Preliminary Results

Tanfield Group PLC
01 April 2004

TANFIELD GROUP PLC
PRELIMINARY RESULTS FOR THE FIFTEEN MONTHS ENDED 31 DECEMBER 2003



Chairman's Statement



This is my first statement as Chairman of the newly constituted Tanfield Group
plc.  As shareholders will be aware the group was formed by bringing together
comeleon plc and Tanfield Holdings Limited in order to form Tanfield Group plc.
This transaction was finalised at the Company's EGM on the 29 December 2003.



We announced in December 2003, that the Company would change its accounting
reference date from 30 September to 31 December with effect from 31 December
2003.  Therefore, the Company announces today its results for the fifteen months
ended 31 December 2003.  The Directors have made provisions against the carrying
values of a number of assets.  In addition, there has been a restructuring of
personnel and the cost base of the business in order to take advantage of
savings in bringing the companies together.  As expected this has resulted in a
reported loss.



Financial Summary



The acquisition of Tanfield Holdings Limited was completed on 31 December 2003,
and therefore the profit and loss account for the 15 months ended 31 December
2003 represents only the trading results of the comeleon business.



Turnover for the 15 month period was £2.9 million (2002: £4.5m for 12 months).



The gross loss of £1.0 million ( 2002: gross profit £1.1 million) arose
following a stock write-down of £0.8million, a gross loss on handset sales of
£0.2 million and a number of restructuring provisions. These include provisions
for redundancies, provisions for the closure and exit from Comeleon House into
the Tanfield building and provision for claims from customers following the
cessation of internal production at Comeleon House.  The stock write-down and
the further provisions were a consequence of the very significant fall off in
the market for replaceable covers for mobile phones which also affected a number
of our customers.



Administrative overheads for the period increased to £5.9m (2002: £4.4m).
Exceptional administrative overheads were as outlined in the note to the
accounts and include the impairment costs of fixed assets and goodwill
consequent upon the strategic shift of the Company away from the in house
manufacture of decorated products and towards the Licensing of the Comeleon
technology.



The loss before tax for the 15 months was £7.0m (2002: £3.2m in 12 months).



The consolidated balance sheet for the Group recognises the acquisition of
Tanfield Holdings Limited as outlined in an Admission Document published in
December 2003.  This includes the raising of £1.16 million (net of expenses)
through the placing of 526,300 new ordinary shares at 9.5p each and £1.6 million
of 8.5% Convertible Loan Stock 2009.  Goodwill on acquisition of £4.4m has been
accounted for.





Current Trading and Prospects.



Tanfield

Trading for the current financial year has started well.  The first quarter has
been good especially considering the reorganisation that the business has
undergone.  Sales for the first quarter for the Tanfield businesses are ahead of
the same period last year.  There have been a number of substantial contracts
won over this first quarter.  These contracts are over a number of years
providing some stability to the order book which now stands at over £13 million
(based upon booked and committed billable work).  Customer schedules have been
generally rising. The automotive schedules have been reduced  as a result of a
deliberate decision to reposition the business away from this volatile  sector.



The prospects for the manufacturing side of the Group for the near and medium
future are good.  A number of contracts are being negotiated with new customers.
Existing customers have shown that our strategy of offering assembly solutions
is appropriate to their needs by giving us and offering us more business.



comeleon

The signs for comeleon are also encouraging.  comeleon had almost disappeared
from its market towards the end of last year, partly as a result of its
financial position, and it is taking time to re-establish it as viable in the
eyes of its potential customers.  comeleon has signed another license for its
technology with a manufacturer in the USA, and now has 3 licenses signed for its
ImageBox Supa (high volume imaging) and over 50 ImageBoxes (desktop imaging) in
the field.  We are beginning to see repeat sales for consumable materials
related to these licenses.



JoeKnowsIt?

JoeKnowsIt?, the Group's online training and learning business, has seen a
number of projects start over the past 3 months and is reasonably well
positioned for growth.



Group Prospects

The Group raised approximately £1.16 million (after expenses) in the placing of
convertible loan stock and shares in December 2003.  These new funds were raised
to provide working capital for the Group to allow it to exploit opportunities
for growth.  The Group has been through a period of change since the acquisition
of the Tanfield Group, with some reorganisation of staff and activities. The
Group's financial resources have been managed prudently during this period and
this will continue.



The Board is pleased with the progress to date.  The organic growth prospects
are healthy and being managed well and offer the potential of good returns for
the future.  We believe that the Group has established a  firm base from which
we can  grow and if appropriate, to consider potential acquisitions that are
complementary to our   product and skill base. We are pleased to say that
several opportunities have presented themselves.



I would like to thank all the people involved in the acquisition process, the
shareholders for their support during some difficult times and my colleagues in
Tanfield Group who have worked diligently during the past three months to
establish the business on such a sound footing.





CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the fifteen months ended 31  December 2003


                                                                                 15 month ended            Year ended
                                                           Note                 31 December 2003    30 September 2002


                                                                                               £                    £

TURNOVER                                                                               2,854,037            4,502,696
Cost of sales                                                                        (3,855,248)          (3,404,025)
                                                                                  ______________       ______________
Gross (loss)/profit                                                                  (1,001,211)            1,098,671

Administrative expenses:

Exceptional Administrative expenses - goodwill
impairment
                                                                                       (672,067)                    -
Exceptional Administrative expenses - other                                          (1,196,934)                    -
Other administrative expenses                                                        (4,008,557)          (4,378,907)
Total Administrative expenses                                                        (5,877,558)          (4,378,907)
Other operating income                                                                         -               50,000
                                                                                  ______________       ______________
OPERATING LOSS                                                                       (6,878,769)          (3,230,236)

Interest receivable and similar income                                                    36,275               91,243
Interest payable and similar charges                                                   (145,799)            (128,728)
                                                                                  ______________       ______________
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION

                                                                                     (6,988,293)          (3,267,721)

Tax on loss on ordinary activities                                                             -               24,679
                                                                                  ______________       ______________
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION

                                                                                     (6,988,293)          (3,243,042)

Equity minority interest                                                                       -                    -
                                                                                  ______________       ______________
RETAINED LOSS FOR THE FINANCIAL YEAR/PERIOD WITHDRAWN
FROM RESERVES


                                                                                     (6,988,293)          (3,243,042)
                                                                                      ==========           ==========


Basic and diluted loss per ordinary shares                  3                           (45.08p)             (24.32p)
                                                                                      ==========           ==========




CONSOLIDATED BALANCE SHEET
As at 31 December 2003


                                                                              2003         2002
                                                                                  £           £
FIXED ASSETS

Intangible assets                                                         4,556,411     839,460
Tangible assets                                                           2,962,325   2,317,683
                                                                         __________  __________
                                                                          7,518,736   3,157,143
                                                                         __________  __________
CURRENT ASSETS

Stocks                                                                      779,000     455,797
Debtors                                                                   1,228,057   4,704,713
Cash at bank and in hand                                                  3,171,604   2,985,734
                                                                         __________  __________
                                                                          5,178,661   8,146,244
CREDITORS: amounts falling due within one
year
                                                                        (8,554,196) (4,587,070)
                                                                         __________  __________
NET CURRENT (LIABILITIES)/ASSETS                                        (3,375,535)   3,559,174
                                                                         __________  __________

TOTAL ASSETS LESS CURRENT LIABILITIES

                                                                          4,143,201   6,716,317

CREDITORS: amounts falling due after more
than one year


Convertible debt                                                        (1,783,880)           -
Other creditors                                                         (1,634,015)   (716,912)

PROVISION FOR LIABILITIES AND CHARGES

                                                                          (543,769)           -

                                                                         __________  __________
                                                                            181,537   5,999,405
                                                                          =========   =========
CAPITAL AND RESERVES

Called up share capital                                                     617,347     153,021
Shares to be issued                                                         298,706     555,469
Other reserve                                                               111,150     111,150
Share premium account                                                    12,528,605  12,483,869
Merger Reserve                                                            1,533,740     615,614
Profit and loss account                                                (14,908,011) (7,919,718)
                                                                         __________  __________
TOTAL EQUITY SHAREHOLDERS'

FUNDS                                                                       181,537   5,999,405
                                                                          =========   =========







CONSOLIDATED CASH FLOW STATEMENT
For the fifteen months ended 31 December 2003


                                                            15 months ended         Year ended
                                            Note           31 December 2003  30 September 2002
                                                                          £                  £

Net cash outflow from operating               2                 (2,009,760)        (3,882,383)
activities

Returns on investments and servicing of
finance
                                                                  (109,524)           (37,485)

Taxation                                                             24,679                  -

Acquisitions and disposals                                      (2,328,817)                  -

Capital expenditure & financial investment                        (155,483)          (435,491)
                                                                 __________         __________
Cash outflow before financing                                   (4,578,297)        (4,355,359)

Financing                                                         1,309,989          3,493,237
                                                                 __________         __________
Decrease in cash in the period                                  (3,268,308)          (862,122)
                                                                 ==========         ==========




NOTES



1.       Accounting policies

These financial statements have been prepared using the accounting policies set
out in the Annual Report and Financial Statements for the year ended 30
September 2002.

The financial statements are prepared in accordance with United Kingdom
applicable accounting standards.



2.       Basis of preparation



(i)      Prior periods acquisition



Tanfield Group Plc (formerly Comeleon Plc) was incorporated on 30 August 2000
and on 28 November 2000 acquired the entire share capital of E Comeleon Limited.
In accordance with the principles set out in Financial Reporting Standard (FRS)
6 'Acquisitions and Mergers', 93.5% of the shares acquired were accounted for
under merger accounting. The remaining 6.5% have been accounted for under
acquisition accounting.



