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Campbell takes major stake at Kavanagh and seeks better times

Microscope contributor

Kavanagh managing director Rob Campbell has taken a controlling stake in the business as he seeks to put the recession behind it and return to profitability.

According to belatedly filed financials for fiscal 2009 ended 30 April, the specialist data centre integrator went into the red for just the second time in its 13-year history, losing £1.6m.

Sales slid 14% year-on-year to £24.8m, hit by the economic meltdown and in part by a change in accounting policy which means it can no longer recognise support contracts as revenue.

"The downturn took us by surprise," said Campbell, who has increased his shareholding from one third of the business to just over 50% after providing a director guarantee required to renew its banking overdraft, due to expire this month.

The change of ownership will result in Kavanagh's two other directors Dave Shlackton and Anthony Head reducing their stakes, previously equal with Campbell.

There are just days to go before management can put fiscal 2010 to bed and while a surge in the fourth quarter may soften the "poor start" to the year, there are hopes that the uplift continues into the next financial and beyond early summer.

"We are seeing a return of large project activity...in some of those we've recently won we've been talking to the customer for 18 months and they had delayed for as long as they could," he said.

Management are forecasting 25% to 30% growth this year, in part by taking market share from rivals. It has taken chunks out of the high cost base that hampered it up until February to 90 employees and has also slightly reduced its reliance on HP.

"I am so confident in the future of Kavanagh that I have been prepared to put up a personal guarantee in order to get the long term funding required for growth plans," said Campbell.

Alan Norton, head of intelligence at Graydon UK, said Kavanagh needed to maintain open dialogue with the channel following a period of difficulty, "I can see them moving to more profitable times in the future."

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