Services swing boosts NSC Global in profitable FY12

London VAR posts big uptick in profit as sales grow eight per cent to £65m

VAR NSC Global posted another robust set of results in its 2012 fiscal year, with operating profit surging by more than a fifth on sales that grew eight per cent.

For the 12 months to 30 June 2012, revenue at the London-based networking and comms reseller increased eight per cent year on year to £65.3m. Operating profit grew 21.3 per cent to almost £3.3m, equating to a rise in margins from 4.4 to five per cent. Net current assets declined by about £2m to £9.2m over the course of the year.

Europe continued to be a key growth engine for NSC in FY12, with sales in the continent rising 23.6 per cent annually to £12.5m. Revenue generated in its homeland grew 5.2 per cent to £51.1m, while North America chipped in £918,178 – almost half the £1.7m the region provided in the prior year. Sales from the rest of the world increased almost eightfold to £830,490.

The directors' report for the year reveals that the Cisco Gold partner now has 299 staff, up from 222 at FY11 year end, and thrice the figure it employed "a few years ago". The directors add that, over the past few years, product has gone down in the sales mix from 87 to just over 50 per cent.

"The market is tough [and] we are seeing tougher commercial requirements from our clients; payment terms are being extended and margin pressure on traditional products increasing," adds the report. "However, we have also discovered that the willingness to engage in our new service offerings has increased and we have seen a [48 per cent] increase in [sales from] our Managed Resourcing Business Unit."

NSC's accounts for FY11 made the rather bold prediction that the firm would boost sales by 70 per cent in FY12, while this year's report adopts a more sedate tone. In the ongoing year the VAR is "expecting similar levels of growth, with a two per cent increase in gross profits".

"[There will be] an increased focus on cash generation, which will be the theme of the company over the coming three years, as we give time for our investments to mature."