Pre-Close Trading Update


 

TIDMCCC 
 
RNS Number : 3698V 
Computacenter PLC 
09 July 2009 
 
Computacenter plc 
 
 
Pre-Close Trading Update 
 
 
 
 
Computacenter is today holding an Investor and Analyst conference call to 
provide an update on trading for the six months to 30 June 2009. 
 
 
Overall profitability in the first half (pre-exceptional charges) will be ahead 
of current market expectations. 
 
 
The first half of 2009 has seen good growth in our Contractual Services across 
the Group and significant cost reductions, both of which have driven our 
increased profitability. Conversely, we have seen a significant negative impact 
of the reduction in our customers' capital budgets in product sales and in 
Professional Services which is involved with the implementation of new systems 
and projects. Overall revenues reduced by 3% in the period, but were down by 8% 
in constant currency. 
 
 
Additionally, this combination of factors has not only improved the 
profitability in this period but this continuing trend in business mix increases 
our long term visibility and predictability of earnings. 
 
 
As previously announced there is likely to be an exceptional charge 
of circa GBP5m for the year as a whole, the majority of which has been expensed 
in the first half. 
 
 
Our continued focus on the rigorous management of working capital has resulted 
in strong cash generation in the period.  At the end of the period Group net 
funds were circa GBP49 million before customer specific financing 'CSF' (net 
debt before CSF at H1 2008 was GBP29.7 million). The cash position was flattered 
on a one off basis by circa GBP10 million in the UK due to the timing of our 
quarter end. CSF at the end of the period was circa GBP65 million (GBP66.2 
million at 30 June 2008). In January 2009 we announced our decision to cease the 
trade distribution of personal systems and expected a cash inflow of 
approximately GBP15 million, this was implemented successfully with an actual 
cash inflow of approximately GBP18 million. 
 
 
We have realised the majority of our planned cost reductions in the UK. We 
implemented the organisational change, enhanced our competitive positioning and 
improved profitability as set out in our Pre-Close briefing on 13 January, 2009. 
Contractual Services revenue increased by 10% in the period which bodes well for 
profitability in the second half and years to come. Overall revenue in the UK 
was down 8% excluding the impact of exiting the trade distribution of personal 
systems. The combination of these factors in the UK together with the exiting of 
trade distribution will have a positive effect on margins. 
 
 
In Germany, we are continuing to see further progress with increased services 
revenues of 4% in constant currency coupled with an increase in services margin. 
German product revenue was down only 4% but has been a little weaker towards the 
end of the period. Computacenter Germany has been successful in winning one of 
its largest Managed Services contracts to date, which will commence in the 
second half but will not make a significant contribution to the business until 
2010. 
 
 
Computacenter France has seen an improved performance against the first half of 
last year driven by 12% service revenue growth in constant currency and improved 
service margins combined with overhead cost reduction. These factors are 
encouraging for the future of our French business, however the second half of 
2009 as previously highlighted will be challenging due to the start-up of new 
contracts with our largest customer in France. 
 
 
At a Group level, our annual service contract base now stands in excess of 
GBP510 million on 30 June 2009 representing a growth in excess of 11% over 30 
June 2008 based on constant currency. 
 
 
We are pleased with the progress achieved in the first six months and the 
consistent improvement in Group performance that we have been able to deliver. 
However, we are far from satisfied and much remains to be done to achieve the 
long term performance we desire. 
 
 
Looking particularly at the second half of 2009, we are unlikely to see a return 
to growth in capital expenditure on IT equipment across our geography, however 
we are confident of further progress in our contractual services business where 
we save our customers money. We will also continue to be rigorous in the cost 
management of our business. We are obviously not immune to the broader economic 
environment but our performance to date gives us encouragement for the future. 
Mike Norris, Chief Executive of Computacenter plc, commented: 
"The trading environment remains very challenging and neither Computacenter nor 
its customers are immune.  It is therefore no surprise that our product sales 
are down in the period. However the steps that we have taken to reduce our costs 
and win new service contracts have meant that we are again able to deliver 
another strong profit performance." 
 
 
Computacenter will report its Interim results on 27 August 2009. 
 
 
 
 
 
 
Enquiries: 
 
 
Computacenter plc 
Mike Norris, Chief Executive01707 631601 
Tony Conophy, Finance Director01707 631515 
Tessa Freeman, PR Manager01707 631514 
 
Tulchan Communications                   020 7353 4200 
Andrew Grant 
Stephen Malthouse 
 
 
 
 
 
 
Note 
The financial information contained within this announcement is sourced from 
unaudited management accounts. 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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