TIDMCCC
RNS Number : 7510Z
Computacenter PLC
12 March 2013
Computacenter plc
2012 Final Results
Computacenter plc, the independent provider of IT infrastructure
services and solutions, announces final results for the twelve
months ended 31 December 2012.
"Excellent UK performance, early signs of recovery in
Germany"
FINANCIAL HIGHLIGHTS
Underlying performance
-- Group revenues increased 2.2 per cent to GBP2.91 billion
(2011: GBP2.85 billion) and up 6.5 per cent in constant
currency
-- Adjusted* profit before tax decreased 4.0 per cent to GBP71.3
million (2011: GBP74.2 million) and broadly flat in constant
currency
-- Adjusted* diluted earnings per share ('EPS') decreased 3.5
per cent to 36.1 pence (2011: 37.4 pence), with 14.3 per cent
compound EPS growth over the past five years
-- Net funds prior to customer specific financing (CSF) was
GBP147.3 million (2011: GBP136.8 million)
Statutory Performance
-- Profit before tax decreased 10.1 per cent to GBP64.8 million (2011: GBP72.1 million)
-- Diluted EPS decreased by 17.6 per cent to 32.4 pence (2011: 39.3 pence)
-- Net funds after CSF of GBP128.6 million (2011: GBP113.6 million)
-- Total dividend for 2012 of 15.5 pence per share up 3.3 per cent (2011: 15.0 pence)
RETURN OF CAPITAL
-- During the course of 2013, the Board intends to return up to
GBP75 million to shareholders, in addition to the normal
dividend
OPERATING HIGHLIGHTS
-- Group annual Services contract base grew 11.0 per cent in
constant currency to a record GBP615.0 million (2011: GBP554.0
million)
-- Excellent performance in the UK with adjusted* operating
profit increasing 40.2 per cent to GBP52.2 million driven by strong
contribution from new Services contracts
-- German Services business adversely impacted by additional
resourcing costs associated with simultaneous contract wins,
however there are early signs of improvement in performance
-- Significant investment in France including head office
relocation and new logistics facility
-- Group-wide ERP system delivering operational benefits in the
UK and Germany with France on track to go live in H1 2013
-- Group operating model implemented in the UK and Germany since the start of 2013
Mike Norris, Chief Executive of Computacenter plc,
commented:
"We expect 2013 to be a year of progress for Computacenter.
While the Group financial outcome for 2013 will be dependent on the
in-year performance of Germany and the speed at which we recover
from our problem contracts, which is unpredictable, we are
confident that these contracts will improve. More importantly,
winning, contracting and taking on new contracts successfully, is
more fundamental to the long-term growth of the business and its
strategic development. This will be underpinned by our new Group
operating model, which has taken effect in the UK and Germany,
since the start of 2013.
Our pipeline for new business in the UK is significant, bringing
growth prospects for 2014 and beyond, whilst the pipeline is
beginning to grow in France and again in Germany. We therefore look
forward with confidence.
The cash generative nature of Computacenter's business has
resulted in a net cash balance in excess of our current needs.
While we intend to continue to maintain a robust and prudent
balance sheet, the Board believes that it is now appropriate to
consider a return of capital to shareholders, in addition to the
normal dividend. As soon as practicable in 2013, the Board intends
to return up to GBP75 million to shareholders and we are exploring
options as to the best mechanism to effect this return to all
shareholders."
*Adjusted profit before tax and EPS is stated prior to
amortisation of acquired intangibles and exceptional items.
Adjusted operating profit is also stated after charging finance
costs on CSF.
For further information, please contact:
Computacenter plc
Mike Norris, Chief Executive 01707 631 601
Tony Conophy, Finance Director
www.computacenter.com
Tulchan Communications 020 7353 4200
Christian Cowley
James Macey White
Rebecca Scott
www.tulchangroup.com
Chairman's statement
2012 was a year in which we stumbled in Germany, invested
significantly in France and reaped the reward of three years of
building and investing in the UK. We were disappointed with our
underestimations of the resource demands and associated costs of
starting a significant number of contracts simultaneously in
Germany. Taken together with our out-performance in the UK, the
impact upon our potential earnings was approximately GBP7.5
million. Our potential earnings reduced by a further circa GBP2.5
million due to currency movement. There is however a silver lining
to this cloud. We acted vigorously to ensure that the established
relationships with our customers and the long term value of the
contracts involved remained protected. In addition, it prompted a
comprehensive review of and alteration to, our bid and sales
processes in Germany and our overall operating model.
As a result, we have decided to accelerate our plans to
structure the Group on a Europe-wide basis. Our UK and Germany
propositions, bidding and contract management functions, are now
becoming aligned and our support functions of HR, Finance and
Commercial Operations are integrating across all countries. We are
able to move swiftly because of the successful ERP implementation
in Germany and the UK. At the same time, we shall deliver our ERP
system in France during the first half of 2013, allowing us to
expand and complete the new structure across the whole Group,
during 2014.
We are confident that our actions will address our growing pains
of 2012. Our focus remains on improving our Services margins and
revenues faster than our other business lines, and on managing our
working capital and cash.
In this report you will see the details of our performance for
the year, with a splendid result in the UK and overall revenue
growth of 6.5 per cent in constant currency, to just short of GBP3
billion. Profit was broadly flat in constant currency and our cash
balance, excluding customer specific finance, improved by circa 8
per cent.
The Company's cash generation over a number of years has
resulted in a cash position that will enable us to, over and above
the regular dividend, return up to GBP75 million to our
shareholders in 2013.
Once our Annual Report is published, please read the Directors'
Remuneration Report and judge for yourselves our determination to
ensure that our Executive Directors are paid commensurate with our
disappointing profit result. As the custodian of governance within
Computacenter, I also urge you to read the Corporate Governance
Report, which summarises our work in this regard.
I thank our employees for their efforts and results, our
customers for their faith in us and our partners for their
continued support. Above all, I thank you, our shareholders, for
your endorsement and support of our actions and strategy. Your
Company enters 2013 a little humbler but in good heart.
Greg Lock
Chairman
11 March 2013
CEO - Operating review - 2012
Group Overview
Overall Group revenue in 2012 increased by 2.2 per cent to
GBP2.91 billion (2011: GBP2.85 billion) and in constant currency,
Group revenue increased by 6.5 per cent. It was particularly
pleasing that the revenue growth was largely driven by our Services
business. It includes the impact of our 2011 acquisitions, which
was minimal at a Group level.
At a Group level and in absolute terms, our Supply Chain
business revenue declined marginally by 0.5 per cent, but in
constant currency, it grew by 3.9 per cent to GBP2.01 billion. The
gross margin percentage in our Supply Chain business reduced,
mainly due to a higher mix of lower margin desktop and laptop
products in 2012, driven by the Windows 7 roll-out programme. Given
the impending deadline to complete the refresh of Windows 7 before
the official support termination date for Windows XP in April 2014,
it is likely that the impact from this mix will continue part-way
through 2013, but should then revert to a more usual mix.
Group Services revenue increased by 8.6 per cent on an as
reported basis and by a strong 12.7 per cent in constant currency.
This significant growth reflects our continued drive to increase
the proportion of our total Group revenue that is generated from
our Contractual Services offerings, thereby improving the
visibility and predictability of that revenue. This year, above all
others, has confirmed the fundamental importance of successful
contract take-on and execution in generating significant Services
margin. The encouraging increase of approximately 6.3 per cent in
gross profit, delivered by Group Services in constant currency, was
largely reflective of our ability to provide very high levels of
Services execution throughout the year, in the UK.
We are extremely pleased with the performance and achievements
of the UK Services business, which are significant and have
ultimately proved to be the cornerstone of the Group's achievements
in 2012. While we believe it is unrealistic to anticipate the same
extent of Contractual Services growth in the UK in 2013, we are
fully aware of the need to maintain these levels of execution and
we are confident that the UK Services margin generated in 2012 is
sustainable.
The Group's adjusted* profit before tax fell by 4.0 per cent to
GBP71.3 million (2011: GBP74.2 million). The impact of currency
exchange rate fluctuation on the Group's profit levels was
significant and, in constant currency, the Group's adjusted
operating profit
remained broadly flat on 2011 levels. The Group's adjusted
diluted earnings per share ('EPS') fell by 3.5 per cent to 36.1
pence (2011: 37.4 pence). While we are disappointed that
profitability levels have not increased in 2012, compound EPS
growth over the past five years is still running at 14.3 per
cent.
The Group incurred GBP3.9 million in exceptional items relating
to one-off costs of relocations for RDC and in France, as well as
cost reduction initiatives during the final quarter of 2012 in
Germany. Therefore, on a statutory basis, taking account of these
exceptional items and amortisation of acquired intangibles, Group
profit before tax decreased by 10.1 per cent to GBP64.8 million
(2011: GBP72.1 million) and diluted EPS decreased by 17.6 per cent
to 32.4 pence (2011: 39.3 pence).
Group profitability levels in 2012 were materially affected by
the difficulties we experienced within our German business. These
have been well-documented and were, to a significant degree, an
illustration of what happens when our contractual terms and
conditions, take-on and execution processes do not adhere to the
standards we expect across the Group. An unusually high rate of
contract wins towards the end of 2011 in Germany, stretched
contract take-on resources to the point where processes failed and
exposed weaknesses within our internal governance procedures. As a
result, significant incremental cost was incurred by us in order to
endeavour to achieve appropriate customer satisfaction levels.
While we are very disappointed that this has occurred, we are
confident that the actions we have taken in Germany in response to
these issues, which have included a thorough review and alteration
of our governance processes, were correct to ensure both the
long-term interests of the Group's customers and shareholders and
to start releasing the earnings potential of these contracts over
the remainder of their lifetime. We are pleased to report that the
early signs of improved Services performance in Germany were noted
in the last quarter of the year and, whilst there remains much to
be done, we anticipate further progress in the months ahead.
Our balance sheet position had strengthened significantly by the
year-end. Net cash prior to customer specific financing at the end
of 2012 was GBP147.3 million (2011: net cash of GBP136.8 million).
Including CSF, net funds were GBP128.6 million (2011: GBP113.6
million). It should again be noted that these figures are flattered
by approximately GBP34.0 million (2011: GBP45.0 million) from
extended credit facility terms provided by one of our major
suppliers. These terms, which have been in place for over three
years, could be withdrawn at short notice.
The cash generative nature of Computacenter's business has
resulted in a net cash balance in excess of our current needs.
While we intend to continue to maintain a robust and prudent
balance sheet, the Board believes that it is now appropriate to
consider a return of capital to shareholders, in addition to the
normal dividend. As soon as practicable in 2013, the Board intends
to return up to GBP75 million to shareholders and we are exploring
options as to the best mechanism to effect this return to all
shareholders.
