Sales and margins grow as 20:20 Mobile switches focus

A CONCERTED push into overseas market allowed Crewe-based mobile phones distributor 20:20 Mobile to achieve a 20% growth in annualised sales in 2010/11.

Newly-filed accounts show the company posted sales of £1.5bn for a 15-month period to March 31, compared with £991.6m in the 12 months to December 2009. In the year to December 2010 sales rose to £1.2bn.

Chief executive Meinie Oldersma, pictured, told TheBusinessDesk.com that growth had come from market expansion and also a shift from selling phones and accessories to providing services to the major mobile operators.

Now half of revenues come from running websites, insurance services and contact centres for phone operators and retailers such as Tesco. Mr Oldersma said this move had aligned the business more closely with the long term strategy of customers and suppliers, and increased margins.

“We saw that trading margins were coming down,” he said. “It was clear that margins would continue to decline from buying and selling. So if we wanted to get the return up we needed to add services, which also meant we became more part of the businesses we were supporting.”

Over the year the gross margin increased by 7% and operating profits rose by 4%. However, lossmaking divisions in Ireland and France dragged down the company’s overall profits and led to the firm declaring a pre-tax loss of £15.6m. The loss was largely due to a £19.3m write-down in the value of its Irish business, which had been a joint venture with a major customer.

The company sold its stake in the business to its partner and also wound down the French business, at a cost of £3.5m, after failing to get a foothold in the market.

20:20 opened in a number of new markets last year including Finland, Hungary, Poland and Turkey. It also upgraded its operations in Germany, Italy, Poland, the Netherlands and Turkey by setting up its own trading entities and distribution facilities in each country, and in Germany it also bolted-on an acquisition of accessories distributor Axxit

Mr Oldersma added: “Three years ago the group had revenues of £730m so it’s a substantial growth over the last three years. Profitability has grown at an operating level and we’ve also looked at the wider financing structure of the organisation.

“We’ve obtained asset-based lending and reduced the senior long-term debt with the lending syndicate, basically putting the company on a much better footing to continue growth going forward.”

New facilities have helped to reduce net debt from £125m at the start of the period to £68.9m at the end. Net assets fell from £96.9m to £80.3m. 20:20 Mobile has been owned by US-based private equity firm Doughty Hanson since it completed a £347m buyout from founder John Caudwell in 2006. It employs around 1,400 staff, with 550 based in Crewe.