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Warthog PLC (WHOG)


Tuesday 29 July, 2003

Warthog PLC

Final Results

Warthog PLC
29 July 2003

For immediate release

Tuesday, 29th July 2003

                                 PRESS RELEASE

                                  WARTHOG PLC

                           ('Warthog' or 'the Group')



• Transition from small, regional, specialist developer to high-calibre,
multi-functional, leading European developer

• Turnover increased by 29% from £8.9 Million (for 2002) to £11.4 Million

• EBITDA (pre-exceptional costs) up 54% to £1.18 Million

• Three acquisitions in UK, Sweden and US completed and fully integrated
- total workforce increased to 263

• Long term strategy to work closely with premium publishers on global
brands has been realised

• Developing 'Harry Potter and the Philosopher's Stone' for PS2, Xbox and
Game Cube for Electronic Arts. Game scheduled for release in Q4 2003

• Developing 'Looney Tunes: Back in Action' game, based on film due for
  release in Q4 2003. Warner Bros. Consumer Products and Electronic Arts are
  co-publishing game to be released on multiple platforms.

Commenting on the results, Ashley Hall, CEO of Warthog said:

'The last year has been both exciting and frustrating for Warthog. The Group has
made the vitally important transition to become a leading European developer and
our reputation and standing in this global industry is amongst the very highest.
We have won several particularly high-calibre contracts over the last year,
including 'Battlestar Galactica' and 'Looney Tunes: Back in Action'.
Significantly, we won the contract to develop a game for what is arguably the
most coveted IP of the moment, 'Harry Potter & The Philosopher's Stone' for
Electronic Arts. These contracts, as well as other, as yet unannounced,
contracts of a similar stature, reaffirm our long-term strategy of working
closely with premium publishers on global brands.

'The precarious financial position of some of the smaller publishers with whom
we entered into contractual relationships in previous years has meant we have
had to shoulder the financial burden of these products to completion. However,
we are optimistic that we will be able to re-sell them to other publishers in
due course.'


Ashley Hall
CEO - Warthog plc                              0161 608 1200

Andrew Gething
Corporate Development - Warthog plc            0161 608 1200

David Simonson/ Clare Maciocia
Merlin Financial                               0207 606 1244

Chairman's Statement

Over the past five years Warthog has made the transition that few European games
developers achieve, from being a small regional, specialist developer with one
or two projects into a high-calibre, multi-functional, international developer
whose customers are the world's premier publishers and IP owners. Warthog's
reputation and standing in this global industry is amongst the very highest.

It is our pleasure to report on an exciting year for the Group, although
latterly seeing the continued expansion marred by exceptional difficulties
resulting in a disappointing financial return. Our revenue increased by 29% from
£8.9 million to £11.4 million for this period. However, several of our customers
could not raise sufficient capital to fund their growth plans and found
themselves in difficult financial positions resulting in two of our game
development projects no longer being funded. This together with a consistently
unfavourable US$ exchange rate, meant we have been obliged to report a pre-tax
loss for this period of £790,705 after exceptional costs of £1,313,726. In line
with the policy outlined at the time of our flotation, the Directors do not
propose the payment of a dividend.

I can report progress on our long term strategy of working closely with premium
publishers on global brands has been realised, with contracts for 'Battlestar
Galactica' with Vivendi/Universal; 'Looney Tunes: Back In Action' with Warner
Bros./Electronic Arts; 'Harry Potter & The Philosopher's Stone' for Electronic
Arts and other, as yet unannounced contracts of a similar stature.

The dominant market for our industry is the USA and for some time it has been
our goal to build a presence in this market to assist in serving our US
customers. I am delighted with the route we have taken with the acquisition of
the high-calibre team known originally as 'Fever Pitch' in February and their
progress to date.

We appointed Ian Templeton to the Board in February. An experienced accountant
at the most senior level, who has been dedicated to corporate finance for
several years, Ian brings valuable know how to the Warthog Board. In accordance
with good corporate governance procedures Ian has joined both the remuneration
and audit committees.


