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INTERVIEW-UPDATE 1-Systemat eyes cash return to shareholders

Published 09/14/2010, 05:30 AM
Updated 09/14/2010, 05:32 AM

* Could hand back cash next year-general manager

* Confident of reaching at least 3 pct margin goal in 2011

(Adds margin outlook for 2011, background, further detals)

By Ben Deighton

LASNE, Belgium, Sept 14 (Reuters) - Belgian computer firm Systemat plans to return more cash to shareholders due to the low interest it receives and is confident of reaching its 2011 target as it moves from selling hardware to services.

Last month shares in the company, which provides laptops and IT services to the European Commission and sells to ING as well as smaller firms, rose 9 percent after it handed back over 6 million euros ($7.7 million), leaving it with about 8 million euros on its balance sheet.

"I think eventually we will reimburse the 8 million. That could be next year, yes," General Manager Bernard Lescot told Reuters in an interview.

He said interest rates were in the range of 0.7 to 0.8 percent.

"When you are here, there is no point (keeping it in the bank)," Lescot said in the interview at the company's headquarters in Lasne, Belgium, a few kilometres from the battlefields of Waterloo.

If it handed back the full amount it would represent just over one euro per share, which closed at 4.85 euros on Monday.

He said the final decision would be taken once the company released full-year results in February next year.

TECH BUBBLE

It raised the cash to expand internationally in the late 1990s as its shares soared with the bubble in technology stocks. It has since abandoned its international plans.

During the tech bubble of the late 1990s the company's share price increased more than five-fold from 10 euros at the start of 1998 to a high of 54 euros per share in Feb. 1999.

By January 2001 the shares had fallen back to around 12 euros.

Systemat returned to a net profit for the first half of 2010, after making a loss in 2009, as its clients started spending again because they benefited from restructuring measures taken during the downturn.

The company primarily competes in Belgium with RealDolmen and Econocom.

Lescot, a joint founder of Systemat, said while 2010 would be an acceptable year, he was confident that Systemat would strike its long-term goal of a net profit margin of at least 3 percent in 2011.

"I think the big return will be for 2011, 2012," said Lescot.

"We are confident (of making the 3 percent in 2011)."

As more and more people work from home and as computers become increasingly mobile, Systemat is shifting its focus from mainly selling computer equipment to the more profitable business of providing IT services.

"We did five years ago 10 percent (of our turnover in) service, today we do 30 percent ... In five years we should do more service than sales," said Lescot. (For more stories on Euronext small- and mid-cap interviews, please double click on) ($1=.7770 euro) (Reporting by Ben Deighton; Editing by Louise Heavens)

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