TIDMCCC
RNS Number : 7559Y
Computacenter PLC
24 August 2018
Computacenter plc
Incorporated in England
Registration number: 03110569
LEI: 549300XSXUZ1I19DB105
ISIN: GB00BV9FP302
Computacenter plc
Interim results for the six months ended 30 June 2018
Computacenter plc ("Computacenter" or the "Group"), the
independent provider of IT infrastructure and services that enables
users and their business, today announces unaudited results for the
six-month period ended 30 June 2018.
Financial Highlights H1 2018 H1 2017 Percentage
Change
Increase/
(Decrease)
Financial Performance
Revenue (GBP million) 2,008.9 1,700.3 18.1
Adjusted(1) profit before tax
(GBP million) 52.1 41.9 24.3
Adjusted(1) diluted earnings
per share (pence) 32.7 25.6 27.7
Dividend per share (pence) 8.7 7.4 17.6
Statutory profit before tax (GBP
million) 52.0 47.5 9.5
Statutory diluted earnings per
share (pence) 31.6 28.3 11.7
Cash Position
Net funds(3) (GBP million) 49.7 137.3 (63.8)
Net cash flow from operating 8.4 11.4 (26.3)
activities (GBP million)
Revenue Performance by Sector
Services revenue (GBP million) 574.8 562.1 2.3
Technology Sourcing revenue (GBP
million) 1,434.1 1,138.2 26.0
Reconciliation between Adjusted(1) and Statutory
Performance
Adjusted(1) profit before tax (GBP
million) 52.1 41.9
Exceptional and other adjusting items:
Release of provision for onerous German
contracts (GBP million) - 1.4
Exceptional gain on disposal of an
investment property (GBP million) - 4.3
Amortisation of acquired intangibles
(GBP million) (0.1) (0.1)
Statutory profit before tax (GBP million) 52.0 47.5
Operational highlights
-- Group revenues exceed GBP2 billion for the half, the first
time this milestone has been reached in the first six months
of a year. The Group's total revenues grew GBP309 million during
the period, GBP288 million in constant currency(2) ;
-- Germany delivers another strong performance with revenue growth
of 11.4 per cent during the period driven by excellent Technology
Sourcing sales leading to a 53.1 per cent increase in adjusted(1)
operating profit, both on a constant currency(2) basis;
-- The UK continued positive sales momentum with growth of 29.5
per cent in revenue during the period, albeit flattered by
two very large margin-dilutive Technology Sourcing deals. These
Technology Sourcing margin challenges, and several challenging
Professional Services engagements, have resulted in an adjusted(1)
operating profit of 20.6 per cent during the period; and
-- France has successfully negotiated a difficult period of contract
renewals, and the expiry of a significant Managed Services
contract, with a revenue decline of 1.2 per cent contrasted
by a 41.2 per cent increase in adjusted(1) operating profit,
both on a constant currency(2) basis.
Mike Norris, Chief Executive of Computacenter plc,
commented:
"The Board's outlook remains in line with its expectation which
was upgraded on 12 July 2018. While the second half of the year is
a more difficult comparison to the first half, due to the
outstanding performance in H2 2017, 2018 is proving to be a year of
significant progress particularly for our Technology Sourcing
business.
The buoyant market conditions are being driven by a number of
factors specifically, but not limited to, the need to increase
network capacity, the constant need for enhanced cyber security,
workplace upgrades and a move to the cloud. While it is impossible
to predict how long these buoyant market conditions will continue,
most of these drivers have significant momentum.
As always Computacenter will continue to focus on the long term,
investing in our business, innovating our offerings and enhancing
our customer service. It is through delivering increased value and
competitive offerings to new and existing customers which enables
us to deliver shareholder value over the long term."
(1) Adjusted operating profit or loss, adjusted profit or loss
before tax, adjusted tax, adjusted profit or loss for the period,
adjusted earnings per share and adjusted diluted earnings per share
are, as appropriate, each stated before: exceptional and other
adjusting items including gain or loss on business disposals, gain
or loss on disposal of investment properties, amortisation of
acquired intangibles, utilisation of deferred tax assets (where
initial recognition was as an exceptional item or a fair value
adjustment on acquisition), and the related tax effect of these
exceptional and other adjusting items, as Management do not
consider these items when reviewing the underlying performance of
the Segment or the Group as a whole. Additionally, adjusted gross
profit or loss and adjusted operating profit or loss includes the
interest paid on customer specific financing (CSF) which Management
considers to be a cost of sale. A reconciliation between key
adjusted and statutory measures is provided within the Group
Finance Director's review included within this announcement.
Further detail is provided within note 4 to the summary financial
information included within this announcement, Adjusted
measures.
(2) We evaluate the long-term performance and trends within our
strategic objectives on a constant currency basis. Further, the
performance of the Group and its overseas Segments are shown, where
indicated, in constant currency. The constant currency
presentation, which is a non-GAAP measure, excludes the impact of
fluctuations in foreign currency exchange rates. We believe
providing constant currency information gives valuable supplemental
detail regarding our results of operations, consistent with how we
evaluate our performance. We calculate constant currency
percentages by converting our prior-period local currency financial
results using the current period average exchange rates and
comparing these recalculated amounts to our current period results
or by presenting the results in the equivalent local currency
amounts. Wherever the performance of the Group, or its overseas
Segments, are presented in constant currency, or equivalent local
currency amounts, the equivalent prior-period measure is also
presented in the reported pound sterling equivalent using the
exchange rates prevailing at the time. 2018 interim Financial
Highlights, as shown at the beginning of this announcement, and
statutory measures, are provided in the reported pound sterling
equivalent.
(3) Net funds includes cash and cash equivalents, CSF, other
short or other long-term borrowings and current asset
investments.
Enquiries:
Computacenter plc
Mike Norris, Chief
Executive 01707 631601
Tony Conophy, Finance
Director 01707 631515
Tulchan Communications
020 7353
James Macey White 4200
DISCLAIMER - FORWARD LOOKING STATEMENTS
This announcement includes statements that are, or may be deemed
to be, 'forward-looking statements'. These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms 'anticipates', 'believes',
'estimates', 'expects', 'intends', 'may', 'plans', 'projects',
'should' or 'will', or, in each case, their negative or other
variations or comparable terminology, or by discussions of
strategy, plans, objectives, goals, future events or intentions.
These forward-looking statements include all matters that are not
historical facts. They appear in a number of places throughout this
announcement and include, but are not limited to, statements
regarding the Groups' intentions, beliefs or current expectations
concerning, amongst other things, results of operations, prospects,
growth, strategies and expectations of its respective
businesses.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances.
Forward-looking statements are not guarantees of future performance
and the actual results of the Group's operations and the
development of the markets and the industry in which they operate
or are likely to operate and their respective operations may differ
materially from those described in, or suggested by, the
forward-looking statements contained in this announcement. In
addition, even if the results of operations and the development of
the markets and the industry in which the Group operates are
consistent with the forward-looking statements contained in this
announcement, those results or developments may not be indicative
of results or developments in subsequent periods. A number of
factors could cause results and developments to differ materially
from those expressed or implied by the forward-looking statements,
including, without limitation, those risks in the risk factor
section of the 2017 Computacenter Annual Report and Accounts, as
well as general economic and business conditions, industry trends,
competition, changes in regulation, currency fluctuations or
advancements in research and development.
Forward-looking statements speak only as of the date of this
announcement and may and often do, differ materially from actual
results. Any forward-looking statements in this announcement
reflect the Group's current view with respect to future events and
are subject to risks relating to future events and other risks,
uncertainties and assumptions relating to the Group's operations,
results of operations and growth strategy.
Neither Computacenter plc nor any of its subsidiaries undertakes
any obligation to update the forward-looking statements to reflect
actual results or any change in events, conditions or assumptions
or other factors unless otherwise required by applicable law or
regulation.
Chairman's statement
Managed for the long term
2017 was a record year for our Company in both revenue and
profit, and we anticipate that 2018 will be even better. The first
half has seen an increase in revenue of 18.1 per cent, to more than
GBP2 billion, and an increase in adjusted(1) profit before tax of
24.3 per cent, to GBP52.1 million.
Our customers have shown confidence in our Company, with UK
Technology Sourcing revenue soaring by more than 48 per cent,
German Services revenue showing good growth of 6.8 per cent in
constant currency(2) and French adjusted(1) gross profit growing by
14.2 per cent in constant currency(2) . We are pleased that one of
our largest, and oldest, French customers has awarded us a new
contract, after a very competitive tender.
As a result, we were able to announce increased expectations for
the full year in our unscheduled Q2 Trading Update on 12 July
2018.
Our employees have delivered in no uncertain terms over many
years and their contribution is reflected in Computacenter
receiving, from a leading industry publication, the TechMarket View
'Boring Company' award, for ten years of continuous EPS growth. I
thank them for their performance in the first half of this year,
which has resulted in an increase in revenue of some GBP300
million, on top of last year's increase of GBP548 million for the
full year. They are to be congratulated!
The Company returned a combined circa GBP121.1 million from the
2017 final dividend and the Return of Value Tender Offer, both
completed during the period.
We are very pleased with our progress but not satisfied, so we
continue to invest for our future and are redoubling our efforts to
improve everything we do.
Thank you for being shareholders in our Company. I hope you stay
with us for the long term.
Greg Lock
Chairman
24 August 2018
Our interim performance in 2018
Continuing to invest in our capabilities
Financial performance
The Group's revenues increased by 18.1 per cent to GBP2,008.9
million (H1 2017: GBP1,700.3 million) and were 16.8 per cent higher
in constant currency(2) .
The Group made a statutory profit before tax of GBP52.0 million,
an increase of 9.5 per cent (H1 2017: GBP47.5 million). The Group's
adjusted(1) profit before tax increased by 24.3 per cent to GBP52.1
million (H1 2017: GBP41.9 million) and by 23.8 per cent in constant
currency(2) .
The difference between statutory profit before tax and
adjusted(1) profit before tax primarily relates to the Group's
reported net loss of GBP0.1 million (H1 2017: gain of GBP5.6
million) from exceptional and other adjusting items. Further
information on these can be found within this announcement. With
the increase in the Group's overall profitability, statutory
diluted earnings per share increased by 11.7 per cent to 31.6 pence
for the period (H1 2017: 28.3 pence). Adjusted(1) diluted earnings
per share, the Group's primary measure, increased by 27.7 per cent
to 32.7 pence (H1 2017: 25.6 pence) in the first half of 2018.
The six months of trading to 30 June 2018 showed considerable
progress in Computacenter's adjusted(1) profitability and even
further progress in adjusted(1) earnings per share, following the
Return of Value Tender Offer completed in February 2018. The
improvement on the prior period was principally driven by the
German business, with the strong UK revenue performance in
Technology Sourcing somewhat constrained by declining Services
revenues and reduced margins in both Technology Sourcing and
Professional Services, particularly through the known incremental
low margin one-off opportunities.
As noted in our unscheduled Q2 Trading Update on 12 July 2018,
the Group's first half performance was ahead of the revised
expectations we set out at the time of our Q1 Trading Update on 27
April 2018.
We reiterate that, whilst the pleasing performance in the first
half has set a good platform for the full year, there remains a
significant amount to do in the second half to meet our recently
upgraded expectations, and to beat the second half of 2017, which
is a more difficult comparison than the first half of the year.
Segmental reporting structure changes
During the first half of the year, Management reviewed the way
it reported segmental performance to the Board and the Chief
Executive Officer, who is the Group's Chief Operating Decision
Maker ('CODM'), to determine whether it could improve the
transparency and understandability of the trading performance of
its core Group Operating Model geographies. As a result of this
analysis, and as endorsed by the Audit Committee, the Board has
decided to adopt a new segmental reporting structure from the
period ended 30 June 2018.
In accordance with IFRS 8 Operating Segments, the Group has
identified four revised operating segments:
-- UK;
-- Germany;
-- France; and
-- International.