The computer games industry has undergone some significant changes over the last
year, and many of our competitors have been forced to downsize or even exit from
the industry. However, despite the difficulties faced by some competitors,
Warthog has managed to strengthen its position as a leading European computer
games developer.

Warthog sees the year ahead as one in which we will take advantage of the growth
undergone in the year gone by, in which we will not seek to achieve growth
through further acquisition, but rather through capitalising on the strength of
the position we have established. We have laid the foundations to enable us to
build up our financial strength, increasing revenues and profitability without
corresponding investment in fixed assets and overheads. This should allow us to
improve our financial performance and to replenish our reserves for future
opportunities in the medium term.

Iain Macdonald

Chief Executive's Review

The last year has been both exciting and frustrating. Winning high calibre
contracts such as 'Harry Potter and the Philosopher's Stone', 'Battlestar
Galactica', 'Looney Tunes: Back In Action', as well as other as yet unannounced
titles, has been an immense achievement and has positioned Warthog ahead of our
competition. Expanding to our now four-studio format, including a presence in
Austin, Texas, has been a major strategic step and achievement for us.

The precarious financial position of some of the less strong, second tier
publishers with whom we entered into contractual relationships in previous
years, has meant we have had to shoulder the financial burden of a number of
products to completion and endeavour to re-sell them to new publishers. As we
have not managed to complete these re-arrangements within the financial year, we
have, most disappointingly, reported a pre-tax loss of £790,705 after
exceptional costs. This is the first time in our history we have reported a
loss. Although we are now forced temporarily to self-fund several projects until
we find new publishers for them, this does not represent a change in strategy in
our business model, but an exceptional operational necessity forced on us by
these circumstances. We were unable at that stage of our development to avoid
accepting these risks, but have since been able to move past that point, based
on our more strongly established position in the industry.

We are correspondingly well placed to meet the challenges and increasing
pressures of future games development. Technological advances on all platforms
means that it is not uncommon that team sizes have increased to up to 50 people
working on a single game, and will continue to increase further with the launch
of the PlayStation3 and Microsoft Xbox2 platforms. There is a small and
diminishing number of development studios that have the capacity to manage
projects of this scale. We are focusing our efforts in three areas: People,
Process and Technology.

Warthog prides itself on its technical excellence and I am delighted to report
that our proprietary TUSKTM game engine, is receiving wide recognition and is a
unique strength for the group. TUSKTM is now being used successfully on multiple
projects at three out of our four studios. As a result, we have over 30
programmers both using and enhancing TUSKTM, which is comparable to the
development resource levels of competing middleware products sold commercially,
and was a major factor in Warthog winning the 'Harry Potter & the Philoshopher's
Stone' contract. We are also investing in a process improvement project under
the title Hog Application Manual (HAM) to enhance our present development
systems, and also to prepare for ever larger development teams.

The majority of our success is down to the experience and dedication of our
staff. In many instances they have worked excessive hours to accommodate
customer requests and their commitment to quality is outstanding. We thank them

Our Expanding Group

Our Swedish office was acquired in April 2002 for an initial consideration of
£413,115 in Warthog shares with further shares to be issued subject to
performance. The studio is working well on 'Richard Burns Rally Championship'
and we have invested in staff in order to commence a second project in this
studio. The total number of employees has increased from 24 on acquisition to

In December 2002 we acquired the Manchester-based game studio, known as 'Zed
Two'. The company, founded in 1996, is best known for their original puzzle
games 'Wetrix' and 'Aqua Aqua' and currently numbers 21 people. The acquisition
consideration is dependent on the future profitability of the business. Games in
development include the role-playing game 'Pillage' for major consoles, a new
puzzle franchise 'Sticky Balls', and a recently won premium title, which has yet
to be announced.

In line with our strategic objective to build a presence in the all-important
USA, to be closer to the industry's largest publishers, we were delighted to
agree the acquisition of Fever Pitch in February of this year. Fever Pitch not
only met this strategic objective, but also met our operational objectives by
bringing to the Group such a highly talented and experienced team. The now
renamed 'Warthog Texas' studio is based in Austin, Texas and has presently a
workforce of 18 working on a major title. The business was acquired for an
initial consideration of £186,000 satisfied by the issue of Warthog shares with
further shares to be issued depending on its performance. The studio has been
cash flow positive and earnings enhancing since acquisition.

