Computacenter
plc
2024 Half Year
results
Computacenter plc ('Computacenter'
or the 'Group'), a leading independent technology and services
provider, today announces unaudited half year results for the six
months ended 30 June 2024.
Financial highlights
|
H1 2024
|
H1
2023
|
Change
|
Change in constant
currency1
|
Technology Sourcing gross invoiced
income (£m)
|
3,740.1
|
4,341.7
|
-13.9%
|
-12.2%
|
Services revenue (£m)
|
796.5
|
816.5
|
-2.4%
|
-0.6%
|
Gross invoiced income1
(£m)
|
4,536.6
|
5,158.2
|
-12.1%
|
-10.3%
|
Technology Sourcing revenue
(£m)
|
2,307.3
|
2,768.4
|
-16.7%
|
-14.8%
|
Services revenue (£m)
|
796.5
|
816.5
|
-2.4%
|
-0.6%
|
Revenue (£m)
|
3,103.8
|
3,584.9
|
-13.4%
|
-11.6%
|
Gross profit (£m)
|
472.2
|
505.7
|
-6.6%
|
-4.8%
|
Gross margin (%)
|
15.2%
|
14.1%
|
111bps
|
|
Adjusted1 operating
profit (£m)
|
81.1
|
118.5
|
-31.6%
|
-30.0%
|
Adjusted1 profit before
tax (£m)
|
87.2
|
121.8
|
-28.4%
|
-26.8%
|
Adjusted1 diluted
earnings per share (p)
|
55.0
|
73.5
|
-25.2%
|
|
Dividend per share (p)
|
23.3
|
22.6
|
3.1%
|
|
Net cash inflow from operating
activities (£m)
|
1.4
|
116.5
|
-98.8%
|
|
Adjusted1 net funds
(£m)
|
401.9
|
285.1
|
+41.0%
|
|
Statutory measures
|
H1 2024
|
H1
2023
|
Change
|
|
Operating profit (£m)
|
78.4
|
121.5
|
-35.5%
|
|
Profit before tax (£m)
|
84.0
|
122.8
|
-31.6%
|
|
Diluted earnings per share
(p)
|
52.9
|
76.5
|
-30.8%
|
|
Net funds (£m)
|
287.8
|
164.8
|
74.6%
|
|
1Alternative performance measures (APMs) and other terms are
used throughout this announcement. These are defined in full in the
Appendix to this announcement.
Mike Norris, Chief Executive Officer,
commented:
"Our performance in the first half largely reflected the
expected normalisation of Technology Sourcing volumes against an
exceptionally strong comparative. At the same time, we have
executed well against our strategy by adding seven 'podium'
customers in the half, broadening our customer base in North
America. Professional Services has also delivered good growth,
leveraging our experience in Germany into other
markets.
"We continue to invest in new systems and tools to ensure
Computacenter's continued success while maintaining our strong
track record of delivering shareholder returns. The previously
announced £200m share buyback is ongoing, which will take the total
value of capital distributed to shareholders, including ordinary
dividends, to nearly £1bn since 2013.
"We have made an encouraging start to our third quarter and
continue to expect stronger momentum in the second half, resulting
in progress in the full year on a constant currency
basis."
Financial highlights
· Gross
profit declined by 4.8% and adjusted PBT by 26.8% in constant
currency driven by the expected normalisation of Technology
Sourcing volumes against exceptionally strong comparatives, solid
underlying performances in Germany and North America, softer UK
market conditions and planned increased strategic investment in the
half
· Strong
balance sheet position with adjusted net funds increasing by
£116.8m to £401.9m supporting a £200m return of capital by way of
share buyback
Strategic and operational highlights
· Continuing to deliver our strategic priorities of growing our
target market customers, scaling our activities and empowering our
people
· Good
progress in growing the number of customers generating over £1m of
gross profit p.a., with a net 7 added across the Group since the
year end, and 'podium' customers now totalling 190 (FY 2023:
183)
· In
North America, new hyperscale and enterprise customer wins, with 8
'podium' customers added in the half; we remain excited about the
scale of the long-term growth opportunity
· Product order backlog as at 30 June 2024 up 18.5% year on year
in constant currency, and up 47.8% since 31 December 2023, driven
by strong Technology Sourcing order intake in North
America
· £17.6m
of spend on strategic initiatives (H1 2023: £11.9m) to improve our
capabilities, enhance productivity and secure future
growth
Shareholder returns
· Interim dividend increased by 3.1% to 23.3p
· £200m
share buyback programme commenced in late July given strength of
balance sheet, and in line with our capital allocation policy;
£66.1m completed to date
Outlook
We have made an encouraging start
to Q3 and, consistent with our July trading
update, we expect stronger momentum in the
second half underpinned by the size of our committed product order
backlog and wider pipeline of opportunities. While we are mindful
of the backdrop of continuing geopolitical and macro uncertainty
across our markets we continue to expect to make progress in FY
2024 as a whole on a constant currency basis.
Enquiries:
Computacenter plc
|
|
Mike Norris, CEO
|
+44 (0) 1707 631 601
|
Chris Jehle, CFO
|
+44 (0) 1707 631 346
|
Christian Cowley, Investor
Relations
|
+44 (0) 1707 631 132
|
|
|
Teneo
|
|
James Macey White / Matt
Low
|
+44 (0) 207 353 4200
|
About Computacenter:
Computacenter is a leading
independent technology and services provider, trusted by large
corporate and public sector organisations. We are a responsible
business that believes in winning together for our people and our
planet. We help our customers to Source, Transform and Manage their
technology infrastructure to deliver digital transformation,
enabling people and their business. Computacenter plc is a public
company quoted on the London Stock Exchange (CCC.L) and a member of
FTSE 250. Computacenter employs over 20,000 people
worldwide.
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 Group's 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 Computacenter plc 2023 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.
Chief Executive Officer's review
Summary of H1 2024 performance
As anticipated, Technology Sourcing
volumes normalised during the first half of 2024 against an
exceptionally strong performance in H1 2023. While this naturally
impacted our overall financial performance in the short term, we
delivered solid underlying performances in Germany and North
America. In the UK, demand for hardware has been weaker than we
expected at the start of the year, with customers exercising
greater caution and purchasing decisions taking longer to conclude.
The H1 result was also impacted by the timing of fulfilment for
certain large orders in North America, which moved into H2 and are
now being completed, as well as the phasing of our strategic
initiatives investments, where we spent an additional £5.7m versus
the same period in 2023.