We are particularly pleased with our year-end cash position,
given that further cash growth was achieved despite some
significant capital investments during the year to further drive
business growth. These investments included the delivery of
efficiencies in our French logistics capability, by consolidating
all of the previous facilities in Paris into a single function at
Gonesse and investment into our French head-office relocation. In
addition, we have increased our investment in the upcoming French
ERP migration, which we expect will occur in May 2013. Our
strategic shift towards the provision of Services and Solutions has
continued apace and we continue to invest materially in further
developing our capabilities in this area. In particular, we are
continuing to invest in additional Service Desk capacity and
industry leading tools to assist in automating remote
infrastructure management.
The Board has decided to propose a final dividend of 10.5 pence,
bringing the total dividend paid for 2012 to 15.5 pence,
representing a 3.3 per cent increase on the 2011 total dividend
paid of 15.0 pence. This regular dividend is consistent with our
stated policy of maintaining dividend cover within our target range
of 2 to 2.5 times. Subject to the approval of shareholders at the
Annual General Meeting on 17 May 2013, the proposed dividend will
be paid on 14 June 2013 to shareholders on the register as at 15
May 2013.
We made one small acquisition towards the very end of the year,
with the addition of a Belgian company NEWIS SA and its subsidiary
Informatic Services IS SA, to the Group. We focused on
consolidating those acquisitions that had been made in 2011, with
Top Info in France now fully integrated into the French business,
allowing us to maximise the opportunity of cross-selling our
Service offerings to an expanded customer base. We continue to be
pleased with the integration of, and ongoing contribution from, our
Swiss business, originally named Damax, now Computacenter AG.
While acquisitions made by the Group during the past two years
have helped us increase the scale of our offerings, we continue to
focus on ensuring that we are well positioned to meet the demands
of our customers and adjust our offerings to accommodate any
changing demand trends within the IT market. For some time now, we
have seen our larger customers outsourcing their IT Infrastructure
needs, selectively, across the different IT disciplines and this
continuing trend has helped to drive Computacenter's Contractual
Services revenue growth. We benefit from this segmentation of the
market which allows us to compete, both in terms of size and
offerings, in those selected areas where we confidently believe we
have competitive advantage and can deliver value for our
customers.
We see our larger customers looking to us to deliver our
Services on an expanding, and even global scale. In order to
respond, we have made noteworthy additions to our Group Service
Desk capacity, expanding our existing facilities in Berlin and
Barcelona and investing into new facilities in Kuala Lumpur,
Malaysia and Dallas, Texas. The last of these is a direct result of
a material increase in the services we are providing in the US, as
evidenced by a circa 80 per cent increase in volume through our US
business compared to 2011.
It is important to note that a majority of our Contractual
Services wins in recent times have been second, or greater,
generation outsourcing contracts. This proves that the growth of
Computacenter's Contractual Services revenue is neither necessarily
related to, nor capped at, that level seen by the market
generally.
In order to drive further Managed Services growth, we continue
to focus on end-user support to our largest customers and invest
into tools and processes that make our Services offerings both more
productive and automated. This will allow us to grow the level of
our Services business across the Group, without a pro rata increase
in headcount, meaning that we are able to compete more effectively
in the market and pass on greater cost savings and efficiencies to
our customers, whilst retaining margin.
During 2012, we further developed the use of our ERP system,
particularly in the UK, enabling us to adopt a new Group-wide
operating model, implemented in the UK and Germany since the start
of 2013. Given that the system is now fully operational in the
largest components of our overall business, we are confident that
the migration in France, due in May 2013, will be smooth and that
we will see further enhancements to the drive to industrialise our
business take-on processes, across the whole Group.
Outlook
The Board expects 2013 to be a year of progress for
Computacenter. It is difficult at this early stage in the year, to
work out by how much. Last year's performance in the UK presents us
with a challenging comparison, particularly given the successful
number of business take-ons, which will not be repeated in 2013.
The solid UK Services margin position is likely to continue, albeit
it will grow at a more modest pace. While the Group financial
outcome for 2013 will be dependent on the in-year performance of
Germany and the speed at which we recover from our problem
contracts which is unpredictable, we are confident that these
contracts will improve. More importantly, winning, contracting and
taking on new contracts successfully, is more fundamental to the
long term growth of the business and its strategic development.
This will be underpinned by our new Group operating model, which
has taken effect in the UK and Germany, since the start of
2013.
The performance of our Supply Chain business, with its reliance
on customer capital expenditure, is less significant to the Group
as a whole than it once was, but for our French business, it
remains critical. As such, a fragile economic environment in France
is a cause for some concern.
Our pipeline for new business in the UK is significant, bringing
growth prospects for 2014 and beyond, whilst the pipeline is
beginning to grow in France and again in Germany. We therefore look
forward with confidence.
United Kingdom Operating Review 2012
2012 proved to be a very strong year for the UK business. Total
revenue for the year increased by 8.5 per cent to GBP1,195.6
million (2011: GBP1,102.2 million) and adjusted* operating profit
was up by 40.2 per cent to GBP52.2 million (2011: GBP37.3 million).
This significant growth has been delivered despite the broadly flat
performance of the UK economy during the period and the negative
impact that this has had on IT spend, most notably within the
Public and Investment Banking sectors.
Our performance in 2012 was principally driven by the increased
success of our Services business, which saw revenue grow by 15.3
per cent to GBP431.4 million (2011: GBP374.1 million) and Services
gross profit grow by around one third. We are extremely pleased
that, for the first time in Computacenter UK's history, over 50 per
cent of total gross profit generated was delivered by our Services
business. Our aspiration to continue to grow our Services business
is predicated on the fact that revenue resulting from our
Contractual Services offerings generally enjoy greater visibility
and longevity.
Over recent years, we have made significant investments into our
contract bidding and associated governance processes. We go to
considerable lengths to scrutinise all aspects that could prevent
the delivery of a high standard of service to our customers, as
soon as practical after business take-on. Although it has taken us
some time to reach the standards of service delivery to which we
have for a long time aspired, both within the UK and as a Group, we
have found that such standards are not easily achieved and
maintained without appropriate planning, expertise and discipline.
In 2012, within the UK business we reaped the benefit of our past
efforts and investment in this area.
We have leveraged our central shared services infrastructure and
delivery model to engage and deploy our capability and resources
efficiently. Three large new contracts, firstly with a global
provider of systems and services to the civil and defence
aerospaces, a global infrastructure and media company, and
AstraZeneca, a global research and pharmaceutical company, have
been successfully implemented in the UK during the course of the
year. The full revenue benefit of these contracts will be seen
throughout 2013 and beyond. However, we are fully aware that the
level of margin that we are able to generate from such contracts
depends, to a large degree, on our ability to sustain the levels of
execution that we managed to deliver in 2012.
Customers still value their IT independence and prefer to
outsource their IT requirements selectively. Our ability to advise
on, as well as transition and transform, their IT infrastructure to
respond to their business goals and competitive pressures, is
ensuring that we continue to win a significant number of second, or
greater, generation outsourcing contracts. This allows us not to be
solely reliant on new market growth in this sector. We continue to
focus on sustaining this trend, which mitigates our exposure to a
lack of market growth in this area and ensures that we perform
competitively against our peers. We believe this is borne out by
the fact that, in a market where Gartner predicted no more than 2.8
per cent growth in IT services for 2012, our contract base over the
course of year grew by 18.9 per cent to GBP291.0 million (2011:
GBP244.8 million). However, much of this new contract base has come
from contracts won towards the end of 2011, but which only started
to deliver revenue in 2012.
Our continual focus on customer satisfaction is of paramount
importance to us, not only in the commencement of new contracts,
but also over the life of contracts, as is evidenced by the
significant number of Contractual Services extensions and renewals
secured in the year, as well as additional repeat engagements of
our Professional Services. Our ability to deliver on customer
satisfaction has been rewarded with the number one ranking within
KPMG's UK Outsourcing Service Provider Performance and Satisfaction
(SPSS) Survey for 2012. We additionally achieved top place for
customer reference-ability and innovation within the same
survey.
Supply Chain revenue was up by 5.0 per cent at GBP764.2 million
(2011: GBP728.0 million), illustrating that it was the mix, as
opposed to the volume of product being purchased by our customers
that was the main contributing factor to a reduced profitability in
this business. Our Supply Chain business can be impacted
significantly by the short and medium term buying patterns of our
customers, which are both difficult to forecast and reliant on
external factors. The Supply Chain business was underpinned by
demand for Windows 7 transformations, particularly within the
Retail Banking, Industry and Retail sectors. These transformations
additionally enabled our Professional Services business to grow
revenues by 18.4 per cent, with significant engagements delivered
into the same sectors.
Our IT redeployment and recycling subsidiary, RDC, successfully
moved into their new and larger facility at Braintree, Essex at the
start of the year and this has enabled further opportunities to
deliver enhanced services to customers and improve earnings.
Adjusted* operating profit at RDC grew by 13.9 per cent during the
course of the year and we look forward to continuing this
growth.
While our UK performance in 2012 was very encouraging, the same
rate of Contractual Services growth is unlikely to continue in
2013, but if we continue to provide a high quality of service and
our delivery and execution remain as in 2012, we are confident that
we can sustain these healthy Services margins in 2013.
Germany Operating Review 2012
In 2012, total revenue for the German segment, in local
currency, increased by 4.1 per cent to EUR1,473.1 million (2011:
EUR1,415.3 million). A significant number of large Contractual
Services wins towards the end of 2011 assisted in driving this
growth and indeed, Services revenue in Germany increased by 8.7 per
cent to EUR484.2 million (2011: EUR445.5 million). This growth came
despite a strong Services revenue performance in the comparative
year of 2011.
This material increase in Contractual Services wins, largely
concentrated within the same period of late 2011, presented our
German business with a number of challenges. The situation was
exacerbated by the fact that the overall structure and contract
take-on processes proved inadequate and inappropriate for dealing
with such a significant number of Contractual Services wins at the
same time. It became clear that the German business did not have a
sufficient number of experienced staff required to deal with these
challenges. Our efforts to address this issue were also hampered by
a shortage of project, business take-on and contracting management
resource and skills in the overall German workforce. However,
significant incremental direct investment was made where deemed to
be necessary and appropriate to safeguard our customers.
The direct investment required in overcoming these challenges
has had a material impact on our profitability. Overall, adjusted*
operating profit for the year was reduced by 55.0 per cent to
EUR14.4 million (2011: EUR31.9 million).
While we are disappointed that our Services margins reduced
during 2012, we do believe that we took the correct approach in
protecting our customer relationships, our reputation and the
long-term interests of both the German business and the Group, as a
whole. We believe that this is due to the fact that we have not
suffered any customer attrition as a result of the issues outlined
above. We further believe that we will derive benefit in Germany
from the focused and robust review of our contract approval,
take-on and governance processes.
The German contract take-on processes have now been directly
aligned with those currently used in the UK, which have been
developed and refined over many years. If one considers the UK's
recent track record in this regard, we expect that this action
should bring long-term protection to the business from the same
issues being repeated in future.
