Turnover grew from £49.2 million to £86.4 million. This is an increase of 75%, including the effect of acquisitions. The growth in revenues excluding those derived from acquisitions in 2000 was 37%.

Operating profits (before goodwill amortisation and exceptional items) were £17.1 million, an increase of 65% over the previous year (£10.4 million). The Group operating margin (before goodwill amortisation) was, as planned, reduced from 21.1% to 18.7%, which reflects the accelerated investment programmes, the impact of exceptional rationalisation costs following acquisitions and the initial losses of the web-hosting business. This does not imply any reduction in the underlying profitability of the existing streams of business within the Group. Excluding goodwill amortisation, exceptional costs and the initial losses of the new web-hosting division, the operating margin increased to 21.2%. The operating margin for the business continuity business was 22.1%.

Net interest (which consists of interest on bank borrowings and finance leases, less interest received) increased from £2.1 million to £3.9 million. This reflects the costs of acquisitions made in 1999 and 2000, which were partially funded by the £128 million (net) rights issue and £33 million (net) share issue.

Interest cover (before goodwill amortisation) was 4.2 times compared with 5.0 times in the previous year. This is considered by the Board to be prudent and is well within our banking covenants.

Group profit before tax (and before goodwill amortisation and exceptional items) rose by 59% from £8.3 million to £13.2 million. Excluding a £1.3 million loss from web-hosting, profit before tax (and before goodwill amortisation and exceptional items) rose to £14.6 million, an increase of 75%. The Group profit attributable to shareholders (before goodwill amortisation) was £8.3 million, an increase of 52%, compared to £5.6 million in the previous year. Before web-hosting losses, this was

£9.2 million. Basic earnings per share (before goodwill amortisation) were 13.8p, compared with 10.4p (post rights issue adjustment), an increase of 33%. Excluding the effect of exceptional costs, this was 14.9p per share, an increase of 43%.

The total value of new business and renewals written in 2000 was £101.6 million, which was a 55% increase on the 1999 total of £65.4 million. However, as anticipated, the rate of market growth in our traditional and more mature UK computer backup sector has lessened. In contrast, the UK City and regional workplace and dealer room markets have continued to grow strongly and this is where much of our selling activities and capital expenditure are concentrated. In addition, our European markets for computer backup, workplace and dealer rooms, which are less developed than the UK, are also experiencing higher growth rates, which we continue to exploit. This endorses our strategic decision over the last three years to move strongly into mainland Europe and to broaden our service range from disaster recovery into business continuity and other high growth sectors.

The average length of our UK contracts in 2000 rose to over 36 months, from 34 months, demonstrating our customers’ solid and increasing commitment to business continuity.

Contracted Revenue

Forward contracted revenue is one of the most significant growth indicators in our business, being our outstanding forward contracted order book, assuming no renewals and no new business. Once again, it is at a record level of £178.1 million at 31 December 2000, compared with £103.2 million a year earlier. This is an increase of 73%.

Cash Flow

The company continued to produce an excellent level of cash inflows, with a net inflow of £30.2 million from operating activities, a 50% increase on the 1999 inflow of £20.1 million.

Capital Expenditure

Capital expenditure (excluding acquisitions) reached record levels at £28.2 million, which was 55% up on the previous year, and over three times the expenditure of 1998.

The Board remains committed to high levels of capital expenditure, invested in the right sectors, since this is an essential driver of new business growth.