In the UK, Energis has maintained strong growth in market share with increasing profitability and reported its first pre-tax profit. Abroad, our businesses are at an earlier stage of development, but are rapidly building their position and we are confident we will track the same evolution to bottom line profit that we have shown in the UK.
Energis’ business continues very much on plan and is well on course to achieve its goal of being Europe’s leading e-business and telecoms solutions company. Looking ahead, we see continued strong growth in demand particularly for the higher value-added data, internet, complex hosting and e-business services. We are confident that for the current year and beyond Energis will deliver further significant gains in market share at increased margins.
David Wickham, Chief Executive designate of Energis, said:
For the sixth year running, Energis has delivered sales growth of over 70% with internet and related services more than doubling. Together with advanced services, these sales now account for 70% of total revenues, demonstrating our low dependence on the commoditising segments of the business telecoms marketplace.
Our UK business maintained its strong momentum with revenues up 54% to almost £684 million and EBITDA up 71% to almost £170 million as we further leverage our fixed cost base, secure continued reductions in sales, general and administrative expenses as a proportion of revenues and protect our gross margins through our value-added sales mix. The result is that UK operating profit before amortisation almost quadrupled to £66.4 million, earnings before interest and tax grew almost five times to £47 million, and we recorded our first full year positive pre-tax profit.
Our Continental European revenues more than tripled to £156.7 million and now account for 19% of Group turnover, a proportion which is set to increase markedly. The mix of our overseas sales also improved sharply, with higher margin services growing from 19% to 48% of revenues. In Germany, we have transformed our position with the acquisition of Ision, which is a leader in complex hosting and e-business services and has a blue chip customer base. Our results include only £14.3 million revenue from Ision for the two months since its acquisition, but the process of integration is well advanced and we are confident of securing the £10 million projected cost savings this year. We are also confident Ision will help both propel the position of Energis Deutschland and add to our group momentum with its advanced suite of internet-based services, which dovetail with Energis Squared, its sales and technical strength and its complementary network of internet data centres.
In the UK, we see further benefits to both sales and margins from a continuing improvement in our business mix and from our programme of connecting to BT’s digital local exchanges, the switching of voice services over our IP network, the fall in the wholesale cost of private circuits and our continued ability to leverage our fixed cost base. We also believe that, by Autumn, OFTEL will determine a wholesale regime for running DSL services over BT’s local loop, which will open up new opportunities particularly in the small and medium-sized corporate sector and further improve our ability to deliver our services to all the sites of our major corporate customers.
The steps we have taken, since our entry into Continental Europe in September 1999, will enable us to build our position in Germany and the Netherlands and further develop our internet data centre entry position in neighbouring countries. On 26 June, we also look forward to the official launch of Energis Polska, our joint venture with National Grid in Poland. While our overseas businesses are at an earlier stage of development, we are confident of building them rapidly and generating strong positive EBITDA growth over the medium term.
In a parallel statement issued today, Energis announces that Mike Grabiner will retire as Chief Executive as of 31 July and that David Wickham will become Chief Executive of the Group from 1 August 2001.
As well as our substantial business and financial progress, we are today announcing a key management succession. Mike Grabiner, who has so successfully led Energis since before its flotation, has announced his decision to retire on 31 July 2001 in order to pursue a new direction in his future career. It is with great regret we accept Mike’s decision, but it is one he has only taken knowing that Energis and its management team are in the strongest shape to continue its growth momentum, I am delighted to welcome David Wickham as his successor.
