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Westcoast parent files results for 2007

Paul Kunert

The level of borrowing required to fund acquisitions dramatically dented the profits achieved by Westcoast parent Kelido in 2007.

According to results for the twelve months to 31 December 2007, group revenue rose to £683m from £581m a year earlier but profits after tax more than halved from £973,000 to £435,000.

In December last year Westcoast acquired reseller-come-distributor XMA and as part of the purchase it secured a £145m syndicated borrowing facility.

"2007 has demonstrated the Group's continued ability to deliver profitable growth in a challenging environment. Trading profitability has been impacted by the increased cost of borrowing in funding acquisitions," said the firm's directors in a statement.

The balance sheet shows that bank loans increased to £41.5m compared to £17m and other loans had risen £4.1m to £8.7m.

"Within an aggressively expanding Group the unrelenting focus on operational efficiencies and cost base has ensured an industry leading level of operating expense of 3.4%," the statement continued, adding op-ex was 3.3% in 2006

Gross margins fell in the year from 4.38% in 2006 to 4.29% demonstrating the significant pricing pressure that has occurred in the volume channel. Stock holding rose from £29m to £51m.

The group includes Westcoast, Westcoast Commercial Services, Clarity Computers in Ireland, Orion Storage Solutions, XMA Investment, XMA Holding and XMA Ltd.

Only two weeks of trading by XMA (£11m) in December was including in the Group's results. In the year to August 2006 - the last accounts released - XMA achieved revenues of £199m.

Duncan Forsyth, managing director at Westcoast, said that while the market in 2008 was "challenging", there were "opportunities" and he expected the run rate for the Group to be closer to £1bn by close of the year to 31 December 2008.

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