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In France, overall revenue performance was flat in the third quarter and 7% in constant currency. This brings the year-to date revenue growth position to 1% (CC: 8%).
Germany stutters The picture is not so bright in Germany. Revenue in the third quarter declined 6% to £274m from £292m a year earlier, which represents flat revenue performance on a constant currency basis. This brings the year-to-date position to a decline of 2% (CC: growth of 5%). Services revenue was flat in the third quarter (CC: growth of 7%), bringing the year-to date position to growth of 6% (CC: 13%). Supply Chain revenue in the quarter declined by 9% (CC: decline of 3%), bringing the year-to-date position to a decline of 5% (CC: growth of 1%). "While the third quarter showed decline in the Supply Chain business, for the year-to-date position, this represents a stabilisation from the performance in the second quarter. We have stated before that the comparison was challenging, given the strong growth achieved in the second and third quarters in the German Supply Chain business in 2011 by 46% and 22%, respectively, in constant currency," the firm said. The group may have bitten off more than it can chew in terms of new contractual services arrangements in Germany. The group has seen a material deterioration in the more recent contracts it has taken on, as the transition stage is requiring more time and cost than anticipated.
UK sparkles Performance in the UK has been good, with revenues growing 12% in the third quarter to £265m, bringing the year-to-date growth to 8%. Services revenues rose 18% while the Supply Chain top line improved 9% year-on-year, although the group pointed out that the third quarter of last year was a particularly poor one for the Supply Chain business. The pipeline of orders on the Services side remains strong, the group revealed, while management is satisfied with the performance of new contracts, particularly given the growth rate of the Services business.
Information technology services provider Computacenter is having to spend time and money getting service levels up to the required standard on some new German contracts, but things are going well in the home market. Revenue in the third quarter of 2012 was up 1% to £656m from £648m in the third quarter of 2011, but was 6% higher on a constant currency basis. In the first nine months of the year revenue was up 3% (7% on a constant currency basis) to £2.07bn from £2.01bn the year before. Group Services revenue grew by 9% in the third quarter, 13% in constant currency (CC), bringing the year-to-date position to 11% and 15% respectively. Group Supply Chain revenue declined by 2% in the third quarter and grew by 2% in constant currency, bringing the year-to-date position to a decline of 1% and growth of 4%, respectively.
Information technology solutions provider Computacenter said additional start-up costs in the first half of the year meant profits were down slightly year-on-year. Group adjusted profit before tax in the six months ended June 30th fell to £24.0m from £26.6m the year before. Statutory profit before tax tumbled to £20.8m from £26.2m in the corresponding period of 2011. Group revenue rose 4.2% to £1.42bn from £1.37bn in the first half of last year. Adjusted diluted earnings per share (EPS) of 11.7p was down from 12.9p the year before. The interim dividend has been hiked to 5p from 4.5p last year. "Our Services revenue grew materially in the first half of the year, reflecting our strategic emphasis on growing our Contractual Services base. While we were encouraged to see double digit organic revenue growth in Services in all countries, we must now replicate the successful contract win integration achieved in the UK across the group," declared Mike Norris, Chief Executive of Computacenter, adding that replication would not be a a simple or quick process. "The new Services business momentum we have built in our UK Services business looks set to continue into the second half and beyond. We are likely to see slower top line Services growth outside the UK as we put our processes in order, but this should improve our margins. We remain on track with the board's revised expectations for the year," Norris said.
Total revenue in France, including recent acquisition Top Info, increased by 9.0% in constant currency to €275.8m from €253.1m, but the comparator only includes Top Info revenue for the second quarter of 2011. If the full half-year 2011 revenue is included, there is a revenue decline of 4.0%. Services revenue over the period, in constant currency terms, including Top Info for the whole of the first half of both 2011 and 2012, increased by 15.6%. This growth has been driven by the contracts won last year, and as in Germany - although to a lesser extent - the increased volume of orders has led to "some challenges, but all the new contracts have the potential of delivering improved profitability as they bed in." The Belgium and Netherlands operations saw revenue grow 54.3%, but for once Services revenue growth was below par, at 35.8%. Mike Norris, the Chief Executive of Computacenter, did warn that the group is likely to see slower top-line Services growth outside of the UK "as we put our processes in order" but on the bright side margins from this quarter should improve, "The new Services business momentum we have built in our UK Services business looks set to continue into the second half and beyond," Norris predicted, suggesting that the group's strategic shift from "box-shifter" to "solutions provider" has been a sound one.
"The growth in our constant currency Contractual Services base of 9.4% to £595.0m (H1 2011: £544.0m) is at a strategic level, very positive and has already helped performance in the UK during the period, with a more material contribution to come in the second half of the year and beyond. In addition, the current pipeline in the UK is particularly strong, which bodes well for contract base growth in the second half of the year," Lock revealed. In the UK, Services revenue grew 14.2% year-on-year (yoy), a sharp acceleration from the 0.7% yoy gain in Services revenue in the first half of 2011. In contrast, the IT supply chain market has been relatively flat, resulting in only a marginal improvement in Supply Chain revenue for Computacenter in the UK. Germany saw revenue increase by 7.5% to €718.7m from €668.6m the year before, with Services revenue up 16.0% to €240.1m. Somewhat surprisingly, the German employment market is not rife with candidates who have the specialist skills Computacenter is looking for to handle the clutch of business wins it landed in the second half of 2011, but nevertheless the company is making a significant investment in additional people to deal with the increased workload.