We also believe that the action taken to date has already
brought early signs of stabilisation around the troubled contracts,
as evidenced by improved service levels and increasing Services
gross margins. Additionally, our Services profit margin for the
last quarter in the period increased by 2 per cent, compared to the
weak performance in the third quarter of 2012.
We have implemented additional indirect cost-saving activities,
which have been ongoing since the middle of the second quarter of
2012 and have resulted in indirect headcount reduction by close to
5 per cent from the position at the end of the first half of 2012.
This has resulted in an exceptional charge of EUR1.8 million in
2012 and we expect that the resulting and ongoing efficiency gains
and cost savings will reduce our cost base further in 2013, whilst
incurring some exceptional charges.
We have reduced our focus on winning new Contractual Services
business in Germany which has meant that we have been unable to
take full advantage of the market opportunity arising from the
growth in selective IT outsourcing. We believe that the action we
have taken towards stabilising the troubled contracts deserved
priority and that the revision of our take-on processes provides us
with a more solid foundation, as well as the confidence to
strengthen our pipeline and respond to
market demand at the appropriate time.
We were pleased with the significant recognition we received for
our Professional Services offerings, both in the areas of
consultancy and implementation. Pierre Audoin Consultants ranked us
as 'Best in Class' in the PAC Radar 'Workplace Management &
Transformation' category, as one of the three leading Services
providers in Germany. Our Professional Service activities have
included supporting a large complex Infrastructure Transformation
Project for KPMG Germany.
Our Supply Chain business grew by 2.0 per cent in local
currency. This was in spite of the particularly strong comparative
performance in 2011.We are pleased with this performance, given
that we are experiencing a general lack of economic confidence
linked to the overall Eurozone uncertainty. Our Supply Chain
business suffered from this slow-down, particularly during the
second quarter of the year, but regained strength during the second
half, to the extent where our Supply Chain revenue increased by 6.6
per cent in the second half, over the first half of the year.
The market in general has been fairly stable, but is not showing
comparable growth rates to those experienced in 2011. Demand for
Windows 7 and any 'desktop of the future' offerings remain high, as
it does for all Services and infrastructure needs to access Cloud
services and technology. In this area, we are pleased with an
accolade from the Experton Group, which ranked us as 'Cloud Leader'
in the Cloud Consulting and Cloud Integration arena.
France Operating Review 2012
In France, our overall revenue growth was 7.3 per cent, compared
to 2011, which included nine months of Top Info, to EUR591.5
million (2011: EUR551.3 million). Supply Chain revenue grew by 5.4
per cent, to EUR500.3 million (2011: EUR474.5 million), although
this was flat on a like-for-like basis.
Including the results for Top Info for the full year of 2012, we
delivered an adjusted* operating profit of EUR5.3 million (2011:
EUR6.9 million). Although a weaker performance than last year, we
are encouraged by the acceleration in performance during the second
half of 2012 since, at the half way mark of 2012, profitability of
the business was already trailing EUR1.1 million behind the same
period in 2011.
We believe there remains a significant opportunity to deploy
Computacenter's Services offerings to Top Info clients, but to
date, other operational and market challenges have been our primary
focus. We are encouraged that our Services business revenue grew by
18.7 per cent to EUR91.2 million 2011: EUR76.8 million), which
provides a positive outlook for our Services business during 2013
and beyond. As our focus can now turn to fully exploring our
opportunity with Top Info customers, we have the prospect of
enhancing our Services revenue mix even further.
Overall, we view the Top Info acquisition as a successful
acquisition for our business in France. Top Info is now fully
integrated, without the loss of any significant customers or
important members of staff and without the need for material
exceptional charges.
Our growth and earnings were challenged in the first half of
2012 by resource demand from the high number of Contractual
Services take-ons from wins during late 2011 and a degree of
under-utilisation following the natural end of very profitable
warranty maintenance agreements.
The second half of 2012 saw us complete a relocation of our
Head-office in the north of Paris, with a consolidation of some
other office locations into a single building. This was followed by
the fit-out of a newly designed logistics facility, into which a
variety of other storage facilities were merged. The logistics
consolidation and re-design will significantly improve the
efficiency of our logistic functionality. There were no customers
lost during this significant change period and even at this early
stage, following the warehouse relocation, some of our larger
customers, such as the French rail service, have commented
positively on the service improvement delivered by our
configuration and delivery functions.
These material changes to our offices and logistic facilities,
together with a full 12 months of Top Info costs, were the primary
contributors to the 3.2 per cent increase in SG&A in our
business; cost which we view as investment into the overall
efficiency and productivity of the business.
The strong Services revenue growth was driven, as anticipated,
by the healthy Contractual Services base growth in 2011 of 23.9 per
cent. We predicted that 2012 would not bring material expansion to
our Contractual Services base, for the reasons already set-out, but
also due to the renewal demands we knew the year would present. We
are delighted that our long standing customer, a world leader in
gases for industry, health and the environment, present in 80
countries and with 46,200 employees, has recently awarded us a
renewed three year contract, with the option to renew for a further
two years. This contract will not only utilise both our Managed
Services and Supply Chain offerings, but together with the
customer, we aim to further develop and expand our current Service
Desk capability, ultimately benefitting the Group as a whole.
2013 will also bring challenges, the most significant of which
is our migration to the Group ERP system, anticipated to be
completed by the end of the first half of 2013. We expect that the
change programme arising from the migration will be demanding, as
will some large contract renewals due this year. However, with the
major steps we have taken in strengthening our facilities and the
increased credibility in the market, we are confidently planning
Contractual Services growth in the second half of the year, which
should deliver benefit from 2014 and beyond.
Belgium Operating Review 2012
Our Belgium operation has again delivered a very strong
performance, building further onto its outstanding year in 2011,
with adjusted* operating profit increased by 29.8 per cent to
EUR2.3 million (2011: EUR1.8 million).
Overall revenue in the year increased by 13.4 per cent to
EUR56.1 million (2011: EUR49.5 million), with our Supply Chain
business growing by 9.6 per cent to EUR42.6 million (2011: EUR38.9
million) and the Services business growing by a very pleasing 27.2
per cent to EUR13.5 million (2011: EUR10.6 million).
Although we experienced growth in both our Professional and
Contractual Services businesses, the growth in the latter business
was particularly healthy at 22.8 per cent. This improves the
quality of our revenue significantly, providing us with longer term
performance visibility. As an example, Baloise Insurance, part of
the Swiss based Baloise Group, awarded Computacenter Belgium a
three year desktop Managed Services contract.
We also continue to experience an increasing degree of trust in
our capability to deliver innovation across more diverse
geographies. A global leader in the cosmetics industry has awarded
us a contract to supply, build and support interactive, in-store,
skin-health diagnostic kiosks across a large number of their
European retail sites, using Apple equipment.
Despite the growth in the year in our Supply Chain business,
this growth trend weakened over the last quarter, largely due to a
challenging comparison from an exceptional performance in the
fourth quarter of 2011. In part, however, and as previously
mentioned, the rate of growth we have experienced over the last
years is not likely to be sustained and our current efforts
are directed at stabilising our revenue base.
Whilst our improved quality of revenue will assist us in slowing
market conditions, we are very encouraged by our recent acquisition
of NEWIS SA, and its subsidiary Informatic Services IS SA, both
based in Louvain-la- Neuve, Belgium. This acquisition is too recent
to have made any contribution to our 2012 performance, but it bodes
well for the future, with strong synergy between their customers
and those of Computacenter, as well as bringing fresh Managed
Services offerings to align to our current portfolio.
Mike Norris
Chief Executive
11 March 2013
Finance Director's review 2012
Turnover and profitability
In 2012, Computacenter Group delivered further turnover growth,
although our record of profitability growth was interrupted by the
difficulties we experienced in our German business.
At a headline level, turnover grew by 2.2 per cent to GBP2.91
billion, although on a constant currency basis turnover growth was
6.5 per cent. Adjusted profit before tax reduced by 4.0 per cent
from GBP74.2 million to GBP71.3 million, albeit the impact of
exchange rates accounts for the vast majority of this
reduction.
After taking account of exceptional items and increased
amortisation of acquired intangibles following our acquisitions in
the year, statutory profit before tax decreased by 10.1 per cent
from GBP72.1 million to GBP64.8 million.
The Group profitability performance was mixed across our main
geographies. The UK experienced a 40.2 per cent increase in
adjusted* operating profit, which was offset by a 58.0 per cent
reduction in our German business due to difficulties in business
take on, and a 28.8 per cent reduction in France, which experienced
difficult market conditions, in particular in the first half of
2012.
Adjusted operating profit
Management measure the Group's operating performance using
adjusted operating profit, which is stated prior to amortisation of
acquired intangibles, exceptional items, and after charging finance
costs on customer specific financing ("CSF") for which the Group
receives regular rental income. Gross profit is also adjusted to
take account of CSF finance costs. The reconciliation of statutory
to adjusted results is further explained in the segmental reporting
note (Note 3) to the financial statements. For the purposes of this
statement, all subsequent references are to adjusted measures.
United Kingdom
UK revenues grew in 2012 by 8.5 per cent, increasing to
GBP1,195.6 million. Supply Chain revenues increased by 5.0 per
cent, driven by the demand for workplace and Windows 7 roll outs,
which in turn generated 18.4 per cent growth in Professional
Services revenues. Contractual Services revenue growth of 14.4 per
cent was achieved following a number of significant contract wins
in Q4 2011 that were successfully taken on in 2012. Overall,
therefore, Services Revenues grew by 15.3 per cent.
Whilst there was a lower margin in the Supply Chain business
from a greater mix of workplace product sales, the improved service
margin mix in the UK resulted in an adjusted gross profit increase
from 15.2 per cent to 15.4 per cent of sales. Adjusted operating
expenses ("SG&A") rose by 1.3 per cent, significantly less than
our gross margin improvement.
Overall this has resulted in a 40.2 per cent increase in
adjusted operating profit from GBP37.3 million to GBP52.2
million.
(DELTA>) Unless specifically stated, comments on growth rates
in overseas segments are stated in local/constant currency
Germany(DELTA>)
The pace of growth in our German business reduced in 2012.
Revenue, as reported, contracted in 2012 by 2.8 per cent to
GBP1,193.8 million (2011: GBP1,228.6 million), albeit in local
currency revenue increased by 4.1 per cent.
Following two very strong years of growth, Supply Chain revenues
consolidated in 2012, increasing by a modest 2.0 per cent, with the
majority of the growth in German revenues generated in Services,
which grew by 8.7 per cent.
However, during the year, losses in excess of EUR12 million were
generated during the take on phase of a number of contracts. Our
main focus during 2012 has been to stabilise these contracts, and
performance has started to improve in the fourth quarter of 2012 as
a result.
As a consequence, the gross margin return of the business
reduced significantly by 1.3 per cent points to 11.5 per cent.