Encouragingly, our committed
product order backlog has grown significantly since the start of
the year. This has been driven by notable Technology Sourcing wins
in North America and we have a healthy wider pipeline of
opportunities, leaving us well-positioned to deliver a stronger
second half performance, against a less challenging
comparative.
As outlined at our June 2024
Capital Markets Day - "Delivering Long Term Value" - we continue to
execute on our strategic priorities of growing our target market
customers, scaling our activities and empowering our people. We
made good progress in growing the number of customers generating
over £1m of gross profit per annum, mainly driven by North America,
with a net seven added across the Group since the year end, with
Group podium customers now totalling 190. This is an important
measure of our ability to secure sustainable long-term
growth.
Well-positioned to meet customer needs
We outperformed the broader IT
market in 2023, in the context of a challenging macroeconomic
backdrop, driven in part by growing our share with some of our
existing large customers. During the first half of 2024, customers
have continued to pursue their digital transformations with a
degree of caution as the uncertain macroeconomic environment
persists. Areas such as security are being prioritised over
currently more discretionary areas, such as workplace
refreshes.
Hyperscalers continue to allocate
increasing resources into AI-centric infrastructure. In North
America, we have established a track record of delivering a
high-quality service for hyperscale customers given our expertise
in the areas of high-performance compute, networking, low-latency
storage, datacenter infrastructure and software components.
Encouragingly, we have enjoyed success in broadening our customer
base with this important community during the first
half.
Corporate and public sector
organisations are assessing the opportunities and returns that AI
can deliver, with many now trialling and experimenting with new
products. While some of this innovation is most immediately
accessible through software, customers are also evaluating their
own infrastructure requirements.
Computacenter has always helped
customers to evaluate new technologies, to navigate rising
complexity of their IT estates and to achieve the return on
investment they need. Our customers are looking to work with fewer
suppliers, and for their partners to have a deep understanding of
their requirements as well as the scale, flexibility and cost
competitiveness to meet their specific needs. This puts us in a
strong position to support them, as our three core activities -
Technology Sourcing, Professional Services and Managed Services -
are all critical for helping customers to achieve their IT
ambitions.
Demand for our broad Professional
Services capability during the half has been encouraging. Our
commitment to growing and enhancing Professional Services by having
a broader and scalable portfolio across all countries, based on a
common operating framework and a stronger sales approach, is
starting to gain traction with continued growth in Germany, and now
a return to growth in the UK. Professional Services has been a
strong driver of growth for Services over the last five years, and
we see it as an important future growth driver of revenue and
profit for the Group.
Managed Services saw revenues
decline during the half, reflecting the timing of certain contract
losses, while the onboarding of several large contracts has been
extended and will start to contribute more significantly towards
the end of 2024 and beyond. Our margin performance was also
impacted by one large underperforming contract in Germany which we
have now substantially addressed. While global inflationary
pressures have moderated, we remain vigilant and continue to make
efficiencies and take advantage of contractual opportunities to
recover cost increases.
To offer increased value to our
customers we continue to invest in new and improved systems,
greater automation and offshoring. We now have approximately 1,800
colleagues serving our customers in India versus 1,400 at the end
of 2023. The market opportunity for Managed Services is substantial
in our core areas of workplace, networking, infrastructure and
cloud. These services are important to the longevity of our
customer relationships, with more than three-quarters of our major
European headquartered customers contracting with us, supported by
our Service Centers globally.
Diversified geographic exposure
While IT spending is expected to
grow across all of our markets over the long-term our diversified
geographic exposure provides us with greater protection from any
short-term weakness in particular geographies. Although Germany and
North America both faced very challenging comparatives in the first
half, both delivered solid underlying performances.
In Germany, excluding the impact of
a large networking contract in the prior year and one significantly
underperforming Managed Services contract during the half, gross
profit increased year on year. Our deep capabilities in technology
areas such as networking and cyber as well as our ability to
support customers at every stage of the IT lifecycle means we are
strongly positioned.
North America's performance was
pleasing, in the context of an exceptionally strong comparative,
positioning us well for the second half. During the period we won
significant new hyperscale and enterprise business and have grown
our orderbook substantially since the year end, with an encouraging
pipeline of opportunities. We remain excited by the clear long-term
growth opportunity, in this highly fragmented market, as we
continue to leverage Computacenter's broader capability and
resources.
Our UK performance remains
disappointing with the market for hardware proving weaker than
anticipated at the start of the year. While current market
conditions have outweighed the improvements we have made in how we
approach the UK market, we have maintained the number of podium
customers. Our integrated offer remains compelling to our target
market, as evidenced by the award of a six-year contract worth
approximately £1bn with an existing customer, covering all three
Service Lines. Furthermore, having grown Professional Services
during the half we are in a better position with customers to take
advantage as market conditions improve.
Investing to secure future growth
We continue at pace with the
rollout of our strategic initiatives which will improve our
capabilities and productivity, enable us to further leverage AI
solutions, underpin our systems for the future and create
competitive advantage. This investment increased operating costs by
£5.7m year on year to £17.6m (H1 2023: £11.9m), with our
expectation for the full year of £28-30m unchanged (FY 2023:
£28.4m).
While moving all our Service Desks
onto a common platform, we are migrating from our legacy service
management tool to a new platform and building new functionality
within it for our modern workplace solutions such as Device
Lifecycle Management. We are upgrading all our Integration Centers
across the world to a new standard. This includes the latest
warehouse management software, a Group standard for configuration,
new scanning functionality and a more sophisticated capability for
courier integration. We have finished the rollout of our CRM system
and will complete the implementation of a new configuration and
pricing tool, and ultimately an upgrade of our current ERP system
to a new cloud-based version. At the same time, we
continue to invest significantly to mitigate
evolving cyber risks.
Returning surplus capital via share buyback
programme
Given the Group's strong positive
adjusted net funds position of £401.9m at 30 June, and currently
anticipated capital needs, we announced in late July that we will
return up to £200m to shareholders via a share buyback programme.
This is in line with our disciplined capital allocation policy to
invest organically, make targeted acquisitions and distribute
surplus capital while retaining a strong balance sheet. Following
the completion of the buyback, we expect to maintain a strong
balance sheet with positive adjusted net funds.