It is a credit to the professionalism of these studios that they have integrated
so well within the Group.

The Games Market

The rise in attention on the games market by the supermarket retailers has
focused the industry on popular brands, diminishing the signing of original
products. In many cases games are aligned with other mass-market entertainment
products as part of global branding and marketing campaigns.

The Game Cube market is proving financially challenging for third party
publishers, and although the gaming community is very supportive of the
excellent hardware, there are few new games being commissioned for this

These factors have resulted in games sales largely being dominated by the top
games in the charts. Although the games market continues to grow in-line with
forecasts, the number of games being commissioned has reduced.

The arrival of more technically advanced phones, dedicated hand held gaming
devices and Personal Digital Assistants further invigorates these fledgling
markets. The market for Game Boy Advance games is difficult, although the
announcement of the Portable PlayStation by Sony will provide some further
stimulation of this hand-held market.

Games Released in 2002/2003

'Rally Championship' on GC and PS2 was released with Sci Entertainment and
received good critical acclaim. It was also released in Japan by the Japanese
publisher Success, and by Conspiracy in the USA.

'Robot Wars' on GBA was completed for the BBC and received rave reviews
including their highest rating 'Excellent' from EAGB Advance.

We completed 'Loons: The Fight for Fame' for Infogrames after acquiring the
project development team and partly completed game from Infogrames themselves.

'Mace Griffin Bounty Hunter' was published in June 2003 on the PS2 and Xbox in
the USA and it will follow in the shops in August in the UK. The PC and GC
versions will follow shortly after. It has received some excellent reviews from
the games press including:

'Game of the month' and 90% score from PSW magazine (UK)

'Gold award' and 95% score from PSE2 magazine (USA)

'Wolverine's Revenge' was published by Activision simultaneously with the new X
Men 2 movie and achieved No 4 in the UK all formats chart and No 3 on the PS2
only chart.

SWING!, the publicly listed German publisher, for which we produced the
Animaniacs games 'Hollywood Hijinx' announced their receivership in early 2003.
We have since negotiated the rights to the game back from the receivers and have
come to an agreement with the owners of the Animaniacs licence, Warner Bros., so
that we can re-sell the game to an alternative publisher. We are optimistic that
we will be able to sell the game in due course.

We redeployed our development team from 'X10' to work on 'Harry Potter and the
Philosopher's Stone'. This was by mutual agreement with Conspiracy Entertainment
Inc. our publisher for 'X10' while they undertook some re-organisation. We
expect to continue development soon.

We developed the 'ET' title for the publisher New Kid Co. who found themselves
unable to meet their financial commitments. The Group has come to an agreement
with Universal Interactive, the owners of the 'ET' games licence, and New Kid
Co. to obtain the rights to re-sell the game and to recover a proportion of the
development costs incurred. Good progress has been made on this, with several
offers made and we expect to announce a deal shortly.

Several mobile games were completed and published for THQ and Mobile Scope
within the period.

Games in Development

Last year we were commissioned to develop a multi-platform game for 'Battlestar 
Galactica', the first time that the franchise has appeared on a games console. 
The game, for PS2 and Xbox, is a story-driven space action-adventure that takes 
place at the end of the Cylon-Colonial Wars, 40 years prior to the setting of 
the original TV series. The game will be released to celebrate the 25th 
anniversary of the original series in conjunction with the original series being 
released on home video and DVD and a new Battlestar Galactica mini series.

We won the contract with Warner Bros. for the game of the film 'Looney Tunes: 
Back In Action' which will be released simultaneously with the film in November
 2003 on PS2 and GC. Warner Bros. Consumer Products has partnered with 
Electronic Arts to co-publish the game. This is the first time Warner Bros. has
 placed a contract directly with a developer and we were delighted to be 
selected against worldwide competition.