SG&A had increased through 2011 and the first quarter of 2012.
However following a period of stabilisation in the middle of the
year, there was a reduction in SG&A headcount and expenses in
the latter part of 2012, and accordingly a EUR1.8 million charge
for redundancy expense was incurred, which has been disclosed as an
exceptional item.
Overall, the German segment operating profit reduced by 58.0 per
cent from GBP27.7 million to GBP11.6 million as reported, a
reduction of 55.0 per cent in local currency.
France(DELTA>)
The revenue in the French segment increased by 7.3 per cent in
the year. Supply Chain revenue increased by 5.4 per cent, although
the majority of this growth was due to the full year impact of the
acquisition of Top Info SAS in 2011. Following a series of
Contractual Services wins in 2011, Services revenue grew by 18.7
per cent.
The gross profit return in 2012 has been impacted by the scale
of Contractual Services take-ons and lower margins from service
delivery arrangements supporting customers on behalf of other parts
of the Group, reducing from 10.6 per cent to 9.9 per cent. In
absolute terms, gross profit is in line with 2012.
SG&A expenses have increased by 3.2 per cent, although the
2011 comparative includes only three quarters from our Top Info
acquisition, and there are some additional costs from the projects
undertaken to integrate Top Info, relocate the warehouse and office
facilities in Paris, and implement our Group ERP system in
France.
Overall, adjusted operating profit in France has therefore
reduced by 23.7 per cent in local currency, equating to a reduction
of 28.8 per cent as reported from GBP6.0 million to GBP4.3 million
in 2012.
Belgium(DELTA>)
Reported revenue increased by 5.8 per cent to GBP45.5 million
(2011: GBP43.0 million) equating to an increase of 13.4 per cent in
local currency. Whilst Supply Chain revenue increased by 9.6 per
cent, Services revenue growth was a pleasing 27.2 per cent.
Due to the increasing service mix of the business, gross profit
return on sales for Belgium overall improved from 10.7 per cent to
11.0 per cent. However, SG&A increased by 8.6 per cent, albeit
at a lower rate than our overall gross profit, mainly due to
increased commission costs from the improvement in gross margin.
Therefore, operating profit improved from GBP1.6 million in 2011 to
GBP1.9 million in 2012. In addition, on 28 December 2012,
Computacenter purchased NEWIS SA, and its subsidiary Informatic
Services IS SA, both based in Louvain-la-Neuve, Belgium, albeit
this acquisition did not contribute to the result of the Group in
2012.
Exceptional items
During the year, Computacenter France consolidated its
operations in a new office and began the move to a new warehouse.
In January 2012, RDC located to new premises in Braintree. The
one-off costs in relation to the relocation of these premises of
GBP2.4 million that have been disclosed as exceptional items relate
principally to:
-- operating lease rental expense charged on new properties
during the fit out period and prior to occupation;
-- redundancy expenses paid as a result of the integration and relocation activities; and
-- rental expense related to legacy properties after they had been vacated.
In the second half of 2012, Computacenter Germany undertook a
programme to reduce its SG&A by approximately GBP1.2 million
annually. The related redundancy expenses of GBP1.5 million, due to
their size and nature, have been included within exceptional
items.
Finance income and costs
Net finance income of GBP0.2 million was earned on a statutory
basis in 2012 (2011: net finance income of GBP0.2 million). This
takes account of finance costs on CSF of GBP1.1 million (2011:
GBP1.5 million). On an adjusted basis, prior to the interest on
CSF, net finance income decreased from GBP1.7 million in 2011 to
GBP1.3 million in 2012.
Taxation
The effective adjusted tax rate for 2012 was 23.3 per cent
(2011: 21.7 per cent). The deterioration was due to a lower mix of
overseas earnings in 2012 compared to 2011. However, the Group's
tax rate continues to benefit from losses utilised on earnings in
Germany and this year in France and further benefits from the
reducing corporation tax rate in the UK.
Deferred tax assets of GBP15.7 million (2011: GBP15.4 million)
have been recognised in respect of losses carried forward. In
addition, at 31 December 2012, there were unused tax losses across
the Group of GBP115.5 million (2011: GBP125.6 million) for which no
deferred tax asset has been recognised. Of these losses, GBP61.6
million (2011: GBP68.5 million) arise in Germany, albeit a
significant proportion have been generated in statutory entities
that no longer have significant levels of trade. The remaining
unrecognised tax losses relate to other loss-making overseas
subsidiaries.
Earnings per share and dividend
The adjusted* diluted earnings per share has reduced in line
with profit performance by 3.5 per cent from 37.4 pence in 2011 to
36.1 pence in 2012. Due to the impact of exceptional charges in
2012, and exceptional tax credit in 2011, the statutory diluted
earnings per share has reduced from 39.3 pence in 2011 to 32.4
pence in 2012.
The Board is recommending a final dividend of 10.5 pence per
share, bringing the total dividend for the year to 15.5 pence
(2011: 15.0 pence). Subject to the approval of shareholders at the
Annual General Meeting (AGM) on 17 May 2013, the proposed dividend
will be paid on 14 June 2013 to shareholders on the register as at
15 May 2013.
Acquisitions
On 28 December 2012, the Group acquired 100 per cent of the
voting shares of NEWIS SA and its subsidiary Informatic Services IS
SA (together "IS") for an initial consideration of EUR2.3 million
and a contingent consideration of EUR0.6 million dependant on
future performance. The net book value of the assets acquired
included EUR0.1 million of net cash and bank loans. The costs of
acquisition amounted to EUR0.1 million and are included in the
income statement. IS is based in Belgium and is a provider of
infrastructure services including end user support and system
administration.
During the first half of 2011, the Group acquired Top Info SAS
and HSD Consult GmbH and during the second half of 2011, the Group
acquired Damax AG. For each of these acquisitions, the book and
provisional fair values of the net assets acquired that were
disclosed in note 16 of the 31 December 2011 Annual Report and
Accounts are now final and are unchanged.
Cash flow
The Group's trading net funds position takes account of current
asset investments and factor financing when the Group entered into
such facilities, but excludes customer specific financing. There is
an adjusted cash flow statement provided in note 9 that restates
the statutory cash flow to take account of this definition.
Net funds excluding CSF increased from GBP136.8 million to
GBP147.3 million by the end of the year. The Group continued to
deliver strong cash generation from its operations in 2012, with
adjusted operating cash flow of GBP85.2 million (2011: GBP95.5
million). In the year we spent over GBP30 million on capital
expenditure, such as the relocation of our French warehouse and
offices in Paris, and further investments in the tools and systems
that support our services business, and underpin that growth.
This warehouse relocation and the integration of Top Info in
France, together with a general increase in accrued income
associated with significant contract take-on activity, resulted in
a working capital deterioration during the year. However, these
issues were resolved by the year end and as a consequence, the net
funds position at the end of the year was strong.
Whilst the cash position remains robust, the Group continued to
benefit from the extension of an improvement in credit terms with a
significant vendor, equivalent to GBP34.0 million at 31 December
2012, a decrease of GBP11.0 million from December 2011.
CSF reduced in the year from GBP23.1 million to GBP18.7 million
partially due to a decision to restrict this form of financing in
the light of the credit environment and reduced customer demand.
Taking CSF into account, total net cash at the end of the year was
GBP128.6 million, compared to GBP113.6 million at the start of the
year.
Return of capital
The cash generative nature of Computacenter's business has
resulted in a net cash balance in excess of our current needs.
While we intend to continue to maintain a robust and prudent
balance sheet, the Board believes that it is appropriate to
consider a return of capital to shareholders. During the course of
2013, the Board intends to return up to GBP75 million to
shareholders and we are exploring options as to the best mechanism
to effect this return for shareholders.
Customer specific financing
In certain circumstances, the Group enters into customer
contracts that are financed by leases or loans. The leases are
secured only on the assets that they finance. Whilst the
outstanding balance of CSF is included within the net funds for
statutory reporting purposes, the Group excludes CSF when managing
the net funds of the business, as this CSF is matched by contracted
future receipts from customers.
Whilst CSF is repaid through future customer receipts,
Computacenter retains the credit risk on these customers and
ensures that credit risk is only taken on customers with a strong
credit rating.
The committed CSF financing facilities, are thus outside of the
normal working capital requirements of the Group's product resale
and service activities.
The Group does not expect a material increase in the level of
CSF financing facilities, partly as the Group applies a higher cost
of finance to these transactions than customers' marginal cost of
finance. In addition, some of these requirements have been
satisfied through utilising a sale of receivables process.
Capital Management
Details of the Group's capital management policies will be
included within the financial statements.
Financial instruments
The Group's financial instruments comprise borrowings, cash and
liquid resources, and various items that arise directly from its
operations. The Group enters into hedging transactions, principally
forward exchange contracts or currency swaps. The purpose of these
transactions is to manage currency risks arising from the Group's
operations and its sources of finance. The Group's policy remains
that no trading in financial instruments shall be undertaken.
The main risks arising from the Group's financial instruments
are interest rate, liquidity and foreign currency risks. The
overall financial instruments strategy is to manage these risks in
order to minimise their impact on the financial results of the
Group. The policies for managing each of these risks are set out
below. Further disclosures in line with the requirements of IFRS 7
are included in the financial statements.
Interest rate risk
The Group finances its operations through a mixture of retained
profits, cash and short-term deposits, bank borrowings and finance
leases and loans for certain customer contracts. The Group's bank
borrowings, other facilities and deposits are at floating rates. No
interest rate derivative contracts have been entered into. When
long-term borrowings are utilised, the Group's policy is to
maintain these borrowings at fixed rates to limit the Group's
exposure to interest rate fluctuations.
Liquidity risk
The Group's policy is to ensure that it has sufficient funding
and facilities in place to meet any foreseeable peak in borrowing
requirements. The Group's positive net funds position was
maintained throughout 2012, and at the year-end was GBP147.3
million excluding CSF, and GBP128.6 million including CSF.
Due to strong cash generation over the past three years, the
Group is currently in a position where it can finance its
requirements from its cash balance, and the Group operates a cash
pooling arrangement for the majority of Group entities.
At 31 December 2012, the Group had available uncommitted
overdraft facilities of GBP20.3 million (2011: GBP15.9 million).
Should it be necessary, the Group will seek to enter into committed
facilities.
The Group manages its counterparty risk by placing cash on
deposit across a panel of reputable banking institutions, with no
more than GBP50.0 million deposited at any one time except for UK
Government backed counterparties where the limit is GBP70.0
million.
Customer specific financing facilities are committed.
Foreign currency risk
The Group operates primarily in the UK, Germany, France, and
with smaller operations in Belgium, Luxembourg, Switzerland, Spain
and South Africa. The Group uses a cash pooling facility to ensure
that its operations outside of the UK are adequately funded, where
principal receipts and payments are denominated in Euros. In each
country a small proportion of the sales are made to customers
outside those countries. For those countries within the Eurozone,
the level of non-Euro denominated sales is very small and, if
material, the Group's policy is to eliminate currency exposure
through forward currency contracts. For the UK, the majority of
sales and purchases are denominated in Sterling and any material
trading exposures are eliminated through forward currency
contracts.