Outlook - expecting stronger performance in
H2
Looking to the full year, we have
made an encouraging start to Q3 and, consistent with our July trading
update, we expect stronger momentum in the
second half underpinned by the size of our
committed product order backlog and wider pipeline of
opportunities. While we are mindful of the backdrop of continuing
geopolitical and macro uncertainty across our markets, we continue
to expect to make progress in FY 2024 as a whole on a constant
currency basis. At current exchange rates we expect a negative
c.£8m translation impact on adjusted profit before tax in the full
year.
Looking further ahead, we are
excited by the pace of innovation and growth in demand for
technology. With our strength in Technology Sourcing, Professional
Services and Managed Services, and our focus on retaining and
maximising customer relationships over the long term, we believe
that we are well placed to deliver profitable growth and sustained
cash generation.
Technical guidance for 2024:
·
At current exchange rates a negative c.£8m
translation impact expected on adjusted PBT in the full year
(previously
c.£7m)
·
Strategic initiatives opex expected to be
£28-30m
·
Adjusted effective tax rate expected to be
28.5%-30.5%
·
Capex expected to be £35-40m
·
Dividend cover of 2-2.5x adjusted diluted
EPS
·
£200m share buyback programme commenced in
July
H1
2024 Group financial performance
Total gross invoiced income
decreased by 12.1% and by 10.3% in constant currency and total
revenue decreased by 13.4% and by 11.6% in constant currency,
largely reflecting the normalisation of technology sourcing volumes
versus an exceptionally strong comparative. Gross profit declined
by 6.6% on a reported basis and by 4.8% in constant currency. Group
gross margin increased by 111 basis points to 15.2%, reflecting a
148 basis points increase in Technology Sourcing and a 65 basis
points decline in Services.
Adjusted operating profit decreased
by 31.6% on a reported basis and by 30.0% in constant currency,
driven by the decline in gross profit combined with a 2.8% increase
in administrative expenses in constant currency. By geography,
adjusted operating profit declined in UK reflecting weaker market
conditions than expected as we entered the year. Underlying
performance in Germany and North America was solid against strong
comparatives.
Adjusted profit before tax
decreased by 28.4% on a reported basis and by 26.8% in constant
currency. Adjusted diluted EPS decreased by 25.2% with an increase
in the effective tax rate to 30.2% (H1 2023: 29.4%). Profit before
tax decreased by 31.6%. The difference between profit before tax
and adjusted profit before tax relates to the Group's net costs of
£3.2m from exceptional and other adjusting items, related to the
acquisitions of Pivot and BITS. Diluted EPS decreased by 30.8%. We
maintain a strong balance sheet with an increase of adjusted net
funds of £116.8m to £401.9m versus H1 2023.
Results
|
H1 2024
£m
|
H1 2023
£m
|
Change
|
Change in constant
currency
|
Technology Sourcing gross invoiced income
|
3,740.1
|
4,341.7
|
-13.9%
|
-12.2%
|
Services revenue
|
796.5
|
816.5
|
-2.4%
|
-0.6%
|
Total gross invoiced
income
|
4,536.6
|
5,158.2
|
-12.1%
|
-10.3%
|
|
|
|
|
|
Technology Sourcing revenue
|
2,307.3
|
2,768.4
|
-16.7%
|
-14.8%
|
Services revenue
|
796.5
|
816.5
|
-2.4%
|
-0.6%
|
Professional Services
revenue2
|
365.7
|
348.3
|
5.0%
|
7.1%
|
Managed Services
revenue2
|
430.8
|
468.2
|
-8.0%
|
-6.3%
|
Total revenue
|
3,103.8
|
3,584.9
|
-13.4%
|
-11.6%
|
|
|
|
|
|
Gross profit
|
472.2
|
505.7
|
-6.6%
|
-4.8%
|
Adjusted total administrative
expenses
|
(391.1)
|
(387.2)
|
1.0%
|
2.8%
|
Adjusted operating
profit
|
81.1
|
118.5
|
-31.6%
|
-30.0%
|
Net adjusted finance income /
(costs)
|
6.1
|
3.3
|
84.8%
|
84.8%
|
Adjusted profit before
tax
|
87.2
|
121.8
|
-28.4%
|
-26.8%
|
Adjusted diluted earnings per
share (p)
|
55.0
|
73.5
|
-25.2%
|
|
|
|
|
|
|
Gross profit
|
472.2
|
505.7
|
-6.6%
|
|
Total administrative
expenses
|
(396.3)
|
(392.7)
|
0.9%
|
|
Other income related to acquisition
of subsidiary
|
-
|
5.3
|
|
|
Gain on acquisition of
subsidiary
|
2.5
|
3.2
|
|
|
Operating profit
|
78.4
|
121.5
|
-35.5%
|
|
Net finance income /
(costs)
|
5.6
|
1.3
|
330.8%
|
|
Profit before tax
|
84.0
|
122.8
|
-31.6%
|
|
Diluted earnings per share
(p)
|
52.9
|
76.5
|
-30.8%
|
|
2 We have reallocated certain Services revenues between
Professional Services and Managed Services to better reflect the
type of services provided to customers. There is no change to Total
Services revenue. Restated full year 2023 revenues are detailed in
Note 5 to the Condensed Consolidated Financial Statements within
this announcement.
Technology Sourcing
Against an exceptionally strong
performance in the first half of 2023, as
anticipated, Technology Sourcing activity normalised during the
period. As a result, group Technology
Sourcing gross invoiced income declined by 12.2% in constant
currency. Technology Sourcing gross margin increased by 148 basis
points, reflecting less high-volume, lower-margin activity,
broad-based improvements and a higher software mix.
Encouragingly, our committed
product order backlog has grown by 47.8% since the start of the
year driven by notable Technology Sourcing wins in North America,
and is higher than the prior year equivalent. Our product order
backlog measures the total value of committed outstanding purchase
orders placed with our technology vendors against non-cancellable
sales orders for delivery within 12 months. As at 30 June 2024, the
product order backlog was £1,795.7m on a gross invoiced income
basis, an 18.5% increase since 30 June 2023 (£1,514.9m) in constant
currency. The Technology Sourcing backlog, alongside the Managed
Services contract base and the Professional Services forward order
book, provide visibility of future revenues in these
areas.
Services
Total Services revenue declined by
0.6% in constant currency during the half. Services gross margin
decreased by 65 basis points, mainly reflecting the impact of an
underperforming Managed Services contract in Germany, which has now
been substantially addressed, and onboarding costs for contracts
won in 2023, which we expect to deliver benefits in the coming
years.
