InTechnology results baffle analysts

Distribution arm's health queried

The latest results from storage distributor InTechnology have provoked a mixed response from the industry.

While InTechnology hailed the success of its online storage business, analysts queried the health of its distribution arm.

As vnunet.com's sister publication Computer Reseller News went to press, InTechnology's share price was at a 12-month low.

The company's financial announcement for the year ended 31 March 2002 showed that turnover had increased to £158.1m from £122.4m in the previous year.

Reported profit grew from £15.5m to £22.4m this year. Of this, the Online Data Service (ODS) division generated new revenue of £7m and reported contract wins worth £22m.

Peter Wilkinson, chief executive at InTechnology, said: "The growth of our online storage division is very encouraging."

However, analysts pointed out that the previous tax year was recorded from 24 June 2000 to 31 March 2001, just nine months. Compared with the same period last year, the firm's profit actually fell from £13.23m to £13.18m.

Analysts suggested that, when the growth of the ODS division is taken into account, the distribution business deteriorated significantly.

One financial analyst said that the figures hid the real trouble faced by InTechnology. "I don't understand how its balance sheet is presented, and I have been a chief accountant for years," said independent financial analyst Ian Percival.

According to Percival, In-Technology's claims for its level of profit involved taking a selective view of earnings and costs.

Figures in the chairman's statement showed a net loss of £82.5m. Of this, £72m was accounted for by new accounting rules on goodwill and amortisation of acquisitions, leaving a net loss of around £11m on InTechnology's trading.

Bryn Sage, sales director at InTechnology, defended the results, insisting that the company performed well in a tough market.

"Our figures reflect the storage market and its underlying strength. Our losses were only the result of heavy investment in the ODS division," he said.