The value of contracts where service is provided in multiple
countries has increased. The Group aims to minimise this exposure
by invoicing the customer in the same currency in which the costs
are incurred. For certain contracts, the Group's committed contract
costs are not denominated in the same currency as its sales. In
such circumstances, for example where contract costs are
denominated in South African Rand, the Group eliminates currency
exposure for a foreseeable future period on these future cash flows
through forward currency contracts. In 2012, the Group recognised a
gain of GBP0.5 million (2011: charge of GBP0.5 million) through
other comprehensive income in relation to the changes in fair value
of related forward currency contracts, where the cash flow hedges
relating to firm commitments were assessed to be highly
effective.
Credit risk
The Group principally manages credit risk through management of
customer credit limits. The credit limits are set for each customer
based on the creditworthiness of the customer and the anticipated
levels of business activity. These limits are initially determined
when the customer account is first set up and are regularly
monitored thereafter.
There are no significant concentrations of credit risk within
the Group. The Group's major customer, disclosed in note 3,
consists of entities under the control of the UK Government. The
maximum credit risk exposure relating to financial assets is
represented by carrying value as at the balance sheet date.
Going concern
As will be disclosed in the Directors' Report, when published in
the 2012 Annual Report and Accounts, the Directors have, after due
consideration and investigation, and having taken account of the
intended cash return, a reasonable expectation that the Group has
sufficient cash resources and available facilities to meet its
financial obligations for the foreseeable future. Accordingly they
continue to adopt the going concern basis in preparing the
consolidated financial statements.
Tony Conophy
Finance Director
11 March 2013
* Adjusted profit before tax is stated prior to amortisation of
acquired intangibles and exceptional items. Adjusted operating
profit is also stated after charging interest on CSF.
Risk management
Our Group Risk Committee (GRC) convenes quarterly and within the
revised structure, will be chaired by the new Group Chief Operating
Officer. The GRC is a sub-committee of the Group Executive
Committee and the minutes of all of the GRC meetings are included
within the information packs distributed to the Group Audit
Committee members.
The GRC is responsible for compiling, monitoring and evolving
the Strategic Risk Log (SRL). In this regard, the Committee
receives guidance from external advisors and the results of the
annual Business Risk Assessment (BRA), which is executed by all the
business leaders across the Group.
Ownership of the risks within the SRL is shared across the GRC
members and mitigation of those risks is monitored at the quarterly
meetings. A Key Risk Indicator 'dashboard' is in the process of
development with the aim being to provide 'at a glance' information
on the effectiveness of both mitigation measures and any variation
in risk size. The SRL also serves as a material driver in
determining the priority allotted within the Internal Audit Plan.
The Group Internal Auditor provides the Group Audit Committee with
feedback on the risk control measures being monitored and that the
assessment of risk is made at a senior level.
Going forward, the Board has agreed to scrutinise the management
of the risks contained on the SRL, by engaging in discussion on
five specific risks on the log per Board meeting from May 2013
onwards. Such scrutiny will assist the executive team in
prioritising the various risk mitigation strategies. To date, the
Board has actively participated in assessing risks and suggesting
suitable mitigation for implementation by the executive team. For
example, the Board has dedicated much effort into overseeing the
implementation of enhanced succession and talent development plans
over the last two years, as it has recognised that a lack of
management reserve with ability would be detrimental to the
continuity of the organisation's growth aspirations.
The agenda of items considered at a GRC meeting also includes:
Health and Safety, Insurance and Liabilities, Business Continuity
and IT Disaster Recovery, Corporate Sustainable Development and
Internal Audit reports.
Some of the risks contained on the SRL are detailed below,
aligned to the strategic objectives they could potentially impact
most:
Strategic Accelerating Reducing Maximising Growing Ensuring
objectives the growth cost the our the
of through return on profit margin successful
our Contractual increased working through implementation
Services efficiency capital increased of
business and and freeing services the Group-wide
industrialisation working and high-end ERP system
of our service capital supply
operations where chain sales
not optimally
used
Principal -- Our offerings -- Failure -- Following -- Resource -- With
risks may transpire to utilise significant demands a project
to be established progress could arise of this
uncompetitive and repeatable over the when scale there
within the processes, years in transitioning is the
market or specifically reducing multiple potential
an designed working new service that during
unforeseen for increased capital business early transition
or sudden efficiency, through opportunities operational
technology can result the disposal at or around issues could
shift in poor of the the same occur which
occurs where service distribution time. impact on
the market delivery business, Conversely, customer
develops and threatened as well resource service
appetite reputation. as other surplus levels and
for different Margin erosion working could result ultimately,
equipment and capital where a overall
and solutions significant optimisation contract financial
to those cost increases initiatives, reaches performance
offered. need to a material end of term of the Company.
Conversely, be incurred increase and
we could to recover in working is not renewed.
be motivated stability. capital -- Our vendor
into investing The demand could partners
significantly comprehensively harm further compete
into an reported progress in the
offering contract in this high-end
which transpires take-on regard. sales environment
to amount challenges and approach
to no more in our customers
than hype. Germany directly.
-- Our growth during 2012 A challenged
aspirations was an unfortunate economy
are impacted manifestation does tend
by the of this to impact
economic threat. supply
climate -- Driving chain activity
and with culture adversely.
a certain change from
level of being a
uncertainty fragmented
about a country
full return specific
to economic focused
stability organisation
in the short to becoming
term; there a single
is the potential Group,
for reduced could prove
capital challenging
expenditure and time
from consuming
customers. to embed.
Principal -- We formally -- We have -- There -- We have -- The transition
mitigations review all established is continued an established of the various
lost bids a task force focus on transition systems
and most to stabilise working and have
won bids the challenged capital transformational been phased
to ensure contracts controls activity over a period
that we in Germany. in each programme of circa
keep abreast Progress country with three
of of this at all levels, access to years, with
customer work is supplemented additional the other
expectation monitored by rigorous resources countries
from their by the Board target based as necessary providing
IT Services at each incentivisation utilising back-up
and Solutions meeting. system. our Master support
provider. At the same In future, Vendor relationship to the
We formally time, a the ERP which caters transitioning
review significant system will for bridging country.
our internal level facilitate any capability Lessons
service of focus a common and learnt from
providers is applied approach capacity 2011 transitions
against to ensuring to concerns in
price that the working that may Germany
points and same capital arise. End and the
benchmarked service management, of UK will
service operation across the contract be deployed
quality processes Group, through term exposures in
standards. are available best practice are reviewed future countries.
We tend and applied, and other well in
to invest across the working advance
selectively whole Group. capital and planning
into -- Organisational control for the
new offerings change where adoption. redeployment
and only only the of resource
when they sales is prioritised.
will be and customer -- Senior
complementary facing functions management
to our overall remain in work very
Services country closely
suite of and all with
offerings. operational our leading
-- We believe and business partners
that our support and customers
offerings activities in order
are targeted are driven to continually
specifically from central promote
towards Group functions, and protect
being beneficial should facilitate the value
to our and we bring
customers expedite to the customer.
who are the culture Computacenter's
looking change required. customers
to reduce demand optimisation
costs of their
and an uncertain IT
economic infrastructures
climate and to this
therefore end, vendor
tends to independent
favour our solutions
Contractual are imperative.
Services
aspirations.
We operate
within different
economies
that are
affected
differently,
at different
times and
our balance
sheet
remains
healthy.
Directors' responsibility statement
-- The financial statements, prepared in accordance with
International Financial Reporting Standards, as adopted by the EU,
give a true and fair view of the assets, liabilities, financial
position and profit for the Company and undertakings included in
the consolidation taken as a whole; and
-- Pursuant to the Disclosure and Transparency Rules the
Company's annual report and accounts include a fair review of the
development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face.