Professional Services revenue grew
by 7.1% in constant currency and accounted for 46% of total
Services revenue. Germany, our largest source of Professional
Services revenue, continued its strong performance growing by 6.3%
in constant currency, and encouragingly the UK grew by
7.9%.
Managed Services revenue declined
by 6.3% in constant currency and accounted for 54% of total
Services revenue. The revenue decline reflects the timing of
certain contract losses while onboarding several large contracts
that will start to contribute more significantly towards the end of
2024 and beyond.
Trading reviews by geography
United Kingdom
Results
|
H1 2024
£m
|
H1
2023
£m
|
Change
|
Technology Sourcing gross invoiced income
|
864.6
|
1,051.0
|
-17.7%
|
Services revenue
|
220.1
|
220.2
|
0.0%
|
Total gross invoiced income
|
1,084.7
|
1,271.2
|
-14.7%
|
Technology Sourcing revenue
|
322.1
|
465.9
|
-30.9%
|
Services revenue
|
220.1
|
220.2
|
0.0%
|
Professional Services
revenue2
|
71.0
|
65.8
|
7.9%
|
Managed Services
revenue2
|
149.1
|
154.4
|
-3.4%
|
Total revenue
|
542.2
|
686.1
|
-21.0%
|
|
|
|
|
Gross profit
|
107.8
|
127.2
|
-15.3%
|
Adjusted administrative
expenses
|
(94.4)
|
(101.7)
|
-7.2%
|
Adjusted operating profit
|
13.4
|
25.5
|
-47.5%
|
The UK delivered a weaker result in
a market that was softer than expected, especially for hardware.
Total gross invoiced income decreased by 14.7% reflecting a decline
in Technology Sourcing and flat Services revenue. Total revenue
decreased by 21.0% reflecting a higher mix of software. Gross
profit decreased by 15.3% with gross margin increasing by 134 basis
points. Administrative expenses decreased due to lower commissions
and good cost control, resulting in adjusted operating profit
decreasing by 47.5%.
Customers exercised greater caution
in the period, with purchasing decisions taking longer to conclude.
This behaviour was compounded by the surprise election announcement
in late May. While the competitive environment has intensified,
reflecting the more challenging backdrop, we were pleased to renew
a six-year contract worth approximately £1bn with a large UK
customer covering all three Service Lines.
In 2023, we implemented new
leadership and made significant changes to enhance our focus on our
target market of large corporate and public sector organisations.
While prevailing market conditions in the UK have overshadowed our
organisational progress and changes in how we address the UK market
opportunity, we have maintained the number of podium customers.
Having grown Professional Services during the half we are in a
better position with customers to take advantage as market
conditions improve.
Technology Sourcing
Technology Sourcing gross invoiced
income decreased by 17.7%, with gross margin increasing by 267
basis points, reflecting a higher mix of software. Demand for
workplace hardware remains weak despite the aging installed base of
PCs following significant investment during the pandemic. The
adoption of Windows 11 is also expected to provide an impetus for a
device refresh although this is now expected to be more of a
feature of 2025. The product order backlog at 30 June 2024 was
£360.0m, representing an 18.7% increase since 30 June 2023
(£303.4m).
Services
Services revenue was unchanged,
with Professional Services increasing by 7.9% and Managed Services
decreasing by 3.4%. Gross margin decreased by 172 basis points,
reflecting the onboarding of a large customer which is now
substantially complete.
We are encouraged by the growth we
have achieved in Professional Services after a challenging 2023.
This has been driven by good demand in networking and Windows
11-related consultancy projects. While projects have typically been
smaller than in the past, there is good demand for our skills and
the pipeline for Professional Services is
healthy.
In Managed Services, the onboarding
of a large public sector contract that was secured at the end of
2023 has been extended and is now expected to contribute more
materially in 2025. We are seeing strong interest in our Device
Lifecycle Management proposition, as evidenced by the six-year
contract renewal referenced above.
Germany
Results
|
H1 2024
£m
|
H1 2023
£m
|
Change
|
Change in constant
currency
|
Technology Sourcing gross invoiced income
|
812.9
|
1,042.5
|
-22.0%
|
-20.0%
|
Services revenue
|
376.4
|
380.9
|
-1.2%
|
1.4%
|
Total gross invoiced
income
|
1,189.3
|
1,423.4
|
-16.4%
|
-14.3%
|
|
|
|
|
|
Technology Sourcing revenue
|
525.6
|
592.8
|
-11.3%
|
-9.1%
|
Services revenue
|
376.4
|
380.9
|
-1.2%
|
1.4%
|
Professional Services
revenue2
|
201.5
|
194.5
|
3.6%
|
6.3%
|
Managed Services
revenue2
|
174.9
|
186.4
|
-6.2%
|
-3.7%
|
Total revenue
|
902.0
|
973.7
|
-7.4%
|
-5.0%
|
|
|
|
|
|
Gross profit
|
167.3
|
179.1
|
-6.6%
|
-4.2%
|
Adjusted administrative
expenses
|
(107.8)
|
(105.8)
|
1.9%
|
4.5%
|
Adjusted operating
profit
|
59.5
|
73.3
|
-18.8%
|
-16.7%
|
Germany delivered a solid
underlying performance during the first half. Total gross invoiced income decreased by 14.3% in constant
currency, driven by a reduction in Technology Sourcing against a
very strong comparative, and modest growth in Services revenue.
Gross profit decreased by 4.2% in constant currency with gross
margin increasing by 15 basis points, with a strong margin
performance in Technology Sourcing outweighing a weaker Services
margin. Excluding the impact of a large networking contract in the
prior year and one significantly underperforming Managed Services
contract during the half, gross profit increased. Administrative
expenses increased by 4.5% in constant currency resulting in a
decline in adjusted operating profit of 16.7% in constant
currency.
In the context of a challenging
overall economic backdrop in Germany, we continue to benefit from
the breadth and depth of our portfolio, our capabilities and the
strength of our relationships with both public and corporate sector
customers. As a result, we continue to broaden our portfolio with
existing customers and expanded our customer base.
Technology Sourcing
Technology Sourcing gross invoiced
income decreased by 20.0% in constant currency against an
exceptionally strong comparative, which included a large
networking contract. We delivered solid growth in
datacenter, security and also in workplace. Technology Sourcing gross margin was strong, increasing by
164 basis points due to strong execution and product
mix.