We were delighted to bring Hogwarts to Warthog at the beginning of the year, and
in an extremely quick development schedule we have developed an outstanding
'Harry Potter and the Philosopher's Stone' for Electronic Arts. This game is due
in the shops in Q4 2003.

Our USA studio is working on a contract to develop a top title game associated
with a well-known franchise, with a premium publisher, due for release in early
2005. This confidential development is going well and we look forward to
announcing this game in due course.

Our rally game has now been endorsed by Richard Burns, who is currently leading
the World Rally Championship, to become 'Richard Burns Rally Championship'. The
contract has been modified to complete in Q1 2005 and now fixed for the PS2,
Xbox & PC versions. The game is a simulation rallying game and has pushed the
level of realism and car simulation to the extremes.

Financial Review

We have increased our turnover by 29%, slightly improved gross margins to 19%,
grew our Gross Profit by 39% to £2.2 million, and our EBITDA, before exceptional
items, by 54% to £1.18 million. This demonstrates the continued improvement in
our business.

This achievement is impressive in a period when the US dollar has weakened from
1.42 to 1.57 (or 11%), which affects 78% of our business generated in $US. Based
upon its maximum impact on our US receivables this deterioration alone would
have resulted in a £931,000 decline in revenue. Clearly, we have hedged against
the movement to achieve a better result but nevertheless its impact has been

We would have reported a profit this year had it not been for the exceptional
provisions of £1.3 million we have made against bad and doubtful debts or
stalled contracts. After these exceptional costs we are reporting a loss before
tax for the first time in 6 years of trading. Whilst this is disappointing, we
are optimistic to recover our position on these contracts.

Turning attention to the balance sheet, despite these substantial provisions we
have actually increased our net assets. Fixed assets have increased by £0.3
million through continued investment in our building infrastructure, computers
and software. Goodwill on intangible assets was £0.9 million at the end of the
year, principally being goodwill acquired during the year, and this is being
prudently written off over the next 5 years, although we expect the benefit from
these acquisitions to continue beyond this period. Each acquisition has
generated profits in the period and is likely to be a cash contributor to the
group this coming financial year.

Working capital has increased by £1.95 million during the year with a
significant increase in current assets met only by a small increase in

Unbilled contract work accounts for by far the largest element of the increase
in current assets, rising by £1.7 million over last year. One of the downsides
of working with the largest US brand owners in conjunction with the larger
publishers is a longer approval and payment process, which has contributed to
this figure. Equally the general tight financial environment has meant that in
some instances contracts have a greater degree of payment on completion than we
would like. Further, to win these larger and premier projects we are required to
undertake an increasing amount of work prior to the contract being awarded.

This increase in working capital was accommodated by a reduction in cash and by
a further increase in our debt facility. We have extended our debt facility to
£3 million and had drawn down £1.5 million against this at the end of the
financial year. This new facility was increased to give more headroom for our
working capital requirements and to bridge the cash implications of contracts
against which we have provided at the year-end.

We experienced a cash outflow for the period due to the default by our
customers, previously detailed, against which we have now provided. This,
together with an extension of credit taken by our customers through our unbilled
contract work has pushed us into a cash negative position again. Cash outflow
from operations was £2.3 million compared to £2.1 million last year but this
included working capital loans made to undertakings which were subsequently
acquired and the cash came back from these acquisitions to bring us into line
with last year. Furthermore, the repayment of tax through successful claims for
R&D tax credits and the reduction we predicted in capital expenditure gave us a
£0.7 million improvement in our cash outflow before financing.

With our strong new business pipeline, we are confident that we will improve on
this cash performance this coming year and the additional headroom created by
the extended facility will be sufficient to service the cash needs of the


It has become clear that the Sony PS2, followed by the Microsoft Xbox, as well
as their developing online applications, have become the dominant platforms
within the sector for the foreseeable future. Projects which harness the power
of these sophisticated technologies will get more complex and the vitally
important product marketing will often be linked to, or based upon developments
in other media, such as film, TV and books. There are likely to be fewer but
larger projects, and the willingness on the part of the publishers or IP owners
to take risks on developers without proven track record will shrink.
Relationships between publisher and developer will be more integrated, although
also, at time more tense, as the stakes become higher. This will reshape the
industry, which we believe will be to our advantage.

