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Action halfway to £500m target

Selective acquisitions planned (as opposed to non-selective acquisitions unplanned)

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Action Computer Supplies Holdings reported its 1998 results, ramping up turnover by 45 per cent to £250 million, but still way short of meeting its stated ambition to be a £500m company by the year 2000. Financial director Ian Wakelin said the objective still stands, although the timetable may have changed, but given the 45 per cent growth rate this year, Action is still be on the acquisition trail. “We’re actively looking for companies but don’t expect to see anything happen in the short-term,” said Wakelin. Chairman Henry Lewis said that Action is seeing the benefits of its recent acquisitions, and he confirmed that while the Board expects continued organic growth, “it intends to pursue further selective acquisitions." Pre-tax profits were up 39 per cent to £7.7 million and retained profits after a £990,000 exceptional charge inched up to £3.2 million from £3.1 million last time. Excluding the effect of acquisitions, the company increased network sales by 38 per cent, software sales are up by 45 per cent, PC sales by 19 per cent and e-commerce activities trebled over the year from £6.4 million to £19.2 million. Lewis said the IT market has shown good overall growth during the year, and against negatives trends like falling PC prices, he cited positive growth areas like internet usage and e-commerce. Action said its large base of customer’s order frequently from a widespread range of products, and the customer base grew to 86,513 from 71,680, including the effect of two acquisitions, Fraser Associates Plc in October 1997 and the beleaguered SHL Reseller Division in May 1998. Both acquisitions were almost entirely for cash and funded by a £8 million four-year term loan. Fraser Associates cost £3.5m, SHL Reseller Division was £7.9m and the goodwill amounted to £2.9m and £5.7m respectively. Wakelin said the growth in Action’s customer base was almost entirely from the organic businesses, expanding at around 300 customers per month. At the interim stage Action stated that a reorganisation provision of £1 million was anticipated for the SHL purchase, which almost spot-on since the final charge was £990,000. Both Fraser Associates and the SHL Reseller Division are now integrated into one division, and Action said its rationalisation of facilities and computer systems is on target with benefits expected throughout the current year. The company shed around 47 staff in July, closing two of three warehouses and one of two configuration centres.®

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