In addition to strong software
demand, we continue to see a trend towards bundling procurements in
bigger framework contracts, especially for global requirements of
large international customers and infrastructure demand from our
major public sector clients. Demand for security solutions remains buoyant supported by new
mandatory EU legislation aimed at
enhancing cybersecurity and operational resilience across a number
of sectors. We are also starting to see
increasing demand for AI-related infrastructure. In particular, the
pipeline is growing for on-premise datacenter infrastructure for
data training purposes.
The demand for innovative and
flexible workplace solutions with asset management, deployment and
maintenance services and an increasingly international scope
remains high. Following the successful implementation of the Device
Lifecycle Management solution at a global player in the financial
sector, we have been able to win further large and exciting
projects in the industrial, retail and travel sectors.
The product order backlog at 30
June 2024 was £175.6m, a 23.1% increase in constant currency since
30 June 2023 (£142.7m). We are encouraged by the scale of the wider
pipeline of opportunities as we move into the second half of the
year.
Services
Services revenue increased by 1.4%
in constant currency with 6.3% growth in Professional Services
outweighing a 3.7% decline in Managed Services. Services gross
margin declined by 210 basis points, largely reflecting one
significantly underperforming Managed Services contract. Following
remedial action, some of the losses incurred during the first half
are expected to be recovered during the second half.
Professional Services saw continued
strong demand from public sector customers for support, engineering
and consultancy services. We also see continuing demand for project
support and skills from our corporate customers, especially in
networking and security, datacenter consolidation and cloud
management, as well as for expanding modern workplace
infrastructures. In addition, we are
increasingly seeing a need for comprehensive advice on the use of
AI in general and AI-related infrastructure. During period, we
advised a major German automotive manufacturer on the efficient use
of Microsoft Copilot.
In Managed Services, in the context
of a large portfolio of contracts that performed as expected, it
was disappointing that one significantly underperforming contract
impacted our margin performance for the half. We anticipate an
improved performance in the second half of the year following a
number of wins including a long-term
workplace contract with a global player in the healthcare and
agriculture sector, as well as a better performance from the
underperforming contract. Looking further
ahead, we have a strong pipeline
particularly in workplace and networking, where we are very
well-positioned.
Western Europe
Results
|
H1 2024
£m
|
H1 2023
£m
|
Change
|
Change in constant
currency
|
Technology Sourcing gross invoiced income
|
480.1
|
441.2
|
8.8%
|
11.6%
|
Services revenue
|
114.1
|
131.7
|
-13.4%
|
-11.1%
|
Total gross invoiced
income
|
594.2
|
572.9
|
3.7%
|
6.4%
|
|
|
|
|
|
Technology Sourcing revenue
|
299.2
|
309.7
|
-3.4%
|
-1.0%
|
Services revenue
|
114.1
|
131.7
|
-13.4%
|
-11.1%
|
Professional Services
revenue2
|
32.0
|
32.1
|
-0.3%
|
2.2%
|
Managed Services
revenue2
|
82.1
|
99.6
|
-17.6%
|
-15.3%
|
Total revenue
|
413.3
|
441.4
|
-6.4%
|
-4.0%
|
|
|
|
|
|
Gross profit
|
51.7
|
56.0
|
-7.7%
|
-5.3%
|
Adjusted administrative
expenses
|
(49.6)
|
(50.1)
|
-1.0%
|
1.4%
|
Adjusted operating
profit
|
2.1
|
5.9
|
-64.4%
|
-62.7%
|
"Western Europe" is a new reporting
segment which combines the previously reported France with Belgium,
Netherlands and Switzerland. The entities within Belgium, the
Netherlands and Switzerland have been transferred from the
previously reported "International" into Western Europe. This
change separates the entities that actively sell to local customers
from the International Segment. The previously reported
International segment aggregated selling entities with a number of
purely operational support entities that provide Services to the
Group's global customers. The change makes a clearer distinction
between the countries in which we sell to customers and the other
countries in which we operate directly to support those customers.
Full year 2023 restatements are available in Note 5 to the
Condensed Consolidated Financial Statements within this
announcement.
Total gross invoiced income
increased by 6.4% in constant currency, with strong growth in
Technology Sourcing partly offset by a decline in Services revenue.
Gross profit decreased by 5.3% in constant currency, with gross
margin down 18 basis points. Technology Sourcing gross margin
increased by 4 basis points and Services gross margin decreased by
125 basis points. Administrative expenses increased by 1.4% in
constant currency, resulting in adjusted operating profit declining
by £3.8m and by 62.7% in constant currency.
France delivered increased
gross invoiced income driven by strong growth in Technology
Sourcing partly offset by a decline in Services revenue, largely
reflecting the termination of low-margin Managed Services
contracts. Technology Sourcing growth was driven by an increase in
sales of lower margin workplace hardware and software. We are
onboarding several new Managed Services contracts in the public and
private sector during 2024 which we expect to deliver benefits in
the coming years. We continue to build on our enhanced market
position with combined strength in workplace, networking and
datacenter. Looking forward, however, we are mindful of the
increase in political uncertainty following recent elections.
Belgium continued to deliver a
strong performance, driven by growth in Technology Sourcing,
especially networking, and in Managed Services. We secured a
multi-year storage framework agreement with an IT company serving
public institutions. In Managed Services we successfully onboarded
a multi-year outsourcing contract with a global customer in the
financial settlement services industry.
The Netherlands performed in
line with our expectations with the result significantly impacted
by the loss of one of the largest public sector Technology Sourcing
contracts in the second half of last year. Excluding this,
performance was stable year on year.
Switzerland delivered an
improved performance against a weak comparative driven by growth in
Services. Volumes increased for our main Services contracts and we
secured a five-year contract extension with a key customer.
Technology Sourcing activity was at similar levels to last year
with recent wins expected to deliver growth in the second
half.
The combined product order backlog
at 30 June 2024 was £141.7m, a 117.8% increase in constant currency
since 30 June 2023 (£65.1m) in constant currency.
