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Viglen's off the page ban pays off

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Viglen PC unit shipments eased "only" one cent for the six months to 31 December 1998, compared with the same period in 1997, despite a move away from off-the-page sales into higher margin networking. Like is not being compared with like -- the London computer builder's equivalent trading period in 1997 was only five months long. Nevertheless, Viglen's strategy to turn itself from a computer builder into a full-blown value-adding computer dealer is beginning to pay dividends. Viglen's off-the-page busines will represents less than ten per cent of the company’s turnover for the current financial year, chairman Alan Sugar revealed. "During the run-up to Christmas we continued with our policy of not focusing on low margin cash sales by not advertising off-the-page. This policy most certainly paid off. Sales in the first half were down on last year but were offset by substantial cost savings," he said, in a statement. "Viglen cash sales division will continue to offer PCs to second time knowledgeable buyers where price is not the criteria for purchase." Sales for the interim period were £47 million (1997: £40.2 million) and a pre-tax profit of £2.5m (1997: £1.8 million). The company recorded exceptional costs of £300,000 related to the takeover of the company last year by Amshold, Sugar's wholly-owned investment vehicle. Helpfully, Viglen breaks down its sales by market sector. Education sales were £17 million, up nine per cent on 1997. Viglen forecasts strong growth in this market, on the back of interest shown in the company's Classlink software package. This should translate into installations and sales in the summer months -- after Viglen's next year end. Corporate sales were £11 million, 7.6 per cent down on 1997. Sales in this sector were "slower than expected". However, the acquisition last year of Xenon (a networking reseller bought for peanuts from Datrontech) has helped "grow our solution sales into corporates which continue to grow in line with expectations". Public sector sales accounted for £8.7 million in the first half, 11 per cent up on the same period in 1997. Indications for February and March -- the key buying season for the UK public sector -- are "positive". Networking sales now account for 14 per cent of Viglen's group turnover, up from nine per cent at the end of the last financial year. It is unclear from Viglen's statement whether there is an element of double counting here, as the company sells networking into education and corporate sectors, through Xenon Networking Services. This division made a "small contribution" to group profits. ®

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