Record interim results from IT service provider ComputerLand show 20% growth in contracted services and pre-tax profits up 21% to £900,000. Chief executive Graham Gilbert argues the current trend for mid-sized companies to outsource IT services will continue to be a good supply of revenue. Turnover dropped 4% to £25.7m due to a 15% price deflation for IT hardware, offset in part by a 5% rise in project services. Gilbert predicts a revival in project services as demand has returned after two-to-three years of holding back and also by Microsoft's 'carrot and stick' approach of promoting its MS 2003 server, while ceasing MS NT support in December '04. ComputerLand is now targeting the public sector, with 40% of the UK market. Customers include Manchester City and Solihull councils. Net cash at end-October was £6.1m. The interim dividend has increased 23% to 1.35p per share in line with the company's 'unofficial policy' of paying a third of all profits. House broker Charles Stanley forecasts profit before tax will rise to £1.8m for 2004. Revenues are expected to remain flat in the current half, but Gilbert confidently expects revenues, especially from outsourcing, to build up strongly next year. Buy.