I am indebted to the hard work of our staff, and it is they who deserve the
credit for our significant achievements in this and previous years. The
combination of creativity and hard work together with our TUSKTM engine and
associated tools pipeline is a powerful combination and appealing for our
customers. We are now reaping the rewards from our investment in TUSKTM and we
will continue to do this.

After our heady growth over the last few years, this year will be one of
consolidation. Having now achieved a portfolio of premium titles, we are
concentrating on delivering these to the best quality and working closely with
our publishers to give these the best chance of achieving hit status, as well as
focusing on increasing our returns.

Warthog plc


for the year ended 31 March 2003

                Continuing     Acquisitions             Total
                      2003            2003              2003              2002
                         £                £                 £                 £
TURNOVER        11,180,765          236,373        11,417,138         8,858,117

Cost of          
sales            8,981,258          219,641         9,200,899         7,266,913

              --------------   --------------   ---------------    --------------
profit           2,199,507           16,732         2,216,239         1,591,204

(net)            1,433,440          226,103         1,659,543         1,142,358

             ---------------  ---------------   ---------------    --------------
PROFIT             766,067         (209,371)          556,696           448,846

costs            1,313,726                -         1,313,726                 -
              --------------   --------------   ---------------    --------------
PROFIT ON          
INTEREST          (547,659)        (209,371)         (757,030)          448,846
              --------------   ---------------

income                                                 35,267            77,536
                                                ---------------    --------------
                                                     (721,763)          526,382

payable                                                68,942            38,591

                                                ---------------    --------------
TAXATION                                             (790,705)          487,791

Taxation                                              377,914          (182,437)
                                                ---------------    --------------
THE YEAR                                             (412,791)          305,354
                                                ===============    ==============

share -
basic                                                   (0.87)p            0.72p
share -
diluted                                                   N/A              0.64p
                                               ================  ================

Warthog plc


for the year ended 31 March 2003

                                                               2003       2002
                                                                  £          £
(Loss)/Profit for the financial year                       (412,791)   305,354

Currency translation gain on foreign currency net            
investments                                                  55,740          -
                                                       ------------  -----------

Total recognised gains and losses relating to the year     (357,051)   305,354
                                                       ============  ===========

Warthog plc


31 March 2003

                                                         2003             2002
                                                            £                £

Tangible assets                                     2,270,250        1,988,025
Investments                                                 -                -
Intangible assets                                     906,358                -
                                             ------------------  ---------------
                                                    3,176,608        1,988,025
                                             ------------------  ---------------

Stock                                               1,634,034        1,470,342
Debtors                                             5,570,430        3,649,522
Cash at bank and in hand                              359,488        2,828,801
                                             ------------------  ---------------
                                                    7,563,952        7,948,665

CREDITORS: Amounts falling due within one          (1,411,267)      (1,306,618)
                                             ------------------  ---------------
NET CURRENT ASSETS                                  6,152,685        6,642,047
                                               ----------------  ---------------

TOTAL ASSETS LESS CURRENT LIABILITIES               9,329,293        8,630,072

CREDITORS: Amounts falling due after more          (1,500,000)      (1,137,992)
than one year

PROVISIONS FOR LIABILITIES AND CHARGES                      -          (25,011)
                                             ------------------  ---------------
                                                    7,829,293        7,467,069
                                             ==================  ===============

Called up share capital                               481,820          461,497
Contingent share capital                              286,885                -
Share premium account                               6,655,214        6,243,147
Merger reserve                                         52,463           52,463
Profit and loss account                               352,911          709,962
                                             ------------------  ---------------
SHAREHOLDERS' FUNDS                                 7,829,293        7,467,069
                                             ==================  ===============

Warthog plc


for the year ended 31 March 2003

                                                         2003             2002
                                                            £                £

Cash flow from operating activities                (2,328,154)      (2,145,012)

Returns on investments and servicing of               (33,675)          38,945

Taxation                                              110,718         (105,862)

