Dragon-owned Expansys bemoans weak UK gadget lust

Peter Jones' etailer restructures

Expansys' fiscal 2011 numbers were boosted by several acquisitions and cost-cutting efforts, the firm has claimed.

Sales at the London Stock Exchange listed firm for the year ended 30 April climbed more than 60 per cent on 12 months earlier to £81.8m, operating losses narrowed to £725,000 from £2.7m and underlying pre-tax profits grew to £3.4m from £200,000.

The group comprises a classic etail business and firms it acquired for £38m in July 2010: B2B SIM card distie Data Select Network Solutions (DSNS) and e-commerce platform developer PJ Media. Excluding acquisitions, sales grew 31 per cent to £66.8m.

The DSNS and PJ Media businesses contributed £13m and £2.8m to the top line and made a combined operating profit of £4.36m, however operating losses at Expansys etail business and central/ consolidation costs pushed the firm into the red.

Dragon's Den bad boy Peter Jones is non-exec deputy chairman at Expansys and was also a director at DSNS and PJ Media when they were sold. He owns 43 per cent of Expansys.

Chief executive Anthony Catterson said that despite some hefty smartphone launches of the iPhone 4, iPad/ iPad 2 and HTC Desire, the UK was the "most challenging retail market" during the financial year.

"Consumer confidence and activity has reduced significantly in the last six months," he said, "This has meant it has been more difficult and expensive to retain existing customers and attract new ones. In response we have reduced our cost base."

Earlier this summer, Expansys closed its Manchester office, laying off the majority of its staff as it relocated to Marlow.

Resulting restructuring charges were £1.1m, including £400,000 of relocation costs, with £700,000 related to the lease of a warehouse in Manchester not occupied since 2008.

Expansys chairman Bob Wigley said despite the integration of the acquisitions and improvements to its core online business, the group failed to live up to early expectations and this was reflected in the "weak share price".

The price fell from 13.5 pence in early July 2010 to 1.41 pence at the time of writing.

He said an element of the "downward share price pressure" was connected to investors that bought into the firm during last July's rights issue – in part to fund the two acquisitions – expecting quicker ROI and bailing out early.

But he reckoned the performance of the underlying businesses could improve, the global scale provided room for growth and it was "exploring further potential acquisitions", all of which would "drive shareholder value". ®