As the location of the Group's headquarters, the UK entity has
also borne an increasing share of corporate costs since the rollout
of the Group Operating Model from 2013. Certain expenses such as
those for the Board itself and related public company costs, Group
Executive members not aligned to a specific geographic trading
entity and the cost of centrally funded strategic corporate
initiatives that benefit the whole Group, are not allocated to
individual segments because they are not directly attributable to
any single segment. Accordingly, these expenses are disclosed as a
separate column, 'Central Corporate Costs', within the segmental
note.
Under the previous segmental reporting structure, the UK segment
included a number of other operating entities, primarily
international Global Service Desk locations. Whilst these entities
have limited external revenues, and a cost recovery model that
suggests better than breakeven margins to ensure compliance with
transfer pricing regulations, this generated unnecessary complexity
when presenting the UK results to the Board and the CODM, with the
growth in the number and scale of these other operating entities
blurring the underlying performance of the core geography over
time. The revised UK segment now only comprises the trading
performance of Computacenter UK.
The German segment has been revised to remove the independently
run Computacenter Switzerland operation, including cITius, which
has been transferred to the International segment, leaving the
German country trading operations standing alone.
The new International segment replaces the Belgian segment and
includes the Belgium, Switzerland, USA and TeamUltra trading
operations, along with the international Global Service Desk
locations in South Africa, Spain, Hungary, Mexico, Poland,
Malaysia, India and China. The International segment has been
created to reflect the Group's ambitions to continue to expand its
worldwide footprint. This includes expanding trading operations
into new geographic locations, both within our Western European
heartland and beyond, and the need to continue to identify
talent-rich offshore locations, to ensure that we can remain both
cost and resource competitive in the Services marketplace.
The French segment remains unchanged from that reported at 31
December 2017.
This new segmental reporting structure is the basis on which
internal reports are provided to the Chief Executive Officer, as
the CODM, for assessing performance and determining the allocation
of resources within the Group.
Segmental performance is measured based on external revenues,
adjusted(1) gross profit, adjusted(1) operating profit and
adjusted(1) profit before tax.
The change in segmental reporting has no impact on reported
Group numbers.
Further information on this segmental restatement can be found
in note 5 to the summary financial information included within this
announcement where, to enable comparisons with prior period
performance, historical segment information for the periods ended
30 June 2017 and 31 December 2017 are restated in accordance with
the revised segmental reporting structure. All discussion within
this announcement on segmental results reflects this revised
structure, the reclassification of Central Corporate Costs and the
resultant prior period restatements.
Services performance
The Group's Services revenue increased by 2.3 per cent to
GBP574.8 million (H1 2017: GBP562.1 million) and was up 1.4 per
cent on a constant currency(2) basis. Within this, Group
Professional Services revenue increased by 3.0 per cent to GBP156.6
million (H1 2017: GBP152.0 million), and by 1.8 per cent on a
constant currency(2) basis, whilst Group Managed Services revenue
increased by 2.0 per cent to GBP418.2 million (H1 2017: GBP410.1
million), and by 1.2 per cent on a constant currency(2) basis.
UK Services revenue reduced during the first half of 2018, with
both Professional Services and Managed Services activity reducing
by a similar proportion. Professional Services faced a difficult
comparative against 2017, with the prior period including one
engagement that provided significant revenue. This year has seen
lower H1 volumes, however the forward order book for H2 is
rebuilding promisingly. Several Transformation projects during the
period experienced unplanned cost overspends, which constrained
Services margins. The Managed Services business continued to defend
its Contract Base by renewing and extending key contracts. Whilst
renewals are always pleasing, as they validate the efficacy of
incumbency and the 'stickiness' of our strategic approach, the
business did not win a number of tenders for new business and this
remains the focus during the rest of the year. Managed Services
margin performance largely met expectations, apart from significant
overspend on one Public Sector contract that again impacted overall
Services margins.
The German Services business continued to support the Group's
top line growth in this area. Demand for our Professional Services
business was weak during the first quarter of the year but
recovered strongly in the second quarter and benefited from a weak
prior-period comparative. A significant number of Professional
Services resources have been deployed to assist with technical
challenges on difficult Managed Services contracts. This, along
with the shortage of appropriately skilled resource in the
marketplace, has constrained Professional Services growth. The
Managed Services business saw good growth from prior-period
contract wins and continued to attract new customers during the
first half of the year. We have previously reported a number of
significant and complex Entry into Service projects that are now
complete, with these contracts successfully entering the 'run'
phase. However a number of contracts, including more recent wins,
continue to disappoint, restricting an otherwise successful six
months for the business. Margins have improved, in spite of the
challenges, but this is against a weak comparative period.
Our French Services business successfully negotiated a first
half made difficult by the loss of a significant Services customer
and the renewal, at reduced margins, of a significant Managed
Services contract. The business has redeployed resources that were
engaged on this contract that it lost. The Global Services Desk
operation in Montpellier, which only opened in 2015, continues to
be one of the Group's leading facilities and is a core part of the
French business's value proposition.
Overall Group Services margins declined by 80 basis points
during the first half of the year, when compared to the prior
period.
Technology Sourcing performance
Technology Sourcing is the new name for the Business Line
previously referred to as Supply Chain.
Our Technology Sourcing and lifecycle management services are
fundamental parts of our offering for our customers. Reselling
leading manufacturers' hardware and software products enables us to
'Source & Deploy' technology solutions for customers, and
underpins our Professional Services and Transformation solutions.
Most customers require a comprehensive solution, combining our
services with the systems they need to meet their IT and business
objectives. Our ability to seamlessly integrate vendor technology
into our solutions for customers is therefore critical.
The Group's Technology Sourcing revenue increased by 26.0 per
cent to GBP1,434.1 million (H1 2017: GBP1,138.2 million) and by
24.3 per cent on a constant currency(2) basis.
As noted in our Q1 Trading update on 27 April 2018, this revenue
performance was flattered by a one-off software licence sale in the
UK of GBP34.1 million, at very low margins. This deal, along with a
further very similar deal in the UK of GBP36.7 million in Q2 2018
and generally lower margins as the UK business has increased its
Software volumes, has reduced the Technology Sourcing margin
performance of the UK business, resulting in contribution growth
significantly lagging the spectacular increase in revenue.
The Technology Sourcing business in Germany saw significant
growth during the period, following an already pleasing performance
in the prior period. This business underpinned the Group's
performance throughout the first half of the year. The growth
continued to be dominated by the performance of both our Public
Sector business and a hyper-scale data center customer. With growth
across other sectors and portfolios more in line with expectations,
overall growth could reduce if the Public Sector business returns
to more normal patterns of growth or if volumes reduce for this
data center customer. Technology Sourcing margins improved even
further from the already Group-leading position in the prior
period, driven by the change in product mix to items with
significant Technology Sourcing value-add.
French Technology Sourcing revenues showed encouraging growth,
at better margins, as the widening portfolio of target customers
offset reduced activity by one of the business's largest Technology
Sourcing customers. This key Public Sector account saw reduced
volumes, as it went through an extensive rebid process that saw us
retain the account once again. We expect volumes on this key
account to return to a normal pattern towards the end of the
year.
Overall Group Technology Sourcing margins were flat during the
first half of the year, when compared to the prior period.
Outlook
The Board's outlook remains in line with its expectation which
was upgraded on 12 July 2018. While the second half of the year is
a more difficult comparison to the first half, due to the
outstanding performance in H2 2017, 2018 is proving to be a year of
significant progress particularly for our Technology Sourcing
business.
The buoyant market conditions are being driven by a number of
factors specifically, but not limited to, the need to increase
network capacity, the constant need for enhanced cyber security,
workplace upgrades and a move to the cloud. While it is impossible
to predict how long these buoyant market conditions will continue,
most of these drivers have significant momentum.
As always Computacenter will continue to focus on the long term,
investing in our business, innovating our offerings and enhancing
our customer service. It is through delivering increased value and
competitive offerings to new and existing customers which enables
us to deliver shareholder value over the long term.
Mike Norris
Chief Executive Officer
24 August 2018
United Kingdom
Financial performance
Revenues in the UK business increased by 29.5 per cent to
GBP858.1 million (H1 2017: GBP662.8 million).
The UK performance was driven by Technology Sourcing, with
strong revenue growth ahead of a buoyant market, particularly in
Software. The change in product mix reduced Technology Sourcing
margins compared to the first half of 2017.
Services revenues declined during H1, with isolated delivery
challenges which impacted our Professional Services return, but
pleasingly our committed forward order book has increased
significantly, as we secured a number of large Transformation
programmes. These will be delivered in the second half of the year
and beyond.
Adjusted(1) gross profit grew by 7.5 per cent to GBP99.4 million
(H1 2017: GBP92.5 million). This performance exceeded our
expectations, despite some challenging Professional Services
engagements.
Administrative expenses increased by 3.5 per cent to GBP73.6
million (H1 2017: GBP71.1 million), due to increasing variable
remuneration and a continuing focus on tactical investment plans as
we look to enhance our capabilities.
This resulted in adjusted(1) operating profit growing by 20.6
per cent to GBP25.8 million
(H1 2017: GBP21.4 million).
Overall, the performance in the first half has given us a solid
foundation for the year. We have a significant amount of work to do
but the continued momentum in our Technology Sourcing business and
a more favourable comparative in our Services business in H2 should
put us on course to deliver in line with our expectations for 2018
as a whole.
Services performance
Services revenue declined by 4.5 per cent to GBP225.1 million
(H1 2017: GBP235.6million). This resulted from a decline in
Professional Services of 5.3 per cent to GBP60.7 million (H1 2017:
GBP64.1 million) and a decline in Managed Services of 4.1 per cent
to GBP164.4 million (H1 2017: GBP171.5 million). Services margins
declined by 170 basis points.
The overall Services performance was disappointing. Our
Professional Services business has encountered two particularly
challenging projects that have required additional resources to
ensure that they remain on track and that we deliver on our
promises. One of the projects has been concluded commercially and
the other remains under contractual negotiation. This has resulted
in lower margin performance against a strong H1 2017 performance,
with two particularly large non-repeatable projects which were
completed. The outlook for H2 is more encouraging, as we see an
increasing demand for our Transformation services, particularly
driven by the need for our customers to migrate their workplace
environments to the latest Windows platform and their desire to
enhance their employee engagement.
We entered 2018 with several known headwinds in our Managed
Services business but have continued to renew and extend key
contracts, as well as transition new customers into our Services
Contract Base. We previously highlighted a material contract with
an international client that had decided to insource its operations
but pleasingly we have secured a large element of its business in
the customer's new operating model. The retention and expansion of
core Managed Services contracts typically helps drive our overall
business, as customers ask us to deliver associated Transformation
activity and also leverage our Technology Sourcing capability.
Whilst renewal activity has been positive, we remain very focused
on a small number of strategic opportunities, that will conclude in
H2, to stabilise the Contract Base.
We also continue to invest in and develop our operating models
and practices for efficiency, with our customers increasingly
leveraging centrally delivered shared services where possible, as
they strive to minimise operational expenditure.
Technology Sourcing performance
Technology Sourcing revenue increased by 48.2 per cent to
GBP633.0 million (H1 2017: GBP427.2 million).
The Technology Sourcing business saw an extremely strong
performance in the first half of 2018 across all industry sectors.
We benefited from significant investment by our customers, as they
continue to digitise their operations and modernise their
infrastructure. We saw particular growth in our Software business,
with customers seeking to simplify their operations by
consolidating to fewer technology partners, resulting in long-term
commitments and larger transactions. This resulted in Software
revenue growth of 160 per cent in H1 2018, compared to the prior
period. It is also pleasing that our growth was achieved across all
of our business lines, with expenditure in Workplace, Networking,
Data Center and Security continuing to be a key focus for
customers.
We also experienced increasing utilisation of our financing
solutions, enabling our customers to continue their investment in
line with their budget plans. We expect this trend to continue into
the second half and it gives us confidence for the full year and
beyond.
Technology Sourcing margins declined by 80 basis points compared
to the prior period, with the move towards lower margin software as
highlighted above. This was accentuated by two very large
transactions, one in the first quarter, and another in the second,
that were processed at low margins and thus have a disproportionate
dilutive impact. Throughout the first half of the year, Management
has initiated a number of activities to improve the underlying
efficiency and effectiveness of the Technology Sourcing business.
