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Computacenter eyes investment plans for growing cash mountain

Sun shines in Germany, outlook unsettled in UK in 2015

Computacenter's centre of gravity shifted eastwards in 2015, as the mega reseller’s German operation fired on all cylinders while its UK box-shifting business sputtered.

At the same time, its CEO and chairman both seemed to suggested it could be looking even further afield as it ponders what to do with its enormous cash pile.

Adjusted revenues came in at £3.055bn, down 0.3 per cent on the year. Statutory revenues were down 1.6 per cent to £3.58bn. Adjusted pre-tax profits were up 7.2 per cent to £86.9m, while statutory pre-tax profits were £126.8m, up 66 per cent.

The adjustments reflected the offloading of the former RDC recycling unit, on which the firm made a £42.2m gain.

Computacenter’s German operation showed growth in both revenues and adjusted operating profit across its services and supply chain operations, while the UK saw service revenues grow, while supply chain revs were flat, “following a second half performance below management's expectations.”

Computacenter CEO Mike Norris said in a statement, “We are encouraged by the momentum we have in our German business going into 2016. The pleasing performance in France in 2015, while unlikely to accelerate in the short term, should be repeated.

But, he continued, “The UK will have a more challenging year, particularly in the first half. Services revenue will decline in 2016 due to the expiry of a large contract at the end of the first quarter of 2015 and the large volume of business take-on last year creating a challenging comparison, coupled with the one-off £3m gain highlighted in our Interim Statement in 2015.”

The diverging fortunes of the Computacenter’s UK and German arms has long been a feature of its its business. The sun rarely shines on both at the same time.

But it may be the group has ambitions that stretch further beyond Europe.

Norris flagged the company’s growing cash pile, currently at £120.8m, even with £242m distributed to shareholders over the last three years.

He continued, “We intend to increase the rate of spend on our strategic investments, which will be weighted towards the first half of the year, as we invest in our long term competitive advantage through our Income Statement.”

Further into the results statement, chairman Greg Lock added, “We continued diversification of our customer support capability with Barcelona, Cape Town, Budapest, Bangalore and Kuala Lumpur remaining key components of our long term plans. In the future we are planning to begin direct, rather than partner-based, operations in the USA, and the setting up of a support centre in Mexico.

He continued, “We serve customers in more than 100 countries, but we sell to enterprises whose home is in one of five countries being the UK, Germany, France, Belgium and Switzerland. In accordance with the Group's strategy, we continue to invest in our Services capabilities with which we support and enable the end users of our customers.”

Overall, the UK turned in adjusted revenues of £1.4bn last year, compared to £1.37bn the previous year, with adjusted operating profits of £59.3m, compared to 2014’s £60.7m. Germany turned in adjusted revs of £1.2bn, compared to £1.17bn the previous year, and adjusted operating profits of £27.4m, compared to 2014’s £26.7m. ®

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