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Results for the Year Ended 31 December 2007


Newbury – 6th June 08 - 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 2007.

Financial Highlights

EBITDA* increased by 51% to £20.1m from £13.3m

Operating profits increased by 32% to £10.3m from £7.8m

Organic growth continues to be strong

Corporate Highlights

Acquisition of Compel Group plc

Establishment of UK and Netherlands managing directors and management teams

Strong growth in managed services

Completed the integration of UK businesses


Terry Burt, 2e2’s Chief Executive commented: “2007 was another strong year for 2e2 with excellent progress being made across the business. Our run-rate business was augmented by strong managed services growth and by some pleasing major
project wins, as 2e2 was recognised time and time again as an innovative and high-quality solutions and services partner. Compel, our latest acquisition, performed well and we are delighted to welcome their customers and staff into the organisation”.


*Operating profits before depreciation, amortisation of goodwill and exceptional items of £9.8m (2006: £5.4m).

Chairman’s Statement

Our robust and customer-focused strategy has ensured that we achieve high levels of organic growth whilst also strongly enhancing the size and calibre of our customer base.

Against a background of increased competition and tough market conditions, our performance demonstrates the importance of our commitment to innovation and an expanded overall customer offering, as the basis for long-term presence and attractiveness as a quality provider of IT solutions.

This is perhaps best confirmed by the acquisition of Compel and its successful integration into the business. Compel not only provides much-needed capacity in the Enterprise customer arena but adds substantially to our overall scale and to the significant skills and expertise of our workforce.

It is by increasing our skills and broadening our offering that we ultimately build our business and this is especially reflected, this year, in the strong growth of managed services. Our capabilities have served us well in dramatically expanding the size and quality of our customer base as the leverage we are able to bring to customer efficiency becomes evident.

Our ability to deliver in ways which add real value to our customers is fundamental to our future and I am delighted that we continue to receive not just industry awards and plaudits but repeat mandates as an endorsement of our excellent service.

Our capacity continues to grow – whether through dedicated technical skills or geographically – making us increasingly attractive to new customers both for our expertise and for our ability to handle their business in a timely and efficient fashion.

Most importantly, whilst undergoing significant growth, we have maintained our high service levels and have retained our all-important differentiator of remaining flexible and innovative. We continue to employ some of the best people in the industry, many with exceptional business and technical skills which allow us to deliver outstanding business advantage for our customers.

That all comes with real support – whether from Duke Street Capital or Bank of Scotland – in the financing of our business and its future growth. It equally comes from the very important ingredient in the business mix without which none of this would be possible, our people.

As we approach a turnover of £250m our headcount grows, but so too does our talent pool, and I want both to welcome all those who have joined us in the last year and to thank everyone for going ‘the extra mile’ for 2e2 – in so doing you also go that ‘extra mile’ for our customers and that’s what really counts.

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

Eric Priestley
Non-executive Chairman
2e2 Holdings Limited


Chief Executives Review

I am delighted to present our results for the year ended 31 December 2007.

Results
The Group achieved revenues of £203m for the year (2006: £143m): an increase of 51%. This strong growth results in part from our acquisition of Compel, which joined the organisation in late March. However, our organic growth also remained strong with revenue growth on a like-for-like basis being an average of over 10% p.a. during the past four years. In a challenging market, we are pleased with this performance.

Compel brought some strong skills and specialisations to 2e2. Their Oracle and PeopleSoft practice formed the core of our Business Applications Solutions offer which we have now augmented with a Microsoft Dynamics practice. Compel’s Technology solutions business has enabled 2e2 to expand from the mid-market into the mission-critical enterprise market, increasing significantly the depth of 2e2’s offers.

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

EBITDA before exceptional items increased to £20.1m (2006: £13.3m). Operating profit increased to £10.3m (2006: £7.8m). Operating margins before amortisation of goodwill and exceptional items increased to 9.2% (2006: 8.4%) reflecting the ongoing benefits of
the integrated business. Cash balances remained exceptionally strong at the end of the year.

Operational Review

There was one acquisition in the year, Compel Group plc, which was acquired in March. This business operated in complementary markets to 2e2. The higher-end mission-critical storage and server business forms a natural extension of 2e2’s data management practice and allows us to provide a broader range of services to customers spanning the mid–market to enterprise and encompassing data centre and mission- critical server solutions. Compel’s Oracle and PeopleSoft consultancy practice brought new consultancy skills to 2e2 at a time when we were seeking to enter this space, in order to support the growing demand for managed applications services as part of our managed services offer. We remain pleased with the operation of this business and believe it will form a key part of the offer going forward.

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 continuing to come through with some strong wins across the business including those between the newly-acquired Compel business and 2e2 Channel Islands.

We experienced particularly strong growth within our managed services business, implementing several broad-based solution and support projects for customers. Our Managed Services Centre and Network Operations Centre which we opened last year have proven to be an excellent assets, providing consistently high service levels from a scalable and professionally-managed centre.

Terry Burt
Chief Executive Officer


Consolidated Profit and Loss Account
For the year ended 31 December 2006

2007 2006
£’000 £’000
Turnover
Continuing operations
Acquisitions 130,567
72,635 143,114 -
203.202 143,114
Cost of sales (128,919) (84,681)
Gross profit
74,283
58,433
Administration expenses
(54,233) (45,149)
Operating profit before depreciation, amortisation of goodwill and exceptional items* 20,050 13,284
Depreciation (non rental assets)
Amortisation of goodwill
Exceptional administration expenses (1,291)
(4,244)
(4,223) (1,324) (2,563) (1,553)
Operating profit
Continuing operations
Acquisitions

6,785
3,507 6,801 1,043

Costs of fundamental restructuring
Net interest and other similar charges 10,292
-
(9,979) 7,844 (1,515) (4,455)
Profit on ordinary activities before taxation 313 1,874
Tax on profit on ordinary activities (965) (1,131)
Loss/Profit for the financial year attributable to members of the parent company
(652)
743


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

Consolidated Statement of Total Recognised Gains and Losses

2007 2006
£’000 £’000
Loss/Profit for the year (652) 743
Currency translation differences on foreign currency net investments (808) 155
Total recognised gains and losses related to the year (1,460) 898


Consolidated Balance Sheet
As at 31 December 2006

2007 2006
£’000 £’000
Fixed assets
Intangible assets
Goodwill 93,448 51,540
Negative goodwill - (252)
93,448 51,288
Tangible assets 11,710 2,247
105.158 53,535
Current assets
Stocks 8,076 5,450
Debtors: amounts due within one year 51,822 37,432
Debtors: amounts due after more than one year 4,385 3,810
Cash at bank and in hand 11,168 3,749
75,440 50,441
Creditors: amounts falling due within one year (39,111) (22,599)
Net current assets 36,329 27,842
Total assets less current liabilities 141,487 81,377
Financed by:
Creditors: amounts falling due after more than one year 122,795 65,554
Deferred income 15,441 11,282
Capital and reserves
Called up share capital 105 105
Share premium account 265 265
Other reserves 458 292
Profit and loss account 2,423 3,879
Shareholders’ funds 3,251 4,541
141,487 81,377



These accounts were approved by the board of directors on 16 May 2008


Publisher Contact Information:

2e2 UK Limited
01635 568000
info@2e2.com

Company profile of 2e2 UK Limited
Past press releases of 2e2 UK Limited.

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