Capital expenditure and servicing of finance         (630,114)      (1,096,774)
Acquisitions                                          242,260                -
                                                ---------------  ---------------
CASH OUTFLOW BEFORE FINANCING                      (2,638,965)      (3,308,703)

Financing                                             169,652        2,577,095
                                                ---------------  ---------------
DECREASE IN CASH IN THE YEAR                       (2,469,313)        (731,608)
                                                ===============  ===============


                                                          2003            2002
                                                             £               £

Decrease in cash in the year                        (2,469,313)       (731,608)

Change in net debt resulting from cash flows          (350,008)       (587,958)
                                                 ---------------  --------------
MOVEMENT IN NET DEBT IN YEAR                        (2,819,321)     (1,319,566)

NET FUNDS AT 1 APRIL 2002                            1,678,809       2,998,375
                                                 ---------------  --------------
NET DEBT AT 31 MARCH 2003                           (1,140,512)      1,678,809
                                                 ===============  ==============

Warthog plc


for the year ended 31 March 2003


The group's turnover and profit before taxation were all derived from its
principal activity. Sales were made in the following geographical markets:
                   Continuing    Acquisitions            Total
                          £              2003             2003            2002
                                            £                £               £

United            2,561,319            37,829        2,599,148         423,640
USA               8,096,131           198,544        8,294,675       4,575,477
EC                  523,315                 -          523,315       3,859,000
              ---------------  ----------------   --------------  --------------
                 11,180,765           236,373       11,417,138       8,858,117
              ===============  ================  ===============  ==============


    Provisions totalling £1,313,726 have been made in the current year against
    the costs incurred in developing certain games. The directors are of the
    opinion that these provisions are necessary in view of the financial status
    of certain of the parties which had originally contracted these games.

                                                          2003            2002
                                                             £               £
     Due within one year:
     Trade debtors                                     611,513       1,090,178
     Amount recoverable on long term contracts       4,072,811       2,361,984
     Amounts owed by group undertaking                       -               -
     Other debtors                                     480,623          98,498
     Deferred tax asset                                323,101               -
     Prepayments and accrued income                     82,382          98,862
                                                  --------------  --------------
                                                     5,570,430       3,649,522
                                                  ==============  ==============

The deferred tax asset is recoverable in more than one year.

D   CREDITORS: Amounts falling due within
    one year
                                                          2003            2002
                                                             £               £

    Payments received on account                       142,657         157,596
    Trade creditors                                    375,559         340,897
    Corporation tax                                          -         150,408
    Other taxation and social security                 227,499         133,995
    Directors' current accounts                              -               -
    Other creditors                                     48,822          28,967
    Accruals and deferred income                       616,730         494,755
                                              ------------------  --------------
                                                     1,411,267       1,306,618
                                              ==================  ==============

The bank loan and overdraft are secured by a debenture giving fixed or floating
charges on all assets of the company.

E    CASH FLOWS                                        2003               2002
                                                          £                  £
 1   Reconciliation of operating (loss)/
     profit to net cash inflow from
     operating activities
     Operating (loss)/ profit                      (757,030)           448,846
     Depreciation and amortisation                  621,232            318,390
     Increase in stocks                            (163,692)          (836,529)
     Increase in debtors                         (1,492,879)        (2,716,268)
     (Decrease)/ Increase in creditors             (591,525)           640,549
     Other non cash movements                        55,740                  -
                                             ---------------    ---------------
     Net cash outflow from operating             (2,328,154)        (2,145,012)
                                             ===============    ===============

                                                       2003               2002
                                                          £                  £
 2   Analysis of cash flows for headings
     netted in the cash flow
     Returns on investments and servicing
     of finance

     Interest received                               35,267             77,536
     Interest paid                                  (68,942)           (38,591)
                                             ---------------    ---------------
     Net cash (outflow)/ inflow from
     returns on investments and servicing
     of finance
                                                    (33,675)            38,945
                                             ===============    ===============
     Capital expenditure and financial

     Purchase of tangible fixed assets             (630,114)        (1,096,774)
                                             ===============    ===============


