News

Newbury  – 25 June 2007 - 2e2, a leading provider of mission critical IT Services and Solutions, is today delighted to report its financial results for the year ended 31 December 2006.

 

 

 

 

 

 

 

 

 

 

Terry Burt, 2e2’s Chief Executive commented:

 

 

 

* Operating profits before depreciation, amortisation of goodwill and exceptional items of £5.4m (2005: £3.9m).

I am delighted to present our Annual Report and Accounts for 2006.  Once again, this has been a very successful year for 2e2. Our growth rates have remained strong and the business has rapidly established itself as a trusted and innovative partner for increasingly more sophisticated customers.

 

The trading performance remains good against a challenging market, with strong growth in revenues and profits and continued organic growth.  It is pleasing to note that many

customers have chosen 2e2 as their IT services partner over the past year, recognising the specialism, flexibility and stability offered by the Group.

 

The completion of the re-branding and integration project was a major step forward for the business and was achieved with minimal disruption to the organisation. As 2e2 had continued to increase the size and complexity of its customer engagements, it became

increasingly clear that our customers wanted a single contract and contact point for an ever-broader range of services. With the exercise almost complete, 2e2 offers that broader range of solutions and services from its specialist focused divisions, ensuring

that the highest levels of service are maintained at all times.

 

The opening of the new managed services centre marked a significant step in 2e2’s development, with customers able to access a broad range of joined-up 24/7 managed

services that cover all aspects of their enterprise. 

 

September saw the conclusion of the secondary financing round, with Duke Street Capital and I was delighted to join as Non-executive Chairman.  I’m also pleased that

John Loveland has agreed to remain on the board and continued to work alongside me. We are grateful for the continued support of Duke Street Capital and of our new banking

syndicate which has been formed since our refinancing. This includes Bank of Scotland, HSBC, Lloyds TSB and Alpstar, who are supporting the business through its next stage of growth. I must also thank Richard Connell and Gresham Partners for their support in the past.

 

2007 will be another key year for 2e2.  It has been a busy start to the year and we were pleased to acquire 100% of the share capital of Compel Group plc in the first few weeks. Compel forms a key step in the development of the Group, providing access to their

enterprise customer base and allowing access to a broader range of offers for our combined customers.

 

Over the coming year we will be launching some compelling industry specific solutions and specialisations that will generate additional business advantage for customers. We will also extend our application management services within our managed services

portfolio to include a comprehensive Oracle-orientated service.

 

 

 

 

We will continue to consider opportunities for acquisition as they arise, providing niche skillsets to augment our capabilities, and will continue our mission to provide a

comprehensive, value-enhancing and easy-to-access range of services and solutions to our customers.

 

Increasingly, 2e2 occupies a leading market position as an innovative provider of solutions and services and is rapidly becoming one of the most valued mid-tier IT Services organisations.

 

For further information please visit our website at www.2e2.com or email us at info@2e2.com.

 

 

 

I am delighted to present our results for the year ended 31 December 2006.

 

2006 was another strong year for 2e2, with the completion of our UK integration and re-branding project, an acquisition earlier in the year and continued strong organic growth. We also completed a secondary financing with Duke Street Capital which provides us with the backing to support the next stage of our development.

 

I would like to thank our managers and staff for their continued hard work and support over the past year in what has been a challenging period of change.

 

The Group achieved revenues of £143m for the year (2005: £11 2m).

 

Revenues from continuing operations increased by 54%. This strong growth results in part from the full-year effect of our 2005 acquisitions of our Jersey, Guernsey and Isle of Man operations, along with our storage and security practices TriSys and Yul Data Security.  However, our organic growth also remained strong, with revenue growth

on a like-for-like basis being 16%.

 

In January 2006 we acquired Kingswell Data Management, which has since been integrated into our Data Management division.

 

Our continuing excellence in execution, coupled with ongoing cross-selling successes, underpinned this performance with major projects delivered to British Airways, London

Borough of Barnet and Allen & Overy, amongst others.

 

We continue to benefit from good visibility of contracted, recurring revenues which underpin our position and are able to identify around 50% of the Group’s annual revenues

looking forward.

 

EBITDA before exceptional items increased to £13.3m (2005: £9.5m).  Operating margins before amortisation of goodwill and exceptional items increased to 8.4% (2005: 7.8%) as the benefits of the UK integration came through. Operating profits increased to

£7.8m from £5.6m.