North America
Results
|
H1 2024
£m
|
H1 2023
£m
|
Change
|
Change in constant
currency
|
Technology Sourcing gross invoiced income
|
1,579.6
|
1,805.6
|
-12.5%
|
-10.1%
|
Services revenue
|
74.2
|
70.3
|
5.5%
|
8.2%
|
Total gross invoiced
income
|
1,653.8
|
1,875.9
|
-11.8%
|
-9.4%
|
|
|
|
|
|
Technology Sourcing revenue
|
1,157.5
|
1,398.6
|
-17.2%
|
-14.9%
|
Services revenue
|
74.2
|
70.3
|
5.5%
|
8.2%
|
Professional Services
revenue2
|
61.2
|
55.7
|
9.9%
|
12.5%
|
Managed Services
revenue2
|
13.0
|
14.6
|
-11.0%
|
-8.3%
|
Total revenue
|
1,231.7
|
1,468.9
|
-16.1%
|
-13.8%
|
|
|
|
|
|
Gross profit
|
127.8
|
132.7
|
-3.7%
|
-1.2%
|
Adjusted administrative
expenses
|
(101.7)
|
(103.4)
|
-1.6%
|
0.9%
|
Adjusted operating
profit
|
26.1
|
29.3
|
-10.9%
|
-8.3%
|
North America delivered a solid
underlying first half performance reflecting the expected decrease
in activity with a large hyperscale customer, partly offset by
growth with existing customers and new customer wins.
The result was also impacted by the timing of
fulfilment of certain large orders which moved from the end of the
first half into the second half. Gross
invoiced income decreased by 9.4% in constant currency. Gross
profit decreased by 1.2% in constant currency, with gross margin
increasing by 134 basis points, reflecting the lower proportion of
hyperscale business during the period and an improved margin
performance from rest of the business. Administrative expenses
increased by 0.9% in constant currency largely reflecting
investment in sales capacity and lower commissions, resulting in a
decline in adjusted operating profit of 8.3% in constant
currency.
During the half we added eight
podium customers including two new hyperscale customers. We
continue to add targeted sales capacity to capitalise on the
significant market opportunity. In April we successfully migrated
Pivot onto our group-wide ERP system.
Technology Sourcing
Technology Sourcing gross invoiced
income decreased by 10.1% on a constant currency basis and gross
margin in Technology Sourcing increased by 143 basis points,
primarily due to mix impact of the expected decrease in activity
with our largest hyperscale customer and improved margin
performance across the rest of our portfolio of customers. Despite
the normalisation of activity of our largest hyperscale customer it
remains a significant contributor with a healthy
orderbook.
Our strong track record of
delivering IT infrastructure at scale is helping us to win new
customers and start to broaden our hyperscale customer base. During
the first half, we won significant new business with two hyperscale
customers. Some of these orders were rephased from the end of the
first half into the second half of the year.
The product order backlog at 30
June 2024 was £1,118.3m, an 11.4% increase in constant currency
since 30 June 2023 (£1,003.7m) reflecting the significant business
won during the half. We remain excited by the pipeline of
opportunities with both enterprise and hyperscale
customers.
Services
Services revenue increased by 8.2%
in constant currency, reflecting a 12.5% increase in Professional
Services and an 8.3% decline in Managed Services. Services gross
margin decreased by 25 basis points. We continue to focus on
leveraging Group-wide tools, expertise and systems to deliver
accelerated Services growth.
Professional Services revenue
increased strongly during the half, reflecting growth with existing
and new enterprise and hyperscale customers. We continue to focus
our efforts on driving efficiency and improving
utilisation.
Managed Services experienced a
decline during the half, primarily due to lower than expected
activity from two customers coupled with the discontinuation of
some services previously offered by our Canadian business. This
decline has been partially offset by the successful onboarding of a
large global automotive manufacturer earlier in 2024, which is
providing opportunities to cross-sell other Service Lines this
year.
Financial review
Gross profit
Gross profit fell by 6.6% in the
period following the decline in gross invoiced income and revenue.
Group gross margin increased by 111 basis points, with an increase
in Technology Sourcing gross margin reflecting strong execution and
product mix, outweighing a slight decline in Services largely
reflecting the impact of an underperforming contract in Germany.
Overall, Group gross margin, expressed as gross profit as a
percentage of revenue, increased to 15.2% (H1 2023:
14.1%).
Operating profit
Operating profit fell by 35.5% to
£78.4m (H1 2023: 121.5m). Adjusted operating profit fell by 31.6%
to £81.1m (H1 2023: £118.5m), and by 30.0% in constant
currency.
Administrative expenses increased
by 3.1% to £396.3m (H1 2023: £392.7), reflecting lower commission
payments and increased investment. During the period we increased
our spend on strategic corporate initiatives by 47.4% to £17.6m (H1
2023: £11.9m). Adjusted administrative expenses increased by 1.0%
to £391.1m (H1 2023: £387.2m) and by 2.8% in constant
currency.
Profit before tax
The Group's profit before tax for
the period decreased by 31.6% to £84.0m (H1 2023: £122.8m).
Adjusted profit before tax decreased by 28.4% to £87.2m (H1 2023:
£121.8m) and declined by 26.8% in constant currency.
The difference between profit
before tax and adjusted profit before tax relates to the Group's
net costs of £3.2m (H1 2023: net gain of £1.0m) from exceptional
and other adjusting items, associated with the acquisitions of
Pivot and BITS and the amortisation of acquired intangibles as a
result of these and other North American acquisitions. Further
information on these items can be found below.
