4Projects plugs in to make a £590k profit

4Projects, the IT group offering construction project collaboration software via the extranet, has unveiled a healthy set of financial results, with pre-tax profit jumping from £140,000 to £590,000 in the year to 31 March.
Finance director Steve Nelson claimed that, while rivals BIW and BuildOnline have received significant venture capital funding, 4Projects took an alternative route to market.
After an initial investment of just £750,000, it has been trading profitably since the first quarter of 2001.
The latest figures show turn-over up to £1.6m (£1m). Nelson said there had also been an internal transfer of £240,000 of profit during each of the past two years.
Nelson said: "For the current year we've budgeting to lift turnover to £2.5m and at this point we are running to plan," he said. "Profit will be well over £1m."
4Projects was born from the Leighton Group, a loose association of software companies. Following the sale of one of Leighton's successful ventures (DomainNames, a registrar of dotcom titles) in December 2000, it used £400,000 of the money received to set up 4Projects.
Managing director Richard Vertigan was previously head of IT at Taylor Woodrow. "He had a vision of where construction IT could go. He came to us and we worked up his ideas," Nelson said.
"The initial money didn't see us to profit, so we put another £350,000 in, making £750,000 in total. Privately owned and run by five daft lads from Durham, we have neither debts nor venture capital to repay."
4Projects also has a different business model to its two main competitors. "They sell a perpetual licence for a big sum and follow this up with a smaller annual maintenance contract," Nelson said. "It's good for cash flow initially, but you have effectively mortgaged your future.
"But we took a different approach, which is much slower and harmed us financially in the short-term. We simply rent access. It means that a contractor such as Carillion doesn't need either hardware or software, only internet access and a PC browser," Nelson said.
"Our monthly revenue slowly rises as more customers come on board. We're not particularly looking to win customers from our competitors, but rather from the untapped market - only 25% of large construction projects use an extranet, so there is a lot of educating to do. The market is still warming up.
"We're bullish about winning a major share of the emerging UK market," Nelson added.