'Extreme caution' this year for nscglobal after FY13 declines

Accounts show run-rate sales and profit taking a big hit but VAR says pipeline looks 'phenomenal'

Cisco Gold partner nscglobal will be exercising "extreme caution" in executing its growth strategy this year after an FY13 in which profits and run-rate revenue took a nosedive.

Recently published accounts for the London-based VAR show that sales for the 16-month period to the end of October 2013 stood at £73.2m. On a prorated basis this represents a decline of more than £10m on the prior year's £65m figure. The firm's FY12 net profit of £3m was more than cut in half to £1.4m.

Nscglobal generated £55.3m in sales – just over three quarters of the FY13 total – in this country, with the rest of Europe providing £16.75m (21.7 per cent). With sales of almost £700,000, North America was the principal generator of the £1.17m in turnover the VAR accrued outside Europe.

The company's sales mix tipped slightly back towards product in FY13, although it maintains a fairly even split between product and services.With revenue of £38.8m, product accounted for about 53 per cent of the top line, while services sales of £33.6m equated to almost 46 per cent of turnover.

In previous years nscglobal's directors' reports have tended towards loquaciousness and eyebrow-raising predictions – such as the FY11 report in which it boldly forecast 70 per cent growth in turnover and a 40 per cent rise in operating profit for the upcoming year. The latest set of accounts are no exception, although the projections contained appear somewhat more achievable, with targeted growth this year in gross profit and revenue of seven and six per cent, respectively.

"The market continues to be challenging; however, revenues are growing within EMEA, APAC, and the US," says the FY13 report. "Our customers have an increasing requirement for standardisation and centralisation, coupled with the need to be fast, flexible, and reliable. This is a tough balancing act, which is why we have such limited competition in our chosen market.

"As a result, the pipeline and forecast for the next three years looks phenomenal. However, extreme caution needs to be taken over the coming 12 months as we develop the systems and processes to ensure the controlled growth of our global organisation."