Computacenter says its £459 million war chest could fund mergers and acquisitions or payouts to investors

FTSE 250-listed Computacenter is considering how to spend its record £459m net cash position amassed last year, with acquisitions and investor payouts taken into consideration.

The group, which sells technology and related services to both the public and private sectors, achieved record sales and profits last year as major companies poured huge sums into their IT systems.

London-based Computacenter saw its annual turnover increase by 7 percent to £6.9 billion, while total revenue increased by 11.3 percent to more than £10 billion

Adjusted operating profit rose 0.9 percent to £271.5 million on a reported basis and 0.6 percent at constant exchange rates. This largely reflects the impact of inflation and “incremental investments in strategic initiatives,” the group said.

Computacenter shares fell 6.8 percent or 200.02p to 2,741.98p on Wednesday, after rising more than 38 percent in the past year.

Analysts at UBS said the decline reflected “disappointment” with sales, which were 6 percent below market consensus, and a “particularly weak UK performance” in the second half of the year.

The group’s net cash holdings were £459m, up 88 per cent on the previous year, reflecting a reduction in computer inventory used to manage supply chain disruptions post-Covid.

The company’s board said this war chest gives it “significant options” and that it was evaluating “a number of capital allocation options,” including potential merger and acquisition activity and “the return of excess capital to shareholders.”

Despite a “continued uncertain macroeconomic backdrop”, the group said it was well positioned to maintain a competitive advantage over rivals and gain further market share.

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

‘We have effectively dealt with an uncertain macroeconomic backdrop and inflationary pressures, significantly reducing our inventories, resulting in a record net cash position. As planned, we have increased our investments in strategic initiatives to support our competitiveness and future growth.

“Overall, we expect 2024 to be another year of progress, with growth concentrated in the second half as we continue to invest in 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.”