Consolidated net income was GBP 673,000, or 5.7 pence per share for the first quarter of 2001, compared to net income of £111,000 or 0.9 pence per share for the same period in 2000. All earnings per share figures are calculated on a fully diluted basis.
Operating profit before goodwill amortisation and exceptional items increased to GBP36,000 in the first quarter, up from a net operating loss of GBP13,000 for the same period in 2000. Operating margin for the first quarter 2001 increased by 450 basis points over first quarter 2000, to 4.4%.
During the first quarter, the Company earned a net profit of GBP1.9 million resulting from the disposal of ECsoft’s Managed Support Business in the UK to Pink Elephant.
Commenting on the results, Jerry Ellis, Chief Executive of ECsoft Group plc, said: We are very pleased to report an operating profit this quarter well in excess of results reported in the first quarter 2000. This represents the third successive quarter of growth and is the first time since 1999 that ECsoft has been profitable in every country. A key contribution towards the Company’s continuing improvement was the solid performance of our Norwegian operations, which had suffered heavy losses in the first three quarters of 2000. They achieved break-even in Q4 2000 and, in Q1 2001, continued their recovery with a return to profitability.
New customer projects won during the quarter include Hitachi Europe and CDL (Cheshire DataSystems Ltd.), where ECsoft is delivering powerful and flexible ‘next generation’ business systems. In Denmark, ECsoft is project managing an Internet-based mobile phone payment system for Telia, and at Den Danske Bank the Company is involved in a large Internet banking integration project. In Norway, ECsoft secured a contract to develop an electronic invoicing system for the Norwegian Public Roads Administration, and in the Netherlands, ECsoft is implementing a CRM system for LogiGo.com, an innovative logistics company. The UK operations are winning further e-Government projects with Local Authorities, following on from their significant Modernising Government programme at the London Borough of Bromley.
As announced within our Q4 2000 results, the Company divested its Managed Support Business in the UK to Pink Elephant for up to £9 million in cash, effective 1 March 2001. The transition of work is proceeding ahead of plan with all major customer contracts now transferred and new joint business opportunities being pursued, in accordance with the strategic co-operation agreement signed by ECsoft and Pink Elephant.
ECsoft continues to strengthen its senior management team with experienced individuals. Mr. Wim de Gier joins the company as the Managing Director of the combined Dutch operations, with effect from 1 May 2001. Having previously served as the Managing Director of COLT-Telecom BV as well as Director of Logica’s Finance Division in the Netherlands, Mr. de Gier brings over 25 years of IT, sales and management experience to the Company.
At 31 March 2001, ECsoft’s workforce was 899, a decrease of 17% over the previous quarter. This reduction is primarily as a result of the sale of ECsoft UK’s Managed Support Division and the consolidation of the Company’s three operations in the Netherlands.
Cash reserves increased by 7.6% to GBP38.9 million, as at 31 March 2001, from GBP36.2 million at 31 December 2000. The Company is committed to increasing its scale and market penetration, both through organic growth and strategic acquisitions, currently focused on the core IT solutions business in the UK.
Despite the downturn in general business confidence in the US, and more recently in Europe, the Board remains comfortable with the continued improvement in performance of our operations. With a strong senior management team now in place, a clear focus on our core business and our experienced and high calibre employees, we are confident that we can sustain this strengthening business performance.
