ITNet in Cabinet contract blow
Shares crash as £83m deal cancelled
ITNet shares fell sharply today on news that the Cabinet Office has cancelled an £83m Web hosting datacentre contract with the company. The contract, due to last five years, was signed last July but the Cabinet Office said it had cancelled because the company had failed to meet a series of deadlines.
ITNet warned that the loss would hit margins for the year. Shares fell 30 per cent to 192p. A statement on ITNet's website says: "ITNET is extremely disappointed to receive this communication in circumstances when it is making good progress in delivering the contract in accordance with milestones revised to reflect significant changes to the customer's requirements."
To date, ITNET has spent £15.2 million on the fixed assets of the Datacentre (for which it has received a pre-payment of £5 million), approximately £10 million on the implementation of the Datacentre, and has made further commitments in relation to software maintenance and other contracts." The statement also said the original contract allowed reimbursement for funds spent and committed. ®