How the UK's publicly listed resellers have responded to COVID-19
Resellers including Softcat and Computacenter have had their say on how the coronavirus could impact the IT market
The majority of the UK's publicly listed resellers have published statements on the impact of COVID-19, whether this be in scheduled trading updates or specific notes to investors. We've rounded up the highlights from each that has done so.
Computacenter
Computacenter published a strong set of yearly results on 12 March, but CEO Mike Norris voiced concerns over the impact of COVID-19.
"It is too early to predict the outcome for the year as a whole and there is still much work to be done, particularly as we have not yet completed our first quarter," he said.
He highlighted a surge on demand for laptops as businesses prepare for mass remote working, but also raised fears that IT projects could grind to a standstill, adding that supply chains could also be disrupted.
Computacenter has since announced the acquisition of BT's French business.
"The current coronavirus pandemic shows the importance of secure and reliable networks to our customers and this deal would significantly strengthen our existing French business in this growth area," Norris said.
How the UK's publicly listed resellers have responded to COVID-19
Resellers including Softcat and Computacenter have had their say on how the coronavirus could impact the IT market
K3
K3 announced earlier this week that it will be placing its £21m-revenue Microosft Dynamics resell business into administration as part of plans to boost liquidity.
It had earlier claimed that it was considering shuttering one of its "underperforming" business units.
The firm, which specialises in the retail sector, has also delayed the publication of its accounts for the year ending November 2019, on the advice of the Financial Conduct Authority and AIM.
"Whilst the board was encouraged by the company's trading prospects at the start of the current financial year, the unprecedented events now being experienced due to the coronavirus outbreak, which has resulted in contract delays and deferrals, make it difficult to forecast revenues for the year to 30 November 2020," K3 said.
It added that it will try to sell all or parts of the Dynamics business, highlighting that it is specifically shutting the UK arm.
In other efforts to shore up its liquidity, the solutions provider secured £6m in additional loans from Barclays bank and its two major shareholders, Kestrel Partners and non-executive director Johan Claesson.
Half of the loan will be provided by Barclays, while the remaining £3m will be split evenly between Kestrel and Claesson.
How the UK's publicly listed resellers have responded to COVID-19
Resellers including Softcat and Computacenter have had their say on how the coronavirus could impact the IT market
Maintel
Comms provider Maintel delayed the publication of its results for 2019 because of "recent unprecedented events", adding that it is too tricky to provide guidance for the current year.
It said that trading for 2019 was in line with expectations.
"However, it is worth noting that approximately 70 per cent of the Company's revenue for the last financial year was recurring, providing a base level of visibility for revenues in the current period," it added.
The firm also said that it is working with a number of both private and public sector businesses to "keep critical services running through this period".
How the UK's publicly listed resellers have responded to COVID-19
Resellers including Softcat and Computacenter have had their say on how the coronavirus could impact the IT market
RM
Education specialist RM has been impacted by the closure of schools and colleges and the cancellation of exams, scrapping its dividend on 19 March and claiming that the pandemic "will inevitably impact trading for the companies in the group".
It said that trading had been broadly unaffected at the time of publishing the note, but added that it was "evaluating a number of actions to balance the conservation of cash with the long-term needs of the business".
Boss David Brooks said: "As a market leader, RM's products and services underpin the national education system and the board remains confident of the Group's fundamental resilience and ability to pay dividends in the future."
A "material impact on trading is anticipated", RM added.
How the UK's publicly listed resellers have responded to COVID-19
Resellers including Softcat and Computacenter have had their say on how the coronavirus could impact the IT market
Shearwater
Cybersecurity provider Shearwater told investors that the increase in remote working as led to strong demand for its multi-factor authentication software.
"During March 2020, the universally substantial increase in remote working has resulted in group company SecurEnvoy experiencing an increase in demand for its security software products and this increased level of interest has resulted in a number of new contract wins and existing contract upgrades for its SecurIdentity MFA multi-factor authentication software solution," it said.
