UK-based computer reseller and IT services provider, Computacentre posted pre-tax profits for the six months to June 30 up 30% to 40.7m pounds ($65.82m), bucking analyst forecasts which had ranged between 39.6m pounds ($64.84m) and 40.5m pounds ($65.49m). Revenue climbed 16.6% to ?904.8m ($1.5bn).

Half-year performance contributed to a healthy balance sheet with net cash reserves standing at 33m pounds ($53.36m) from 21.1m pounds ($34.12m) at the close of 1998. But growth in overall sales slowed up on last year, hit by reduced hardware sales growth, a development the company blames on falling hardware prices and pre-Year 2000 uncertainty in the corporate market.

The company has factored depressed hardware sales driven by Year 2000 caution into its revenue projections for the second half of this year. It expects sales to bounce back in the New Year boosted by pent-up demand and corporate clamor for hardware to run Microsoft Corp's next generation operating system, Windows 2000.

Finance director, Tony Conophy also singled out desktop outsourcing as offering the company growing revenue opportunities in the future; a point echoed by Anthony Miller, analyst at UK IT company observer, Richard Holway & Associates. Holway & Associates tips the so-called "enhanced services" market, primarily made up of desktop outsourcing and managed services, as the fastest-growing sector in the UK software and services industry.

Holway sized market growth at 39% in 1998 reaching a total worth of 230m pounds ($371.93m) by year-end, and predicts the market will grow 30% this year to 300m pounds ($485.13m), growing above 20% a year for the next five. Computacenter expects its IT services business, which accounts for a growing proportion of revenue, to be immune to the date change sales downturn.

In July it reported the renewal of its flagship three-year deal providing desktop services to UK telecommunications giant, British Telecom, the country's biggest IT spender, under which it stands to earn an enhanced revenue stream. The present three-year deal to expire in October netted the firm 5% of total revenue last year.

The firm did not split out product sales from services revenue but a Computacenter spokesperson reported that support services contracts spanning helpdesk and call center functions showed more than 50% growth for the half. Technical services, including training, project management and Microsoft consulting grew by 60% said the spokesperson.

Computacenter is extending the range of Microsoft services it offers under an alliance with the software vendor announced last year which will see it train 900 Microsoft Certified Systems Engineers by 2002. It is currently in the throes of setting up an e-commerce division, recruiting 60 personnel to staff planned offerings spanning e-commerce project management and consulting, extant development and web site design.

Revenue and market share in the firm's fledgling continental Europe operations increased for the period. Computacenter France grew turnover 54.3% to FF1.06bn ($171.8m), and posted operating profits up 8.5% to FF12.4m ($2.01m). The company soaked up losses in line with expectation in Germany where it describes itself as in "investment mode". It acquired a presence in Germany in mid-1997, purchasing Bad Homberg-based Bit Services for 1.4m pounds ($2.26m) and has incurred expenses building a national infrastructure of sales outlets and service centres and boosting staff numbers from 80 to 312. Revenue in Germany increased 146.7% to DM94.4m ($51.27m) for the period and group accountant, Karen O'Donnell said the firm expected to turn a profit in the country by the end of next year. French business grew to 12% of group revenue from 9% in the first half of 1998. German business doubled its share of total revenue from 2% to 4% for the period.

The firm acquired the distributed systems and services division of ECSI International Belgium in June for 1.64m pounds ($2.65m) to establish a foothold in the Belgian and Luxembourg markets (CI No 3,683).