UPDATE: Computacenter Full-Year Profit Climbs, Lifts Dividend

IT infrastructure services and hardware company Computacenter PLC (CCC.LN) Thursday posted a 23% increase in full-year pretax profit as higher margins in support and managed services revenue offset declining product sales, and said it would boost its dividend by 34%.

The company, which has seen its share price more than double in the past 12 months, said the continued focus on IT services is proving to be its most profitable area of growth, and it expects to secure more managed services contracts.

"The increase in the Group's annual service contract base is clear evidence that customers are turning to Computacenter to help them to reduce their operating costs," Chief Executive Mike Norris said, adding he expects steady revenue growth through 2010.

Pretax profit for the year ended Dec. 31 stood at GBP48.4 million against GBP39.5 million last year, on revenue down 2.2% at GBP2.503 billion. Services revenue rose 8.1% on the year to GBP740 million.

The company said it will pay a dividend of 11 pence a share compared with 8.2 pence a share last year.

The group had a net cash position of GBP86.4 million before customer-specific financing, up from GBP4.6 million a year earlier.

Computacenter has a track record of returning cash to shareholders and hasn't stopped paying dividends throughout the recession. In 2009, 40% of its after tax earnings were paid out as dividends.

"We're not scared of stepping up and returning quite large chunks to shareholders when we get to a situation where we feel like we have more cash than we need," Norris told Dow Jones Newswires in an interview.

Norris added he has ruled out making a large-scale acquisition to accelerate the company's growth, but said the occasional GBP10 million to GBP30 million bolt-on deal would be the highest he is likely to target.

The company also said trading in the first quarter had started well as revenue growth continued at a sustainable pace.

Panmure Gordon analyst George O'Connor said the numbers were solid and the positive first-quarter trading is pleasing for skeptical investors who thought the growth at the end of 2009 was down to the lower value-added-tax rate.

O'Connor kept his buy recommendation on the stock and raised his target price to 382 pence from 370 pence.

Computacenter which is based in Hatfield, north of London, has a market capitalization of GBP500 million. Its customers include Santander Group (SBP), BP PLC (BP.LN), Schroders PLC (SDR.LN), and Severn Trent PLC (SVT.LN).

At 1001 GMT, shares were down 11.4 pence, or 3.5%, at 315.3 pence, against a 0.009% fall in the FTSE 250 Index.

Company Web site: www.computacenter.com

-By Elliott Ball, Dow Jones Newswires; 44-20-7842-9314; elliott.ball@dowjones.com

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