E-Net profits rise despite challenging IT market conditions
Tuesday 22nd June 2010
IT ENTREPRENEUR Shaf Rasul saw a strong recovery in profits from his optical media distribution business E-Net last year.
Although prices on products including blank DVDs and CDs have continued to fall, a focus on improving margins saw pre-tax profits increase to £747,000 in the year to 31 March 2010, up from £138,000 the previous year.
Turnover fell to £18.1 million from £24.3m the previous year although the Edinburgh-based company is still the largest storage media distributor in Europe.
Rasul, who features in an online version of the BBC's Dragons Den and is estimated to be worth £48m, said the profit improvement was impressive given the dramatic fall in prices seen in the optical media market in recent years.
"In the market we're in, prices just keep on falling. A disc that would sell for $10 five years ago now sells for 10 cents. We're doing much higher volumes of product than we ever did, but the turnover in financial terms is lower," he pointed out.
Rasul said a strong focus on improving efficiency and margins had led to the significant rise in profits for the firm which employs about 100 staff.
He paid tribute to the role played by his finance director Bruce Gellatly, a former Ernst & Young audit partner who had been involved with the company since its launch in 2000 and who joined the board last September.
The company's net cash and borrowings position improved by over £1m and at the year end it had £741,000 in cash.
"Bruce knows the business inside out and has had a real impact on our financial performance," said Rasul.
Rasul said John Ebate, who joined E-Net as operations director from John Lewis a year ago, had also made significant improvements in efficiency at the company.
Trading in the first few months of the new financial year had been "within expectations" and the company is looking to expand by working with another business owned by Rasul, boffer.co.uk, to increase product range and routes to market.
The online business and its sister site bigoffers.co.uk specialise in selling bankrupt and excess stock from retailers to the general public.
Rasul put up £250,000 two years ago to take a minority stake in the West Midlands-based operations and in February took full control of the companies which have since relocated to Edinburgh.
Tom Mursell, 20, one of four apprentice entrepreneurs Rasul recruited earlier this year, is heading up the operation on a day-to-day basis.
Rasul said the sites would be an important part of his ambition to establish the UK's leading online discount retail portfolio. Born in Lahore, Rasul moved to the UK with his family when he was four and grew up in Alloa. He set up E-Net on the back of an order to supply the RAF with IT equipment.