TIDMCCC
RNS Number : 1463R
Computacenter PLC
23 October 2013
Computacenter plc
Interim Management Statement
'The outlook for the Group's trading result in 2013 remains in
line with the Board's expectations'
23 October 2013
Computacenter plc ("Computacenter"), the independent provider of
IT infrastructure services and solutions, today publishes its
Interim Management Statement from 30 June 2013 to date. Figures
below are based on unaudited financial information, for the third
quarter.
Financial Performance
Overall revenue for the third quarter on an as reported basis
increased by 11% to GBP730 million (2012: GBP657 million). In
constant currency, growth was 8%. Revenue grew in the year-to-date
by 4% to GBP2.16 billion (2012: GBP2.07 billion). On a constant
currency basis, year-to-date revenue growth was 1%. Group Services
revenue grew by 9% in the third quarter and by 6% in constant
currency, bringing the year-to-date position to 7% and 4%
respectively. Group Supply Chain revenue grew by 12% in the third
quarter and 9% in constant currency, bringing the year-to-date
position to a growth of 3% and flat respectively.
UK
The UK had strong growth in the quarter of 13% to GBP299 million
(2012: GBP265 million) bringing the year-to-date revenue growth to
6%. The Company was particularly pleased with Services growth of 9%
in the third quarter, bringing the year-to-date position to 7%. As
previously communicated, second quarter growth was held back by a
strong comparator, and the rebound of growth in the third quarter
reflects this. Supply Chain growth of 16% in the third quarter was
the best the Company has seen for some time, bringing the
year-to-date position to 5%.
The UK business is clearly benefitting from a number of
substantial Services contract wins over the last few years, not
just from the contract revenue itself but from the projects,
services and product pull-through the business is delivering.
The Company is also benefitting from customers' needs to upgrade
their operating systems due to support coming to an end for soon to
be obsolete versions. The resulting project work and new business
take-on mean that the Company's Professional Services utilisation
is currently at record highs.
Germany
German revenue in the third quarter increased 17% to GBP321
million (2012: GBP274 million) on an as reported basis, which
represents 11% growth in constant currency. This brings the
year-to-date position to an increase of 8% (constant currency
growth of 3%).
Services revenue grew 10% in the third quarter (constant
currency growth of 5%), bringing the year-to date position to a
growth of 6% (constant currency 1%). The Services business
(excluding the previously communicated three onerous contracts) is
seeing some margin improvement as well as a promising pipeline,
although Services growth in the first half of next year will be
challenging, due to a contract which will reduce significantly in
size at the start of the fourth quarter of 2013. With respect to
the three onerous contracts, trading is in line with the provisions
set out in the Interim Results in August 2013, and customer
satisfaction continues to improve.
Supply Chain revenue in the quarter grew by 21% (constant
currency growth of 15%), bringing the year-to-date position to a
growth of 9% (constant currency growth of 3%). While the strong
growth in the Supply Chain business is partially due to a
disappointing performance a year ago, the Company is pleased with
the performance.
The benefits of the Group operating model and the bedding down
of local management changes are improving governance and optimism
in the German business, whilst also streamlining the cost base.
France
In France, overall revenue performance in the third quarter
declined by 9% and 13% in constant currency. This brings the
year-to date revenue decline to 8% (constant currency 12%).
Services growth in France in the third quarter was 1% (constant
currency decline of 4%) bringing the year-to-date position to a
growth of 3% (constant currency decline of 2%). Supply Chain
revenue in the third quarter declined by 11% (constant currency
decline of 15%).
A number of factors contributed to a disappointing quarter and
year-to-date period in France. The market is certainly weaker than
the Company's other major countries, and the Services business in
France is not yet sufficiently well-developed to mitigate the risk
from market downturns. Additionally, migration to the Group ERP
system has been more problematic than it was in Germany or the UK
and, as has been previously communicated, a major customer has
reduced its spend due to a contract renewal cycle.
Improving performance in France is no easy task. However, our
intention to implement the Group operating model by the end of the
year and some local management changes represents a substantial
step in the right direction.
Financial Position
At the end of the third quarter of this year, net cash excluding
CSF was approximately GBP26 million, compared to GBP85 million at
the end of the third quarter of 2012. However, when allowing for
the GBP75 million cash return to shareholders earlier this year,
the Company's cash position has improved by GBP16 million.
The Company continues to benefit from the extended credit scheme
with a major vendor by approximately GBP35 million (End of
September 2012: GBP31 million).
The Company is making ongoing capital investments within the
business to help support its growth rates, particularly in
Services. However, this cash position demonstrates the Company's
ability to maintain its consistent track record of cash
generation.
Group Outlook
As is the case every year, the fourth quarter is always the most
important for the Company's annual financial performance. However,
the Company enters the fourth quarter of 2013 with substantial
momentum from its Supply Chain business and steady Services growth
in the Company's two major markets. Therefore, the outlook for the
Group's trading result in 2013 remains in line with the Board's
expectations. The three onerous contracts are performing in line,
but Group performance is being held back by France, which is likely
to continue for some time.
Looking to 2014 and beyond, we are encouraged by our pipeline
both within our existing customer base as well as new business
opportunities, although we would expect this to have a greater
positive impact in 2015. As a consequence, we expect growth, while
still positive, to be a little quieter next year in Contractual
Services, with 2014 profitability augmented by margin improvement,
particularly in Germany. Substantial work is required in our French
business as we build our portfolio of Services closer to what we
deliver to customers in the UK and Germany.
Computacenter's next scheduled trading update will be the
pre-close briefing, prior to the annual results, which is scheduled
for 16 January 2014.
Enquiries
Computacenter plc
Mike Norris, Chief Executive 01707 631601
Tony Conophy, Finance Director 01707 631515
Tulchan Communications 020 7353 4200
James Macey White
Christian Cowley
APPENDIX
REVENUE GROWTH Q3 AND YTD
Q3 Change Q3 Change YTD Change YTD Change
As Constant As Constant
Change vs 2012 Reported Currency Reported Currency
------------------ ---------- ---------- ----------- -----------
Supply Chain
Revenue
UK 16% 16% 5% 5%
Germany 21% 15% 9% 3%
France -11% -15% -10% -14%
------------------ ---------- ---------- ----------- -----------
Group 12% 9% 3% 0%
------------------ ---------- ---------- ----------- -----------
Services Revenue
UK 9% 9% 7% 7%
Germany 10% 5% 6% 1%
France 1% -4% 3% -2%
------------------ ---------- ---------- ----------- -----------
Group 9% 6% 7% 4%
------------------ ---------- ---------- ----------- -----------
Total Revenue
UK 13% 13% 6% 6%
Germany 17% 11% 8% 3%
France -9% -13% -8% -12%
------------------ ---------- ---------- ----------- -----------
Group 11% 8% 4% 1%
------------------ ---------- ---------- ----------- -----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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