Reconciliation to adjusted measures for the period ended 30
June 2024
|
Reported
Interim
results
£m
|
|
Adjustments
|
|
|
Principal element on agency
contracts
£m
|
Amortisation
of acquired intangibles
£m
|
Exceptionals
and others
£m
|
Adjusted
Interim
results
£m
|
Revenue
|
3,103.8
|
1,432.8
|
-
|
-
|
4,536.6
|
Cost of sales
|
(2,631.6)
|
(1,432.8)
|
-
|
-
|
(4,064.4)
|
Gross profit
|
472.2
|
-
|
-
|
-
|
472.2
|
Administrative expenses
|
(396.3)
|
-
|
5.2
|
-
|
(391.1)
|
Other income related to acquisition
of subsidiary
|
-
|
-
|
-
|
-
|
-
|
Gain related to acquisition of
subsidiary
|
2.5
|
-
|
-
|
(2.5)
|
-
|
Operating profit
|
78.4
|
-
|
5.2
|
(2.5)
|
81.1
|
Finance income
|
9.9
|
-
|
-
|
-
|
9.9
|
Finance costs
|
(4.3)
|
-
|
-
|
0.5
|
(3.8)
|
Profit before tax
|
84.0
|
-
|
5.2
|
(2.0)
|
87.2
|
Income tax expense
|
(25.5)
|
-
|
(0.8)
|
-
|
(26.3)
|
Profit for the period
|
58.5
|
-
|
4.4
|
(2.0)
|
60.9
|
Reconciliation to adjusted measures for the period ended 30
June 2023
|
Reported
Interim
results
£m
|
|
Adjustments
|
|
|
Principal element on agency
contracts
£m
|
Amortisation
of acquired intangibles
£m
|
Exceptionals
and others
£m
|
Adjusted
Interim
results
£m
|
Revenue
|
3,584.9
|
1,573.3
|
-
|
-
|
5,158.2
|
Cost of sales
|
(3,079.2)
|
(1,573.3)
|
-
|
-
|
(4,652.5)
|
Gross profit
|
505.7
|
-
|
-
|
-
|
505.7
|
Administrative expenses
|
(392.7)
|
-
|
5.5
|
-
|
(387.2)
|
Other income related to acquisition
of subsidiary
|
5.3
|
-
|
-
|
(5.3)
|
-
|
Gain related to acquisition of
subsidiary
|
3.2
|
-
|
-
|
(3.2)
|
-
|
Operating profit
|
121.5
|
-
|
5.5
|
(8.5)
|
118.5
|
Finance income
|
6.6
|
-
|
-
|
-
|
6.6
|
Finance costs
|
(5.3)
|
-
|
-
|
2.0
|
(3.3)
|
Profit before tax
|
122.8
|
-
|
5.5
|
(6.5)
|
121.8
|
Income tax expense
|
(33.4)
|
-
|
(2.4)
|
-
|
(35.8)
|
Profit for the period
|
89.4
|
-
|
3.1
|
(6.5)
|
86.0
|
Net finance income
Net finance income in the period
amounted to £5.6m (H1 2023: £1.3m income). The main items included
within the net income were £2.6m of interest charged on lease
liabilities recognised under IFRS 16 (H1 2023: £2.3m) and
exceptional interest costs of £0.5m relating to the unwinding of
the discount on the contingent consideration for the purchase of
BITS, which was excluded on an adjusted basis (H1 2023: £2.0m).
Outside of the specific items above, net finance income of £8.7m
was recorded (H1 2023: net finance income of £5.6m). On an adjusted
basis, the net finance income was £6.1m during the period (H1 2023:
net finance income of £3.3m).
Taxation
The tax charge was £25.5m (H1 2023:
£33.4m) on profit before tax of £84.0m (H1 2023: £122.8m). This
represented a tax rate of 30.4% (H1 2023: 27.2%).
The tax credit related to the
amortisation of acquired intangibles was £0.8 (H1 2023: £2.4m). The
£5.2m of amortisation of intangible assets was almost entirely a
result of the North American acquisitions (H1 2023: £5.5m). As the
amortisation is recognised outside of our adjusted profitability,
the tax benefit on the amortisation is also reported outside of our
adjusted tax charge.
The adjusted tax charge for the
period was £26.3m (H1 2023: £35.8m), on an adjusted profit before
tax for the period of £87.2m (H1 2023: £121.8m). The effective tax
rate (ETR) was therefore 30.2% (H1 2023: 29.4%) on an adjusted
basis.
Overall, the adjusted ETR, is
continuing to trend upwards due to an increasing reweighting of the
geographic split of adjusted profit before tax away from the United
Kingdom to Germany and the United States, where tax rates are
higher.
The adjusted ETR is therefore
within the full-year range that we indicated at the time of our
2023 Full Year Results, which showed an expected ETR for 2024 of
28.5% to 30.5%. We expect that the full year ETR in 2024 will
remain in this range and continue to be subject to increasing
upwards pressure, due to the changing mix in where profits are
earned geographically to where tax rates are higher, as noted
above, and also as governments across our primary markets come
under fiscal and political pressure to increase corporation tax
rates.
The table below reconciles the tax
charge to the adjusted tax charge for the periods ended 30 June
2024, 30 June 2023 and the year ended 31 December 2023.
|
H1 2024
£m
|
H1 2023
£m
|
Year 2023
£m
|
Tax charge
|
25.5
|
33.4
|
72.7
|
Items to exclude from adjusted
tax:
|
|
|
|
Tax credit on amortisation of
acquired intangibles
|
0.8
|
2.4
|
4.0
|
Tax on exceptional items
|
-
|
-
|
-
|
Adjusted tax charge
|
26.3
|
35.8
|
76.7
|
Effective tax rate
|
30.4%
|
27.2%
|
26.7%
|
Adjusted effective tax
rate
|
30.2%
|
29.4%
|
27.6%
|
Profit for the period
The profit for the period decreased
by 34.6% to £58.5m (H1 2023: £89.4m). The adjusted profit for the
period decreased by 29.2% to £60.9m (H1 2023: £86.0m) and by 27.5%
in constant currency.
Exceptional and other adjusting items
The net loss from exceptional and
other adjusting items in the period was £2.4m (H1 2023: gain of
£3.4m). Excluding the tax items noted above, which resulted in a
gain of £0.8m (H1 2023: gain of £2.4m), the profit before tax
impact was a net loss from exceptional and other adjusting items of
£3.2m (H1 2023: gain of £1.0m).
At acquisition, contingent
consideration was agreed which required the Group to pay former
owners of Business IT Source Holdings, Inc. (BITS), two earn-out
payments based on BITS's 2022 and 2023 earnings before interest,
taxation, depreciation and amortisation (EBITDA) and indebtedness.
On 30 June 2023, a renegotiated agreement was signed with the
former owners following which, the second earn-out is now based on
BITS's 2023 EBITDA, H1 2024 EBITDA, and indebtedness over these
periods.
As the EBITDA for H1 2024 was lower
than originally forecast in the agreement with the vendors, due to
the phasing of business within 2024, and having considered a range
of possible earn-out scenarios, Management has determined that a
liability under the revised agreement should be recorded as
contingent consideration of £3.6m on a discounted basis as at 30
June 2024. The impact of this revised assessment has resulted in a
release during the period of £2.5m. This release related to the
acquisition is non-operational in nature, significant in size and
has therefore been classified as an exceptional item.
A further £0.5m relating to the
unwinding of the discount on the contingent consideration for the
purchase of BITS has been removed from the adjusted net finance
expense and classified as exceptional interest costs (H1 2023:
£2.0m).