 

Cash balances remained strong at the end of the year.

 

There was one acquisition in the year, Kingswell Data Management Limited, which was acquired in January from SunGard.  This business operated in the same space as our existing data management business, TriSys, and the two organisations were merged in

the earlier part of the year to form a strong UK specialist business line.

 

All of our businesses traded well during the year with a strong performance all round.

 

It was particularly pleasing to see the fruits of our cross-selling campaign within our Jersey, Guernsey and Isle of Man businesses, which resulted in several excellent wins on the islands. Already established as the leading IT services suppliers in their geographies,

we have now successfully introduced our Unified Communications solutions to the islands, resulting in a number of IP Telephony solution projects.

 

We also opened our managed services centre and network operations centre (NOC) in the latter part of the year.  This saw all our UK help desk operations coming together into one

state-of-the-art centre from which we deliver 24/7 proactive support to a large number of customers.  The facility is accredited to the highest standards (ISO 9001, ISO 20000-1 and ISO 27001), which provides peace of mind and security for our customers.

 

2e2’s vendor relationships continued to be strengthened during 2006, with the award of: HP Preferred Partner status in the UK; HP Computing Systems Specialist in the Netherlands, placing us within the top 25 enterprise partners in the country; Symantec

Information Integrity Partner of the year in the Netherlands; Network reseller of the year in the UK; and Microsoft Gold Certified Partner status in the Netherlands for networking

infrastructure solutions and advanced infrastructure solutions.

 

A major landmark during 2006 was the launch of our revised 2e2 brand and the amalgamation of all our UK businesses into a unified structure and operating model. This was conducted during the second half of the year and has resulted in clearer, easier-to access offers; an improved and simplified engagement for our customers; and a streamlined and scalable operational model. All of our UK, Channel Islands and Isle of Man businesses now trade as 2e2 and our Dutch and Belgian businesses will

move towards this model during 2007.

 

We will continue with our integration of the businesses through 2007, completing the amalgamation of our business and ensuring that we build an effective and scalable organisation.  This will involve embracing the differing cultures across the group and forming a unified 2e2 environment. As part of this we are also strengthening the

management team and have recently appointed two Senior Executive Managing Directors for the UK and Dutch businesses.

 

As we continue to grow, we will work to retain the culture of innovation, technical excellence and reliability that has underpinned our success to date.

 

In September 2006 we were delighted to complete our secondary financing round with Duke Street Capital, who replaced Gresham Partners, our VC for the prior three years. Whilst Gresham have been excellent backers for us, the time was right to move to the next stage of growth and funding. At the same time we engaged with our new lead banking partner, Bank of Scotland.  The participation of our new financial backers strengthens our position and provides us with the resource to underpin our next stage of growth.

 

We were also pleased to appear in the Sunday Times Virgin Atlantic Fast Track 100 table for the first time.  2e2 were ranked at number 24 but had the highest turnover in the top 30 by some margin and the fifth largest absolute increase in revenues in the

whole survey.

 

There have been some good customer wins over the past year, including valued orders involving Lloyds TSB (for an IP Telephony solution in Jersey, Guernsey and the Isle of Man), Carphone Warehouse and Acopia.

 

Our mission remains to develop the group into a provider of a broader range of services and solutions that can be accessed as a unified customer experience, and

increasingly as a managed service.

 

Our continual focus on innovation and technical excellence has resulted in several landmark successes in the year.  Microsoft appointed us as one of only three partners in the UK with whom they are working on their new Unified Communications solutions, integrating IP communications with the Microsoft architectures. Additionally, Cisco

appointed 2e2 as one of three partners in the UK who are providing their TelePresence conferencing technology.

 

Finally, in the weeks following the reported period, we were pleased to announce our cash offer for the entire issued and to-be-issued share capital of Compel Group plc.  The acquisition of Compel will be significantly accretive to 2e2 and creates a significant £250m IT services and solutions organisation.  It opens up Compel’s large corporate customer base to 2e2’s specialisations and Compel’s high-end mission-critical

solutions, Oracle consultancy and rental services to 2e2’s customers.

 

 

 

* Non-statutory disclosure, presented for supplementary understanding of the financial statements.