On behalf of the Board
Mike Norris Tony Conophy
Chief Executive Finance Director
11 March 2013
Consolidated income statement 2012 2011
For the year ended 31 December 2012 Notes GBP'000 GBP'000
Revenue 3 2,914,214 2,852,303
Cost of sales (2,539,955) (2,470,932)
----------- -----------
Gross profit 374,259 381,371
Administrative expenses (303,172) (307,377)
Operating profit:
------------------------------------------------------------ -------------- ----------- -----------
Before amortisation of acquired intangibles and exceptional
items 71,087 73,994
Amortisation of acquired intangibles (2,608) (1,986)
Exceptional items 4 (3,874) (131)
------------------------------------------------------------ -------------- ----------- -----------
Operating profit 64,605 71,877
Finance income 1,971 2,361
Finance costs (1,778) (2,136)
Profit before tax:
------------------------------------------------------------ -------------- ----------- -----------
Before amortisation of acquired intangibles and exceptional
items 71,280 74,219
Amortisation of acquired intangibles (2,608) (1,986)
Exceptional items (3,874) (131)
------------------------------------------------------------ -------------- ----------- -----------
Profit before tax 64,798 72,102
Income tax expense:
------------------------------------------------------------ -------------- ----------- -----------
Before amortisation of acquired intangibles and exceptional
items (16,578) (16,125)
Tax on amortisation of acquired intangibles 538 433
Tax on exceptional items 4 362 174
Exceptional tax items 4 - 4,427
------------------------------------------------------------ -------------- ----------- -----------
Income tax expense 5 (15,678) (11,091)
----------- -----------
Profit for the year 49,120 61,011
----------- -----------
Attributable to:
Equity holders of the parent 49,121 61,013
Non-controlling interests (1) (2)
----------- -----------
49,120 61,011
----------- -----------
Earnings per share
- basic 6 32.9p 41.0p
- diluted 6 32.4p 39.3p
Consolidated statement of comprehensive income 2012 2011
For the year ended 31 December 2012 GBP'000 GBP'000
Profit for the year 49,120 61,011
Items that may be reclassified to profit or
loss:
Gain/(loss) arising on cash flow hedge 494 (464)
Income tax effect (120) 116
--------- --------
374 (348)
Exchange differences on translation of foreign
operations (5,311) (4,495)
--------- --------
Other comprehensive loss for the year, net
of tax (4,937) (4,843)
Total comprehensive income for the period 44,183 56,168
--------- --------
Attributable to:
Equity holders of the parent 44,182 56,166
Non-controlling interests 1 2
--------- --------
44,183 56,168
--------- --------
Consolidated balance sheet 2012 2011
As at 31 December 2012 Notes GBP'000 GBP'000
Non-current assets
Property, plant and equipment 100,696 98,261
Intangible assets 104,612 104,242
Investment in associate 575 497
Deferred income tax asset 5 14,385 15,928
--------- ---------------
220,268 218,928
Current assets
Inventories 67,782 97,440
Trade and other receivables 573,661 548,968
Prepayments 46,250 43,042
Accrued income 58,029 47,019
Forward currency contracts 30 296
Current asset investment 8 10,000 10,000
Cash and short-term deposits 8 138,149 128,437
--------- ---------------
893,901 875,202
--------- ---------------
Total assets 1,114,169 1,094,130
--------- ---------------
Current liabilities
Trade and other payables 527,539 530,953
Deferred income 128,540 115,350
Financial liabilities 9,117 12,247
Forward currency contracts 584 464
Income tax payable 3,778 4,700
Provisions 4,373 2,689
--------- ---------------
673,931 666,403
--------- ---------------
Non-current liabilities
Financial liabilities 10,406 12,554
Provisions 6,455 9,059
Other non-current liabilities - 831
Deferred income tax liabilities 5 1,034 1,536
--------- ---------------
17,895 23,980
--------- ---------------
Total liabilities 691,826 690,383
--------- ---------------
Net assets 422,343 403,747
--------- ---------------
Capital and reserves
Issued capital 9,234 9,233
Share premium 3,769 3,717
Capital redemption reserve 74,957 74,957
Own shares held (13,848) (10,962)
Foreign currency translation reserve 2,325 7,638
Retained earnings 345,893 319,152
Shareholders' equity 422,330 403,735
--------- ---------------
Non-controlling interests 13 12
--------- ---------------
Total equity 422,343 403,747
--------- ---------------
Approved by the Board on 11 March 2013
MJ Norris FA Conophy
Chief Executive Finance Director
Consolidated statement of changes in equity
For the year ended 31 December 2012
Attributable to equity holders of the
parent
-------- --------------- --------
Foreign
Capital Own currency
Issued Share redemption shares translation Retained Non-controlling Total
capital premium reserve held reserve earnings Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------- -------- ---------- -------- ----------- ------------- -------- --------------- --------
At 1 January
2012 9,233 3,717 74,957 (10,962) 7,638 319,152 403,735 12 403,747
Profit for the
year - - - - - 49,121 49,121 (1) 49,120
Other
comprehensive
income - - - - (5,313) 374 (4,939) 2 (4,937)
-------------- ------- -------- ---------- -------- ----------- ------------- -------- --------------- --------
Total
comprehensive
income - - - - (5,313) 49,495 44,182 1 44,183
Cost of
share-based
payments - - - - - 2,176 2,176 - 2,176
Tax on
share-based
payment
transactions - - - - - 216 216 - 216
Exercise of
options 1 52 - 1,933 - (1,933) 53 - 53
Purchase of
own shares - - - (4,819) - - (4,819) - (4,819)
Equity
dividends - - - - - (23,213) (23,213) - (23,213)
-------------- ------- -------- ---------- -------- ----------- ------------- -------- --------------- --------
At 31 December
2012 9,234 3,769 74,957 (13,848) 2,325 345,893 422,330 13 422,343
-------------- ------- -------- ---------- -------- ----------- ------------- -------- --------------- --------
At 1 January
2011 9,233 3,697 74,957 (10,146) 12,137 279,674 369,552 10 369,562
Profit for the
year - - - - - 61,013 61,013 (2) 61,011
Other
comprehensive
income - - - - (4,499) (348) (4,847) 4 (4,843)
-------------- ------- -------- ---------- -------- ----------- ------------- -------- --------------- --------
Total
comprehensive
income - - - - (4,499) 60,665 56,166 2 56,168
Cost of
share-based
payments - - - - - 2,476 2,476 - 2,476
Tax on
share-based
payment
transactions - - - - - 296 296 - 296
Exercise of
options - 20 - 2,790 - (2,790) 20 - 20
Purchase of
own shares - - - (3,606) - - (3,606) - (3,606)
Equity
dividends - - - - - (21,169) (21,169) - (21,169)
-------------- ------- -------- ---------- -------- ----------- ------------- -------- --------------- --------
At 31 December
2011 9,233 3,717 74,957 (10,962) 7,638 319,152 403,735 12 403,747
-------------- ------- -------- ---------- -------- ----------- ------------- -------- --------------- --------
Consolidated cash flow statement
For the year ended 31 December 2012
2012 2011
Notes GBP'000 GBP'000
Operating activities
Profit before taxation 64,798 72,102
Net finance income (193) (225)
Depreciation 24,337 27,417
Amortisation 9,573 7,844
Impairment reversal - (398)
Share-based payments 2,176 2,476
Loss on disposal of property, plant and equipment 363 545
Loss on disposal of intangibles 184 33
Decrease/ (increase) in inventories 27,477 (13,698)
Increase in trade and other receivables (49,061) (67,372)
Increase in trade and other payables 16,755 87,687
Other adjustments 74 (3)
-------------- ----------------
Cash generated from operations 96,483 116,408
Income taxes paid (13,111) (14,384)
-------------- ----------------
Net cash flow from operating activities 83,372 102,024
-------------- ----------------
Investing activities
Interest received 1,926 2,316
Increase in current asset investment - (10,000)
Acquisition of subsidiaries, net of cash acquired (1,754) (24,840)
Increase investment in associate (100) (500)
Proceeds from sale of property, plant and equipment 1,074 1,449
Purchases of property, plant and equipment (22,906) (24,181)
Purchases of intangible assets (8,981) (10,487)
-------------- ----------------
Net cash flow from investing activities (30,741) (66,243)
-------------- ----------------
Financing activities
Interest paid (1,929) (2,513)
Dividends paid to equity shareholders of the parent 7 (23,213) (21,169)
Proceeds from share issues 53 20
Purchase of own shares (4,819) (3,606)
Repayment of capital element of finance leases (9,201) (17,415)
Repayment of loans (2,353) (1,971)
New borrowings 1,577 -
Decrease in factor financing - (16,500)
-------------- ----------------
Net cash flow from financing activities (39,885) (63,154)
-------------- ----------------
Increase in cash and cash equivalents 12,746 (27,373)
Effect of exchange rates on cash and cash equivalents (2,059) (1,776)
Cash and cash equivalents at the beginning of the year 126,784 155,933
-------------- ----------------
Cash and cash equivalents at the year-end 8 137,471 126,784
-------------- ----------------
Notes to the consolidated financial statements
For the year ended 31 December 2012
1 Authorisation of financial statements and statement of compliance with IFRS
The consolidated financial statements of Computacenter plc for
the year ended 31 December 2012 were authorised for issue in
accordance with a resolution of the Directors on 11 March 2013. The
balance sheet was signed on behalf of the Board by MJ Norris and FA
Conophy. Computacenter plc is a limited company incorporated and
domiciled in England whose shares are publicly traded.
The Group's financial statements have been prepared in
accordance with International Financial Reporting Standards
('IFRS'), as adopted by the European Union as they apply to the
financial statements of the Group for the year ended 31 December
2012 and applied in accordance with the Companies Act 2006.
2 Summary of significant accounting policies
Basis of preparation
The consolidated financial statements are presented in Sterling
and all values are rounded to the nearest thousand (GBP'000) except
when otherwise indicated.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of Computacenter plc and its subsidiaries as at
31 December each year. The financial statements of subsidiaries
are prepared for the same reporting year as the Parent
Company, using existing GAAP in each country of operation.
Adjustments are made on consolidation for differences that may
exist between the respective local GAAPs and IFRS.
All intra-group balances, transactions, income and expenses and
profit and losses resulting from intra-group transactions have been
eliminated in full.
Subsidiaries are consolidated from the date on which the Group
obtains control and cease to be consolidated from the date on which
the Group no longer retains control.
Non-controlling interests represent the portion of profit or
loss and net assets in subsidiaries that is not held by the Group
and is presented separately within equity in the consolidated
balance sheet, separately from parent shareholders' equity.
Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the
previous financial year except as follows:
The Group has adopted the following new and amended IFRS and
IFRIC interpretations during the year. Except as noted below,
adoption of these standards did not have any effect on the
financial performance or position of the Group. The other
pronouncements which came into force during the year were not
relevant to the Group:
IAS 12 Income Taxes (Amendment) - Deferred Taxes: Recovery of
Underlying Assets
The amendment clarified the determination of deferred tax on
investment property measured at fair value and introduces a
rebuttable presumption that deferred tax on investment property
measured using the fair value model in IAS 40 should be determined
on the basis that its carrying amount will be recovered through
sale. It includes the requirement that deferred tax on
non-depreciable assets that are measured using the revaluation
model in IAS 16 should always be measured on a sale basis. The
amendment is effective for annual periods beginning on or after 1
January 2012 and has been no effect on the Group's financial
position, performance or its disclosures.
IFRS 7 Financial Instruments: Disclosures - Enhanced
Derecognition Disclosure Requirements
The amendment requires additional disclosure about financial
assets that have been transferred but not derecognised to enable
the user of the Group's financial statements to understand the
relationship with those assets that have not been derecognised and
their associated liabilities. In addition, the amendment requires
disclosures about the entity's continuing involvement in
derecognised assets to enable the users to evaluate the nature of,
and risks associated with, such involvement. The amendment is
effective for annual periods beginning on or after 1 July 2011. The
Group does not have any assets with these characteristics so there
has been no effect on the presentation of its financial
statements.
Improvements to IFRS
In May 2012 the IASB issued its second omnibus of amendments to
its standards, primarily with a view to removing inconsistencies
and clarifying wording. These improvements are effective for annual
periods beginning on or after 1 January 2013. The adoption of the
amendments are not expected to have any impact on the financial
position or performance of the Group.
IAS 1 Presentation of Financial Statements
This improvement clarifies the difference between voluntary
additional comparative information and the minimum required
comparative information. Generally, the minimum required
comparative information is the previous period.
IAS 16 Property Plant and Equipment
This improvement clarifies that major spare parts and servicing
equipment that meet the definition of property, plant and equipment
are not inventory.
IAS 32 Financial Instruments, Presentation
This improvement clarifies that income taxes arising from
distributions to equity holders are accounted for in accordance
with IAS 12 Income Taxes.
IAS 34 Interim Financial Reporting
The amendment aligns the disclosure requirements for total
segment assets with total segment liabilities in interim financial
statements. This clarification also ensures that interim
disclosures are aligned with annual disclosures.
Standards issued but not yet effective
The standards and interpretations that are issued, but not yet
effective, up to the date of issuance of the Group's financial
statements are disclosed below. The Group intends to adopt these
standards, if applicable, when they become effective.
IAS 1 Presentation of Items of Other Comprehensive Income -
Amendments to IAS
IAS 19 Employee Benefits (Revised)
IAS 28 Investments in Associates and Joint Ventures (as revised
in 2011)
IAS 32 Offsetting Financial Assets and Financial Liabilities -
Amendments to IAS 32
IFRS 7 Disclosures - Offsetting Financial Assets and Financial
Liabilities - Amendments to IFRS 7
IFRS 9 Financial Instruments: Classification and Measurement
IFRS 10 Consolidated Financial Statements, IAS 27 Separate
Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IFRIC 20 Stripping Costs in the Production Phase of a Surface
Mine
The adoption of the standards is not expected to have any impact
on the financial position or performance of the Group.