     Issue of ordinary share capital                      -          2,102,932
     Issue costs                                   (180,356)          (113,837)
     Repayment of other long term loans            (609,992)           (12,000)
     New Loans                                      960,000            600,000
                                           ----------------   ----------------
     Net cash inflow from financing                 169,652          2,577,095

                                           ================== ==================

     CASH FLOWS                       At                                    At
                                 1 April                         31 March 2003
                                    2002          Cash flow                  £
 3   Analysis of net                   £                  £

     Cash in hand              2,828,801         (2,469,313)           359,488
     and at bank
                            --------------  -----------------  -----------------
     Debt due within             (12,000)            12,000                  -
     1 year
     Debt due after           (1,137,992)          (362,008)        (1,500,000)
     1 year
                           ---------------    ---------------  -----------------
                              (1,149,992)          (350,008)        (1,500,000)
                           ---------------    ---------------    ---------------

             Total             1,678,809         (2,819,321)        (1,140,512)
                           ===============    ===============    ===============


On 5th April 2002 the company acquired the entire share capital of 42 Bit AB. On
16th December 2002 the company acquired the entire share capital of Zed Two
Limited. On 4th February 2003 the company acquired the entire share capital of
Fever Pitch Studios Inc:-

                42 Bit AB            Zed Two     Fever Pitch        Total
                                     Limited    Studios, Inc.
                         £                  £              £            £
Fixed Assets        77,707             10,801         28,527      117,035
Deferred tax             -            174,101              -      174,101
Debtors             82,797             39,076        102,810      224,683
Bank                85,582               (436)       157,114      242,260
Creditors         (239,329)          (348,994)      (345,571)    (933,894)
                 _________           ________        ________    _________
                     6,757           (125,452)       (57,120)    (175,815)

Goodwill           693,243            125,452        243,120    1,061,815
                  ________           ________       ________    _________
                   700,000                  -        186,000      886,000

Discharged by:
                         ===              ===            ===          ===
Shares             700,000                  -        186,000      886,000
Cash                     -                  -              -            -
                   ---------           --------      -------     --------
                   700,000                  -        186,000      886,000
                   =========           ========      =======     ========

The subsidiary undertakings acquired during the year contributed £(351,014) to
the group's net operating cash flows, received £1,132 in respect of net returns
on investments and servicing of finance, paid £2,976 in respect of taxation and
utilised £95,083 for capital expenditure.

                                                                2003      2002
                                                                   £         £
Analysis of the net outflow of cash in respect of the
purchase of subsidiary undertakings

Cash consideration                                                 -         -
Cash at bank and in hand acquired                            243,365         -
Bank overdrafts acquired                                      (1,105)        -
                                                             ---------  --------
Net flow of cash in respect of the purchase of               
subsidiaries                                                 242,260         -
                                                             =========  ========


Earnings and the number of shares used in the calculations of earnings per share
are set out below:

                                                    2003                 2002
                                                       £                    £
(Loss)/ Profit after tax                        (412,791)             305,354
Weighted average number of shares             47,344,052           42,593,312
EPS (pence)                                        (0.87)                0.72
                                           ===============      ===============
Fully diluted:
(Loss)/ Profit after tax                             N/A              305,354
Weighted average number of shares                    N/A           47,496,256
EPS (pence)                                          N/A                 0.64
                                         =================    =================


Weighted average number of shares
                                                           2003             2002
                                                  No. of shares    No. of shares

    For basic earnings per share                           N/A       42,593,312
    Share options in issue                                 N/A        4,958,753
    Lapse of share options                                 N/A          (55,809)
                                                ---------------  ---------------
    For diluted earnings per share                          N/A       47,496,256
                                                ===============  ===============


    The preliminary financial statements for the twelve months ended 31 March
    2003 were approved by the Board of Directors on 28 July 2003. The results
    are unaudited.

    The preliminary financial information set out above does not constitute full
    accounts within the meaning of Section 240 of the Companies Act 1985.

                      This information is provided by RNS
            The company news service from the London Stock Exchange

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