CCC Computacenter Plc

 
TIDMCCC 
 
Computacenter plc 
                    Pre-close Trading Update 12 January 2010 
 
 
Computacenter  is  today  holding  an  investor  and  analyst conference call to 
provide an update on trading for the year ended 31st December 2009. 
 
The  Group's profit before tax and exceptional items, for 2009 is expected to be 
materially  ahead  of  consensus  market  expectations  of  GBP48.4 million [source 
Reuters]. 
 
At  the end of the period net cash excluding customer-specific financing ("CSF") 
was   GBP87 million  [net cash  of  GBP4.6  million at 31st December 2008].   Including 
CSF,  net funds  were  GBP37  million [net  debt of   GBP84.6 million at 31st December 
2008]. 
 
Exceptional items for the year 2009 are likely to be approximately  GBP4.5 million, 
 GBP1.5  million less than previously predicted, due to the exceptional gain on the 
disposal of our Trade Distribution Division in November 2009. 
 
In our pre-close briefing in January 2009 we laid out a clear programme to focus 
the  Group's activities,  reduce our  operating costs  and optimise  our working 
capital.    A year of working capital improvements  can be clearly seen.   We have 
also  reduced our operating cost  in constant currency by  close to  GBP30 million, 
almost twice the estimates made 12 months ago. 
 
The Group has continued to develop its contractual services offerings throughout 
2009 with investments in new data centre facilities, incremental capacity in our 
service  desks,  enhancements  to  our  customer  facing  software tools and the 
continuing  development of the skills of our employees. As our customers seek to 
reduce  their operating costs, by outsourcing their IT operations, our offerings 
continue  to gain traction in  the market. At a  Group level our annual services 
contract  base exceeds  GBP500 million on 31st December 2009, representing a growth 
in excess of 7% over 31st December 2008, based on constant currency. 
 
As  we also announced a year ago, we have embarked on a major group wide systems 
upgrade  implementing a  single group  wide ERP  system which  will deliver cost 
savings  and greater flexibility to the Group.   We are on target to commence the 
rollout  of this  program in  the second  half of  2010 and be fully operational 
across  all  major  group  countries  in  the  second half of 2011.   The capital 
invested in this project to date is  GBP22 million of which  GBP11 million was paid in 
2009.   Our estimates are that an additional  GBP10 million will be spent before the 
project is completed. 
 
In  the UK, revenue  in the period  fell by 11% to  approximately  GBP1.25 billion. 
  However,  excluding  the  effect  of  the  exit  from Trade Distribution sales, 
revenues  fell by  6%.   Pleasingly, the  fourth quarter  showed a revenue growth 
from  continuing  operations  of  2%.   Services  revenue  grew by 8% over 2008, 
however,  this masks  the fact  that contractual  services revenue  grew by 13% 
whilst   professional   services   revenue  declined  by  11%.   The  decline  in 
professional  services  revenue  was  caused  by  the lack of new infrastructure 
projects  throughout 2009, the pipeline for  which has improved steadily towards 
the  end of the period.    Product revenue in the  fourth quarter was undoubtedly 
helped  by the  VAT increase  on 1st January  2010, but the  extent to  which is 
difficult  to tell.    The UK's  profit growth  was aided  materially by the cost 
reduction  programme introduced  a year  ago.     We have  seen the UK's overhead 
costs reduced by approximately  GBP23 million. 
 
In  Germany we have  seen another year  of encouraging profit  growth, despite a 
decline  in  revenues  of  1% to  approximately  EUR1.03  billion,  excluding  the 
acquisition  of becom in late November.    However, this translates into a growth 
of  approximately 11% when  converted into  sterling.   A  combination of prudent 
financial  management,  a  small  increase  in  services  margin and an improved 
product  mix  have  all  added  to  the improved profit performance.   The recent 
acquisition of becom should increase our annual German revenues by around 10% in 
2010 and add to our data centre capability. 
 
Whilst overall profit performance in Computacenter France in 2009 has declined a 
little  on 2008, it  is materially  ahead of  our internal,  as well as external 
expectations,  at the beginning of the year.    We are pleased with the strategic 
progress we have made in 2009 and particularly the growth in services revenue of 
11%, in  local currency.   We believe we are  making good progress in laying down 
firm  foundations for long-term  profit improvement, which  should bear fruit in 
the years ahead. 
 
We  are pleased with the  progress that the Group  has made in 2009 particularly 
against  the  strategic  objectives  laid  out  a  year ago, but we are far from 
satisfied  and believe that the Group can still make further improvements in the 
years  ahead.   Ultimately our profitability is the result of our strategic plan, 
how  we execute  against that  plan and  the state  of the  markets in  which we 
operate. Our markets for contractual services remain positive, as they have over 
the  last few  years and  we are  encouraged that  there have been some signs of 
improvement in capital expenditure in the fourth quarter of 2009.   It remains to 
be  seen whether this is a  temporary improvement or something more fundamental. 
  We are clearly buoyed by recent performance and optimistic about the future. 
 
Mike  Norris, CEO, commented:    "Our performance has  constantly improved as the 
year   has  progressed  and  it  is  worth  remembering  that  consensus  market 
expectations  have already been upgraded by more than  GBP10 million throughout the 
course of 2009. 
 
The  actions we have taken to restructure and focus our business have enabled us 
to  significantly reduce our costs  in the year and  create a step change in our 
profits.    We  are  also  pleased  with  the  growth  in  our contract base that 
underpins profit growth into the future. 
 
While  the side of our  business that is reliant  on capital expenditure remains 
uncertain,  the contractual services growth and structural changes we have made, 
make us confident in the business and future progress in 2010" 
 
Computacenter  will announce full year results  for the year ended 31st December 
2009 on Thursday 11th March 2010. 
 
 
[HUG#1372338] 
 

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