XMA and Viglen reveal currency fears

2014 accounts for both resellers published

XMA and Viglen have pointed to foreign exchange rates as a key risk facing the businesses in the near future as they separately publish their 2014 annual accounts.

At the beginning of last year, XMA owner Westcoast acquired Viglen and in the former's accounts filed with Companies House, it claims the integration is "progressing on schedule and will be complete during 2015".

For the 12 months to 31 December 2014, profit at XMA rose 27 per cent to £3.29m on sales which over the same period rose 35.5 per cent to £222.35m.

At Viglen, profit for the 15 months to the end of 2014 came to £1.97m compared with £2.41m for 2013, on sales which reached £90.7m compared with £73.2m in 2013 during the same timeframe.

The reseller said foreign exchange rates could have a detrimental impact on the company.

"The company principally sells in sterling and buys in dollars," it said. "Therefore there is a risk in terms of adverse exchange rate movements. The company mitigates this risk by hedging its exposure through the forward purchase of dollars. Additionally, the company produces a new price list monthly. The forward exchange rate exposure unhedged is therefore limited to one month's sales."

XMA also pointed to currency fluctuations as a risk in the accounts, adding that the cost of commodities which make up IT components is also a factor to consider.

The reseller said "intense" competition in the channel is a risk to the business and could lead to reduced prices, lower sales and margin figures and extended payment terms with customers. On top of this, it said changes at its vendor partners could have a big impact on the company.

"Significant changes in supplier terms such as volume discounts or rebates, a reduction in the amount of incentives available, reduction or termination of price protection, stock rotations or other stock management programmes or reduction in payment terms may adversely impact operations or financial conditions," it said.

Overall, XMA said 2014 was a good year.

"2014 has demonstrated both the strength and adaptability of the company by increasing turnover by 35.5 per cent, achieving gross profit margin at 10.63 per cent," it said.

"The directors remain convinced that XMA's position is firmly established in this marketplace and continue to remain confident that XMA's presence across the breadth of the public sector and growing engagement in the corporate sector across a variety of technologies and related services will ensure success over the medium to longer term."