TABLE OF CONTENTS

INTRODUCTION: SOFTWARE AND COMPUTER SERVICES INDUSTRY 1!

1. SUMMARY SECTION: TELECITY GROUP PLC 3!

1.1. TELECITY GROUP PLC – ‘POWERING THE DIGITAL ECONOMY’ 3!

1.2. SWOT ANALYSIS 5!
1.2.1. STRENGTHS 5!
1.2.2. WEAKNESSES 6!
1.2.3. OPPORTUNITIES 6!
1.2.4. THREATS 7!
1.3. BALANCED SCORECARD 7!
1.4. INVESTMENT RECOMMENDATION 8!

2. DETAILED SECTION 10!

2.1. ACCOUNTING ANALYSIS 10!

2.1.1. KEY ACCOUNTING POLICIES 10!
2.1.2. ACCOUNTING FLEXIBILITY 13!
2.1.3. QUALITY OF THE COMPANY’S DISCLOSURES 14!
2.1.4. RED FLAGS 14!
2.1.5. ADJUSTMENTS 14!
2.2. FINANCIAL ANALYSIS 16!
2.2.1. PROFITABILITY 16!
2.2.2. LIQUIDITY 20!
2.2.3. EFFICIENCY 21!
2.2.4. CAPITAL STRUCTURE 23!
2.2.5. INVESTMENT 26!
2.3. CONCLUSION 27!

3. REFERENCES 28!

4. APPENDIX 29!

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TABLE OF FIGURES
Table 1. Balanced Scorecard Outcome .......................................................... 8!
Table 2. Analyst Report on Telecity Group plc ............................................... 9!
Table 3. Profitability Ratios, Telecity Group plc ............................................ 16!
Table 4. Operating Margin Ratio, Industry .................................................... 17!
Table 5. Net Profit Margin Ratio, Industry ..................................................... 18!
Table 6. Return on Capital Employed Ratio, Industry ................................... 19!
Table 7. Return on Shareholder's Funds Ratio, Industry .............................. 20!
Table 8. Current Ratio, Industry .................................................................... 21!
Table 9. Operating Leases, Industry ............................................................. 22!
Table 10. Asset Turnover Ratio, Industry ..................................................... 22!
Table 11. Deferred Revenue Y-o-Y, Industry ............................................... 23!
Table 12. Gearing Ratio, Industry ................................................................. 24!
Table 13. Interest Cover Ratio, Industry ....................................................... 25!
Table 14. Earnings per Share, Industry ........................................................ 26!
Table 15. Price Earnings Ratio, Industry ...................................................... 27!
Appendix 1. Share price development, SDL plc, 5 years ............................ 29!
Appendix 2. Share price development, Phoenix IT Group plc, 5 years ....... 29!
Appendix 3. Share price development, The Sage Group plc, 5 years ......... 30!
Appendix 4. Share price development, RM plc, 5 years .............................. 30!
Appendix 5. Share price development, Telecity Group plc, 5 years ............ 31!
Appendix 6. Data centre locations, Telecity Group plc ................................ 31!
Appendix 7. SWOT Analysis, Telecity Group plc ......................................... 32!
Appendix 8. Balance Scorecard Methodology ............................................. 33!
Appendix 9. Workings, Telecity Group plc ................................................... 35!
Appendix 10. Industry Ratio Analysis .......................................................... 36!
Appendix 11. SDL plc .................................................................................. 38!
Appendix 12. Telecity Group plc .................................................................. 39!
Appendix 13. Phoenix IT Group plc ............................................................. 40!
Appendix 14. Sage Group plc ...................................................................... 41!
Appendix 15. RM plc .................................................................................... 42!

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