Computacenter plc (LON:CCC), a leading independent technology and services provider, has published a trading update, based on preliminary unaudited financial information, for the year ended 31 December 2023.
Record adjusted1 profit before tax, with cash generation ahead of expectations, while continuing to invest for future growth
We expect FY 2023 to be another record year of adjusted1 profit before tax. This result has been delivered against the backdrop of uncertain macroeconomic conditions throughout the year while, as planned, increasing the level of investment in strategic initiatives. It reflects the strength of our integrated Technology Sourcing and Services model as well as our geographic diversity.
Total revenue, on a Gross Invoiced Income basis, increased by 12% on both a reported and constant currency basis driven by strong growth in Technology Sourcing and solid growth in Services. In Technology Sourcing, after a very strong performance in the first half of 2023, the second half of the year saw an anticipated normalisation of activity as certain projects were completed. Services revenue growth for the year was solid. Inflation remained a headwind, however we managed our margin recovery effectively as the year progressed.
By geography for the year, the strength of Germany and North America outweighed the impact of a weaker performance in the UK where, as previously highlighted, we have made changes to improve our performance.
Financial Position
As industry supply chains normalised across the year, following disruption during the pandemic, we have managed our inventory position very effectively and generated strong levels of cash. The Group’s adjusted net funds2, excluding IFRS16 lease liabilities, finished the year extremely strongly at around £450m, ahead of our expectations. December is the peak month in our annual cash cycle with net outflows expected to occur through to the end of March 2024.
Given the strength of our balance sheet, we are evaluating our options. Historically, Computacenter has a track record of returning surplus capital to shareholders when suitable acquisitions are not available.
Group Outlook
Looking ahead to 2024, in the context of a continuing uncertain macroeconomic backdrop, the Group is well positioned to continue to compete and gain further market share.
As anticipated, we expect to see Technology Sourcing volumes normalise in 2024 as some of the high volume, low margin projects we delivered, especially in the first half of 2023, were completed. In Services we expect continued growth while inflationary pressures are expected to moderate further.
We will continue to invest in strategic initiatives to enhance our systems and improve our competitive position to sustain our long-term performance. At the same time, we are increasingly focused on delivering productivity benefits across the Group.
Overall, we expect to make further progress in FY 2024 with a more challenging comparison in the first half of the year than in the second half.
Looking further ahead, we are excited by the pace of innovation and growth in demand for technology. With our strength in Technology Sourcing, Professional Services and Managed Services, and focus on retaining and maximising customer relationships over the long term, we believe that we are well placed to deliver profitable growth and sustained cash generation.
We look forward to publishing our final results for the year ended 31 December 2023 on Wednesday 20 March 2024.
Footnotes:
1 Adjusted profit before tax is stated before exceptional and other adjusting items, including gains or losses on business acquisitions and disposals and amortisation of acquired intangibles as Management does not consider these items when reviewing the underlying performance of the Segment or the Group as a whole.
2 Adjusted net funds or adjusted net debt includes cash and cash equivalents, other short- or long-term borrowings and current asset investments. Following the adoption of IFRS 16, this measure excludes all lease liabilities.
