Computacenter reports 25.8% increase in FY profit in 2009

In it full-year results statement, Computacenter (LSE: CCC) said it made good progress in 2009 and it has entered 2010 with a lower cost base, having secured large services contracts. For the twelve months ended 31st December2009, the company reported a 25.8% increase adjusted pre-tax profit to £54.2m compared with £43.1m in the previous year, earnings per share (EPS) increased 31.9% to 27.7p.

"Computacenter has delivered a strong performance in 2009 with increased profits, earnings per share and a materially improved cash position”,  chief executive Mike Norris said. "We enter 2010 in good shape with a lower cost base and having secured our largest services contract win to date in the first quarter of the year”.

Whilst overall group revenue declined by 2.2% to £2.5bn, partly the result of a strategic decision to exit trade distribution, the company’s services division had a notably stronger performance. Services revenue increased by 8.1%, and according to Computacenter the 12.2% increase in long-term contractual revenues was particularly pleasing. At 31 December, the annual services contract base stood at £503.6m, an increase of 3.9% compared to the end of 2008 and 9% higher on a constant currency basis.

The contract wins and extensions during the year included high profile clients such as the Santander Group’s Produban IT Business, Threadneedle, BP, Schroders and Severn Trent Water.

“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. As a result we expect steady revenue growth in 2010”, Norris added.

The company said it reduced operating expenses by over £30m, and its balance sheet has strengthened considerably. At the end of the yea,r net cash before customer specific financing (CSF) was £86.4m compared with £4.6m in 2008 and net funds including CSF were £37.3m compared with the £84.6m net debt in the prior year. Computacenter noted that approximately £30m accounted for extended credit terms of one of our major vendors, which was made available to all of the vendors business partners, and these terms are likely to return to normal in the second half of 2010.

According to Computacenter it is facing the future encouraged by its progress and the company is optimistic for its prospects ahead. However the company also noted that ‘competition is fierce and we must continuously improve our performance in order to win in the market place’.

“The economic climate across Europe is still fragile and while the UK has begun the year very well, Germany has experienced a challenging start. In spite of this we believe that the investments we are making in our business, together with our strong balance sheet, position the group well to take advantage of market opportunities and capture further share", Norris concluded.