The benefit of these should be seen in the remainder of 2018, as we
look to improve the underlying margin return whilst further
improving the experience we deliver to our customers.
Neil Hall
Managing Director, UK
Germany
Financial performance
Total revenue increased by 11.4 per cent to EUR984.1 million (H1
2017: EUR883.2 million) and by 13.9 per cent in reported pound
sterling equivalents(2) .
Ongoing demand for infrastructure replacement and refreshes and
the implementation of new technologies drove Computacenter's
Technology Sourcing growth in Germany. The local economy remained
robust, encouraging customers to invest in innovation and the
associated underlying infrastructure. Services growth, whilst
satisfactory, did not keep pace and could have been stronger. The
lack of available resources across the German employment market
remains a growth inhibitor. This will drive us to move activities
to more near and offshore locations in the future.
Adjusted(1) gross profit grew by 14.0 per cent to EUR124.7
million (H1 2017: EUR109.4 million) and by 16.5 per cent in
reported pound sterling equivalents(2) .
Administrative expenses increased by 3.0 per cent to EUR88.1
million (H1 2017: EUR85.5 million), and by 5.4 per cent in reported
pound sterling equivalents(2) . This increase was below
expectations and remains an area of Management focus. We kept our
salesforce headcount flat, despite the revenue growth, but we are
now investing in areas where we need new talent and special skills.
Indirect cost growth remains tightly controlled.
Adjusted(1) operating profit for the German business increased
by 53.1 per cent to EUR36.6 million (H1 2017: EUR23.9 million) and
by 55.6 per cent in reported pound sterling equivalents(2) .
Overall, the first half performance was pleasing. Growth was
good compared to the comparative period and well above our already
demanding expectations. Whilst market conditions look set to remain
buoyant for Technology Sourcing, the second half comparative will
be difficult to grow from. The Services pipeline remains strong but
will require the onboarding of new personnel to satisfy customer
demand, which remains challenging. Whilst the economy continues to
drive forward, the political environment in Germany and the
European Union could lead to a premature curtailment of local
economic growth.
Services performance
Services revenue grew by 6.8 per cent to EUR304.6 million (H1
2017: EUR285.3 million) and by 9.3 per cent in reported pound
sterling equivalents(2) . This included Professional Services
growth of 4.8 per cent to EUR90.8 million (H1 2017: EUR86.6
million), an increase of 7.2 per cent in reported pound sterling
equivalents(2) , and Managed Services growth of 7.6 per cent to
EUR213.8 million (H1 2017: EUR198.7 million), an increase of 10.1
per cent in reported pound sterling equivalents(2) .
Services revenue growth was pleasing in the context of
significantly higher market demand but performance was held back by
resource shortages, especially in the Professional Services areas
of engineering and consultancy. In addition, we had to put more
staff into new Managed Services contracts, to stabilise and fix
technical challenges during the Entry into Service phase. Overall
Professional Services growth for the first half of the year was
therefore in line with expectations, with modest growth compared to
the same period last year. Managed Services growth was good,
benefiting from last year's wins and additional growth within
existing contracts.
Our teams successfully finalised a Transformation on the renewal
of our biggest networking operating contract. This included
successfully shifting to an Indian offshore solution, which gives
us confidence to use this offshore capability for future new
business. We also made a good start to a workplace Transformation
for an international industrial customer, with 15,000 seats. This
included fully implementing a Windows 10 and Office365 cloud
infrastructure and managing it afterwards. We are on the way to
finalising the Transformations of three other major contracts. Two
of these are new wins and the third is a renewal with a large and
innovative refresh. All three contracts place heavy demand on
skills and resources in certain technical areas. As they come to an
end, this should give us more resources, capabilities and
flexibility for upcoming new deals.
Our Professional Services business had a weak Q1, but a much
better Q2, when it saw significant growth. Overall performance in
the first half was in line with expectations. We are seeing
increasing demand from customers for Windows 10 proof of concepts,
migrations and rollouts. We should benefit from this in the second
half and in 2019. Cloud enablement, networking infrastructure
services and substantial demand in various security areas are also
driving the business. New wins and existing framework contracts,
especially in the Public Sector, give us the opportunity for
further growth, which is only limited by resource capacity. Our
infrastructure consultancy practice remained in high demand due to
its skillset and this looks set to continue. However, the ongoing
high demand for skills and personnel across Germany makes the
environment challenging for us and rest of the market.
Services margins were affected by Entry into Service and
Transformation cost overruns for new deals and by a small group of
underperforming contracts. We were aware that these underperforming
contracts would affect Services margin in the first half and,
overall, we ended up with a Services margin 60 basis points higher
than in the same period last year. Whilst slightly above
expectations, the Services margin is still below the level we
should achieve, due to the financial underperformance of these
contracts.
Technology Sourcing performance
Technology Sourcing revenue grew by 13.6 per cent to EUR679.5
million (H1 2017: EUR597.9 million) and by 16.1 per cent in
reported pound sterling equivalents(2) .
We saw strong demand in Workplace infrastructure refreshes,
initiated by Windows 10 projects and implementations. Cloud,
Security and Networking demand provided further growth. In
addition, we saw exceptional growth in the Data Center market, with
broad customer investments in private and hybrid cloud
infrastructures and the benefit of one hyper-scale customer, as we
built and expanded the cloud infrastructure for its software
platforms. The Public Sector grew during the first half but this
was constrained by the delay in approval for the Federal budget,
presenting opportunities to catch up in the second half of the
year. Networking and Security were slightly behind our growth
expectations. The focus in Networking is on refreshing the
infrastructure and preparing for the future, with more demand being
created by increasing public and hybrid cloud usage. Security
remains a growth-generating decision point for customers, across
all hardware and software investments. Technology Sourcing margins
remained strong and were up by 30 basis points over the same period
last year.
We made good progress with the new Integration Center in Kerpen,
which we will use for warehousing, configuration and logistics. Our
plan to prepare and move into the new facility towards the end of
the year is on track. The facility is approximately 30,000m(2) ,
giving us more space and flexibility for the future, especially for
the huge Workplace rollouts and complex Data Center integration
projects that we are increasingly seeing. The associated office
being built on the same site for 650 people is also on schedule and
will be ready for occupation in early 2019.
Reiner Louis
Managing Director, Germany
France
Financial performance
Total revenue decreased by 1.2 per cent to EUR262.2 million (H1
2017: EUR265.5 million). In reported pound sterling equivalents(2)
, total revenue was up 0.9 per cent.
With the French business having exceeded our expectations in
2017, we were pleased that the first half of 2018 matched the
comparative period from the prior year. The business had a
challenging set of expectations for the first half, with slowdowns
in several key contracts during their renewals, including the
largest Technology Sourcing framework contract in France.
Technology Sourcing margins were higher than in the first half of
last year and in line with those seen in the second half of 2017,
compensating for a large Services contract expiry and allowing the
business to both stabilise and add further new Services and
Technology Sourcing customers.
Overall adjusted(1) gross profit grew by 14.2 per cent to
EUR27.4 million (H1 2017: EUR24.0 million) and by 16.4 per cent in
reported pound sterling equivalents(2) .
Whilst French headcount has remained flat, we have transformed
the structural makeup of the workforce. Over the last four years,
engineering roles have decreased by one third and Managed Services
operations roles have nearly quadrupled. We have invested in
resources to support our development of Solutions and Services for
our target customers. Our Private Sector organisation was also
realigned to our core target customers, giving us better focus on
their needs. This will help us to retain and maximise our
relationship with them over the long term, with the objective of
increasing the number of customer accounts with contributions of
over GBP1 million, in line with the Group's full year strategic
objectives. Whilst Management continued to focus on cost control
within the French business, these investments resulted in
administrative expenses increasing by 12.1 per cent to EUR25.0
million (H1 2017: EUR22.3 million), and by 14.6 per cent in
reported pound sterling equivalents(2) . The business has launched
a recruitment drive for sales specialists in the second half of the
year, to further support our long-term development plan and enable
us to exploit addressable opportunities within the marketplace.
Adjusted(1) operating profit for the French business increased
by 41.2 per cent to EUR2.4 million (H1 2017: EUR1.7 million), and
by 40.0 per cent in reported pound sterling equivalents(2) .
The strong comparative period means the second half of the year
remains challenging but we are pleased with the business's
resilience, as it continues to develop its breadth of customers, to
increase stability and the potential for growth.
Services performance
Services revenue declined by 11.8 per cent to EUR54.8 million
(H1 2017: EUR62.1 million) and by 9.6 per cent in reported pound
sterling equivalents(2) . Professional Services declined by 13.7
per cent to EUR10.1 million (H1 2017: EUR11.7 million), which was a
decrease of 11.9 per cent in reported pound sterling equivalents(2)
. Managed Services declined by 11.3 per cent to EUR44.7 million (H1
2017: EUR50.4 million), a decrease of 9.0 per cent in reported
pound sterling equivalents(2) .
As previously reported, the expiry of a large Managed Services
contract at the end of 2017 materially impacted the top line of the
Services business. The contract itself was relatively low margin
compared to the rest of the Contract Base, so the impact on overall
Services gross profit was not as pronounced. Another key Managed
Services contract was also renewed during the period, which
suppressed revenue and margins whilst the contract was reconfigured
as part of the renewal process.
We were pleased with our recent wins, with contracts in both
Professional Services and Managed Services with customers who are
new to the Group and within our target market of large Private and
Public Sector organisations. This has given the business real
resilience and reduced the over-reliance on several key customers.
These wins, and the current pipeline, make us confident of further
Managed Services growth in the near term.
We signed several large Windows 10 implementation and
Transformation projects, which will have a positive impact on our
Project and Consultancy practices in the second half of 2018 and
into 2019. We see rising demand for these Windows 10 and Workplace
Transformation projects from new pipeline prospects within our
target operating segment, as well as additional Professional
Services opportunities generated by pull-through from our expanding
Managed Services customer base.
Services margins increased by 30 basis points over the same
period last year, due primarily to the expiry of the previously
mentioned low margin large Managed Services contract.
Technology Sourcing performance
Technology Sourcing revenue grew by 2.0 per cent to EUR207.4
million (H1 2017: EUR203.4 million) and by 4.1 per cent in reported
pound sterling equivalents(2) .
We saw lower than expected activity from our largest Technology
Sourcing customer, impacting mainly in software. We are, however,
pleased that one of our oldest and largest framework contracts has
now renewed after a lengthy process. Over performance from new
customer wins within our target market of large Private and Public
Sector organisations helped to stabilise overall Technology
Sourcing revenues and, more importantly, produced a more favourable
product mix, with an increase in Data Center and Networking
solutions revenues.
As usual at this time of year, there is still much work to do to
secure Technology Sourcing business in the second half and
traditionally there is considerable focus on the last quarter of
the year. With a positive economic climate in France, a strong
short-term pipeline and the recent wins of some high-volume
framework tenders in the Public Sector, we are optimistic about our
chances of exceeding the overall Technology Sourcing revenue
achieved in 2017.
Technology Sourcing margins increased by 190 basis points, due
to the marked change in product mix towards higher-value product
with more value-added Technology Sourcing activities, and less
Software. We expect margins to reduce slightly from this level
during the remainder of the year, as the new framework contract
with our largest Technology Sourcing customer starts to come into
operation.
Arnaud Lepinois
Managing Director, France
International
International segment
The new International segment comprises a number of trading
entities and offshore Global Service Desk delivery locations.
The trading entities include TeamUltra, based in Surrey, UK,
which is a ServiceNow consultancy; Computacenter USA, which
provides local services to the American subsidiaries of a number of
large Western European Group customers; Computacenter Switzerland,
which is an independent business providing predominately Services
and some limited Technology Sourcing activity to large local Swiss
financial services customers; and Computacenter Belgium.
These trading entities are complemented by the offshore Global
Service Desk entities in Spain, Malaysia, India, South Africa,
Hungary, China and Mexico which have limited external revenues.
On top of their operational delivery capabilities, the Belgian
and Swiss entities have in-country sales organisations, which
enable us to engage with local customers. Our ambition is to grow
other entities in the International segment with similar in-country
sales structures and to develop new geographies over time, either
organically or through selective acquisitions.