(ii)     Current period acquisition



Tanfield Group Plc (formerly Comeleon Plc) acquired the entire share capital of
Tanfield Holdings Limited on 30 December 2003. The consideration given in
exchange for the entire share capital of Tanfield Holdings Limited was
45,906,312 ordinary shares in Tanfield Group Plc (formerly Comeleon Plc). In
accordance with the provisions of section 131 of the Companies Act 1985, the
company has taken advantage of merger relief accounting.



3.       Unaudited Financial Statements

These unaudited Financial Statements do not constitute statutory accounts.  The
results for the period ended 31 December 2003 are extracts from the unaudited
Group Annual Report and Financial Statements for that period, which will be
delivered to the Registrar of Companies.  The audited financial statements will
be concluded on the basis of information set out in the announcement. The
results for the year ended 30 September 2002 have been extracted from the Annual
Report and Financial Statements for that year, which have been delivered to the
Registrar of Companies and on which the auditors have given an unqualified
report which did not contain a statement under Section 237(2) or (3) of the
Companies Act 1985.



4.       Exceptional Items
                                                                                15 months ended          Year ended 30
                                                                                31 December 2003         September 2002
                                                                                               £                      £

Impairment of goodwill                                                                   672,067                      -
Impairment of tangible fixed assets                                                    1,196,934                      -
                                                                                      __________             __________
                                                                                       1,869,001                      -
                                                                                      ==========             ==========



The impairment of goodwill relates to the investment in E-Comeleon Limited and
is based on predicted future profitability.



The fixed asset impairment relates to the decision to vacate the leased property
and reduce the size of the workforce.



5.       Loss per ordinary share



Loss per share has been calculated using the weighted average number of shares
in issue during the relevant financial periods.  The weighted average number of
shares in issue is 15,501,846 (2002 - 13,333,577), and the earnings, being loss
on ordinary activities after taxation and minority interest are £6,988,293 (2002
- £3,243,042).

No diluted loss per share has been disclosed as the share options are
anti-dilutive.
                                                                              15 months ended               Year ended
                                                                             31 December 2003        30 September 2002
                                                                                        pence                    pence

Loss per share                                                                        (45.08)                   (24.32)
                                                                                   ==========                ==========





6.       Reconciliation of operating loss to net cash outflow from operating   activities


                                                                                             2003             2002
                                                                                                £                £

Operating loss                                                                        (6,878,769)      (3,230,236)
Depreciation on tangible fixed assets                                                     753,424          464,864
Impairment of tangible fixed assets                                                     1,196,934                -
Amortisation of intangible fixed assets                                                    11,270           70,267
Impairment of intangible fixed assets                                                     672,067                -
Loss on disposal of fixed assets                                                          488,951                -
Increase in provisions                                                                    309,769                -
Decrease/ (increase) in stocks                                                            326,797         (265,960)
Decrease/ (increase) in debtors                                                         4,606,657       (4,083,781)
(Decrease)/increase in creditors                                                      (3,496,860)         3,162,463
                                                                                      __________         __________
Net cash outflow from operating activities                                            (2,009,760)        (3,882,383)
                                                                                      ==========         ==========






7.             Analysis of net debt


                                                         On acquisition                           
                                                   At    (excluding cash                      Other non           At 31
                                            1 October     and overdrafts)         Cash             cash        December
                                                 2002                             flow          changes            2003
                                                    £                  £             £                £               £

Cash in hand and at bank                    2,985,734                  -       185,870                -       3,171,604
Overdrafts                                          -                  -    (3,454,178)               -     (3,454,178)
                                           __________          __________      __________     __________     __________
                                            2,985,734                  -    (3,268,308)               -       (282,754)

Debt due after one year                             -          (850,000)    (1,408,880)        (375,000)    (2,633,880)
Finance leases                            (1,078,025)        (1,045,000)        286,403                -    (1,836,622)
                                           __________          __________      __________     __________     __________
                                            1,907,709        (1,895,000)     (4,390,785)       (375,000)    (4,753,076)
                                           ==========          ==========      ==========     ==========     ==========



8.             Analysis of change in net debt




                                                             2003          2003          2002         2002
                                                                £             £             £            £

Decrease in cash in the year                           (3,268,308)                  (862,122)
Cash outflow from increase in debt and
lease financing
                                                       (1,122,477)                    427,497
                                                        __________                 __________
Change in net debt resulting from cash flows                         (4,390,785)                  (434,625)

Other non cash changes                                                 (375,000)
Loans and finance leases acquired with subsidiary                    (1,895,000)                  (729,616)
                                                                      __________                 __________
Movement in the year                                                 (6,660,785)                (1,164,241)
Net funds at 1 October 2002                                            1,907,709                  3,071,950
                                                                      __________                 __________
Net debt at 31 December 2003                                         (4,753,076)                  1,907,709
                                                                       =========                  =========





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