3 Segmental analysis
For management purposes, the Group is organised into
geographical segments, with each segment determined by the location
of the Group's assets and operations. The Group's business in each
geography is managed separately and held in separate statutory
entities.
No operating segments have been aggregated to form the below
reportable operating segments.
Management monitor the operating results of its geographical
segments separately for the purposes of making decisions about
resource allocation and performance assessment. Segment performance
is evaluated based on adjusted operating profit or loss which is
measured differently from operating profit or loss in the
consolidated financial statements. At a Group level however
management measure performance on adjusted profit before tax.
Adjusted operating profit or loss takes account of the interest
paid on customer specific financing ('CSF') which management
consider to be a cost of sale for management reporting purposes.
Excluded from adjusted operating profit is the amortisation of
acquired intangibles and exceptional items as management do not
consider these items when reviewing the underlying performance of a
segment.
Restatement and classification of costs
Following our ERP implementation in the UK and Germany, the
Group has been able to further align its structure and therefore
how it classifies departmental costs between cost of sales and
administrative expenses. The Group estimates that the net impact of
these changes, principally related to pre-sales costs, has resulted
in approximately GBP2.9 million of costs being reported in cost of
sales in 2012 that were reported in administrative expenses
previously. This represents the Group's best estimate of the impact
of the changes made in the 2012 reported results. The results for
2011 have not been restated to reflect this change.
Segmental performance for the years ended 31 December 2012 and
2011 was as follows:
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------- --------- --------- --------- ----------
For the year ended 31 December 2012
Revenue 1,195,647 1,193,796 479,306 45,465 2,914,214
---------- --------- --------- --------- ----------
Results
Adjusted gross profit 183,914 136,992 47,297 4,984 373,187
Adjusted net operating expenses (131,686) (125,356) (43,033) (3,097) (303,172)
---------- --------- --------- --------- ----------
Adjusted segment operating profit 52,228 11,636 4,264 1,887 70,015
---------- --------- --------- ---------
Adjusted net interest 1,265
----------
Adjusted profit before tax 71,280
----------
Other segment information
Capital expenditure:
---------- --------- --------- --------- ----------
Property, plant and equipment 11,311 6,992 10,622 12 28,937
Goodwill and acquired intangible assets - - - 1,930 1,930
Software 7,803 1,022 156 - 8,981
---------- --------- --------- --------- ----------
Depreciation 14,258 8,601 1,418 60 24,337
Amortisation of software 5,838 1,024 103 - 6,965
Amortisation of acquired intangibles 481 1,183 944 - 2,608
Share-based payments 1,613 522 41 - 2,176
---------- --------- --------- --------- ----------
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- -------------- ---------- -------- ---------
For the year ended 31 December 2011
Revenue 1,102,184 1,228,574 478,583 42,962 2,852,303
-------------- -------------- ---------- -------- ---------
Results
Adjusted gross profit 167,305 157,355 50,636 4,610 379,906
Adjusted net operating expenses (130,040) (129,633) (44,651) (3,053) (307,377)
-------------- -------------- ---------- -------- ---------
Adjusted segment operating profit 37,265 27,722 5,985 1,557 72,529
-------------- -------------- ---------- --------
Adjusted net interest 1,690
---------
Adjusted profit before tax 74,219
---------
Other segment information
Capital expenditure:
-------------- -------------- ---------- -------- ---------
Property, plant and equipment 18,403 19,034 1,136 136 38,709
Goodwill and acquired intangible assets - 10,074 14,629 - 24,703
Software 8,951 1,428 108 - 10,487
-------------- -------------- ---------- -------- ---------
Depreciation 15,783 11,153 410 71 27,417
Amortisation of software 2,886 2,879 93 - 5,858
Amortisation of acquired intangibles 481 765 740 - 1,986
Impairment reversal - - (398) - (398)
Share-based payments 1,842 471 163 - 2,476
-------------- -------------- ---------- -------- ---------
Reconciliation of adjusted results
Management review adjusted measures of performance as shown in
the tables above. Adjusted profit before tax excludes exceptional
items and the amortisation of acquired intangibles as shown
below:
2012 2011
GBP'000 GBP'000
-------- --------
Adjusted profit before tax 71,280 74,219
Amortisation of acquired intangibles (2,608) (1,986)
Exceptional items (3,874) (131)
-------- --------
Profit before tax 64,798 72,102
-------- --------
Management also review adjusted measures for gross profit,
operating expenses, operating profit and net interest, which in
addition takes account of interest costs of CSF within cost of
sales (as these are considered to form part of the gross profit
performance of a contract). The reconciliation for adjusted
operating profit to operating profit, as disclosed in the
Consolidated Income Statement, is as follows:
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ------------- -------- -------- -----------
For the year ended 31 December 2012
Adjusted segment operating profit 52,228 11,636 4,264 1,887 70,015
Add back interest on CSF 226 846 - - 1,072
Amortisation of acquired intangibles (481) (1,194) (933) - (2,608)
Exceptional items (364) (1,484) (2,026) - (3,874)
----------- ------------- -------- -------- -----------
Segment operating profit 51,609 9,804 1,305 1,887 64,605
----------- ------------- -------- -------- -----------
For the year ended 31 December 2011
Adjusted segment operating profit 37,265 27,722 5,985 1,557 72,529
Add back interest on CSF 585 880 - - 1,465
Amortisation of acquired intangibles (481) (764) (741) - (1,986)
Exceptional items (656) (82) 607 - (131)
----------- ------------- -------- -------- -----------
Segment operating profit 36,713 27,756 5,851 1,557 71,877
----------- ------------- -------- -------- -----------
Sources of revenue
Within each geographical segment the Group has three sources of
revenue, which are aggregated and shown in the table below. The
sale of goods is recorded within Supply Chain and the rendering of
services is split into Professional and Contractual Services.
2012 2011
GBP'000 GBP'000
---------- ---------
Sources of revenue
Total Supply Chain revenue 2,005,584 2,015,582
Services revenue
Professional Services 220,254 216,906
Contractual Services 688,376 619,815
---------- ---------
Total Services revenue 908,630 836,721
---------- ---------
Total revenue 2,914,214 2,852,303
---------- ---------
Information about major customers
Included in revenues arising from the UK segment are revenues of
approximately GBP251 million (2011: GBP254 million) which arose
from sales to the Group's largest customer. For the purposes of
this disclosure a single customer is considered to be a group of
entities known to be under common control. This customer consists
of entities under control of the UK Government, and includes the
Group's revenues with central government, local government and
certain government controlled banking institutions.
4 Exceptional items
2012 2011
GBP'000 GBP'000
Operating profit
Acquisition-related costs - (999)
Costs in relation to relocation of premises (2,390) -
Redundancy costs (1,484) -
Deferred consideration reversed - 868
-------- ---------
(3,874) (131)
-------- ---------
Income tax
Exceptional tax items - 4,427
Tax on exceptional items included in operating profit 362 174
-------- ---------
362 4,601
-------- ---------
Exceptional items after taxation (3,512) 4,470
-------- ---------
Included within the current year are the following exceptional
items:
During the year Computacenter France consolidated its operations
in a new office and began the move to a new warehouse. In January
2012, RDC located to new premises in Braintree. The one-off costs
in relation to the relocation of these premises of GBP2.4 million
that have been disclosed as an exceptional item relate principally
to:
-- operating lease rental expense charged on new properties
during the fit out period and prior to occupation,
-- redundancy costs paid as a result of the relocation, and
-- rental expense related to legacy properties once they had been vacated.
In the second half of 2012, Computacenter Germany undertook a
programme to reduce its net operating expenses by approximately
GBP1.2 million annually. The related redundancy expenses of GBP1.5
million, due to their size and nature, have been included within
exceptional items.
Included within the prior year are:
-- acquisition related costs of GBP1.0 million incurred for both
successful and aborted acquisitions. This cost comprised of
consultancy, legal and professional and tax fees regarding the
acquisitions; and
-- due to circumstances arising after the acquisition date, the
performance criteria required to trigger deferred consideration of
EUR1 million that were previously expected to be achieved, were not
met. As a result, deferred consideration recognised had been
reversed, with the gain in the income statement disclosed as an
exceptional item.
The exceptional income tax credit for the prior year comprises
two items which, due to their size were disclosed separately as
follows:
-- the deferred tax asset in respect of losses in Germany was
re-assessed in line with management's view of the entity's future
performance. Where the reassessment exceeded the losses utilised in
the year, the change in the recoverable amount of the deferred tax
asset is shown as an exceptional item.
-- a deferred tax asset in respect of losses in France was recognised for the first time.
The income statement impact of both items were shown as an
exceptional tax item in 2011.
5 Income tax
a) Tax on profit on ordinary activities
2012 2011
GBP'000 GBP'000
---------------- --------
Tax charged in the income statement
Current income tax
UK corporation tax 14,820 10,484
Foreign tax 3,337 5,122
Adjustments in respect of prior periods (2,952) (1,425)
---------------- --------
Total current income tax 15,205 14,181
---------------- --------
Deferred tax
Origination and reversal of temporary differences (1,698) 294
Exceptional changes in recoverable amounts of deferred tax assets - (4,427)
Adjustments in respect of prior periods 2,171 1,043
Total deferred tax 473 (3,090)
---------------- --------
Tax charge in the income statement 15,678 11,091
---------------- --------
b) Reconciliation of the total tax charge
2012 2011
GBP'000 GBP'000
----------- --------
Accounting profit before income tax 64,798 72,102
At the UK standard rate of corporation tax of 24.5 per cent (2011:
26.5 per cent) 15,876 19,107
Expenses not deductible for tax purposes 1,885 869
Non-deductible element of share-based payment charge 211 168
Adjustments in respect of current income tax of previous periods (1,274) (382)
Higher tax on overseas earnings 276 284
Other differences (549) 677
Effect of changes in tax rate (140) 270
Utilisation of previously unrecognised deferred tax assets (2,098) (6,834)
Exceptional changes in recoverable amounts of deferred tax assets - (4,427)
Overseas tax not based on earnings 1,491 1,359
----------- --------
At effective income tax rate of 24.2 per cent (2011: 15.4 per cent) 15,678 11,091
----------- --------
c) Tax losses
Deferred tax assets of GBP15.7 million (2011: GBP15.4 million)
have been recognised in respect of losses carried forward.