Financial performance
Revenues in the International business increased by 11.3 per
cent to GBP54.1 million (H1 2017: GBP48.6 million) and by 14.4 per
cent in constant currency(2) .
Adjusted(1) gross profit increased by 0.6 per cent to GBP15.5
million (H1 2017: GBP15.4 million), and by 2.6 per cent in constant
currency(2) .
Administrative expenses increased by 16.3 per cent to GBP12.1
million (H1 2017: GBP10.4 million) and by 18.6 per cent in constant
currency(2) .
Overall adjusted(1) operating profit reduced by 32.0 per cent to
GBP3.4 million (H1 2017: GBP5.0 million) and by 30.6 per cent in
constant currency(2) .
Services performance
Services revenue increased by 20.1 per cent to GBP33.4 million
(H1 2017: GBP27.8 million) and by 28.0 per cent in constant
currency(2) . This included a Professional Services increase of
115.2 per cent to GBP7.1 million (H1 2017: GBP3.3 million), which
was an increase of 121.9 per cent in constant currency(2) , and a
Managed Services increase of 7.3 per cent to GBP26.3 million (H1
2017: GBP24.5 million), an increase of 14.8 per cent in constant
currency(2) .
The Swiss operations saw a strong increase in Professional
Services revenues and profitability. Local customers in the Managed
Services business increased the scope of existing engagements and
provided additional assignments, leading to further growth. In a
highly competitive market, the acquisition of cITius in January
2017 has been a success in expanding our Professional Services
product portfolio and achieving growth in this area. Opportunities
are apparent, particularly in the Windows 10 implementation
pipeline. Finally, there has been a noticeable increase in activity
with global Group customers, who are looking to Computacenter
Switzerland to meet their local requirements in Switzerland.
The Belgian organisation is now entirely integrated into the
Computacenter Group Operating Model. The business remains focused
on leveraging this to strengthen its Managed Services pipeline,
utilising the compelling competitive advantage of the Group's
scale, especially around End User Computing. To achieve its growth
ambitions, Management continues to develop skills both internally
and through the acquisition of new talent, in a competitive
market.
The American business continued on its development path with
several important milestones during the first half of 2018. We
expanded the Managed Services contracts of two significant Group
customers into a global scope, with the US being the single largest
delivery location for these customers outside their European
headquarters. In addition, we continued to invest in our near-shore
Global Service Desk location in Mexico City which, since going live
in 2016, has exceeded service level and financial performance
targets.
Technology Sourcing performance
Technology Sourcing revenue, driven primarily out of Belgium,
decreased by 0.5 per cent to GBP20.7 million (H1 2017: GBP20.8
million) and by 2.4 per cent in constant currency(2) . There were
pleasing results within Workplace Technology Sourcing.
Lieven Bergmans
Managing Director, European Development
Group Finance Director's review
Maximising shareholder value
The Group result was underpinned by the continuing strength of
the German business, particularly in Technology Sourcing, and an
increased customer breadth in France. This offset a somewhat
disappointing UK bottom-line result, when compared to the overall
revenue growth.
The Technology Sourcing performance in Germany was the story of
2017 and this business continued to dominate the Group's results in
the first half of 2018. It was well supported by similarly strong
Technology Sourcing growth in both the UK and France, as customers
invested in new technology, in particular in Workplace and Data
Center.
UK Technology Sourcing margins were disappointing. They were
impacted by two significant and very low margin software deals in
the Software Security line of business. These deals are becoming
more common, driven by the strength of our leasing and financing
business and, whilst profitable, are margin dilutive.
Notwithstanding this, they remained depressed against prior periods
and much remains to be done to restore them to the levels seen in
France and Germany where these types of deals are more rare or
where Software sales are a decreasing part of the product mix.
The Group's Services margins were constrained by a number of
Professional Services engagements and Managed Services contracts in
the UK and, to a lesser extent, Germany. The one-off growth in
Professional Services in the UK last year reversed, as the
significant engagement completed. Demand for our Professional
Services resources in Germany continued to outstrip our capacity to
service new customers and to assist with difficult Entry into
Service engagements in Managed Services.
Overall, we remain pleased with the performance of the business.
Concerns remain about the concentration of Technology Sourcing
growth across several key accounts in Germany and the erosion of
margins in the UK. We are pleased with the ability of the French
business to weather, so far, what we always expected to be a
difficult transitional year, with the expiry of a key contract and
several key renewals.
At a Group level, we remain concerned about the overall lack of
growth in the Managed Services business, which is attributable to a
lack of competitiveness in both pricing and technological
innovation within the offerings. Whilst the Technology Sourcing
business continues to provide significant growth opportunities, we
are conscious that the market buoyancy is unlikely to last for a
very long period. We are using this opportunity to make significant
investment to improve the competitive positioning of our Managed
Services business.
A reconciliation between key adjusted(1) and statutory measures
is provided below. Further details are provided in note 4 to the
summary financial information included within this announcement,
Adjusted measures. For the avoidance of duplication, further
information on the Group's financial performance can be found
within this announcement.
Reconciliation from statutory to adjusted(1) measures for the
period ended 30 June 2018
Adjustments
=========== ===================================== ===========
Utilisation
Statutory CSF of deferred Exceptionals Adjusted(1)
results interest tax and others results
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========== ========= ============ ============ ===========
Revenue 2,008,904 - - - 2,008,904
===================================== =========== ========= ============ ============ ===========
Cost of sales (1,760,094) (123) - - (1,760,217)
===================================== =========== ========= ============ ============ ===========
Gross profit 248,810 (123) - - 248,687
===================================== =========== ========= ============ ============ ===========
- - - - -
===================================== =========== ========= ============ ============ ===========
Administrative expenses (196,586) - - - (196,586)
===================================== =========== ========= ============ ============ ===========
Amortisation of acquired intangibles (119) - - 119 -
===================================== =========== ========= ============ ============ ===========
Exceptional items - - - - -
===================================== =========== ========= ============ ============ ===========
Operating profit 52,105 (123) - 119 52,101
===================================== =========== ========= ============ ============ ===========
Finance revenue 626 - - - 626
===================================== =========== ========= ============ ============ ===========
Finance costs (738) 123 - - (615)
===================================== =========== ========= ============ ============ ===========
Profit before tax 51,993 - - 119 52,112
===================================== =========== ========= ============ ============ ===========
Income tax expense:
===================================== =========== ========= ============ ============ ===========
Before exceptional items (15,190) - 1,109 (16) (14,097)
===================================== =========== ========= ============ ============ ===========
Exceptional items - - - - -
===================================== =========== ========= ============ ============ ===========
Profit for the period 36,803 - 1,109 103 38,015
===================================== =========== ========= ============ ============ ===========
Reconciliation from statutory to adjusted(1) measures for the
period ended 30 June 2017
Adjustments
=========== ===================================== ===========
Utilisation
Statutory CSF of deferred Exceptionals Adjusted(1)
results interest tax and others results
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========== ========= ============ ============ ===========
Revenue 1,700,329 - - - 1,700,329
===================================== =========== ========= ============ ============ ===========
Cost of sales (1,477,393) (137) - - (1,477,530)
===================================== =========== ========= ============ ============ ===========
Gross profit 222,936 (137) - - 222,799
===================================== =========== ========= ============ ============ ===========
Administrative expenses (181,395) - - - (181,395)
===================================== =========== ========= ============ ============ ===========
Amortisation of acquired intangibles (111) - - 111 -
===================================== =========== ========= ============ ============ ===========
Exceptional items 1,460 - - (1,460) -
===================================== =========== ========= ============ ============ ===========
Operating profit 42,890 (137) - (1,349) 41,404
===================================== =========== ========= ============ ============ ===========
Exceptional gain on disposal of an
investment property 4,320 - - (4,320) -
===================================== =========== ========= ============ ============ ===========
Finance revenue 676 - - - 676
===================================== =========== ========= ============ ============ ===========
Finance costs (359) 137 - - (222)
===================================== =========== ========= ============ ============ ===========
Profit before tax 47,527 - - (5,669) 41,858
===================================== =========== ========= ============ ============ ===========
Income tax expense:
===================================== =========== ========= ============ ============ ===========
Before exceptional items (12,701) - 2,048 (16) (10,669)
===================================== =========== ========= ============ ============ ===========
Exceptional items (351) - - 351 -
===================================== =========== ========= ============ ============ ===========
Profit for the period 34,475 - 2,048 (5,334) 31,189
===================================== =========== ========= ============ ============ ===========
Profit before tax
The Group's statutory profit before tax increased by 9.5 per
cent to GBP52.0 million (H1 2017: GBP47.5 million). Adjusted(1)
profit before tax increased by 24.3 per cent to GBP52.1 million (H1
2017: GBP41.9 million) and by 23.8 per cent in constant currency(2)
. The difference between statutory profit before tax and
adjusted(1) profit before tax relates to the Group's reported net
loss of GBP0.1 million (H1 2017: gain of GBP5.6 million) from
exceptional and other adjusting items. Further information on these
can be found below.
Profit for the period
The statutory profit for the period increased by 6.7 per cent to
GBP36.8 million (H1 2017: GBP34.5 million). The adjusted(1) profit
for the period increased by 21.8 per cent to GBP38.0 million (H1
2017: GBP31.2 million) and by 20.6 per cent in constant currency(2)
.
Net finance income
Net finance income in the period amounted to a charge of GBP0.1
million on a statutory basis (H1 2017: income of GBP0.3
million).
The decrease in net finance income during the first half was due
to lower net funds and the closure of the current asset investments
held in the first half of 2017, associated with the Return of Value
of GBP100 million that occurred in February 2018. Additionally, the
Group saw modest charges relating to the renewed committed facility
of GBP60 million that remains available, and undrawn, as at 30 June
2018. Finally, finance charges were impacted by the interest
charges relating to the unwind of the discount on the deferred
consideration for the purchase of TeamUltra and cITius AG, for a
total of GBP0.4 million during the period.
On an adjusted(1) basis, prior to interest on customer-specific
financing, net finance income was nil during the period (H1 2017:
income of GBP0.5 million).
Taxation
The adjusted(1) tax charge on ordinary activities was GBP14.1
million (H1 2017: GBP10.7 million), on an adjusted(1) profit before
tax of GBP52.1 million (H1 2017: GBP41.9 million). The adjusted(1)
effective tax rate ('ETR') was 27.1 per cent (H1 2017: 25.5 per
cent). The ETR was higher than in the prior period, due to a change
in the geographic split of profit before tax. Profits were higher
in Germany, where there is an increasing German cash tax rate, and
the Group earned a comparatively smaller share of profits in the
UK, where the tax rate is substantially lower than in other
European countries. This impact was slightly offset during the
first half by a lower than expected ETR in our non-EU
locations.
The statutory tax charge was GBP15.2 million (H1 2017: GBP13.1
million), on profit before tax of GBP52.0 million (H1 2017: GBP47.5
million). This represented a statutory ETR of 29.2 per cent (H1
2017: 27.5 per cent). The GBP4.3 million gain on the disposal of
the investment property in 2017 was not taxable and is the most
significant reason for the movement in the ETR.
We continued to utilise the German tax losses, which reduced the
statutory ETR. However, the deferred tax asset, which we previously
recognised as an exceptional tax item, is no longer replenishing
and readily available losses will be exhausted by the end of 2018,
leading to the increase in the expected adjusted(1) ETR for
2018.
Over the longer term, increasing profits in Germany and a
comparatively smaller share of Group profits earned in the UK will
lead to an increasing ETR for the Group.
The table below reconciles the statutory tax charge to the
adjusted(1) tax charge for the period ended 30 June 2018.
H1 2018 H1 2017 Year 2017
GBP'000 GBP'000 GBP'000
======== ======== =========
Statutory tax charge 15,190 13,052 30,381
============================================ ======== ======== =========
Adjustments to exclude:
============================================ ======== ======== =========
Utilisation of German deferred tax assets (1,109) (2,048) (3,457)
============================================ ======== ======== =========
Tax on amortisation of acquired intangibles 16 16 31
============================================ ======== ======== =========
Tax on exceptional items - (351) (351)
============================================ ======== ======== =========
Adjusted(1) tax charge 14,097 10,669 26,604
============================================ ======== ======== =========
Statutory ETR 29.2% 27.5% 27.2%
============================================ ======== ======== =========
Adjusted(1) ETR 27.1% 25.5% 25.0%
============================================ ======== ======== =========
Exceptional and other adjusting items
A net loss of GBP0.1 million was recorded, resulting from
exceptional and other adjusting items (H1 2017: net gain of GBP5.6
million).
