Current trading update

The current financial year has started well, with revenue for the first quarter to 30 June 2007 up by 44% compared with the same period last year.

Growth within our UK Government businesses has continued strongly and the market, particularly in National Security, remains good. Our UK Commercial businesses have had a slower start to the year, particularly in TMTE, but, following the completion of the integration of m.a.partners, our revenues are considerably ahead of last year.

Our US Financial Services business is performing well and continues to benefit from strong client demand. In our US National Security business, the recently acquired DFI business has proven more difficult to integrate and this has involved more disruption than we originally planned. As a result, although we expect the DFI business to grow modestly, it is unlikely to make material profits in the current financial year despite recent restructuring of its support cost base. Importantly however, the US National Security market remains healthy, focused sales efforts have strengthened the sales pipeline and we have now made several sales of Detica capability to DFI clients. We remain confident that DFI provides a solid platform for future growth in this important market.

Financial position

There have been no significant changes in the financial position of the Group and Detica's balance sheet remains strong. At 30 June 2007, net debt stood at £20.3m following normal seasonal outflows combined with the payment of deferred consideration on the acquisition of m.a.partners.

Outlook

We continue to see healthy demand for our services across our markets and the outlook for the Group therefore remains good. The Board's expectations for Group revenue and profit for the current year remain unchanged, although the year will be slightly more second-half weighted than normal.