than disclosed above.




CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2000

                                                     2000                  1999
                                            £           £          £          £

Fixed assets
Intangible assets                              18,867,815                     -
Tangible assets                                   790,671               346,333

                                               19,658,486               346,333

Current assets
Stocks                                 34,249                 55,538
Debtors                             2,672,693              2,133,925
Cash and bank balances              2,443,310              2,106,779
Term deposit                       14,000,000                      -

                                   19,150,252              4,296,242

Creditors: Amounts falling due
within                             (3,567,859)             (1,532,488)
one year

Net current assets                             15,582,393             2,763,754

Total assets less current                      35,240,879             3,110,087
liabilities

Creditors: Amounts falling due
after                                         (14,000,000)              (10,731)
more than one year

Net assets                                     21,240,879             3,099,356

Capital and reserves
Called up share capital                           286,237               206,617
Share premium account                          23,935,516             4,548,112
Capital redemption reserve                        268,972               268,972
Profit and loss account                       (3,249,868)            (1,924,345)

Equity shareholders' funds                     21,240,857             3,099,356
Minority interests                                     22                     -

Total shareholders' funds                      21,240,879             3,099,356




CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2000

                                                        2000               1999
                                                  £        £         £        £

Net cash inflow/(outflow) from operating
activities                                           192,029           (320,074)

Returns on investments and servicing of
finance

Interest received                           646,602             14,832
Interest paid                              (534,788)          (229,148)

                                                     111,814           (214,316)

Taxation
Corporation tax paid                                (51,844)                  -

Capital expenditure and financial
investment
Purchases of tangible fixed assets         (480,857)          (131,651)
Sales of tangible fixed assets              106,284             17,500
Purchase of minority interests                    -           (34,487)

Net cash outflow from investing
                                                    (374,573)          (148,638)
activities

Acquisitions and disposals
Purchase of subsidiary undertaking         (112,500)                 -
Net cash acquired with subsidiaries         578,476                  -

                                                     465,976                  -
Net cash inflow/(outflow) before financing           343,402           (683,028)
                                                     

Financing
Issue of ordinary share capital            14,761,490          5,459,621
Costs of issue of ordinary share capital   (594,465)          (519,624)
Issue of shares to minority                      22                  -
Issue of discounted capital bond                  -            284,295
Other loans repaid                         (27,455)          (400,000)
Repurchase of discounted capital bonds            -          (1,436,439)
Hire purchase loans repaid                 (21,522)          (133,238)

Increase in cash                                    14,118,070         3,254,615

                                                    14,461,472         2,571,587






CONSOLIDATED CASH FLOW STATEMENT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2000

                                                          2000             1999
                                                             £                £

Reconciliation of net cash flow to movement in net
funds

Increase in cash in the year                        14,461,472        2,571,587
Change in net debt resulting from cashflows             48,977        1,685,382
Loan notes issued for acquisition of subsidiaries  (14,000,000)
Finance leases acquired with subsidiaries             (19,276)         (62,955)
Debt acquired with subsidiaries                       (27,455)                -

Movement in net funds in the year                      463,718        4,194,014

Net funds/(debt) at start of year                    1,871,803       (2,322,211)

Net funds at end of year                             2,335,521        1,871,803




NOTES TO THE FINANCIAL INFORMATION

FOR THE YEAR ENDED 31 DECEMBER 2000


 1. The preliminary announcement of results has been prepared under the
    historical cost convention in accordance with the Group's accounting
    policies for the year ended 31 December 2000.


 2. The above financial information does not constitute statutory accounts as
    defined in Section 240 of the Companies Act 1985. The summarised balance
    sheet at 31 December 2000 and the summarised profit and loss account and
    cash flow statement for the year then ended have been extracted from the
    Group's financial statements. These financial statements have not yet been
    delivered to the Registrar of Companies.


 3. On 15 March 2000, the Company acquired ReNet Limited for £112,500 in cash
    and £17,500 deferred consideration. On 12 May 2000, the Company issued
    5,903,337 1p ordinary shares for a total consideration of £14,758,343
    together with 2,000,000 consideration shares at £2.65. The proceeds were
    used to purchase Zeuros Limited. A further 58,683 shares were issued in
    November as a result of employees exercising their share options under the
    Unapproved Share Option Scheme.


 4. The group has used the acquisition accounting basis for the acquisition of
    Zeuros Limited and ReNet Limited. The book and fair values of the assets
    and liabilities acquired were as follows:-

                                                        £

    Net Assets Acquired
    Fixed assets                                  267,982
    Stock                                         613,155
    Debtors                                       205,893
    Cash at bank and in hand                      578,476
    Creditors                                  (1,461,212)
    Corporation tax creditor                     (257,840)
    Finance leases                                (19,276)

                                                  (72,822)

    Goodwill                                   19,502,822

                                               19,430,000

    Satisfied by:
    Cash                                          112,500
    Deferred consideration                         17,500
    Consideration shares                        5,300,000
    Loan notes                                 14,000,000

                                               19,430,000


 5. The calculation of basic and diluted loss per ordinary share of 1p each is
    based on the loss on ordinary activities after taxation and minority
    interests of £1,325,523 divided by the weighted average number of ordinary
    shares of 1p each 25,704,451 (basic) and 27,866,165 (diluted). The IIMR '
    headline' loss per share is the basic figure excluding the goodwill
    amortisation and is therefore based on a loss of £(690,516) and a weighted
    average number of shares of 25,704,451.

 6. Reconciliation of (loss)/profit to net cash inflow/(outflow) from
    continuing operating activities


                                                 Year ended          Year ended 
                                                                      Dec 1999

                                                   Dec 2000
                                                          £                  £  
  

    Operating (loss)/profit                      (1,437,337)            61,638
    Amortisation of goodwill                        635,007                  -
    Depreciation                                    150,314            164,382
    Loss on sale of fixed assets                     47,904              7,488
    Decrease/(increase) in stock                    634,444            (18,299)
    Increase in debtors                           (332,875)           (486,169)
    Increase/(decrease) in creditors                494,572            (49,114)

    Net cash inflow/(outflow) from operating        192,029           (320,074)
    activities



 7. All of the Group's activities are classed as continuing and include
    acquisitions during the year. There are no gains and losses other than
    disclosed above. The post acquisition results of the acquired operations
    have not been separately disclosed as the businesses were integrated into
    the existing operations and it is not possible to separately identify the
    post acquisition results.


 8. No dividends are proposed or were paid during the period.


 9. The Annual General Meeting will be held at 12.00pm on 25 April 2001 at the
    Hilton London Kensington Hotel, 179-199 Holland Park Avenue, London W11
    4UL.


10. The Report and Accounts will be sent to shareholders on, or before 2 April
    2001. Further copies may be obtained on application to the Company at the
    Registered Office (Pacific House, Imperial Way, Reading, Berkshire RG2
    0TD).

END
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