Clive Hyland, CEO for PinkRoccade’s UK operation told ComputerWire: We started the headcount reduction in the last quarter and have taken out around 100 people. The target is 10% of the workforce, and we are almost there.

For the three-month period ended March 31, PinkRoccade reported a 73% drop in net profit to 600,000 euros ($720,000), on revenue that fell 8% to 174.6m euros ($209.5m). Profit was also hit by a 1.4m euro ($1.68m) charge for the workforce reduction in the UK. At the end of the period, the company’s solvency ratio had worsened to 26.4% from 27.1% at the end of 2003. Demand was also down 9% in the company’s core Netherlands market due to delays in signing new business, pricing pressure and the cancellation of a few contracts. At the end of the quarter PinkRoccade employed some 7,184 people down from 7,804 in the first quarter of 2003, and down from 7,436 at the end of December 2003.

Hyland said the UK division is planning to generate some 70m pounds ($123.7m) in revenue in 2004, and this will be up 4% from 99.6m euros ($119m) in 2003.

We expect to make 20m pounds ($35.2m) from professional services, 38m pounds to 40m pounds ($68.8m) from managed services, and 12m pounds ($21.1m) from distribution and maintenance, of which 10m pounds ($17.6m) will be in maintenance, he said.

PinkRoccade has also said it is looking to sell off its UK maintenance business but has yet to receive an adequate offer. Hyland said the deal would be structured as an outsourcing arrangement, through a contract with an external services provider. We still want to offer maintenance services, for example for EPOS tills in the retail sector, but the volume and investment means we need to look for a partner, he said. The type of profile is a company with a UK and western European presence, and it would be a deal of between two to five years. Hyland would not be drawn on the companies that had already tabled bids, but interested parties are likely to include firms such as SCC, Synstar, and Computacenter.

Despite the disappointing results, Hyland said the UK operation had its best quarter ever, although this has not been reflected in the results. We have signed 60m pounds ($105.6m) worth of renewal and new business between the start of the year and last week, he said. This included a 8m pound ($14.1m) renewal with shoe retailer Clark’s and a 2m pound ($3.52m) deal with Harcourt Education.

However, PinkRoccade as a whole could prove to be an attractive takeover candidate once it has gone through its restructuring. US-based outsourcers like CSC, HP and ACS are all looking to expand into continental Europe. The company has no long-term debt, and its share price slump to 10.6 euros yesterday valued it at just 245m euros ($294m), or a discount of three times its 2003 revenue of 738.6m euros ($886.3m).