The first half of the year saw Computacenter suffer growing pains, particularly in Germany, but it is putting its hand in its pocket to ensure it does not suffer a G4S-style delivery failure. "The challenge of implementing multiple contracts simultaneously and delivering what our customers want, is leading us to spend an incremental £7m on additional staff and related costs to ensure our future success," revealed Greg Lock, Chairman of the provider of information technology (IT) infrastructure services and solutions. After first half headline profit before tax dropped to £24.0m from £26.6m the year before, primarily because of the impact of start-up costs associated with new business wins, the group is hoping this is a case of taking a step back in order to take several steps forward in the future. Strategically speaking, the group's increased emphasis on growing its Contractual Services base appears to be paying off, with the group seeing double-digit percentage organic revenue growth (in constant currency terms) in Services in all countries.
Mike Norris, Chief Executive of Computacenter plc, commented: "Our Services revenue grew materially in the first half of the year, reflecting our strategic emphasis on growing our Contractual Services base. While we were encouraged to see double digit organic revenue growth in Services in all countries, we must now replicate the successful contract win integration achieved in the UK across the Group. This is not a simple or quick process and much work needs to be done. However, our uncompromising approach to customer satisfaction, whatever the short term consequences, we believe is in the long term interest of all of our stakeholders, particularly our shareholders. The new Services business momentum we have built in our UK Services business looks set to continue into the second half and beyond. We are likely to see slower top line Services growth outside the UK as we put our processes in order, but this should improve our margins. We remain on track with the Board's revised expectations for the year."
http://www.investegate.co.uk/Article.aspx?id=201208310700051441L
Computacenter (CCC) reported revenue growth of 4.2% to 1.42 billion pounds for the six months ended 30th June, boosted by acquisitions, but pre-tax profits fell 20.6% to 20.8 million pounds. The IT services provider spent 7 million pounds in order to hire additional staff in order to support growth, particularly in Germany and France. The firm noted a good performance from its UK division, with adjusted operating profits rising 5.2% to 17.6 million pounds. Computacenter shares rose by 12.3p to 382.2p.
"While we have been pleased with the growth in our Services revenue, the increase in new business has come with significant additional start-up costs that will adversely impact profit in 2012." "However, the Board believes that this incremental cost, which remains in line with our statement of 14 June 2012, will help secure Computacenter's long term growth potential and enhance the quality of earnings," it said in a statement. Across its geographical divisions UK revenue grew by 5% in the first half of the year, German total revenue increased by 7% and France grew revenues by 9% on a constant currency basis.
European IT services provider Computacenter said it continues to trade in line with company expectations and the outlook for the full year to 31 December remains intact. Group revenue increased 4 per cent in the first half on a reported basis and 8 per cent in constant currency and includes a small contribution from acquisitions made during 2011. Services revenue rose by 12% on a reported basis in the half year and 15% in constant currency. Supply Chain revenue increased 1% on a reported basis and 4% in constant currency. During the second quarter Computacenter saw a 16% increase in services revenue in constant currency resulting in the group taking on 700 extra staff to cope with the demand. The cost of the recruitment and training of the extra staff is expected to cost the group an extra £7m in 2012.
Outlook We are making good progress in addressing the challenges in Germany and strengthening our contract take-on processes across the whole Group, in order to ensure that we do not miss the opportunity for Computacenter to grow its Services revenue and market share. The Board believes, following completion of these actions, we will be well placed to continue responding to these opportunities. Overall, the Group continues to trade in line with our expectations and the outlook for the full year to 31 December, remains consistent with our trading update on 14 June 2012. We will be announcing our interim results for the six months to 30 June 2012 on Friday, 31 August 2012.
Cash Position Net cash before customer specific financing (CSF) was £96.6 million, compared to £104.3 million on 30 June 2011. Net funds, including CSF was £79.3 million, compared to £80.9 million on 30 June 2011. During the last 12 months, we completed the acquisition of a majority stake in Damax and made significant capital investments, more specifically in equipping our new French warehousing facility, refurbishing our new property for our recycling business, RDC and expanding our Service Desk in Barcelona, at a total cost of approximately £7 million. We have additionally seen some increase in the working capital, resulting from general growth in our business.
