The second half was, as expected, especially strong and the Group’s results once again show its ability to grow year on year, based on its position as a leading provider of e-CRM solutions for financial services organisations. AIT continues to lead the industry, capitalising on its core expertise in multi-channel customer engagement and using its technical excellence to deliver and integrate new e-commerce channels such as interactive television and mobile telephony.
The year to 31 March 2000 delivered good organic growth and increased margins. Turnover grew by 24% toGBP 21.7 million (1999: GBP17.5 million). Operating profit rose 34% to GBP3.6 million (1999: GBP2.7 million) with operating margin strengthening to 16.8% from 15.5%. This was achieved despite significant increases in R&D expenditure which totalled GBP£2.2 million (1999: GBP0.8 million) for the year supporting the Group’s strategic aims of providing alliance partners with AIT’s advanced software products that are highly efficient to implement. As expected, the second half was strong despite Y2K slowdown experienced elsewhere – revenue increased 32%, operating profit 43%, over the comparable period in 1999.
Net interest earned declined to GBP16,000 (1999: GBP44,000), following the Group’s interim funding of the Fairmile office development which was subsequently sold and leased back. Pre-tax profit rose by 32% to GBP3.7 million (1999: GBP2.8 million) and by 41% in the second half when compared to the respective half in 1999. Basic earnings per share increased by 32% to 12.23p (1999: 9.30p) and the Group’s balance sheet remains strong. Cash generation remained effective, as debtor days improved once again, and the Group ended the year with cash balances of GBP5.3 million (1999: GBP4.2 million), representing 60% of net assets. The Board is proposing to declare a final net dividend of 1.93p per 10p ordinary share bringing the total net dividend for the year to 2.90p per share (1999: 2.40p).
Business Review
The year has been notable for the diversity of channels AIT now implements for its clients. The Group’s investment in product development has enabled it to integrate new channels for some of its well-established clients, as well as providing complete e-CRM solutions for others. The Board is particularly pleased that the Group is committed to maintain long-established relationships with many of its clients such as Woolwich: AIT’s ever-growing product offering has enabled the Group to provide further solutions to customers as their own services expand and diversify. This is reinforced, for example, by the selection of AIT to implement the e-business solution for GE Capital bank – supporting such retail clients as Debenhams and the Arcadia Group.
Product-based strategy leads to higher operating margins
The Board took the decision over a year ago to change AIT’s business model from being service-led to being more product based. The Board believes that this is the optimum way for the Group to secure long-term growth whilst increasing profitability. It is a controlled period of change, which the Board faces fully aware of the challenges and rewards. AIT is aiming high and intends to strengthen significantly, indirect product sales and project delivery through alliance partners whilst still retaining an involvement in each project and growing the direct sales force.
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Benefits from the new business model are demonstrated through the Group’s improving revenue mix. Licence and support streams account for 26% of revenue (1999: 18%); respective growth of 92% and 40% over 1999. As a result, operating margin strengthening to 16.8% from 15.5%, despite significant increases in R&D expenditure which totalled £2.2 million (1999: £0.8 million).
New customers won and further penetration of customer base
The client list for this year combines existing strong relationships with new names – all of them are exciting projects utilising the very latest e-CRM technology. As well as Woolwich, AIT also continues its long-standing relationship with NatWest, Lloyds TSB and Komercni Banka of the Czech Republic. For NatWest, AIT is implementing ShareBus, an innovative trading system for employee share option schemes. AIT’s e-commerce skills were utilised for a new multi-channel loans service for Lloyds TSB, which will integrate telephone, Internet, branch and post. Among AIT’s new clients, the Group was involved in the UK’s first Internet-based mortgage service for emfinance.com, a project which is changing the face of the industry, and supported the John Charcol business system strategy with a call centre and agent channel. More recently AIT has commenced strategic e-CRM programmes for Alliance & Leicester and a leading UK building society, as well as initial scoping for a pan-European retail investment service.
Good progress in international sales
The Group’s overseas penetration continues, with contracts this year across mainland Europe; notably in Spain where AIT implemented a call centre project for DKV Previasa. In addition, the Group’s partnership with CSC has made a solid contribution to AIT’s increasing overseas revenue with royalties from product sales in the US, Japan, Portugal, Hong Kong and Germany. The Group’s management team continues to develop the direct sales channel in the US and is determined and confident that its plans for next year will see an upturn in North American revenues. The Group is building alliance partnerships in the US, strengthening the direct sales force through East and West Coast appointments and activity is already increasing.
R&D effort continues to focus on supporting ease of implementation by the indirect channel
The Group’s strategy of investing in ever increasing product development has been instrumental in its ability to respond to demands for new electronic channels. The R&D team ensures that AIT maintains its position as innovators, enabling the Group to meet clients’ current and anticipated future needs. AIT’s commitment to a full product plan has included further developments for e-CRM business process modelling and configuration, work on customer behavioural analysis and marketing integration, plus enhanced web and thin client delivery capabilities. The Group is committed to up-to-date platform support with work in the latest Microsoft technologies, and also additional developments within the Java and Corba arenas. AIT’s continued lead in emerging channels has been demonstrated through mobile phone banking utilising WAP, and AIT has solidified its market-leading position in the interactive TV field, building closer relationships with both NTL and Open.
