ComputerLand's headline results for the year to April didn't look to impressive, with sales largely flat at £59.3m and pre-tax profits up a mere 5% to £2.2m. However, according to chairman, CEO and 38% shareholder Graham Gilbert, much progress was made.

The group's business is the supply of IT services to medium and large enterprises. The bulk of annual sales - £42.2m and falling - is made up of 'managed product supply', corporate speak for selling computer hardware and the like. As you might expect, it was another difficult year for this division, with sales falling 3.2% and price deflation impacting on margins. The current year is proving challenging as well, with sales flat.

For Gilbert though, this arm is merely one component of a comprehensive range of products ComputerLand offers its increasingly blue chip client base. The most exciting division for Gilbert is 'Managed Services', where revenues soared 11.3% and where new contracts were won with the likes of Burberry and HJ Heinz and IT service contract extensions secured with Egg and Manchester City Council. Since the year-end, ComputerLand has secured a deal with O2 (subject to contract) for the supply of desktop and server managed services. If everything goes according to plan, this could be worth £15m over five years.

'Hardware Maintenance' is another interesting area, with sales up 9% to £7.3m last year and decent investment made in the core product to ensure ComputerLand can deliver on its service commitments. On the 'Project Service' side of the business, sales were flat at £2.9m.

Says Gilbert 'Hardware supply is something that we have to do - its a necessary facility to have. But it is the other areas on which we are really focused. Contracted service revenues improved 10% during the year to £14.2m, significant new business wins were made and the market for managed services is a great opportunity for us. At present, our three IT services businesses now make up 29% of revenues. We expect this to increase going forward'.

Another year of good cash management enabled ComputerLand to finish the reporting period with net cash of £9.0m (against a market cap of £20.5m). As well as an annual dividend of 6p, a special dividend of 20p will be paid to investors in due course.

This year, the services side should account for around 33% of sales. As the margins here are much healthier than the hardware sales side, profits should jump to £2.7m pre-tax. The current market value of ComputerLand doesn't reflect prospects of services side nor the canny strategy being executed by its management. A strong buy.

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