The IT services industry in Europe twitched nervously when the chairman of UK outfit Admiral Plc said it was investing heavily to strengthen their organization to cope with any change in market conditions. Services companies usually report a growth in earnings way in advance of other sectors and this year Admiral was no exception. Net profits bounded forward by 42.1% at 16m pounds on revenues that rose 25.5% to 147.1m pounds. What chairman Clay Brendish was reflecting was uncertainty about what the current year will bring. Will clients be so concerned at sorting out Y2K and euro issues that they will defer spending on longer-term projects? And will companies remain so confident that IT spending will bring large returns that they will be happy to commit a growing portion of their budgets to it? For its part, Admiral equates strength with size. It has always been an acquisitive outfit and Brendish says that strategic acquisitions are a vital ingredient in their growth plans. Europe remains a prime focus in their search for companies to join the Admiral group. This reflects current trends which show that Europe showed the fastest growth rate with revenues rising 46% to 35.9m pounds compared with a 21% rise in UK revenue to 104.8m pounds. A breakdown of Admiral’s revenues shows how it is vulnerable to swings in individual sectors. Government business raced ahead by 62% to 22.2m pounds and finance – which accounts for 43% of the total – showed a robust 33% rise to 64.5m pounds. But the defense sector showed only 4% growth and, while revenues from industry climbed 32%, those from commerce slipped by 3% to 21.6m pounds. Acquisitions which spread Admiral’s revenues both geographically and by vertical sector will leave it fearing less vulnerable to the uncertainties that lie ahead.
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