Bullish Trustmarque open to “transformational” acquisition

Trustmarque has not ruled out making a "transformational" acquisition this year after strong services growth fuelled an annual profit spike for the software VAR.

The York-based firm saw pre-tax profit for the 12 months to 31 August 2011 increase 36 per cent to £4.6m, as revenues rose seven per cent to £115m. This is a far cry from the previous year, when both revenue and profit dropped.

Talking to ChannelWeb, Trustmarque chief executive Scott Haddow said the results were underpinned by a surge in its services business, which almost trebled to £19.6m.

"This marks the end of the turnaround of the business and gets us much more akin to what we set out in our strategic plan nearly three years ago," he said.

"The reason we have been successful is that we have stuck to our core message of helping organisations take out cost and increase efficiency. And we have reached a tipping point in that customers now see us as a credible service provider."

Trustmarque's headcount rose from 118 to 170 during its fiscal 2011, and it now stands at 190.

Although the plan for 2012 is to "scale what we've got", Trustmarque has access to private equity backer Lloyds Development Capital's deep pockets should the right acquisition target should pop up, said Haddow.

"If we do something, it will be transformational and a similar size to Trustmarque," he said. "Of course, the investment case has to stack up, but we have the verbal backing of Lloyds if there is something we feel could enhance Trustmarque's brand."

Sales and marketing director Angelo Di Ventura added: "We are very strong in asset management and technology deployment. If there were an area we were looking at, it might be in datacentre skills. It is difficult to build those skills quickly."

Trustmarque claimed its efforts to help public sector organisations deliver optimum value on IT investments typically yield savings of 25-30 per cent.

Di Ventura said this chimes perfectly with the agenda of the new government procurement team.

"We are expecting growth from the public sector in this year's plan," he said.

"The old stance was to look for partners to drive revenue through a framework, but this government doesn't buy that at all. There is a big drive to demonstrate cashable savings versus a baseline of 2009 or 2010."

Last year's acquisition, cloud services outfit Nimbus, generated just two per cent of Trustmarque's services revenue and Haddow admitted it was a "defensive move".

"When we bought it, we were very clear it wouldn't give us a big lift," he said. "It was more about setting a path for the next two to three years when we will hopefully see a tipping point in cloud services and will therefore have access to intellectual property."