There were no items classified as exceptional during the first
half of 2018, with the amortisation of intangible assets of GBP0.1
million (H1 2017: GBP0.1 million) the only other adjusting item
between adjusted(1) profit before tax and statutory profit before
tax.
The remaining provisions for the last two onerous contracts in
Germany were released during 2017, for an exceptional gain of
GBP1.4 million. These provisions were originally booked in 2013 and
the contracts had returned to profitability, so the provisions were
no longer required. As these provisions were booked as exceptional
items, the release during 2017 was also classified as such. The
disposal of an investment property in Braintree, Essex, was
completed on 26 May 2017 for GBP14.5 million. This property was
associated with a former subsidiary of the Group, R.D. Trading
Limited, which was itself sold in February 2015. Due to the size
and non-operational nature of the transaction, the GBP4.3 million
gain on disposal, net of disposal costs, was classified as
exceptional.
Central corporate costs
As noted above within Segmental Reporting Structure Changes,
certain expenses such as those for the Board itself, and related
public company costs, Group Executive members not aligned to a
specific geographic trading entity, and the cost of centrally
funded strategic corporate initiatives that benefit the whole
Group, are not specifically allocated to individual segments
because they are not directly attributable to any single segment.
Accordingly, these expenses are disclosed as a separate column,
'Central Corporate Costs', within the segmental note. These costs
are borne within the Computacenter (UK) Limited legal entity and
have been removed for segmental reporting and performance analysis
but form part of the overall Group administrative expenses.
During the period, total Central Corporate Costs were GBP11.4
million, an increase of 58.3 per cent (H1 2017: GBP7.2 million).
Within this:
-- Board expenses and related public company costs were flat at
GBP1.5 million (H1 2017: GBP1.5 million);
-- costs associated with Group Executive members not aligned to
a specific geographic trading entity were GBP2.1 million (H1
2017: GBP1.9 million);
-- share-based payment charges associated with the Group Executive
members identified above, including the Group Executive Directors,
increased from GBP0.6 million in H1 2017 to GBP1.6 million
in H1 2018, due primarily to the increasing cost of Computacenter
plc ordinary shares and the increased internal forecasts for
2018 and beyond, as a result of the trading updates made on
27 April 2018 and 12 July 2018; and
-- strategic corporate initiatives increased from GBP3.2 million
in H1 2017 to GBP6.2 million in H1 2018, primarily due to increased
spend on projects designed to increase capability, enhance
productivity or strengthen systems which underpin the Group.
Earnings per share
Statutory diluted earnings per share increased by 11.7 per cent
to 31.6 pence per share (H1 2017: 28.3 pence per share).
Adjusted(1) diluted earnings per share increased by 27.7 per cent
to 32.7 pence per share (H1 2017: 25.6 pence per share).
H1 2018 H1 2017 Year 2017
======= ======= =========
Basic weighted average number of shares (excluding
own shares held) (no. '000) 114,620 120,842 120,766
==================================================== ======= ======= =========
Effect of dilution:
==================================================== ======= ======= =========
Share options 1,662 888 1,471
==================================================== ======= ======= =========
Diluted weighted average number of shares 116,282 121,730 122,237
==================================================== ======= ======= =========
Statutory profit for the period/year attributable
to equity holders of the parent (GBP'000) 36,803 34,475 81,314
==================================================== ======= ======= =========
Basic earnings per share (pence) 32.1 28.5 67.3
==================================================== ======= ======= =========
Diluted earnings per share (pence) 31.6 28.3 66.5
==================================================== ======= ======= =========
Adjusted(1) profit for the period/year attributable
to equity holders of the parent (GBP'000) 38,015 31,189 79,625
==================================================== ======= ======= =========
Adjusted(1) basic earnings per share (pence) 33.2 25.8 65.9
==================================================== ======= ======= =========
Adjusted(1) diluted earnings per share (pence) 32.7 25.6 65.1
==================================================== ======= ======= =========
Dividend
We are pleased to announce an interim dividend of 8.7 pence per
share. This is in line with our policy that the interim dividend
will be approximately one third of the previous year's full
dividend. The interim dividend will be paid on Friday 12 October
2018. The dividend record date is Friday 14 September 2018, and the
shares will be marked ex-dividend on Thursday 13 September
2018.
Net funds
Net funds(3) at 30 June 2018 were GBP49.7 million, compared to
GBP137.3 million at 30 June 2017. The cash position continues to
rebuild, after what is historically the weaker half of the year in
terms of our working capital cycle, and after the return of GBP100
million to shareholders in the first quarter of the year. Net
funds(3) decreased by GBP141.5 million from GBP191.2 million as at
31 December 2017.
The Group's operating cash flow performance was an inflow of
GBP8.4 million for the period to 30 June 2018 (H1 2017: GBP11.4
million inflow).
The Group continues to have no material structural borrowings,
except for customer-specific finance leases and loans to finance
specific capital projects, namely the GBP19.3 million borrowed as
at 30 June 2018 to finance the offices and logistics facilities in
Kerpen.
We remain conscious of our responsibility to shareholders to
maximise the return on the Group's cash assets and improve the
efficiency of our balance sheet. We were pleased to return GBP100
million of excess cash to shareholders in the first quarter of the
year and we look forward to rebuilding the net funds of the Group
over the short term.
As reported in the Company's 2017 Annual Report and Accounts,
the Group's net funds(3) continued to benefit from extended credit
terms with a major supplier and had done so for approximately nine
years. The amount of benefit at any one time fluctuates as a direct
result of the volume of business with that vendor. In line with the
disclosure in the Company's 2017 Annual Report and Accounts, these
extended terms have now changed to closer to standard terms during
the first half of 2018, in line with all material partners of that
significant vendor resulting in a reduction in the Group's net
funds(3) . The estimated benefit of these extended terms to the
Group's net funds(3) was GBP24.1 million at 30 June 2018 (H1 2017:
GBP65.2 million), down from GBP54.9 million as at 31 December 2017.
The Group continues to appropriately manage its cash and working
capital positions using standard mechanisms to ensure that cash
levels remain within expectations throughout 2018 and beyond, which
resulted in a true sale of receivables, on a non-recourse basis, as
at the end of the period of GBP38.8 million.
Currency
The Group reports its results in pounds sterling. The weakness
of sterling, particularly against the euro, is expected to continue
to result in a foreign exchange translation benefit to the
Group.
The impact of restating the first half of 2017 at 2018 exchange
rates would be an increase of approximately GBP20.3 million in H1
2017 revenue and an increase of approximately GBP0.3 million in H1
2017 adjusted(1) profit before tax.
If the 30 June 2018 spot rates were to continue through the
remainder of 2018, the impact of restating 2017 at 2018 exchange
rates would be an increase of approximately GBP3.7 million in 2017
revenue and a decrease of approximately GBP0.5 million in 2017
adjusted(1) profit before tax.
Planning for the United Kingdom exiting the European Union
Computacenter's target clients are large corporate customers and
large government departments. We operate in three principal
geographies, the UK, Germany and France.
This allows us to manage EU requirements from our EU locations
and we have a long history of trading with the subsidiaries of
large global Western European headquartered organisations, in many
diverse locations across the world. The concept of exporting to and
importing from multiple countries is therefore already established
across the business, along with the related systems
requirements.
There remains considerable uncertainty around the exact nature
and timing of the UK's exit from the EU, which makes it difficult
to develop specific plans for the various potential outcomes.
The senior Management committee established during 2017
continues to oversee the key risks and changes that may be required
to the way that the Group operates. It is clear that there will be
additional investment required in IT systems to manage the
transition, and changes to business processes. Whilst these changes
will be a cost to Computacenter, we continue to see opportunities
as our customers, in some cases, may need to increase investment in
a similar manner.
Principal risks and uncertainties
The Group's activities expose it to a variety of economic,
financial, operational and regulatory risks.
Our principal risks continue to be concentrated in the
availability and resilience of systems, our people, our cost base,
technology change, and in the design, Entry into Service and
running of large Services contracts.
The principal risks and uncertainties facing the Group are set
out on pages 30 to 35 of the 2017 Annual Report and Accounts, a
copy of which is available on the Group's website.
The Group's risk management approach and the principal risks,
potential impacts and primary mitigating activities are unchanged
from those set out in the 2017 Annual Report and Accounts.
Mike Norris
Chief Executive Officer
Tony Conophy
Group Finance Director
24 August 2018
Directors' responsibility statement
Responsibility statement of the Directors in respect of the
half-yearly financial report.
