Operating and financial review

During the period under review, the group has successfully completed

locating all key hosting equipment off site and into secure, high quality

data centre environments, supplied by third parties.  This multi site

approach was designed in order to provide high quality hosting services

with growth capability, but without being subject to capacity or capital

constraints.

Our research indicates that availability and speed are the key influences

on the customer choice and commercial success of web hosting

providers.  External performance monitoring of web hosting companies is

undertaken by third party organisations and the results are published in

industry magazines. The NetBenefit group's successful application for

membership of LINX (the UK Internet traffic peering organisation) was

announced in May 2001 and a range of peering arrangements with other

LINX members has since been secured.  Membership of LINX, effective

Internet bandwidth procurement and attention to server availability has

meant that the group has performed very well in external performance

monitoring tests.  Web hosting performance was underlined by the

introduction of a formal service level agreement for customers in April

2001.  Attention to hosting performance was rewarded by Journal du Net

recognising the group's french subsidiary, Voxpop, as best performing

hosting provider in France during July 2001.

Further information can be found at www.netbenefit.com or

www.voxpop.fr.

Opportunity and

The Group remains positive about the growing market opportunity and

outlook

outlook for high value added domain name management services.

Recently published research by Gartner, Inc. identified the management

of domains by corporations as becoming absolutely critical, indicating that

a typical large business will spend up to US$100,000 per year on domain

name services.  By recognising and responding to market demand, we

should see good revenue growth in this area of the business.

The business case for outsourced SME hosting remains compelling and

may well strengthen over the medium term as customer requirements

become increasingly complex.  The opportunity exists for both new

customer acquisition and increasing revenue from existing customers.

The NetBenefit brand has a well established position in the market and by

continuing to supply affordable and robust hosting solutions, the Group

remains in a good position to capitalise on the opportunity.

Jonathan Robinson

Chief Executive Officer

21 September 2001

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