Zonal losses keep shrinking as new contracts rung up

Published on Friday 13 July 2007 11:54

ZONAL, the Edinburgh-based maker of high-tech electronic tills for the leisure industry, has managed to reduce its annual losses and pointed to a more profitable year after a number of contract wins.

The company, based in Forth Street, saw pre-tax losses shrink to 92,906, from 349,792 the year before, marking the third successive year of reducing deficit despite a series of upheavals in the hospitality industry.

But at the operating level, the group made a profit of 354,518 in the year to June 30, 2006, from 111,138 previously after keeping overheads "in check".

Overall turnover grew almost 11 per cent to 12.65 million, from 11.43m the year before, according to its latest accounts filing.

Zonal - which specialises in point-of-sale touch-screen terminals that can link sales, orders, staffing and stock control throughout an entire estate of outlets - said the hospitality industry was facing a number of hurdles.

In the group's latest accounts, which covered a period just after the smoking ban's introduction in Scotland and a full year before its roll-out in England, Stuart McLean, the privately-owned firm's managing director, said : "The hospitality industry is facing some considerable uncertainties in the short-to-medium term, specifically in relation to actual and proposed smoking bans and changes to licensing hours.

"In the last few years there has been a trend of consolidation which the [Zonal] directors believe will continue."

Despite the flux, Mr McLean said the group's core Aztec product had become a staple of the hospitality industry and the business was well placed to cope with wider changes affecting the industry.

Last December, Zonal, which employs around 160 staff, picked up its biggest ever contract, worth 4.3m, supplying and fitting 1250 of its systems to 305 outlets owned by the Orchid Pub Company (OPC), Britain's fifth-biggest managed pubs operator, whose Edinburgh outlets include the Shakespeare, Malt Shovel and Rose Street Brewery.

The contract helped boost Zonal's network of electronic point of sale units to more than 16,000 across the UK, Ireland and the US, where it last year appointed its first system reseller as it looked to expand overseas.

Mr McLean said turnover had been driven by investment made in the previous year.

But given competition in the industry, Zonal - whose other clients include JD Wetherspoon, Belhaven Brewery owner Greene King, Edinburgh-based Festival Inns and Stringfellows nightclub in London - said gross profit margin was "slightly eroded".

Mr McLean said the group had also made a big dent in its debt after selling off some of its surplus property in Edinburgh.

Looking ahead, Mr McLean said: "The new financial year reflects several new contract wins together with many existing customers upgrading to our Aztec software platform.

"The directors are confident trading levels will reflect this, leading to much improved profitability in the year to June 30, 2007."