Against the backdrop of three loss-making contracts in Germany and a struggling French business, Computacenter’s UK operation has again performed well under the leadership of Neil Muller. Total UK revenue increased 2.4% to £592.1m, with adjusted operating profit up 14.2% to £20.1m. At the Group level, revenue was £1.43bn, up from £1.42bn in the comparable period last year, while adjusted profit before tax was £26.2m - up 1.9%.
That “adjusted” Group profit number refers to a one-off provision of £10.7m for future losses on the three troublesome German contracts. However, Computacenter is confident these problem deals are now under control. The “adjusted” figure also refers to a non-cash impairment of goodwill and acquired intangibles in France of £12.2m, due to “deterioration in business performance”. Unlike Germany, the situation in France continues to provide CEO, Mike Norris, with something of a headache.
Of course it is Computacenter’s UK services business that we watch particularly closely - and it is a business that continues to perform well. Although revenue growth of 5.9% is not in the same league as last year (see Computacenter’s “fantastic” first half services growth), following such a stonking performance in 2012 that was expected. The important point is that the pipeline for managed services remains strong, with a couple of large contracts due to close in September. Furthermore, the UK services business continues to improve operationally, pushing margins in the right direction. In all, it’s a good performance, especially when set against such tough market conditions.
We’ll have more analysis later today for subscribers in HotViewsExtra– including details following our call with CEO, Mike Norris.