ZONAL, the Edinburgh-based supplier of electronic point of sale (EPoS) systems, has highlighted its expanding customer base as it reported a profits increase of more than 50 per cent.

The hospitality-focused company, whose recent client wins include the Pizza Express chain, recorded a trading profit of £3.5 million in the year ended June 30, up from £2.3m last time.

Profits grew as Zonal, which employs nearly 500 staff, installed its systems in more than 1,400 new locations during the period. The company, whose roots stretch back nearly 40 years, said the period saw it upgrade systems for existing clients and boosted product sales.

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Zonal chief executive Stuart McLean said: “Zonal is unrecognisable from when it was launched 37 years ago, we have evolved from a Scottish start-up business to the market leader in the UK hospitality technology market.

“We believe that by employing strong local talent, which is nearing 500 employees, we will continue to provide a unique offering that makes us stand out from our competitors.

“We remain focused on improving our business and have taken key strategic decisions that have been instrumental in driving our long-term vision and these have driven the improvement in cash and margins. We have a very strong new business pipeline in place and are excited about developments.”

Zonal’s results come at a challenging time for the Scottish hospitality industry, with operators citing concerns over the burden brought by rising costs such as business rates, the Living Wage and the Apprenticeship Levy. Mr McLean said he was aware of his clients’ concerns but noted that so far it “hasn’t affected us at all “. He said: “We are still seeing new customers come on board.”

Mr McLean said the period saw the company complete the roll-out of its systems across the estates of pub giants Mitchells & Butlers and Stonegate. It began work for Cardiff-based brewer and hospitality group Brains on its fast-growing Coffee#1 chain and take the Casual Dining Group, operator of the Bella Italia and Cafe Rouge chains, on board as a client. In other projects it worked on integrating the systems of Greene King and Spirit Company following the former’s £774 billion takeover.

Acquisitions continue to be a theme at Zonal, which also counts independent bar groups such as Edinburgh’s Montpeliers among its clients. The period saw it acquire a majority shareholding in High Level Software, a Cardiff-based provider of property management systems to the hotel sector. At the same time liveRES, the online booking specialist acquired by the company in 2015, was reported to have won a range of high-profile clients during the year.

Mr McLean said the firm will continue to run the rule over potential takeover opportunities, stating its most recent deal had brought “huge synergies” to the business. “Anything we feel will add value to us and our customers we will look at,” he said.

Zonal said turnover fell to £45m from £59.6m the year before. The company said the drop in revenue reflected a decision to stop recognising certain procurement revenues through its food purchasing portal in favour of its software as a service model, which focuses on long-term recurring revenue rather than upfront sales.

Research and development remains a focus, the firm added, with £4m invested in R&D last year and even higher sums expected to be spent this year. Last year saw it introduce web-based online supply chain management and ordering platform Acquire and develop payment services on its system to allow customers to use Apple Pay and give money to charity.