Computacenter says £459m war chest could fund M&A or investor payouts

 FTSE 250-listed Computacenter is weighing how to spend a record net cash position of £459million amassed last year, with takeovers and investor payouts under consideration. 

The group, which sells tech and related services to both the public and private sector, enjoyed record revenue and profits last year as big businesses ploughed huge sums into their IT systems.

London-based Computacenter saw its annual revenue rise by 7 per cent to £6.9billion as total sales increased by 11.3 per cent to over £10billion

Adjusted operating profit increased by 0.9 per cent to £271.5million on a reported basis and by 0.6 per cent at constant currency levels, largely reflecting the impact of inflation and ‘incremental investment in strategic initiatives’, the group said. 

Computacenter shares fell 6.8 per cent or 200.02p to 2,741.98p on Wednesday, having risen over 38 per cent in the last year. 

Analysts at UBS said the fall reflects ‘disappointment’ on revenues, which came in 6 per cent below market consensus, and an ‘especially weak UK performance’ in the second half of the year.  

The group’s net cash stash reached £459million, up 88 per cent from the previous year, reflecting an unwinding of computing inventory that was used to manage supply chain disruptions after Covid.

The firm’s board said this war chest provides it with ‘significant optionality’ and it was evaluating ‘a number of capital allocation options’, including potential merger and acquisition activity and ‘the return of surplus capital to shareholders.’

Despite a ‘continuing uncertain macroeconomic backdrop’, the group said it was well-placed to maintain a competitive e edge against rivals and gain further market share. 

Mike Norris, the group’s chief executive, added: ‘We delivered our nineteenth consecutive year of growth in adjusted earnings per share, outperforming our markets in 2023, as our large customers continued to invest heavily in new technology. 

‘We managed an uncertain macroeconomic backdrop and inflationary pressures effectively, reduced our inventory significantly, resulting in a record net cash position. As planned, we stepped up our investment in strategic initiatives to underpin our competitiveness and future growth.

‘Overall we expect 2024 to be another year of progress with growth weighted to the second half, while continuing to invest for future growth. Looking further ahead, the combination of the strength of our integrated Technology Sourcing and Services model and our geographic diversity, gives us continued confidence in our long-term growth prospects.’