The company reported pre-tax profits of £400,000 at the end of December, but would have recorded profits of £10.6m had it not recognised the loss of future business with Hackney council in London.
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Ian Mitchell, an analyst with stockbroker Beeson Gregory, said, "This is the more prudent approach now that Hackney have terminated their contract with ITNet as these figures will have no real impact on their future business."
Mitchell added, "The bad publicity ITNet suffered surrounding the eventual loss of the Hackney contract hasn't helped but people realise that Hackney is a difficult council to work for. It will be interesting to see what happens after June when they move out of Hackney."
The company's annual turnover rose 21% in 2001 to £158.9m and only last month East of Scotland Water awarded ITNet a three-year, £850,000 contract to manage its IT server contract.
Graham Fisher an IT analyst with Bloor Research, said, "ITNet have a full order book, with steady business for at least another few years. They have a good reputation in the market places; they have a good business model and do make money. Because they have been honest with their end of year figures, it stands them in good stead for future business."