Turnover up 16% to £87.6m (2000: £75.7m)
Operating profit (pre-goodwill amortisation) of £5.7m (2000: £1.9m loss)
Profit before tax (pre-goodwill amortisation) of £5.3m (2000: £2.3m loss)
Earnings per share (pre-goodwill amortisation) of 5.1p (2000: -3.3p)
Forward order book of £250m at 30 June 2001 (2000: £236m)
Business highlights:-
Growing success in the Public Sector market winning six new contracts this year for the provision of IT services enhanced by e-solutions through our OneGov range of services.
Growth in SAP with five new contract wins across both the Commercial and Public Sector divisions.
Our partnership with Siebel, the world-leading CRM supplier, has been extended to include Commercial markets. ITNET has won four out of six of the Siebel implementations in the UK’s Public Sector market to date.
Announcing today:-
ITNET and the London Borough of Southwark have signed an outsourcing agreement worth at least £30m for a period of up to seven years, to provide ICT services including desktop support and SAP. ITNET is working in partnership with the Council to enable it to meet the challenges of the e-Government agenda.
ITNET has signed a £9m contract extension with the London Borough of Hounslow taking the total contract value to £30 million over seven years. This extends the scope of the existing revenues and benefits contract and delivers continued improvements to the existing revenues and benefits application system.
London Borough of Haringey has awarded ITNET the contract to provide Customer Relationship Management (CRM) services using Siebel for the Council’s Access to Services project. The contract is worth £3.5 million over seven years, with an option to run for an additional three years.
ITNET has renewed and extended existing contracts with two Commercial customers, British Airways Pensions and Alenia Marconi worth together £7.2m for IT and server management services.
ITNET has signed two new SAP Commercial contracts totalling £4.4m one with new customer Accantia Health & Beauty for three years to support and host its UK SAP system and a 2.5 year contract with existing customer Cadbury Schweppes for Open Systems SAP FM.
Commenting on the results, Bridget Blow, Chief Executive, said:
I am pleased to report that the Group has made good progress in the first half of the year in difficult market conditions. Our focus on improving utilisation levels and cash generation has paid off and we are seeing growth in our underlying business ahead of market trends, as well as improved profitability.
We have taken full advantage of a buoyant Public Sector market, winning 11 out of 15 bids to date the introduction of services like OneGov has differentiated us in the market place. In the Commercial market, where investment has reduced, we have been able to reduce costs and maintain good utilisation to match the pattern of demand. A combination of new orders with existing customers, e-business projects and SAP wins has resulted in good growth in this sector.
Our strategy to focus on long term IT contracts and project opportunities with our existing customers continues. We have demonstrated an ability to capitalise on new market opportunities such as Modernising Government. This, coupled with the strength of our order book and forward pipeline, supports our confidence that our underlying growth for 2001 will be in line with expectations.
The management team continues to demonstrate a strong commitment to the business and is enthusiastic about its future prospects.
In the half year to 30 June 2001, turnover increased by 16% to £87.6m (2000: £75.7m). All parts of the business have experienced double-digit growth with the exception of revenues from Business Process Services to local Government, reflecting the ending of the contract with the London Borough of Hackney at the end of March. Applications services revenues increased by 28% reflecting strong demand compared to the quiet market following the Y2K slowdown in the comparable period last year. IT services revenues grew 16%, which is slightly ahead of the market, and our French Thornton consultancy business continued to flourish with revenue growth of approximately 30%.
The Group reported operating profit (pre-goodwill amortisation) of £5.7m in the period . The re-statement of the accounting policy last year for large contracts resulted in a negative adjustment to the first half of 2000 Group operating profits of £6.7m resulting in the reported operating loss of £1.9m. In the first half of 2001, operating profit margins were 6.5% (2000: (2.4%)). If the distorting effect of the large local authority contracts is excluded the margin rises to 6.9% (2000: 5%). The improvement can be attributed to increased revenues, the benefit of a full half-year contribution from the acquisitions made in 2000, carefully controlled costs, enhanced man-time utilisation in application services and enhanced capacity utilisation in the Data Centre. Strong growth was experienced in our Desktop and SAP services.
In addition, profit before tax (pre-goodwill amortisation) of £5.3m (2000: £2.3m loss) reflects lower interest costs due to the repayment of borrowings that had been raised in 2000 to fund the acquisitions. The effective corporate tax rate was 31% and earnings per share (pre-goodwill amortisation) increased to 5.1p (2000: 3.3p loss).
Free cash flow improved by £5m compared to 2000 and has benefited from increased operating profits, tax losses brought forward from 2000 and the re-financing of the Group’s car fleet. During the period, we chose to re-pay bank loans to reduce debt and related interest costs. We expect cash flow to continue to improve during the second half of the year. Net debt at 30 June 2001 reduced to £2.8m (30 June 2000: £10.5m).
During the period, compensation under the earnout agreement with French Thornton was paid in respect of the achievement of the 2000 targets. The total amount of £2m was settled as £0.8m in loan notes and £1.2min ITNET shares.
SOURCE: COMPANY PRESS RELEASE
