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TWST: Can we begin with a brief introduction to Netstore (London: NES.L)?

Mr. Barry-Walsh: The Company was founded in 1995 offering online backup, principally, over the Internet. It had customer such as Logica, Cisco, and a number of other hi-tech companies. We've maintained that stream going forward. In 1998, a CEO was recruited to take the company public, which we did successfully in April 2000, raising $60 million. And with that came a new strategy, moving away from large companies to offer big boys toys to small boys SME’s. The only product that was actually ready on an ASP basis – was Microsoft Exchange. So, we signed with a lot of resellers and pushed hard on that. I think we spent $6m trying to establish a dominant position in what was believed by all to be a new marketplace, and got something like $5 million of revenue, so not a fantastic start. We pursued that strategy until mid-2001. It was becoming obvious that it wasn't going to be a very profitable line, at this point the CEO exited. I've been the Chairman throughout and I assumed day-to-day control. I was running another company up until then. We then decided to go back to our roots, high-value long-term contracts to blue chip companies. We also decided, we were going to look for acquisitions and partners. We made two acquisitions. One, to reinforce the Exchange area. Red Rock, which allows the sending of text messages through Outlook to mobile phones and uniquely mobiles can respond back to the desktop. We also bought out the managed service of QSP, who had gone into receivership. They have some prestigious clients in both the private and public sector. We acquired that in December 2001 and we have grown it very strongly. It gave us about $7 million of extra revenue and we've grown that business in the last 12 months to about $10 million. In addition we started a professional services business and that business has grown from nothing to about $3 million. So, there has been a big change, offering managed services to big companies again, and we have sold off the lower end SME business. We had about 600 customers, but I want to be down to about 40 customers by the end of this year. So we are going to grow by getting fewer customers.

TWST: What's your sense of addressable market size today -- and I am assuming it is UK focused for now?

Mr. Barry-Walsh: Yes, we decided to focus on the UK, because we feel the market is pretty big. On our next quarter, we reckon we will be turning over about $7.5 million. This will give us a $30 million run rate. We are hoping that we should be able to grow the business with some acquisition to about $150 million in 3-4 years. That's what we feel we can get out there.

TWST: Who else is going to be trying to grab some of that market share? Who is the competition?

Mr. Barry-Walsh: It is the big old guys who are out there. We are probably going to stand underneath their radar actually. There's EDS, ITnet and a few more associates, but they are not really scalable, i.e. they take over a single infrastructure and manage it, with some savings on the people. We can take some of the applications over and then just deposit them on to our infrastructure. Service - typically you do not get much from big suppliers; however our research show 96% of our customers get “good or very good service”.

TWST: Going forward, what will be your approach and criteria for considering acquisition opportunities?

Mr. Barry-Walsh: We want them to be managed services, selling to blue chips; ideally relatively local to our offices; ideally profitable or can be profitable in a short space of time; and a good cultural fit, i.e. they want to be acquired. Obviously, you don’t always get all of those criteria but those are the sorts of things we are looking for.

TWST: Is there a ripe environment at the moment?

Mr. Barry-Walsh: Yes I am getting a lot of enquiries but a good portion of them are software houses rather than managed services. It is very difficult to find people who have gained some traction, who aren’t losing an absolute fortune. So if some one is breakeven or close to it, that is attractive

TWST: How would you describe your game plan for the next 12 to 24 months?

Mr. Barry-Walsh: We are gunning for what we call type one customers, and that is characterized by them taking not one application but multiple services from us, which are over £1 million in total- or could be. Currently, we have only got two companies who are over a £1 million. We have got about 30 in the £100,000 to £1 million, and what we would like to do is make all of those potentially up to a £1 million with multiple services so that they are reliant upon it.