ITNET has traded well during the first quarter of the current financial year. Revenues were up 18% on the corresponding period in the previous year. After adjusting for the full first quarter impact of the acquisitions made in March and May 2000, this represents a year on year growth rate of 11%, in line with current market growth rates. At 31 March 2001 our order book was in excess of GBP274m (31 December 2000: GBP270m). Of this, GBP80m is deliverable during the remainder of 2001, which compares to GBP65m deliverable in the corresponding period in 2000.

The improvement in our order book reflects a buoyant level of activity and a good sales pipeline as well as a number of contract wins in our Public Sector division. We are providing, through our OneGov framework, services to local Councils that have a major positive impact on citizens and the communities in which they live. Our offering is proving critical to many Council’s plans for meeting their requirements for ‘joined-up’ government giving citizens access to Council information. Our OneGov service offering has extended to Epsom and Ewell Borough Council for a new CRM implementation.

We are announcing today the following Public Sector new business wins:

Preferred supplier for a seven-year partnership agreement expected to be in the region of GBP35m to deliver Information Communications Technology (ICT) services to the London Borough of Southwark. Southwark selected ITNET as its preferred partner based on its track record of ICT service delivery, coupled with its ability to meet the challenges of e-government.

Preferred supplier for a five-year GBP3m ICT services partnership with Cotswold District Council.

Preferred supplier for the provision of IT services for Milton Keynes Council.

We are pleased to report continued improvement in ITNET’s service delivery and in our financial performance in our revenues and benefits contracts. Since our Preliminary Results in February, we have defined a revised scope for the contract with the London Borough of Hounslow involving the delivery of additional services and payment of additional revenues. An interim agreement was signed in March 2001 and negotiations continue to finalise the new contract specification and contractual arrangements. The service level in Hounslow continues to improve and there are no case backlogs. The Hounslow Council tax collection rate for 2000/2001 was 94%, the best ever rate achieved by the Council.

The contractual arrangements for the new contract at the London Borough of Islington have been negotiated in detail and further significant service improvements have been, and continue to be made. This has led to the Council confirming on the 9th of May 2001 its decision to sign an extension to the existing contract, as reported in our announcement of January 2001, subject to final negotiations.

We have also secured contract extensions totalling GBP6.4m with a further three local authorities and new contracts for the delivery of IT services worth in excess of GBP16m in aggregate with Worcestershire County Council, Wycombe District Council and the South West Regional Development Agency. Our contract win rate has been impressive this year – winning eight out of eleven new contracts that we have bid for in the Public Sector.

In the Commercial market we are pursuing an array of opportunities with partners to continue to enhance our service offerings to our target markets. Taking advantage of our success in CRM solutions in the Public Sector, we are working with Siebel Systems to develop our CRM capabilities for Commercial markets, including the delivery of contact centre, communications integration and other CRM related services.

Commercial business in the first quarter is in line with our expectations and has demonstrated specific successes to date with the signing of a number of renewals or additional contracts with existing customers. These have an aggregate value of GBP32.6m for the supply of IT services to customers including Equitas, ALSTOM Power and Signet. In addition, this also includes the announcement today of a renewal of our IT services contract with Credit Lyonnais for a further 3 years. The broad spread of these contract renewals with our existing customer base demonstrates continued satisfaction with the service levels received from ITNET.

We have enhanced our e-business customer base across our markets and won a number of projects in the first quarter of 2001 with customers such as Bet365, Staffordshire Building Society, FW Pharma Systems and The eXchange.

With the encouraging start we have made to the current financial year, the Board remains confident of a satisfactory outcome for the year.