Vanco said that the completion of three significant contracts had been held up, but added that one of the deals had subsequently been signed, with the others set to follow in the second half of the year. However, the company’s shares slipped to a new 52-week low of 170 pence in morning trading on the London stock exchange.
Vanco admitted that it has placed too great a focus on short-term cash targets in the past, at the expense of controlling long-term contract margins. The directors have therefore taken the decision to avoid cash management actions in the future which excessively impact gross margins, the company said in a statement. This action will reduce free cash flow in Vanco’s current fiscal year by 20m pounds ($40.2m).
Cash flow issues aside, Vanco’s results for the six months to the end of July were solid. Net profit hit 2.3m pounds ($4.6m), up from 1.6m pounds ($3.1m) in the same period the previous year, on revenue that grew 24.8% to 98.1m pounds ($197.1m). During the period, Vanco won its largest single contract to date, a $110m deal to provide network design, integration, and management services for an unnamed professional services firm.
Vanco also announced that Simon Hargreaves, managing director of its managed WAN business, had left the company after 13 years. Hargreaves has been replaced by his deputy, Mark Thompson, with Peter Johnston also joining the board as finance director.