In addition, at 31 December 2012, there were unused tax losses
across the Group of GBP115.5 million (2011: GBP125.6 million) for
which no deferred tax asset has been recognised. Of these losses,
GBP61.6 million (2011: GBP68.5 million) arise in Germany, albeit a
significant proportion have been generated in statutory entities
that no longer have significant levels of trade. The remaining
unrecognised tax losses relate to other loss-making overseas
subsidiaries.
d) Deferred tax
Deferred income tax at 31 December relates to the following:
Consolidated balance Consolidated income
sheet statement
2012 2011 2012 2011
GBP'000 GBP'000 GBP'000 GBP'000
-------- ------------ -------- -------------
Deferred income tax liabilities
Accelerated capital allowances 2,486 653 (680) (269)
Revaluations of foreign exchange contracts to
fair value - 74 - 18
Effect of changes in tax rate on opening liability - - (219) (234)
Amortisation of intangibles 2,334 - (440) -
Arising on acquisition 255 2,581 - (244)
-------- ------------
Gross deferred income tax liabilities 5,075 3,308
-------- ------------
Deferred income tax assets
Relief on share option gains 1,100 1,465 (42) 207
Other temporary differences 1,605 699 1,911 1,504
Effect of changes in tax rate on opening liability - - - 153
Revaluations of foreign exchange contracts to
fair value 6 116 59 -
Losses available for offset against future taxable
income 15,715 15,420 (116) (4,225)
-------- ------------
Gross deferred income tax assets 18,426 17,700
-------- ------------ -------- -------------
Deferred income tax charge 473 (3,090)
-------- -------------
Net deferred income tax asset 13,351 14,392
-------- ------------
Disclosed on the balance sheet
Deferred income tax asset 14,385 15,928
Deferred income tax liability (1,034) (1,536)
-------- ------------
Net deferred income tax asset 13,351 14,392
-------- ------------
At 31 December 2012, there was no recognised or unrecognised
deferred income tax liability (2011: GBPnil) for taxes that would
be payable on the unremitted earnings of the Group's subsidiaries
as the Group expects that future remittances of earnings from its
overseas subsidiaries will be covered by the UK dividend
exemption.
e) Impact of rate change
The main rate of UK Corporation tax was reduced to 24 per cent
from 1 April 2012. Finance Act 2011 further reduced the main rate
of UK Corporation tax to 23 per cent from 1 April 2013. Deferred
tax has been restated accordingly in these financial
statements.
Additional changes to the main rate of UK Corporation Tax are
proposed, to reduce the rate by 1 per cent per annum to 21 per cent
by 1 April 2014. These changes had not been substantively enacted
at the balance sheet date and consequently are not included in
these financial statements. The effect of these proposed reductions
would be to reduce the UK net deferred tax asset by GBP0.1
million.
6 Earnings per ordinary share
Earnings per share ('EPS') amounts are calculated by dividing
profit attributable to ordinary equity holders by the weighted
average number of ordinary shares outstanding during the year
(excluding own shares held).
Diluted earnings per share amounts are calculated by dividing
profit attributable to ordinary equity holders by the weighted
average number of ordinary shares outstanding during the year
(excluding own shares held) adjusted for the effect of dilutive
options.
Adjusted basic and adjusted diluted EPS are presented to provide
more comparable and representative information. Accordingly the
adjusted basic and adjusted diluted EPS figures exclude
amortisation of acquired intangibles and exceptional items.
2012 2011
GBP'000 GBP'000
------------- --------
Profit attributable to equity holders of the parent 49,121 61,013
Amortisation of acquired intangibles 2,608 1,986
Tax on amortisation of acquired intangibles (538) (433)
Exceptional items within operating profit 3,874 131
Tax on exceptional items included in operating profit (362) (174)
Exceptional tax items - (4,427)
------------- --------
Profit before amortisation of acquired intangibles and exceptional
items 54,703 58,096
------------- --------
2012 2011
000's 000's
------- -------
Basic weighted average number of shares (excluding own shares held) 149,387 148,793
Effect of dilution:
Share options 2,179 6,639
------- -------
Diluted weighted average number of shares 151,566 155,432
------- -------
2012 2011
pence pence
------ ------
Basic earnings per share 32.9 41.0
Diluted earnings per share 32.4 39.3
Adjusted basic earnings per share 36.6 39.0
Adjusted diluted earnings per share 36.1 37.4
------ ------
7 Dividends paid and proposed
2012 2011
GBP'000 GBP'000
-------- --------------
Declared and paid during the year:
Equity dividends on Ordinary Shares:
Final dividend for 2011: 10.5 pence (2010: 9.7 pence) 15,725 14,460
Interim dividend for 2012: 5.0 pence (2011: 4.5 pence) 7,488 6,709
-------- --------------
23,213 21,169
-------- --------------
Proposed (not recognised as a liability as at 31 December)
Equity dividends on Ordinary Shares:
Final dividend for 2012: 10.5 pence (2011: 10.5 pence) 15,589 16,157
-------- --------------
8 Analysis of changes in net funds
At
At 1 January Cash flows Non-cash Exchange 31 December
2012 in year flow differences 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ---------- -------- ------------ ------------
Cash and short-term deposits 128,437 11,806 - (2,094) 138,149
Bank overdraft (1,653) 940 - 35 (678)
------------ ---------- -------- ------------ ------------
Cash and cash equivalents 126,784 12,746 - (2,059) 137,471
Current asset investment 10,000 - - - 10,000
Bank loans - (144) - - (144)
------------ ---------- -------- ------------ ------------
Net funds excluding customer specific
financing 136,784 12,602 - (2,059) 147,327
Customer specific finance leases (21,624) 9,201 (6,031) 455 (17,999)
Customer specific other loans (1,524) 776 - 46 (702)
------------ ---------- -------- ------------ ------------
Total customer specific financing (23,148) 9,977 (6,031) 501 (18,701)
------------ ---------- -------- ------------ ------------
Net funds 113,636 22,579 (6,031) (1,558) 128,626
------------ ---------- -------- ------------ ------------
At
At 1 January Cash flows Non-cash Exchange 31 December
2011 in year flow differences 2011
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ---------- -------- ------------ ------------
Cash and short-term deposits 159,269 (29,014) - (1,818) 128,437
Bank overdraft (3,336) 1,641 - 42 (1,653)
------------ ---------- -------- ------------ ------------
Cash and cash equivalents 155,933 (27,373) - (1,776) 126,784
Current asset investment - 10,000 - - 10,000
Factor financing (16,494) 16,500 - (6) -
------------ ---------- -------- ------------ ------------
Net funds excluding customer specific
financing 139,439 (873) - (1,782) 136,784
Customer specific finance leases (24,894) 17,415 (14,528) 383 (21,624)
Customer specific other loans (3,532) 1,971 - 37 (1,524)
------------ ---------- -------- ------------ ------------
Total customer specific financing (28,426) 19,386 (14,528) 420 (23,148)
------------ ---------- -------- ------------ ------------
Net funds 111,013 18,513 (14,528) (1,362) 113,636
------------ ---------- -------- ------------ ------------
9 Adjusted management cash flow statement
The adjusted management cash flow has been provided to explain
how management view the cash performance of the business. There are
two primary differences to this presentation compared to the
statutory cash flow statement, as follows:
1) Factor financing is not included within the statutory
definition of cash and cash equivalents but, when the Group has had
factor facilities, operationally they have been managed within the
total net funds/borrowings of the businesses; and
2) Items relating to customer specific financing are adjusted
for as follows:
a. Interest paid on customer specific financing is reclassified
from interest paid to adjusted operating profit; and
b. Where customer specific assets are financed by finance leases
and the liabilities are matched by future amounts receivable under
customer operating lease rentals, the depreciation of leased assets
and the repayment of the capital element of finance leases are
offset within net working capital; and
c. Where assets are financed by loans and the liabilities are
matched by amounts receivable under customer operating lease
rentals, the movement on loans within financing activities is
offset within working capital.
3) Net funds excluding CSF is stated inclusive of current asset
investments. Current asset investments consists of a deposit held
for a term of greater than 3 months from the date of deposit which
is available to the Group with 30 days notice. The fair value of
the current asset investment as at 31 December 2012 is not
materially different to the carrying value.
2012 2011
GBP'000 GBP'000
-------- --------
Adjusted profit before taxation 71,280 74,219
Net finance income (1,265) (1,690)
Depreciation and amortisation 24,384 20,596
Share-based payment 2,176 2,476
Working capital movements (11,711) 281
Other adjustments 377 (358)
-------- --------
Adjusted operating cash inflow 85,241 95,524
Net interest received 1,118 1,268
Income taxes paid (13,111) (14,384)
Capital expenditure and disposals (30,813) (33,186)
Acquisitions and disposals (1,854) (25,340)
Equity dividends paid (23,213) (21,169)
-------- --------
Cash inflow before financing 17,368 2,713
Financing
Proceeds from issue of shares 53 20
Purchase of own shares (4,819) (3,606)
-------- --------
Increase/(decrease) in net funds excluding CSF in the period 12,602 (873)
-------- --------
Increase/(decrease) in net funds excluding CSF 12,602 (873)
Effect of exchange rates on net funds excluding CSF (2,059) (1,782)
Net funds excluding CSF at beginning of period 136,784 139,439
-------- --------
Net funds excluding CSF at end of period 147,327 136,784
-------- --------
10 Related party transactions
During the year the Group entered into transactions, in the
ordinary course of business, with related parties. Transactions
entered into are as described below:
Biomni provides the Computacenter e-procurement system used by
many of Computacenter's major customers. An annual fee has been
agreed on a commercial basis for use of the software for each
installation. Both PJ Ogden and PW Hulme are Directors of and have
a material interest in Biomni Limited.
The table below provides the total amount of transactions that
have been entered into with related parties for the relevant
financial year:
Amounts Amounts
Sales to Purchases owed by owed to
related from related related related
parties parties parties parties
GBP'000 GBP'000 GBP'000 GBP'000
-------- ------------- -------- --------
Biomni Limited 18 519 - 5
-------- ------------- -------- --------
Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made on terms
equivalent to those that prevail in arm's length transactions.
Outstanding balances at the year-end are unsecured and settlement
occurs in cash. There have been no guarantees provided or received
for any related party receivables. The Group has not recognised any
provision for doubtful debts relating to amounts owed by related
parties. This assessment is undertaken each financial year through
examining the financial position of the related party and the
market in which the related party operates.
11 Publication of non-statutory accounts
The financial information in the preliminary statement of
results does not constitute the Group's statutory accounts for the
year ended 31 December 2012 but is derived from those accounts and
the accompanying Directors' report. Statutory accounts for the year
ended 31 December 2012 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting. The
auditors have reported on those accounts; their report was
unqualified and did not contain statements under Section 498 (2) or
Section 498 (3) of the Companies Act 2006.
The financial statements, and this preliminary statement, of the
Group for the year ended 31 December 2012 were authorised for issue
by the Board of Directors on 11 March 2013 and the balance sheet
was signed on behalf of the Board by MJ Norris and FA Conophy.
The statutory accounts have been delivered to the Registrar of
Companies in respect of the year ended 31 December 2011. The report
of the auditors was unqualified and did not contain statements
under Section 498 (2) or Section 498 (3) of the Companies Act
2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UAAKROUAOAAR
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