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2e2 profits wiped out by for-ex conversions

Microscope contributor

Despite the relatively lower valuations of channel businesses in the current climate, acquisition hungry 2e2 has reiterated that it is "unlikely" to make its sixteenth purchase in the "near term".

This is not entirely suprising given the £1.87m loss the integrator posted for the 12 months to 31 December 2008. The £2.4m profit the company made from continuing operations was hit by a £4.29m charge for foreign currency transaltions.

Revenues rose 8.5% to £193.6m, but did not include the £10.5m from the purchase of Netstore in October.

At the time, Terry Burt, CEO at 2e2, told MicroScope that Netstore had represented the final piece of its services strategy and it appears that the situation has not changed, even in a bear market.

"The acquisition of Netstore completed the group's service offering and so it is unlikely that we will be seeking further acquisitions in the near future," said Burt in a statement accompanying the results.

"This will allow management to focus on optimising the business for the challenging market ahead." said Burt.

In July last year 2e2 sold Hamilton Rentals for £10m in a management buy-out and has now restructured and fully integrated the Netstore acquisition, bolstering its managed services, applications and infrastructure consulting business.

As part of the transaction, the group refinanced its bank borrowing with RBC Capital Markets and Barclays Bank, joining the syndicate of banks and members and private equity investors that have funded 2e2. 

Chairman Eric Priestley said the group had been "trading satisfactorily in most parts of the business" but added that the UK was in the midst of a recession that conditions were unlikely to ease this year.

"It is clear that 2009 will be a very difficult year. Whilst current trading is encouraging, the restructuring of the business following the acquisition has given us the opportunity to ready the business for the economic downturn," he said.

Other financial highlights included a drop in cash in the bank from £11.16m a year earlier to £3.7m, while bank debts were nearly £150m.

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