The firm's share price leapt eight per cent after the note to the stock exchange was published.
It added that it, at the time, it was yet to see any significant impact on profitability or cash flow as a result of COVID-19.
It has seen published a pre-close trading update, where it reported its expectations for unaudited EBITDA to be in excess of £3m for its year ending 31 March 2020, in comparison to a loss of £1.4m in its previous financial year.
How the UK's publicly listed resellers have responded to COVID-19
Resellers including Softcat and Computacenter have had their say on how the coronavirus could impact the IT market
Softcat
Softcat published upbeat results in March, with H1 revenue climbing over 20 per cent.
At the time, CEO Graeme Watt told CRN that the firm was yet to see any negative impact from COVID-19, adding that the reseller is among the many suppliers to see an increasing demand for laptops.
"Although this does create uncertain for the remainder of our financial year," Softcat said in a statement.
"Given the strength of our business model, lack of any bank debt and a strong cash position, we will continue to invest in our business and are confident in our ability to continue to build market share and drive profitable growth over the longer term."
Watt also said that demand for collaboration and audio visual solutions has increased, but added that these tend to be longer sales cycles.
The firm has since cancelled its interim dividend, which equated to over £10m.
How the UK's publicly listed resellers have responded to COVID-19
Resellers including Softcat and Computacenter have had their say on how the coronavirus could impact the IT market
Capita
Services giant Capita withdrew its financial guidance for 2020 in light of the COVID-19 outbreak, revealing that it has taken steps to boost the services it offers to public sector entities, particularly in healthcare.
It said that it is seeing "strong support" from major clients in the public sector, telecoms, utilities, and financial services, but added that other areas of business will be "more adversely impacted" by the pandemic.
Central overhead costs will be reduced to "bare minimum", Capita said, while discretionary expenditure has been reduced in areas including travel, marketing, training and recruitment.
It has also reduced the number of contractors it uses, adding that its cuts are expected to mitigate profit impact to the tune of over £100m.
Capita will be furloughing staff that cannot work from home and are not required in their normal workplace.
The firm's drawn out restructuring has also been put on hold, saving £25m this year, while VAT payments of around £100m have been deferred till next year.
"We are taking some tough, but prudent, cost-cutting decisions to protect our financial position and ensure we remain resilient as a business for the long term," CEO Jon Lewis said.
How the UK's publicly listed resellers have responded to COVID-19
Resellers including Softcat and Computacenter have had their say on how the coronavirus could impact the IT market
Redcentric
Redcentric said that it saw a "material increase in sales opportunities as a result of the COVID-19 pandemic".
It added that demand has been strong for increased bandwidth and its secure remote access tool in particular.
However it expects a slowdown of sales to new customers imminently, and also a reduction in the number of large projects from existing customers until the COVID-19 outbreak has been navigated.
But the firm expects to "withstand current challenges" as 90 per cent of its revenue is recurring, while half of its non-recurring revenue flows from the health sector, which is turning towards technology as it battles the virus.
How the UK's publicly listed resellers have responded to COVID-19
Resellers including Softcat and Computacenter have had their say on how the coronavirus could impact the IT market
Adept Technology Group
Adept chairman Ian Fishwick said that all of Adept's staff have been named key workers by the government, with its employee base moving to a remote working set-up.
He added that calls to the firm's support desk have increased by 85 per cent over recent weeks as clients adapt to working from home.
"We doubt that the world of work will return completely to 'as it was before', indeed we anticipate a 'new normal' where remote working is more prevalent - increasing the dependence on effective, unified communication, highly resilient networks and cloud technology," Fishwick said.
Adept declined to provide guidance for its current year ending 31 March 2021 due to the disruption caused by the disease.
It will cancel the £1.2m interim dividend which was due for payment this month and cautioned that it may not pay a final dividend for the recently finished fiscal year. It is also pausing any M&A activity and freezing pay and recruitment in order to limit cash outflows and reduce costs.
"We are convinced that we are well-positioned to survive the economic challenges of the Coronavirus," Fishwick added.