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‘Disappointing’ UK performance hits Computacenter’s bottom line

Full-year statutory profit before tax fell 31% to £87mln, with Computacenter’s UK operations mainly to blame
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Pre-tax profits in the UK more than halved

IT services provider Computacenter plc (LON:CCC) said a poor performance from its UK business was to blame for a slump in profits last year.

For the 12 months to 31 December 2016, statutory profit before tax plummeted by 31% to £87mln (2015: £127mln), despite revenues rising to £3.25bn (2015: £3.05bn).

Computacenter said the overall performance in its UK business was “disappointing”, with fewer new contracts being won in the period than had been expected.

That put margins under “significant” pressure, the company said, which led to statutory pre-tax profits in the UK division more than halving to £47mln (2015: £102mln).

Going forward, Computacenter told investors it expects to see “modest improvements” in the UK business this year.

The performance in the group’s German and French divisions helped to soften the weak performance at home.

Both performed ahead of expectations, with statutory profit before tax up 28% to €46mln (£40.2mln) (2015: €36mln) in Germany.

Likewise, a “major restructuring exercise” in France back in 2014 is still paying off and helped the division to swing to an operating profit of €2.1mln (£1.84mln) from a loss of €4.3mln (£3.76mln) a year earlier.

“It was a year of mixed fortune with the UK business profitability reducing materially but the overall group performance showing resilience due to the strength in Germany and the turnaround in France,” said chief executive Mike Norris.

“The group should have a year of progress in 2017, with a rebalancing of profits between the first and second halves of the year towards the historical pattern.”

Computacenter strengthened its cash position in 2016, finishing the period with £145mln in the bank compared to the £121mln it had at the end of 2015.

Despite the fall in profits, the company has proposed a final dividend of 15p per share, taking the total divi for the year to 22.2p, a 4% increase on last year’s 21.4p offering.

Shares were down 1%, or 5p, to 776p in early deals on Monday.

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