Trading Update 17 July 2012 Computacenter plc ("Computacenter" or the "Group"), the independent provider of IT infrastructure services and solutions is today providing an update on trading based on unaudited financial information for the six months ended 30 June 2012, in advance of the announcement of its interim results on Friday, 31 August 2012. Group Group revenue for the first half increased by 4% on a reported basis and 8% in constant currency. These growth rates include acquisitions made during 2011, for which the impact was minimal. Group Services revenue increased by 12% on a reported basis and 15% in constant currency. Group Supply Chain revenue grew by 1% over this period on a reported basis and 4% in constant currency. Focussing on the second quarter, we saw an increase in our Group Service revenue of 16% in constant currency and a decline in Group Supply Chain revenue of 2% in constant currency. As we stated in our trading update on 14 June 2012, while we have been pleased with the growth in our Services revenue, the increase in new business has come with significant additional start-up costs that will adversely impact profit in 2012. However, the Board believes that this incremental cost, which remains in line with our statement of 14 June 2012, will help secure Computacenter's long term growth potential and enhance the quality of earnings.
http://www.investegate.co.uk/Article.aspx?id=201207170700037798H
for 14.5k. a solid company, one to watch.
There has been something of a sinking fundamental feeling of late at IT services provider Computacenter (CCC). The April Q1 announcement noted a squeeze on margins, which escalated to a profits warning in June in spite of the fact the supply chain business had been forecast to hit high single digit percentage growth. Since then the shares have fallen from over 440p towards 300p, and with Computacenter having to invest in order to maintain growth, the sellers look likely to hold the upper hand for now
Mike Norris, CEO of Computacenter said: 'While we highlighted the necessity for investment in our statement of 18 April 2012, both the size and scope of the opportunities we have won have increased significantly, requiring us to invest further.' Our next scheduled trading update will be the pre-close update prior to our Interim Results, which is scheduled for 17 July 2012.
'Significant new business wins to incur additional start-up costs in 2012' Computacenter plc, Europe's leading independent provider of IT infrastructure services, today publishes a trading update and outlook for the full year, based on unaudited information. As we stated at the time of our Interim Management Statement on 18 April 2012, Services revenue growth has increased substantially and is likely to have grown in excess of 15% at a Group level, in constant currency, during the first half of 2012. This is clearly an acceleration, compared to the 11% growth rate experienced in the first quarter. As we look forward into the rest of the year, we see no indications that this growth rate will moderate, as it is underpinned by contracts already won, as well as a substantial new business pipeline. We expect that our Supply Chain business will experience high single digit growth for H1 2012 and while there are sectors of challenging market conditions, such as investment banking in the UK and the public sector in France, caused by the uncertainty around the changes in their Government, investment by our customers in capital expenditure projects, remains satisfactory. We are clearly pleased with the substantial Services growth rate, which is testament to the commercial market's appetite for Computacenter's offerings and our track record of excellent execution for our clients. However, it has become apparent to the Board that the significant amount of new business growth requires material investment through our P&L, to deliver successful take-on of the new business and drive high customer satisfaction to underpin Computacenter's success in the years ahead. The take-on cost of this new business includes, but is not limited to, the recruitment of over 700 new Services personnel and the transfer of many staff from customers and their historical suppliers. Clearly, there are material recruitment and training costs for these new starters. Our investment in systems, both back office and customer facing, has also been substantial. Understandably, we are seeing these capital investments increase our depreciation costs. The new business has also attracted significant costs associated to sales commissions, which are predominately paid up-front. These incremental investments to support our future growth are likely to cost Computacenter in the region of an additional £7 million in 2012, compared with our previous expectations. It should also be noted that the depreciation of the euro against sterling, if it were to remain at the current level, would impact Computacenter's profit in 2012 by approximately an additional £3 million.
http://www.investegate.co.uk/Article.aspx?id=201206140700133337F
Services Continue To Deliver For Computacenter The services business continues to deliver for Computacenter with the long-term picture looking rosy for the channel player, despite some current margin erosion. The firm revealed the state of its affairs in an interim management statement that indicated that since the start of the year its services business has increased by 9%, the same level as overall group revenue had climbed by. Some margin erosion had happened with the services business because of the on-boarding of contracts but the expectation was that in the long-term this would settle down and not be a feature. Specifically in the UK the revenues remained flat with an 8% increase in services revenue but a continued weakness in the supply chain revenue, which suffered a 5% decline. "Whilst Government IT expenditure remains weak, we have previously explained that this does not have a material effect on our profitability. We have however seen a capital spending freeze during the period, from many of our investment banking customers and this adverse customer and product mix has had a negative effect on our profit," the firm stated. http://www.microscope.co.uk/technology/services/services-continue-to-deliver-for-computacenter/ P.S. Here's a couple of links about SCLP, one of the hottest stocks at the moment: http://www.euroinvestor.com/community/discussionthread.aspx?threadid=252803 http://www.euroinvestor.com/community/discussionthread.aspx?threadid=253089
How Computacenter provides hosting options for customers who like their data and networks managed for them. More and more business users are opting for this; reducing there site requirements to encrypted links to an outsourced data centre from simple inexpensive terminals thus eliminating the considerable cost of having their own dedicated network infrastructure. http://www.youtube.com/watch?v=6l6LgJeL95U&feature=relmfu
Service Centres: Remote Infrastructure Management A video describing how Computacenter helps clients resolve I.T. infrastructure problems remotely: http://www.youtube.com/watch?v=rdqr5Ou_RLg&feature=relmfu