The directors of Digital Animations Group plc are pleased to report its activities of the past five months as it releases the results for the first six months of this financial year.

Today's results reflect the impact of the enlarged group since the acquisition of Black ID in October 2001. In particular, turnover has risen to £993,811, significantly up against the same period the year before (2001, £391,690). This reflects the potential benefits as the company begins to use its consultative skills to leverage its technology. Going forward this is encouraging as DAG implements a new customer focussed strategy and market engagement plan that draws on the strength of a fully integrated technology and services group.

The company is also delighted to announce today a number of major appointments. Mike Antliff has been asked by the Board to step up to CEO, the role he has held on an interim basis since July 2002. Rob Walker has been appointed Non-executive Chairman and an Advisory Panel comprising key industry players has been established.

Rob Walker is the former senior vice president of HP responsible of major customer accounts and CEO of Compaq EMEA, a $15bn business. His remit is to provide practical assistance as well as advice to the Board. With Mr Walker, Dana Cuffe, Chief Information Officer for Egg plc, Bob Downes, Director, BT Scotland and Steve Morrison, formerly CEO at Granada plc make up DAG's new Advisory Panel, tasked to assist the company's engagement with its target markets.

Interims Highlights
Turnover up 154% to £993,811 (2001, £391,690).
Operating loss before exceptionals improved by 3.5% at £400,988 (2001, £415,585).
Exceptional items of £684,010 (2001, nil). relating to goodwill write off and departure of previous CEO.
Cash reserves strong at £9.2 million.

CEO Statement
I am pleased to be able to report directly to our shareholders for the first time since my appointment as Interim CEO in July. These are challenging but exciting times and, over the past five months, your Board has set about redefining our strategy going forward, clarifying our market focus and building a powerful sales resource capable of expanding our presence in the marketplace.

We go forward with a new name, DA Group, which comes into effect in the New Year, and is consistent with our new market position as an integrated technology and services company. The successful integration of Black Graphic Design Limited within the Group harnesses our services capabilities with our technology to leverage new products. Given this and our overall performance, I believe we have made tangible progress in a short period of time and feel heartened that we are now moving forward with momentum.

The results for the first six months of this financial year reflect the impact of the enlarged Group since the acquisition of Black ID in October 2001. Turnover growth achieved is encouraging, showing the potential benefits of linking our services and software.

Equally, our continued investment in R&D shows that we remain committed to the continuing development of our technology and its commercial application. Our faith in the technology as a means to make computers and the information and opportunities which they create accessible to the widest possible audience is absolute - be that realised through a virtual character or other means.

A summary of the results shows that turnover for the 6 month period ended 30 September 2002 increased to £993,811 (2001 £391,690) The operating loss for the period was £400,986 (2001 £415,585) before research and development expenditure of £450,077 (2001 £322,328), impairment and amortisation of goodwill of £457,683 (2001 £nil), exceptional gain of £87,493 (2001, £101,522) and exceptional loss of £226,330 (2001, £nil). We have written off the remaining goodwill which arose on the acquisition of Black Graphic Design Limited consistent with our new strategy of moving forward as an integrated business entity. Overall this has resulted in a net loss before taxation of £1,262,800 (2001 £331,533). Our cash reserves remain strong at £9.2m.

Drawing on the strength of our fully integrated group, we have taken the major step of embedding our technology into comprehensive service-led communications solutions. This approach has specific benefits for both our clients and their customers. As these integrated projects increase in number, our technology will secure the credentials it needs for the company to expand steadily, generating two key revenue streams from services and software. This will be driven by core technology, licence agreements and project implementation.

In support, we have realigned our resources to drive revenue growth from new solution sets and invested in a skilled dedicated sales force to implement this plan. We expect these changes to have a positive effect in the next financial year, however the next 6 months remain challenging. We believe that this refocusing of our activities and resources is essential in order to exploit emerging market opportunities.

As part of the overall strategic review, we now intend to undertake a full financial assessment, which will include our cash requirement. We will communicate the results of this as soon as practicable.

We have also strengthened our team at all levels.

I welcome Rob Walker as our Non-Executive Chairman. With a track record which includes directorships of HP, Compaq and Rank Xerox, Rob will take a hands-on role in helping and advising the Board through the next critical period of development. Alongside Rob, we have appointed an advisory panel comprising leading industry figures: Dana Cuffe, Chief Information Officer at Egg plc, Bob Downes Director, BT Scotland and Steve Morrison, formerly CEO at Granada plc. We believe their expertise in our target markets will make our product application and market penetration strategies all the more effective.

We go forward with strength and a renewed sense of confidence. As ever, the Board thanks our employees for their continuing commitment, and our shareholders for their continuing support.

Mike Antliff

Independent Review Report to Digital Animations Group plc

Introduction
We have been instructed by the company to review the financial information for the six months ended 30 September 2002 which comprises the Group Profit and Loss Account, Group Balance Sheet, and the related notes 1 to 6. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.

Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report as required by the AIM rules issued by the London Stock Exchange.

Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4 "Review of interim financial information" issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information.

Review conclusion
On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 September 2002.

Ernst & Young LLP
Glasgow
9 December 2002

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UNAUDITED GROUP PROFIT AND LOSS ACCOUNT for the six months ended 30 September 2002

UNAUDITED GROUP BALANCE SHEET at 30 September 2002

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NOTES TO THE UNAUDITED INTERIM RESULTS
for the six months ended 30 September 2002

1.BASIS OF PREPARATION OF INTERIM FINANCIAL INFORMATION

The interim financial information has been prepared on the basis of the accounting policies set out in the Group's statutory accounts for the year ended 31 March 2002.

The financial information contained in the interim statement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. Statutory accounts for the period ended 31 March 2002, which were unqualified, have been delivered to the Registrar of Companies.

2.TAXATION

The taxation charge of £111,000 represents a write down of the deferred tax asset arising on the acquisition of subsidiary. No provision for taxation has been made as the Group has losses brought forward.

3.LOSS PER SHARE

Loss per ordinary share is based on 32,121,228 ordinary shares, being the weighted average number of shares in issue during the period. At 31 March 2002 and 30 September 2001 the weighted average number of shares in issue was 31,830,950 and 31,730,036 respectively. Due to the loss for the period, the share options have no dilutive effect.

4.PROVISIONS FOR LIABILITIES AND CHARGES

Full provision has been made for any National Insurance liability which may be payable by the Group in respect of gains made by individual employees on the exercise of options granted under the company's unapproved share option scheme. The provision takes account of the Company's period end share price and assumes that options will be exercised at the earliest opportunity. The reduction in the provision in the period to 30 September 2002 of £87,495 is primarily a result of the movement in the share price in the period.

5.CAPITAL AND RESERVES

The reduction in capital and reserves in the 6 month period to 30 September 2002 reflects the loss for the period of £1,373,800 and a reduction in shares to be issued of £138,334 arising from the reassessment of the contingent consideration for the purchase of Black Graphic Design Limited in October 2001.

6.INTERIM REPORT

The interim report was approved by the board of directors on 9 December 2002. Copies of this report will be sent to all shareholders and are available to members of the public at the Company's Registered Office.