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting, as adopted
by the EU;
-- the interim management report includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
Mike Norris Tony Conophy
Chief Executive Group Finance
Officer Director
--------------
24 August 2018
--------------
Consolidated Income Statement
For the six months ended 30 June 2018
Unaudited Unaudited Audited
H1 2018 H1 2017 Year 2017
Note GBP'000 GBP'000 GBP'000
==== =========== =========== ===========
Revenue 5 2,008,904 1,700,329 3,793,371
============================================== ==== =========== =========== ===========
Cost of sales (1,760,094) (1,477,393) (3,297,142)
============================================== ==== =========== =========== ===========
Gross profit 248,810 222,936 496,229
============================================== ==== =========== =========== ===========
Administrative expenses (196,586) (181,395) (390,583)
============================================== ==== =========== =========== ===========
Amortisation of acquired intangibles (119) (111) (225)
============================================== ==== =========== =========== ===========
Exceptional items 8 - 1,460 1,371
============================================== ==== =========== =========== ===========
Operating profit 52,105 42,890 106,792
============================================== ==== =========== =========== ===========
Exceptional gain on disposal of an investment
property 8 - 4,320 4,320
============================================== ==== =========== =========== ===========
Finance revenue 626 676 1,521
============================================== ==== =========== =========== ===========
Finance costs (738) (359) (938)
============================================== ==== =========== =========== ===========
Profit before tax 51,993 47,527 111,695
============================================== ==== =========== =========== ===========
Income tax expense:
============================================== ==== =========== =========== ===========
Before exceptional items (15,190) (12,701) (30,030)
============================================== ==== =========== =========== ===========
Exceptional items 8 - (351) (351)
============================================== ==== =========== =========== ===========
Income tax expense (15,190) (13,052) (30,381)
============================================== ==== =========== =========== ===========
Profit for the period/year 36,803 34,475 81,314
============================================== ==== =========== =========== ===========
Attributable to:
============================================== ==== =========== =========== ===========
Equity holders of the parent 36,803 34,475 81,314
============================================== ==== =========== =========== ===========
Earnings per share (pence)
============================================== ==== =========== =========== ===========
- basic for profit for the period/year 10 32.1 28.5 67.3p
============================================== ==== =========== =========== ===========
- diluted for profit for the period/year 10 31.6 28.3 66.5p
============================================== ==== =========== =========== ===========
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2018
Unaudited Unaudited Audited
H1 2018 H1 2017 Year 2017
GBP'000 GBP'000 GBP'000
========= ========= ==========
Profit for the period/year 36,803 34,475 81,314
========================================================== ========= ========= ==========
Items that may be reclassified to consolidated income
statement:
========================================================== ========= ========= ==========
(Loss)/gain arising on cash flow hedge, net of amount
transferred to consolidated income statement (2,824) (287) 217
========================================================== ========= ========= ==========
Income tax effect 510 (71) (37)
========================================================== ========= ========= ==========
(2,314) (358) 180
========================================================== ========= ========= ==========
Exchange differences on translation of foreign operations (1,267) 3,532 4,994
========================================================== ========= ========= ==========
(3,581) 3,174 5,174
========================================================== ========= ========= ==========
Items not to be reclassified to consolidated income
statement:
========================================================== ========= ========= ==========
Remeasurement of defined benefit plan - - (668)
========================================================== ========= ========= ==========
Other comprehensive income for the period/year,
net of tax (3,581) 3,174 4,506
========================================================== ========= ========= ==========
Total comprehensive income for the period/year 33,222 37,649 85,820
========================================================== ========= ========= ==========
Attributable to:
========================================================== ========= ========= ==========
Equity holders of the parent 33,222 37,649 85,820
========================================================== ========= ========= ==========
Non-controlling interests - - -
========================================================== ========= ========= ==========
33,222 37,649 85,820
========================================================== ========= ========= ==========
Consolidated Balance Sheet
For the six months ended 30 June 2018
Unaudited Unaudited Audited
H1 2018 H1 2017 Year 2017
GBP'000 GBP'000 GBP'000
========= ========= ==========
Non-current assets
================================= ========= ========= ==========
Property, plant and equipment 88,598 62,066 77,904
================================= ========= ========= ==========
Intangible assets 76,737 80,005 80,335
================================= ========= ========= ==========
Investment in associate 57 56 56
================================= ========= ========= ==========
Deferred income tax asset 8,796 8,447 9,063
================================= ========= ========= ==========
Prepayments 3,806 - -
================================= ========= ========= ==========
177,994 150,574 167,358
================================= ========= ========= ==========
Current assets
================================= ========= ========= ==========
Inventories 61,996 50,116 69,289
================================= ========= ========= ==========
Trade and other receivables 695,900 666,512 835,446
================================= ========= ========= ==========
Prepayments 72,849 68,670 59,679
================================= ========= ========= ==========
Accrued income 118,167 119,336 102,922
================================= ========= ========= ==========
Derivative financial instruments 4,790 6,237 8,209
================================= ========= ========= ==========
Cash and short-term deposits 72,931 140,136 206,605
================================= ========= ========= ==========
1,026,633 1,051,007 1,282,150
================================= ========= ========= ==========
Total assets 1,204,627 1,201,581 1,449,508
================================= ========= ========= ==========
Current liabilities
================================= ========= ========= ==========
Trade and other payables 613,635 606,590 791,980
================================= ========= ========= ==========
Deferred income 114,154 114,077 113,875
================================= ========= ========= ==========
Financial liabilities 4,364 1,393 3,755
================================= ========= ========= ==========
Derivative financial instruments 481 1,488 1,196
================================= ========= ========= ==========
Income tax payable 33,397 19,816 28,422
================================= ========= ========= ==========
Provisions 1,706 1,664 1,681
================================= ========= ========= ==========
767,737 745,028 940,909
================================= ========= ========= ==========
Non-current liabilities
================================= ========= ========= ==========
Financial liabilities 18,820 1,442 11,663
================================= ========= ========= ==========
Provisions 8,089 6,266 7,599
================================= ========= ========= ==========
Deferred income tax liabilities 416 436 477
================================= ========= ========= ==========
27,325 8,144 19,739
================================= ========= ========= ==========
Total liabilities 795,062 753,172 960,648
================================= ========= ========= ==========
Net assets 409,565 448,409 488,860
================================= ========= ========= ==========
Capital and reserves
================================= ========= ========= ==========
Issued capital 9,299 9,299 9,299
================================= ========= ========= ==========
Share premium 3,913 3,913 3,913
================================= ========= ========= ==========
Capital redemption reserve 74,957 74,957 74,957
================================= ========= ========= ==========
Own shares held (109,800) (9,700) (11,360)
================================= ========= ========= ==========
Translation and hedging reserves 24,278 25,859 27,859
================================= ========= ========= ==========
Retained earnings 406,904 344,067 384,178
================================= ========= ========= ==========
Shareholders' equity 409,551 448,395 488,846
================================= ========= ========= ==========
Non-controlling interests 14 14 14
================================= ========= ========= ==========
Total equity 409,565 448,409 488,860
================================= ========= ========= ==========
Approved by the Board on 24 August 2018
MJ Norris FA Conophy
Chief Executive Group Finance
Officer Director
--------------
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2018
Attributable to equity holders
of the parent
================================================================== ======== ============ ========
Translation
Capital Own and Non-
Issued Share redemption shares hedging Retained controlling Total
capital premium reserve held reserves 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
2017 9,299 3,913 74,957 (12,115) 22,685 329,214 427,953 14 427,967
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Profit for the
period - - - - - 34,475 34,475 - 34,475
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Other
comprehensive
income - - - - 3,174 - 3,174 - 3,174
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Total
comprehensive
income - - - - 3,174 34,475 37,649 - 37,649
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Cost of
share-based
payments - - - - - 1,865 1,865 - 1,865
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Tax on
share-based
payments - - - - - 112 112 - 112
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Exercise of
options - - - 4,302 - (3,448) 854 - 854
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Purchase of own
shares - - - (1,887) - - (1,887) - (1,887)
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Equity dividends - - - - - (18,151) (18,151) - (18,151)
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
At 30 June 2017 9,299 3,913 74,957 (9,700) 25,859 344,067 448,395 14 448,409
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Profit for the
period - - - - - 46,839 46,839 - 46,839
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Other
comprehensive
income - - - - 2,000 (668) 1,332 - 1,332
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Total
comprehensive
income - - - - 2,000 46,171 48,171 - 48,171
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Cost of
share-based
payments - - - - - 4,335 4,335 - 4,335
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Tax on
share-based
payments - - - - - 1,507 1,507 - 1,507
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Exercise of
options - - - 5,311 - (2,941) 2,370 - 2,370
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Purchase of own
shares - - - (6,971) - - (6,971) - (6,971)
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Equity dividends - - - - - (8,961) (8,961) - (8,961)
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
At 31 December
2017 9,299 3,913 74,957 (11,360) 27,859 384,178 488,846 14 488,860
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Restatement -
Implementation
of IFRS 15 - - - - - 6,547 6,547 - 6,547
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
At 31 December
2017 - restated 9,299 3,913 74,957 (11,360) 27,859 390,725 495,393 14 495,407
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Profit for the
period - - - - - 36,803 36,803 - 36,803
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Other
comprehensive
income - - - - (3,581) - (3,581) - (3,581)
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Total
comprehensive
income - - - - (3,581) 36,803 33,222 - 33,222
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Cost of
share-based
payments - - - - - 3,148 3,148 - 3,148
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Tax on
share-based
payments - - - - - 2,739 2,739 - 2,739
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Exercise of
options - - - 5,145 - (4,247) 898 - 898
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Purchase of own
shares - - - (3,587) - - (3,587) - (3,587)
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Return of Value
(RoV) - - - (99,998) - - (99,998) - (99,998)
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Expenses
relating to RoV - - - - - (1,189) (1,189) - (1,189)
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Equity dividends - - - - - (21,075) (21,075) - (21,075)
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
At 30 June 2018 9,299 3,913 74,957 (109,800) 24,278 406,904 409,551 14 409,565
================ ======== ======== =========== ========= =========== ========= ======== ============ ========
Consolidated Cash Flow Statement
For the six months ended 30 June 2018
Unaudited Unaudited Audited
H1 2018 H1 2017 Year 2017
GBP'000 GBP'000 GBP'000
========= ========= ==========
Operating activities
======================================================== ========= ========= ==========
Profit before tax 51,993 47,527 111,695
======================================================== ========= ========= ==========
Net finance cost/(income) 112 (317) (583)
======================================================== ========= ========= ==========
Depreciation of property, plant and equipment 8,184 8,505 16,384
======================================================== ========= ========= ==========
Depreciation of investment property - 91 91
======================================================== ========= ========= ==========
Amortisation of intangible assets 5,345 6,316 12,237
======================================================== ========= ========= ==========
Share-based payments 3,148 1,865 6,200
======================================================== ========= ========= ==========
Exceptional gain on disposal of an investment property - (4,320) (4,320)
======================================================== ========= ========= ==========
Loss on disposal of property, plant and equipment 30 (528) (535)
======================================================== ========= ========= ==========
Loss on disposal of intangibles - (688) (688)
======================================================== ========= ========= ==========
Net cash flow from provisions (513) (1,011) 281
======================================================== ========= ========= ==========
Net cash flow from inventories 6,981 (5,142) (23,583)
======================================================== ========= ========= ==========
Net cash flow from trade and other receivables 57,735 44,437 (94,718)
======================================================== ========= ========= ==========
Net cash flow from trade and other payables (118,004) (77,020) 99,004
======================================================== ========= ========= ==========
Other adjustments (894) (506) (477)
======================================================== ========= ========= ==========
Cash generated from operations 14,117 19,209 120,988
======================================================== ========= ========= ==========
Income taxes paid (5,746) (7,785) (14,881)
======================================================== ========= ========= ==========
Net cash flow from operating activities 8,371 11,424 106,107
======================================================== ========= ========= ==========
Investing activities
======================================================== ========= ========= ==========
Interest received 626 676 1,521
======================================================== ========= ========= ==========
Decrease in current asset investments - 30,000 30,000
======================================================== ========= ========= ==========
Acquisition of subsidiaries, net of cash acquired - (7,662) (7,376)
======================================================== ========= ========= ==========
Proceeds from disposal of property, plant and equipment 68 797 915
======================================================== ========= ========= ==========
Proceeds from disposal of an investment property - 14,450 14,450
======================================================== ========= ========= ==========
Proceeds from disposal of intangible assets - 1,381 1,381
======================================================== ========= ========= ==========
Purchases of property, plant and equipment (19,174) (6,916) (30,439)
======================================================== ========= ========= ==========
Purchases of intangible assets (1,868) (2,931) (9,618)
======================================================== ========= ========= ==========
Net cash flow from investing activities (20,348) 29,795 834
======================================================== ========= ========= ==========
Financing activities
======================================================== ========= ========= ==========
Interest paid (738) (359) (938)
======================================================== ========= ========= ==========
Dividends paid to equity shareholders of the parent (21,075) (18,151) (27,112)
======================================================== ========= ========= ==========
Return of Value (99,998) - -
======================================================== ========= ========= ==========
Expenses on Return of Value (1,189) - -
======================================================== ========= ========= ==========
Proceeds from share issues 898 854 3,224
======================================================== ========= ========= ==========
Purchase of own shares (3,587) (1,887) (8,858)
======================================================== ========= ========= ==========
Repayment of capital element of finance leases (787) (1,024) (1,676)
======================================================== ========= ========= ==========
Repayment of loans (1,095) (337) (632)
======================================================== ========= ========= ==========
New borrowings - finance leases - - 3,162
======================================================== ========= ========= ==========
New borrowings - bank loan 6,948 - 10,591
======================================================== ========= ========= ==========
Net cash flow from financing activities (120,623) (20,904) (22,239)
======================================================== ========= ========= ==========
(Decrease)/increase in cash and cash equivalents (132,600) 20,315 84,702
======================================================== ========= ========= ==========
Effect of exchange rates on cash and cash equivalents (1,068) 1,145 3,221
======================================================== ========= ========= ==========
Cash and cash equivalents at the beginning of the
period/year 206,599 118,676 118,676
======================================================== ========= ========= ==========
Cash and cash equivalents at the end of the period/year 72,931 140,136 206,599
======================================================== ========= ========= ==========
Notes to the Interim Condensed Consolidated Financial
Statements
For the six months ended 30 June 2018
1 Corporate information
The interim condensed consolidated financial statements
(Financial Statements) of the Group for the six months ended 30
June 2018 were authorised for issue in accordance with a resolution
of the Directors on 24 August 2018.
Computacenter plc is a limited company incorporated and
domiciled in England whose shares are publicly traded.
2 Basis of preparation
The Financial Statements for the six months ended 30 June 2018
have been prepared in accordance with International Accounting
Standard 34 'Interim Financial Reporting', as adopted by the
European Union. They do not include all of the information and
disclosures required in the annual financial statements, and should
be read in conjunction with the Group's 2017 Annual Report and
Accounts which have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European
Union.
The Group has maintained its positive cash position in the
period. In order to ensure that the Group can maintain its strong
liquidity position it has a GBP60 million committed facility, which
remained unutilised at the reporting date. The Group's forecast and
projections, which allow for reasonably possible variations, show
that the Group will continue to maintain its strong liquidity
position, and therefore supports the Directors' view that the Group
has sufficient funds available to meet its foreseeable
requirements. The Directors have concluded therefore that the going
concern basis remains appropriate.
