Zen benefits from cloud cover

INTERNET service provider Zen Internet witnessed a 69% increase in pre-tax profits to £1m in the year to September 30, 2011 (2010: £591,468) as sales climbed by 7% to £43.1m.

The Rochdale-based company, which has just announced plans to build a £4m data centre at its Sandbrook Park headquarters, credited the turnover growth to “expanding the product offering and growing the existing customer base”.

Zen Internet was set up by owner and managing director Richard Tang in 1995 and now employs 400 people.

The company’s head of product development and marketing, Andrew Saunders, argued that the company had achieved growth as an independent despite some “aggressive” pricing policies from major competitors.

He said that Zen had continued to invest in service enhancements such as fibre broadband, enhanced ethernet connections and the new data centre. A new voice service launched last year, which allows customers to make voice calls via broadband networks, also helped to improve revenues.

Moreover, a high-speed ethernet service offered to business customers is currently experiencing growth rates of around 30% a year.

“These investments are very much in line with Richard’s mission to provide the best internet service in the UK,” said Mr Saunders.

He added that the improvement in profits had been due to investments made in previous years to switch both domestic and commercial customers to higher-grade broadband networks, which have significantly lower operating costs.

“But that’s the way with the internet,” he added. “Products get faster and services get better but prices keep getting lower.”

Around a quarter (£11m) of the company’s revenues come from domestic customers across the UK, although there is a greater concentration in the North West due to the firm’s Rochdale roots.

The remainder comes from corporate customers for the provision of everything from connections, the provision of virtual private networks and from server hosting on the cloud.

“It’s an exciting time for the internet,” said Saunders. “Everyone is becoming more reliant on it when they’re on the move, and as connections become 5-10 times faster it will revolutionise the way people use it.”

By the year end, the company’s net assets had increased by £700,000 to £7.2m.