ITNet reveals bumper profits for 2003 and Nats contract extension

ITNet, the largest provider of IT services to local government organisations, has announced profits of £17.7m for 2003 and a new...

ITNet, the largest provider of IT services to local government organisations, has announced profits of £17.7m for 2003 and a new £8.1m contract with the National Air Traffic Control Service (Nats).

The company now has £181.4m worth of contracts with local government bodies, a number that was boosted by a series of deals last year, including a £36m contract with the London Borough of Richmond and a £25m agreement with East Sussex County Council.

ITNet also made inroads into central government during 2003, the highlight being an £83m datacentre hosting deal with the Cabinet Office - its largest single contract win.

The company attributed its strong financial performance in 2003 to that deal and its strategy of targeting growing sectors.

"Our strategy of investing in areas of the business, which we believed would show growth, has paid off," said Bridget Blow, chief executive at ITNet. "We have strengthened our leadership in services to local government and have established ourselves in central government with the Cabinet Office win."

ITNet signed a contract with Nats in the first half of 2003 for the support of back-office IT systems, which include purchasing, finance, marketing and HR. It has announced an £8.1m extension to the deal, designed to cut IT costs and improve service.

The services sector also proved fruitful for ITNet during 2003, achieving 14% revenue growth with additional business from existing customers such as Powergen, Bristol Water and Scottish Water.

ITNet was at the centre of controversy in 2001, when a £70m IT services contract with Hackney Council was terminated, following a catalogue of problems including a backlog of 17,000 housing benefit cases and council tax collection rate of only 50%.

There were no similar reported calamities in 2003, although in February, Computer Weekly revealed that Islington Council was paying ITNet more than £2m to end its troubled housing benefits contract with the company.

The council took the administration and management of the housing benefit service back in-house in May, although ITNet will provide backroom IT systems and support until 2005.

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