Compel reports £13m loss

'Brutal' market conditions blamed

Corporate reseller Compel has reported a loss for its preliminary year-end, blaming "brutal" market conditions and the disposal of parts of its business.

For its year ended 30 June, the firm made an operating profit of £4m before goodwill charges, related to the sale of some of its business and discontinued activities.

After these reductions it posted a loss of £13.4m, compared with a £2.1m profit for the same period last year.

The firm sold its Compelsource business to Specialist Computer Holdings (SCH) for £18.5m in March [CRN, 7 March], and now comprises Compelsolve and Hamilton Rentals.

Chief executive Neville Davis said: "Despite the difficult conditions, our current business made a profit. We are also cash-positive and well-positioned."

Davis said conditions worsened through the year, and July and August were very difficult. The usual September improvement did not appear, he added.

Chris Jones, senior analyst at Canalys.com, warned of further trouble. "Resellers have endured annual slowdowns when corporates reduce spending, but this year is particularly bad," he said.

VARs may have to fend off acquisitions by competitors while shares are low, he added.

Although the sale of Compelsource to SCH was agreed in principle in March, the firms are still engaged in negotiations over price, according to a source familiar with Compel.

Commenting on the ongoing talks, Davis said: "The process is under way. We have a difference of opinion on the final price."

SCH was unavailable for comment at time of going to press.

Separately, Horizon Technology has reported a turnover of 409.5m euros (£257m) for its year ended 30 June, but a total operating loss of 11.8m euros, compared with a 12.6m euros profit last year.

The company said it held up well in a volatile market, and expects restructuring initiatives to lead to it achieving its long-term objectives.