3 Significant Accounting Policies
The accounting policies adopted are consistent with those of the
previous financial year as disclosed in the 2017 Annual Report and
Accounts except that the Group has had to change its accounting
policies and make material retrospective adjustments as a result of
adopting IFRS 15 'Revenue from Contracts with Customers' ('IFRS
15').
The impact of the adoption of IFRS 15 are disclosed below.
The Group has adopted IFRS 15 from 1 January 2018 which has
resulted in changes in accounting policies and adjustments to the
amounts recognised in the financial statements. In accordance with
the transition provisions in IFRS 15, the Group has adopted the new
rules using the modified retrospective approach, meaning that the
cumulative effect of applying the new accounting policies has been
recognised as an adjustment in equity as at 1 January 2018. The
overall net impact of all adjustments was a credit to retained
earnings of GBP6.6 million as at 1 January 2018.
Adjustments were required in relation to:
-- Certain costs, such as win fees (a form of commission) and
fulfilment cost are capitalised and spread over the life of the
contract, as opposed to being expensed as incurred as was the case
under the previous policy. This resulted in an increase to retained
earnings of GBP7.6 million as at 1 January 2018, with the
corresponding entry to Prepayment. The tax impact of this
adjustment is a debit to equity of GBP1.4 million and a
corresponding increase in deferred tax liabilities as at 1 January
2018. The net impact on retained earnings as at 1 January 2018 is
GBP6.2 million.
-- Certain elements of Managed Services contracts, for example
those relating to Entry into Service, are not treated as separate
performance obligations under the new policy. Under the new policy,
these services are treated as part of the ongoing performance
obligations in the contract. This means the revenues and costs
associated with Entry into Service are recognised over the life of
the contracts with customers rather than being recognised as
incurred as was the case historically. This resulted in an increase
to retained earnings of GBP0.5 million as at 1 January 2018, with
the corresponding entry to Prepayment. The tax impact of this
adjustment is a debit to equity of GBP0.1 million and a
corresponding increase in deferred tax liabilities as at 1 January
2018. The net impact on retained earnings as at 1 January 2018 is
GBP0.4 million.
IFRS 15 has been adopted using the modified retrospective
approach, therefore comparative amounts have not been restated. For
comparability purposes, the following table gives the impact of the
adoption of the new standard on the Consolidated Balance Sheet and
Consolidated Income Statement for the period ended 30 June 2018 by
showing what the results would have been had they been prepared
under the previous accounting policies.
Under
Under previous
existing GAAP
GAAP (IFRS (IAS 18/IAS
15) 11)
Line item GBP'000 GBP'000
=========== ============
Revenue 2,008,904 2,012,400
========================= =========== ============
Cost of sales 1,760,094 1,756,755
========================= =========== ============
Administrative expenses 196,586 196,277
========================= =========== ============
Income tax expense 15,190 15,273
========================= =========== ============
Prepayments: non-current 3,806 -
========================= =========== ============
Prepayments: current 72,849 65,548
========================= =========== ============
Deferred tax liabilities 3,267 1,766
========================= =========== ============
IFRS 9 - Financial Instruments
IFRS 9 - Financial Instruments: IFRS 9 is effective for
accounting periods beginning on or after 1 January 2018. IFRS 9
replaces the classification and measurement models for financial
instruments in IAS 39. The Group has assessed its balance sheet
assets in accordance with the new classification requirements.
There has been no change in the classification and measurement for
any of the Group's financial assets or liabilities.
In addition, IFRS 9 introduces an 'expected loss' model for the
assessment of impairment of financial assets. The 'incurred loss'
model under IAS 39 required the Group to recognise impairment
losses when there was objective evidence that an asset was
impaired. Under the expected loss model, impairment losses are
recorded if there is an expectation of credit losses, even in the
absence of a default event. However, as permitted by IFRS 9, the
Group applies the 'simplified approach' to trade receivable
balances. Due to general quality and short-term nature of the trade
receivables, there is no significant impact on introduction of
'simplified approach'.
The Group applies the hedge accounting requirements under IFRS 9
and its hedging activities are discussed in note 23 of the 2017
Annual Report and Accounts with movements on hedging reserves
disclosed on Consolidated Statement of Changes in Equity. The
Group's existing hedging arrangements have been assessed as
compliant with IFRS 9.
The adoption of IFRS 9 from 1 January 2018 does not have a
material impact on the Group's reported results.
IFRS 16 - Leases
IFRS 16 is effective for accounting periods beginning on or
after 1 January 2019 and replaces IAS 17 Leases and related
interpretations. As mentioned in our 2017 Annual Report and
Accounts, the Group has completed an initial assessment of the
potential impact on its consolidated financial statements but has
not yet completed its detailed assessment. The actual impact of
applying IFRS 16 on the financial statements in the period of
initial application will depend on the future economic conditions,
including the Group's borrowing rate at 1 January 2019 and the
composition of the Group's lease portfolio at that date. Thus far,
the most significant impact identified is that the Group will
recognise new assets and liabilities for its operating leases of
properties and cars. As at 30 June 2018, the Group's future minimum
lease payments under non-cancellable operating leases amounted to
GBP72.3 million, on an undiscounted basis.
In addition, the nature of expenses related to those leases will
now change because IFRS 16 replaced the straight-line operating
lease expense with a depreciation charge for right-to-use assets
and an interest expense on lease liabilities.
4 Adjusted measures
The Group uses a number of non-Generally Accepted Accounting
Practice (non-GAAP) financial measures in addition to those
reported in accordance with IFRS. The Directors believe that these
non-GAAP measures, detailed below, are important when assessing the
underlying financial and operating performance of the Group.
Adjusted operating profit or loss, adjusted profit or loss
before tax, adjusted tax, adjusted profit or loss for the period,
adjusted earnings per share and adjusted diluted earnings per share
are, as appropriate, each stated before: exceptional and other
adjusting items including gain or loss on business disposals, gain
or loss on disposal of investment properties, amortisation of
acquired intangibles, utilisation of deferred tax assets (where
initial recognition was as an exceptional item or a fair value
adjustment on acquisition), and the related tax effect of these
exceptional and other adjusting items, as Management do not
consider these items when reviewing the underlying performance of
the segment or the Group as a whole.
Additionally, adjusted gross profit or loss and adjusted
operating profit or loss includes the interest paid on
customer-specific financing (CSF) which Management considers to be
a cost of sale.
A reconciliation between key adjusted and statutory measures is
provided within the Group Finance Director's review included within
this announcement.
5 Segment information
During the first half of the year, Management reviewed the way
it reported segmental performance to the Board and the Chief
Executive Officer, who is the Group's Chief Operating Decision
Maker ('CODM'), to determine whether it could improve the
transparency and understandability of the trading performance of
its core Group Operating Model geographies. As a result of this
analysis, and as endorsed by the Audit Committee, the Board has
decided to adopt a new segmental reporting structure from the
period ended 30 June 2018.
In accordance with IFRS 8 Operating Segments, the Group has
identified four revised operating segments:
-- UK;
-- Germany;
-- France; and
-- International.
As the location of the Group's headquarters, the UK entity has
also borne an increasing share of corporate costs since the rollout
of the Group Operating Model from 2013. Certain expenses such as
those for the Board itself, and related public company costs, Group
Executive members not aligned to a specific geographic trading
entity and the cost of centrally funded strategic corporate
initiatives that benefit the whole Group, are not allocated to
individual segments because they are not directly attributable to
any single segment. Accordingly, these expenses are disclosed as a
separate column, 'Central Corporate Costs', within the segmental
note.
Under the previous segmental reporting structure, the UK segment
included a number of other operating entities, primarily
international Global Service Desk locations. Whilst these entities
have limited external revenues, and a cost recovery model that
suggests better than breakeven margins to ensure compliance with
transfer pricing regulations, this generated unnecessary complexity
when presenting the UK results to the Board and the CODM, with the
growth in the number and scale of these other operating entities
blurring the underlying performance of the core geography over
time. The revised UK segment now only comprises the trading
performance of Computacenter UK.
The German segment has been revised to remove the independently
run Computacenter Switzerland operation, including cITius, which
has been transferred to the International segment, leaving the
German country trading operations standing alone.
The new International segment replaces the Belgian segment and
includes the Belgium, Switzerland, USA and TeamUltra trading
operations, along with the international Global Service Desk
locations in South Africa, Spain, Hungary, Mexico, Poland,
Malaysia, India and China. The International segment has been
created to reflect the Group's ambitions to continue to expand its
worldwide footprint. This includes expanding trading operations
into new geographic locations, both within our Western European
heartland and beyond, and the need to continue to identify
talent-rich offshore locations, to ensure that we can remain both
cost and resource competitive in the Services marketplace.
The French segment remains unchanged from that reported at 31
December 2017.
This new segmental reporting structure is the basis on which
internal reports are provided to the Chief Executive Officer, as
the CODM, for assessing performance and determining the allocation
of resources within the Group.
Segmental performance is measured based on external revenues,
adjusted(1) gross profit, adjusted(1) operating profit and
adjusted(1) profit before tax.
The change in segment reporting has no impact on reported Group
numbers.
To enable comparisons with prior period performance, historical
segment information for the periods ended 30 June 2017 and 31
December 2017 are restated in accordance with the revised segmental
reporting structure. All discussion within this summary financial
information on segmental results reflects this revised structure,
the reclassification of Central Corporate Costs and the resultant
prior period restatements.
