Original URL: http://www.theregister.co.uk/2002/05/13/azlan_profits_up_outlook_mixed/

Azlan profits up, outlook mixed

Expects £5m VAT clawback

By Drew Cullen

Posted in Channel, 13th May 2002 09:59 GMT

Azlan has had a miraculous year, increasing sales for its core networking equipment division, when vendors (except Cisco) and rival European disties are seeing sales tumble.

The company says that market conditions for the training business "remain challenging", but product distribution and services revenues are holding steady. It also anticipates a boost in the form of a rebate to the tune of £5m to cover overpaid VAT, in the current financial year

The company's completed its last FY on March 31, 2001with sales up 3% to £610.1 million (2001: £591.6m), a PBT up 14 per cent to £18.4m (2001: £16.1m), and and cash of £14.9m (2001: net borrowings of £2.4m). Azlan attributes this success to growing market share for its vendors, and against other disties - the vendors are cutting rosters, but Azlan retains all key networking franchises.

Product shifting accounts for the vast bulk of Azlan's turnover. The other two legs of the business are training and services. According to Cisco, both underpin the company's value-added distribution model. But they are also substantial businesses in their own right.

Training is not as big as it used to be, though - sales are down 9 per cent £42.7 million (2001: £46.9
million) and contribution also decreased to £4.2 million (2001: £8.0 million). Azlan reckons this is a good performance, against a backdrop of reduced expenditure on corporate IT training. Furthermore, the company says it has gained market share with its key MS and Cisco training franchises, and it thinks training budgets will bounce back. But when? In the meantime, Azlan has stripped out £4m of annualised costs from the training business.

Azlan's smallest leg is its services business, which gets most of its turnover from support offered around the product distribion division. Turnover was up to £22.9 million (2001: £18.8 million). Contribution has increased to £1.8 million from £1.6 million in the previous financial year.