Trustmarque in charge of own destiny after 2010 revenue fall

York-based reseller reveals it is in talks with two targets in the cloud space

Trustmarque claims the recent refocusing of its business has left it as the "master of its own destiny" and has revealed it is on the look-out for cloud-based acquisitions.

The York-based reseller's recent decision to exit Microsoft sell-through activities left its mark on its 2010 top line as revenues sank 12.3 per cent to £107.7m.

Pre-tax profit for its fiscal year, which ended 31 August, also dropped 12.3 per cent to £3.4m, which Trustmarque attributed to a staff investment push that saw its headcount swell from 106 to 123 during the period.

However, chief executive Scott Haddow said that Trustmarque's decision to diversify from its roots in volume licensing and invest in services had left the business in a "fit and steady state" for years to come.

The revenue shortfall is entirely attributable to its exit from the Microsoft third-party services game, which generated about £17m turnover, said Haddow.

Trustmarque will also be a beneficiary of the upcoming changes to Microsoft's rebate structure that were recently commented on by fellow LAR Insight Enterprises, Haddow argued.

"We view [the Microsoft rebate change] as a very positive thing," he said. "It was a nice gravy train when everyone was on it but anyone who says it was a surprise or who hasn't adapted their business model is a bit late.

"18 months ago we started the journey to ensure we were the masters of our own destiny and dependent on our own income generation and customer relationships, rather than living off the back of someone else's. We have completely transformed our business model to suit any changes from the vendor community around rebate structures."

Trustmarque's services and solutions arm, Enterprise Solutions Group (TESG), posted revenues of £7.1m last year, generating 15 per cent of gross margins.

Haddow stressed TESG's gross margin contribution had almost doubled this year to hit the late 20s. "Our expecations for this financial year is to have significant growth in gross margins and net profit and we will continue to invest in our business and attract more people," he said. "We are on plan at the half-way point."

Haddow also revealed that Trustmarque is currently in talks with two cloud acquisition targets with a view to closing a deal in the coming weeks.

"If we are not looking to advance our business into that area we will be missing an opportunity," he said. "Had we not transformed ourselves from being a volume reseller two years ago we would be in a very precarious position today. The next compelling event we can see is the advent of cloud computing technology and we are taking steps to ensure our customers have the opportunity to go down the cloud route if they choose."

Haddow stressed that Trustmarque's private equity backers, Lloyds Development Capital, remains "very supportive" and has agreed to bankroll further acquisitions should the right targets arise.