Annual Report and Accounts 2007/2008

The principal activity of the company during the year was the provision of quality Information Technology, Communications and e-business Human Capital solutions to Blue Chip Clients both Nationally and Internationally.

IT Human Resources plc's core business is the provision of contract staff resourcing, permanent recruitment and retained search recruitment to Blue Chip Clients in some 20+ countries worldwide. ITHR Consulting Ltd (a wholly owned subsidiary) provides consulting services focussed on IT project governance, project and programme management and software development and integration, predominantly to the Telecommunications Internet Services sectors.

IT Human Resources plc is a proudly independent organisation, wholly funded, owned and managed by the Directors and Employees of the Company. All growth since our inception in 1999 has been achieved organically and has been driven by our quality ethos in all of our business dealings with all stakeholders; be they with our customers, candidates or suppliers and by our desire to succeed in a spirit of true partnership.

Our aim is to innovate our marketplace with total professionalism whilst being flexible enough through our independence not only to meet but exceed our Clients' expectations.

Now in a landmark 10th year of trading I am pleased to present IT Human Resources plc's 9th annual Group Report and Accounts for the year ended 31st March 2008 – another record year for us.

I am delighted to report that the challenges (2006) and the strategies (2007) adopted by the board and outlined in my previous Annual Reports have finally paid dividends as evidenced in these 2008 Report and Accounts, and in the continuing operations in the first half of FY2008/09. In the last report I described FY2006/07 as a year of “re-organisation, holding and building” and that the benefits of a heavily invested in and the re-positioning of both Companies would be seen in FY2007/08 and beyond.

I am proud to say that this is exactly what happened.

Turnover for the combined group increased some 48% in the year to nearly £13.2m and profit before tax increased in excess of 1,000% - a record turnover and profit growth for the Company which outperformed all but the very most optimistic of Company forecasts. Individually our Recruitment Services business turnover climbed some 42% to £9.4m and our Consulting Services business increased some 67% to £3.7m, again record performances. Gross operating margins for the Group increased some 81% to in excess of £3.4m and we enjoyed a net increase in cash for the year in the region of £1.7m providing us with a solid liquidity platform to fund our expansion plans in 2008/9.

In short our FY2007/08 was almost entirely great news with a number of new contract wins plus a large number of repeat and increased contracts/orders with existing key Clients which has built a platform for continuing growth in FY2008/09. Indeed, the ongoing business growth and continuing operations of the ITHR Group lead me to predict that turnover and profit yields will continue to improve and therefore confidently forecast a further record performance in the current year with turnover anticipated to be in the region of £19m at the lowest end of our expectations and £21.5m at the upper end of our expectations. Profit before taxation, although there may be some exceptional items to be considered in relation to a proposed office relocation in order to accommodate proposed expansion plans, we expect to grow directly in line with turnover growth.

However, despite our optimism for our own medium term growth we are very mindful of the very real and potentially very immediate threats of the world financial turmoil or so called “credit crunch” and the potential Global fiscal and economic contraction which have been in every news headline since the summer and its potential impact on our businesses. As a Company statement all we can comment on is what we believe will materially affect our business in the coming year. Given our intimate knowledge of our Client portfolios our answer to that is that we do not believe it will affect our performance or turnover or profit increase forecasts in the current financial year, but as a Bond film was once entitled “Never Say Never, Again” we once predicted this before and it failed to materialise.

An economic downturn (if it is not excessively deep or lasting) can be viewed very much as an opportunity to those Companies who are agile and financially strong. During the economic turmoil that followed the events of 9/11 and the Dot.Com bubble burst ITHR, as a profitable and agile organisation, experienced record years of growth where many of our larger competitors contracted, were acquired or ceased to be. Having experienced that period we would view a similar short term economic downturn in 2008/09 as a likewise opportunity.

Finally, I would like to further comment on our independence and future plans for the coming year. As our consistent Company message boasts ITHR is a proudly independent Company built on totally professional ethos and backed with a solidly funded balance sheet and consistent profitability through our entire lifetime.

Our stated objective in the coming year, against a backdrop of well publicised “economic uncertainty”, is to use our financial strength to continue to build our business streams. Being financially very strong this puts us in a unique position to take any advantage from any opportunity that may present itself, be that through organic internal and external growth and additionally by utilising our very strong cash positive position to take advantage of any competitor “troubles” - be this by purchasing a consultant book or portfolio or by acquiring in their entirety a competitor which would seamlessly integrate into our existing operations.

Therefore in summary we see our opportunities and, ergo our possible strategies for growth in the coming year(s) to be threefold: internal organic growth through the expansion of our London HQ, external organic growth by the creation of a second or third office(s) - or trading subsidiary(ies) - outside of London for our Recruitment Services business and growth by book or competitor acquisition. All of these are genuine opportunities for ITHR Group in the coming year. Our Consulting Services business growth will most definitely come from expanding out of its current base of Clients and by moving into new market sectors in which its core competencies’ excel.

Sean Gallagher
Managing Director