Segmental performance for the periods to H1 2018, H1 2017 and
Full Year 2017 were as follows:
Six months ended 30 June 2018 (unaudited)
Central
Corporate
UK Germany France International Costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======== ======== ======== ============= ========== =========
Revenue
===================================== ======== ======== ======== ============= ========== =========
Technology Sourcing revenue 632,981 598,033 182,395 20,714 - 1,434,123
===================================== ======== ======== ======== ============= ========== =========
Services revenue
===================================== ======== ======== ======== ============= ========== =========
Professional Services 60,703 79,887 8,894 7,156 - 156,640
===================================== ======== ======== ======== ============= ========== =========
Managed Services 164,377 188,128 39,364 26,272 - 418,141
===================================== ======== ======== ======== ============= ========== =========
Total Services revenue 225,080 268,015 48,258 33,428 - 574,781
===================================== ======== ======== ======== ============= ========== =========
Total revenue 858,061 866,048 230,653 54,142 - 2,008,904
===================================== ======== ======== ======== ============= ========== =========
Results
===================================== ======== ======== ======== ============= ========== =========
Adjusted(1) gross profit 99,434 109,721 24,095 15,437 - 248,687
===================================== ======== ======== ======== ============= ========== =========
Administrative expenses (73,601) (77,523) (22,022) (12,039) (11,401) (196,586)
===================================== ======== ======== ======== ============= ========== =========
Adjusted(1) operating profit 25,833 32,198 2,073 3,398 (11,401) 52,101
===================================== ======== ======== ======== ============= ========== =========
Adjusted(1) net interest 78 43 (35) (75) - 11
===================================== ======== ======== ======== ============= ========== =========
Adjusted(1) profit before tax 25,911 32,241 2,038 3,323 (11,401) 52,112
===================================== ======== ======== ======== ============= ========== =========
Exceptional items:
===================================== ======== ======== ======== ============= ========== =========
- exceptional gains -
===================================== ======== ======== ======== ============= ========== =========
Total exceptional items -
===================================== ======== ======== ======== ============= ========== =========
Amortisation of acquired intangibles (119)
===================================== ======== ======== ======== ============= ========== =========
Statutory profit before tax 51,993
===================================== ======== ======== ======== ============= ========== =========
The reconciliation for adjusted(1) operating profit to statutory
operating profit, as disclosed in the Condensed Consolidated Income
Statement, is as follows:
Six months ended 30 June 2018 (unaudited)
Total
GBP'000
========
Adjusted(1) segment operating profit 52,101
===================================== ========
Add back interest on CSF 123
===================================== ========
Amortisation of acquired intangibles (119)
===================================== ========
Exceptional items -
===================================== ========
Statutory operating profit 52,105
===================================== ========
Six months ended 30 June 2017 (unaudited)
Central
Corporate
UK Germany France International Costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======== ======== ======== ============= ========== =========
Revenue
===================================== ======== ======== ======== ============= ========== =========
Technology Sourcing revenue 427,259 515,000 175,163 20,814 - 1,138,236
===================================== ======== ======== ======== ============= ========== =========
Services revenue
===================================== ======== ======== ======== ============= ========== =========
Professional Services 64,087 74,460 10,108 3,296 - 151,951
===================================== ======== ======== ======== ============= ========== =========
Managed Services 171,368 170,881 43,363 24,530 - 410,142
===================================== ======== ======== ======== ============= ========== =========
Total Services revenue 235,455 245,341 53,471 27,826 - 562,093
===================================== ======== ======== ======== ============= ========== =========
Total revenue 662,714 760,341 228,634 48,640 - 1,700,329
===================================== ======== ======== ======== ============= ========== =========
Results
===================================== ======== ======== ======== ============= ========== =========
Adjusted(1) gross profit 92,472 94,201 20,672 15,454 - 222,799
===================================== ======== ======== ======== ============= ========== =========
Administrative expenses (71,052) (73,519) (19,180) (10,413) (7,231) (181,395)
===================================== ======== ======== ======== ============= ========== =========
Adjusted(1) operating profit 21,420 20,682 1,492 5,041 (7,231) 41,404
===================================== ======== ======== ======== ============= ========== =========
Adjusted(1) net interest 400 135 (77) (4) - 454
===================================== ======== ======== ======== ============= ========== =========
Adjusted(1) profit before tax 21,820 20,817 1,415 5,037 (7,231) 41,858
===================================== ======== ======== ======== ============= ========== =========
Exceptional items:
===================================== ======== ======== ======== ============= ========== =========
- exceptional losses 1,460
===================================== ======== ======== ======== ============= ========== =========
Total exceptional items 1,460
===================================== ======== ======== ======== ============= ========== =========
Exceptional gains on disposal
of an investment property 4,320
===================================== ======== ======== ======== ============= ========== =========
Amortisation of acquired intangibles (111)
===================================== ======== ======== ======== ============= ========== =========
Statutory profit before tax 47,527
===================================== ======== ======== ======== ============= ========== =========
The reconciliation for adjusted(1) operating profit to operating
profit, as disclosed in the Consolidated Income Statement, is as
follows:
Six months ended 30 June 2017 (unaudited)
Total
GBP'000
========
Adjusted(1) segment operating profit 41,404
===================================== ========
Add back interest on CSF 137
===================================== ========
Amortisation of acquired intangibles (111)
===================================== ========
Exceptional items 1,460
===================================== ========
Statutory operating profit 42,890
===================================== ========
Year ended 31 December 2017
Central
Corporate
UK Germany France International Costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========= ========= ======== ============= ========== =========
Revenue
===================================== ========= ========= ======== ============= ========== =========
Technology Sourcing revenue 986,677 1,200,871 405,139 43,507 - 2,636,194
===================================== ========= ========= ======== ============= ========== =========
Services revenue
===================================== ========= ========= ======== ============= ========== =========
Professional Services revenue 141,507 151,306 18,120 8,223 - 319,156
===================================== ========= ========= ======== ============= ========== =========
Managed Services revenue 335,145 362,481 86,684 53,711 - 838,021
===================================== ========= ========= ======== ============= ========== =========
Total Services revenue 476,652 513,787 104,804 61,934 - 1,157,177
===================================== ========= ========= ======== ============= ========== =========
Total revenue 1,463,329 1,714,658 509,943 105,441 - 3,793,371
===================================== ========= ========= ======== ============= ========== =========
Results
===================================== ========= ========= ======== ============= ========== =========
Adjusted(1) gross profit 196,170 214,743 53,539 31,618 - 496,070
===================================== ========= ========= ======== ============= ========== =========
Adjusted(1) administrative expenses (144,632) (156,489) (47,931) (22,530) (19,001) (390,583)
===================================== ========= ========= ======== ============= ========== =========
Adjusted(1) operating profit 51,538 58,254 5,608 9,088 (19,001) 105,487
===================================== ========= ========= ======== ============= ========== =========
Adjusted(1) net interest 607 472 (193) (144) - 742
===================================== ========= ========= ======== ============= ========== =========
Adjusted(1) profit before tax 52,145 58,726 5,415 8,944 (19,001) 106,229
===================================== ========= ========= ======== ============= ========== =========
Exceptional items:
===================================== ========= ========= ======== ============= ========== =========
- onerous contracts provision
for future losses 1,371
===================================== ========= ========= ======== ============= ========== =========
Total exceptional items 1,371
===================================== ========= ========= ======== ============= ========== =========
Exceptional gain on disposal
of an investment property 4,320
===================================== ========= ========= ======== ============= ========== =========
Amortisation of acquired intangibles (225)
===================================== ========= ========= ======== ============= ========== =========
Statutory profit before tax 111,695
===================================== ========= ========= ======== ============= ========== =========
The reconciliation for adjusted(1) operating profit to statutory
operating profit, as disclosed in the Consolidated Income
Statement, is as follows:
Year ended 31 December 2017
Total
GBP'000
========
Adjusted(1) operating profit 105,487
===================================== ========
Add back interest on CSF 159
===================================== ========
Amortisation of acquired intangibles (225)
===================================== ========
Exceptional items 1,371
===================================== ========
Statutory operating profit 106,792
===================================== ========
6 Seasonality of operations
Historically, revenues have been higher in the second half of
the year than in the first six months. This is principally driven
by customer buying behaviour in the markets in which we operate.
Typically this leads to a more pronounced effect on operating
profit. In addition, the effect is compounded further by the
tendency for the holiday entitlements of our employees to accrue
during the first half of the year and to be utilised in the second
half.
7 Dividends paid and proposed
A final dividend for 2017 of 18.7 pence per ordinary share was
paid on 29 June 2018. An interim dividend in respect of 2018 of 8.7
pence per ordinary share, amounting to a total dividend of GBP10.7
million, was declared by the Directors at their meeting on 21
August 2018. The expected payment date of the dividend declared is
12 October 2018. The interim results does not reflect this dividend
payable.
8 Exceptional items
Unaudited Unaudited Audited
H1 2018 H1 2017 Year 2017
GBP'000 GBP'000 GBP'000
========= ========= ==========
Operating profit
====================================================== ========= ========= ==========
Onerous contracts - 1,460 1,371
====================================================== ========= ========= ==========
- 1,460 1,371
====================================================== ========= ========= ==========
Gain on disposal of an investment property - 4,320 4,320
====================================================== ========= ========= ==========
Exceptional items before taxation - 5,780 5,691
====================================================== ========= ========= ==========
Income tax
====================================================== ========= ========= ==========
Tax on onerous contracts included in operating profit - (351) (351)
====================================================== ========= ========= ==========
Exceptional items after taxation - 5,429 5,340
====================================================== ========= ========= ==========
2018:
There are no exceptional items reported within the current
period.
2017:
Included within the prior period are the following exceptional
items:
-- The remaining provisions for the last two onerous contracts
in Germany were released, for an exceptional gain of GBP1,461,000.
These provisions were originally booked in 2013 and the contracts
have now returned to profitability, so the provisions are no longer
required. As these provisions were booked as exceptional items,
this release has also been classified as such.
-- The disposal of an investment property in Braintree, Essex,
was completed on 26 May 2017 for GBP14.5 million. This property was
associated with a former subsidiary of the Group, R.D. Trading
Limited, which was itself sold in February 2015. Due to the size
and non-operational nature of the transaction, the GBP4.3 million
gain on disposal, net of GBP0.2 million disposal costs, has been
classified as exceptional.
9 Income tax
Tax for the six-month period is charged at 29.2 per cent (six
months ended 30 June 2017: 27.5 per cent; year ended 31 December
2017: 27.2 per cent), representing the best estimate of the average
annual effective tax rate expected for the full year, applied to
the pre-tax income of the six month period.
10 Earnings per 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 period
(excluding own shares held).
To calculate diluted earnings per share, the weighted average
number of ordinary shares in issue is adjusted to assume conversion
of all dilutive potential shares. Share options granted to
employees where the exercise price is less than the average market
price of the Company's ordinary shares during the period are
considered to be dilutive potential shares.
Unaudited Unaudited Audited
H1 2018 H1 2017 Year 2017
GBP'000 GBP'000 GBP'000
========= ========= ==========
Profit attributable to equity holders of the Parent 36,803 34,475 81,314
==================================================== ========= ========= ==========
Unaudited Unaudited Audited
H1 2018 H1 2017 Year 2017
'000 '000 '000
========= ========= ==========
Basic weighted average number of shares (excluding
own shares held) 114,620 120,842 120,766
=================================================== ========= ========= ==========
Effect of dilution:
=================================================== ========= ========= ==========
Share options 1,662 888 1,471
=================================================== ========= ========= ==========
Diluted weighted average number of shares 116,282 121,730 122,237
=================================================== ========= ========= ==========
Unaudited Unaudited Audited
H1 2018 H1 2017 Year 2017
pence pence pence
========= ========= ==========
Basic earnings per share 32.1 28.5 67.3
=========================== ========= ========= ==========
Diluted earnings per share 31.6 28.3 66.5
=========================== ========= ========= ==========
11 Fair value measurements recognised in the consolidated
balance sheet
Financial instruments which are recognised at fair value
subsequent to initial recognition are grouped into Levels 1 to 3
based on the degree to which the fair value is observable. The
three levels are defined as follows:
1. Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
2. Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
3. Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
At 30 June 2018 the Group had forward currency contracts, which
were measured at Level 2 fair value subsequent to initial
recognition, to the value of a net asset of GBP4,309,000 (30 June
2017: GBP4,749,000, 31 December 2017: GBP7,013,000).
The net realised gains from forward currency contracts in the
period to 30 June 2018 of GBP3,506,000 (30 June 2017: GBP6,006,000,
31 December 2017: GBP6,293,000, are offset by broadly equivalent
realised losses/gains on the related underlying transactions. There
were no transfers between Level 1 and Level 2 during the period
(2017: nil).
The foreign currency forward contracts are measured based on
observable spot exchange rates, the yield curves of the respective
currencies as well as the currency basis spreads between the
respective currencies. All contracts are fully cash collateralised,
thereby eliminating both counterparty and the Group's own credit
risk.
The carrying value of the Group's short-term receivables and
payables is a reasonable approximation of their fair values. The
fair value of all other financial instruments carried within the
Group's financial statements is not materially different from their
carrying amount.
12 Net funds
Unaudited Unaudited Audited
H1 2018 H1 2017 Year 2017
GBP'000 GBP'000 GBP'000
========= ========= ==========
Cash and short-term deposits 72,931 140,136 206,605
============================= ========= ========= ==========
Bank overdraft - - (6)
============================= ========= ========= ==========
Cash and cash equivalents 72,931 140,136 206,599
============================= ========= ========= ==========
Bank loans (19,251) (472) (10,667)
============================= ========= ========= ==========
Net funds excluding CSF 53,680 139,664 195,932
============================= ========= ========= ==========
CSF leases (3,933) (2,362) (4,745)
============================= ========= ========= ==========
Total CSF (3,933) (2,362) (4,745)
============================= ========= ========= ==========
Net funds 49,747 137,302 191,187
============================= ========= ========= ==========
13 Publication of non-statutory accounts
The financial information contained in this announcement and
summary financial statements does not constitute statutory accounts
as defined in section 435 of the Companies Act 2006.
The comparative figures for the financial year ended 31 December
2017 are not the company's statutory accounts for that financial
year. Those accounts have been reported on by the company's auditor
and delivered to the registrar of companies. The report of the
auditor was (i) unqualified, (ii) did not include a reference to
any matters to which the auditor drew attention by way of emphasis
without qualifying their report, and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
, the news service of the London Stock Exchange. RNS is approved by
the Financial Conduct Authority to act as a Primary Information
Provider in the United Kingdom. Terms and conditions relating to
the use and distribution of this information may apply. For further
information, please contact rns@lseg.com or visit www.rns.com.
IR EAPPDAASPEFF
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August 24, 2018 02:00 ET (06:00 GMT)
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