Skillsgroup figures vindicate focus shift
Results Following sell-offs, reseller hints at drawing on funds to boost enterprise unit.
Skillsgroup's decision to metamorphose from a product-based reselleroost enterprise unit. into a services provider has yielded a swift improvement in the company's financial fortunes.
Preliminary results issued last week showed that Skillsgroup had reversed a #16.3 million loss before tax in 1997, reporting a #14.4 million pre-tax profit for the year ended 30 November 1998.
But the company is prepared to eat into its cash reserves to increase its enterprise systems business by considering a number of significant acquisitions.
Skillsgroup currently has a net cash balance of #34.1 million. But sources claimed that over the next 18 months, as much as #70 million could be spent on purchasing private companies, primarily in the areas of enterprise systems consultancy and technical training - even if some of that money will have to be borrowed.
David Southworth, executive chairman of Skillsgroup, refused to confirm exactly how much the company is prepared to allocate to acquisitions, but said: 'The board recognises that the next stage of Skillsgroup's development will depend on our ability to grow our businesses consistently.'
He added: 'We have identified a number of suitable acquisition targets, which would improve the profitability of the group.'
Skillsgroup has already made one such acquisition. In November 1997, it bought ISL, a provider of business intelligence systems, for #2.9 million.
Driving Skillsgroup's turnaround in 1998 was the sale of its five product businesses - P&P UK Desktop, P&P Sweden, P&P Rentals, P&P Belgium and Acuma PSL.
The sales contributed #53.7 million to Skillsgroup's cashflow during 1998. According to officials, these divisions are the last of the reseller's non-core businesses to be hived off.
ISL has since been folded into Skillsgroup's Acuma operation, which is principally involved in the provision of enterprise systems.
QA, Skillsgroup's other core business, is targeting resource management, providing services to large commercial and public sector organisations.
Skillsgroup used the release of its financial results to announce the departure of John Atkin, long-serving group finance director. Atkin will be replaced by Colin Gibson, former group financial controller.
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