We have continued to exclude, as an
'other adjusting item', the amortisation of acquired intangible
assets in calculating our adjusted results. Amortisation of
intangible assets is non-cash, does not relate to the operational
performance of the business, and is significantly affected by the
timing and size of our acquisitions, which distorts the
understanding of our Group and Segmental operating
results.
The amortisation of acquired
intangible assets was £5.2m (H1 2023: £5.5m), primarily relating to
the amortisation of the intangibles acquired as part of the recent
North American acquisitions.
Earnings per share
Diluted EPS decreased by 30.8% to
52.9p per share (H1 2023: 76.5p per share). Adjusted diluted EPS
decreased by 25.2% to 55.0p per share (H1 2023: 73.5p per
share).
|
|
|
|
|
H1 2024
|
H1 2023
|
Year 2023
|
Basic weighted average number of
shares (excluding own shares held) (m)
|
112.9
|
113.4
|
112.9
|
Effect of dilution:
|
|
|
|
Share options
|
1.3
|
1.3
|
1.2
|
Diluted weighted average number of
shares
|
114.2
|
114.7
|
114.1
|
|
|
|
|
Profit for the period attributable
to equity holders of the Parent (£m)
|
60.4
|
87.7
|
197.6
|
Basic earnings per share
(p)
|
53.5
|
77.3
|
175.0
|
Diluted earnings per share
(p)
|
52.9
|
76.5
|
173.2
|
|
|
|
|
Adjusted profit for the period
attributable to equity holders of the Parent (£m)
|
62.8
|
84.3
|
199.5
|
Adjusted basic earnings per share
(p)
|
55.6
|
74.3
|
176.7
|
Adjusted diluted earnings per share
(p)
|
55.0
|
73.5
|
174.8
|
Dividend
The Board recognises the importance
of dividends to shareholders and the Group has a long track record
of paying dividends and other special cash returns.
Dividends are paid from the
standalone balance sheet of the Parent Company and, as at 30 June
2024, the distributable reserves were £466.6m (30 June 2023:
£378.2m, 31 December 2023: £474.1m).
The Board has consistently applied
the Company's dividend policy, which states that the interim
dividend will be approximately one third of the previous year's
total dividend and that the total dividend paid will result in a
dividend cover of 2 to 2.5 times based on adjusted diluted
EPS.
The Board is therefore pleased to
announce a 3.1% increase in the interim dividend to 23.3p per share
(H1 2023: 22.6p per share). The interim dividend will be paid on
Friday 25 October 2024. The dividend record date is set as Friday
27 September 2024 and the shares will be marked ex-dividend on
Thursday 26 September 2024.
As a business that has already
returned over £1bn through a combination of dividends and share
buybacks since flotation, with no additional investment required
from shareholders over that time, we are committed to managing the
cash position for shareholders.
Share buyback
Computacenter's approach to capital
management is to ensure that the Group has a robust capital base
and maintains a strong credit rating, whilst aiming to maximise
shareholder value.
Given the Group's strong positive
adjusted net funds position and currently anticipated capital
needs, Computacenter announced on 26 July 2024 that it will return
up to £200m to shareholders via a share buyback programme, detailed
below. This is in line with our capital allocation policy to invest
organically, make targeted acquisitions and distribute surplus
capital while retaining a strong balance sheet. Following the
completion of the buyback we expect to maintain a strong balance
sheet with positive adjusted net funds.
Beginning on 26 July 2024,
Computacenter plc commenced a share buyback programme to repurchase
up to 11,414,110 of its ordinary shares. The maximum
amount allocated to the programme is £200m which shall end on
or before 30 June 2025. The sole purpose of the programme is
to reduce the Company's share capital. To date £66.1m of the
programme has been completed.
Whilst the Company has received no
indications at this stage, in line with the approach taken on
previous returns of value, Directors may undertake disposals of
shares during the course of the programme.
Central corporate costs
Central corporate costs primarily
include the costs of the Board, related public company costs, Group
Executive members not aligned to a specific geographic trading
entity and the cost of centrally funded strategic initiatives that
benefit the whole Group. Accordingly, these expenses are disclosed
separately as 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 adjusted
administrative expenses.
Total central corporate costs have
increased by 35.0% to £25.8m (H1 2023: £19.1m). Within
this:
·
Board expenses, related public company costs and
costs associated with Group Executive members not aligned to a
specific geographic trading entity, increased to £6.6m (H1 2023:
£5.9m);
·
share-based payment charges associated with Group
Executive members as identified above, including the Group
Executive Directors, increased from £1.3m in H1 2023 to £1.6m in H1
2024; and
·
strategic corporate initiatives are designed to
increase capability and therefore competitive position, enhance
productivity or strengthen systems which underpin the Group. During
the period this spend was £17.6m, up 47.9% over H1 2023
(£11.9m).
Investments
In 2023, we nearly doubled our
spend on strategic corporate initiatives to £28.1m, all of which
was recognised through the income statement. This spend was spread
across projects that will improve our capabilities, productivity
and underpin our systems of the future. We have seen the pace of
this spend increase in H1 2024 (£17.6m) as the Group continues its
investment in new systems, toolsets and cyber
resilience.
Computacenter resells, deploys and
manages vendor technology for customers. Customers choose
Computacenter because of the quality of our people and service. To
deliver high-quality service to our customers, we need to invest
consistently in our systems and tools, Integration Centers and
support operations to provide us with competitive advantage, to
derive benefits from our Group scale, while ensuring consistency of
service and agility.
We have continued to refine our
systems investment roadmap through to the end of 2027, with a
programme to replace legacy systems that enable our Technology
Sourcing and Services businesses. Investing in best-of-breed tools
will lower cost to serve, improve the quality of our offerings and
enhance our relevance to customers in the marketplace.
Our systems need to be robust,
secure and able to handle large volumes. They also have to be
simple to use and adaptable to most customer eventualities. We
prioritise our plans for systems development, and other investments
in time and capital, in response to the ever-changing environment
in which we operate.
Cash flow
The Group delivered a net cash
inflow from operating activities during the period of £1.4m (H1
2023: £116.5m inflow). In the first half of 2024, following the
correction to working capital positions in 2023, we have seen
operating cashflows closer to our historical norms where,
typically, the Group sees modest to neutral operating cash inflows
in the first half of the year with substantial net operating cash
inflows in the second half of the year.
During the period, net operating
cash outflows from working capital, including inventories, trade
and other receivables, and trade and other payables, were £89.7m
(H1 2023: £3.4m outflow).
Seasonal trends in accounts
receivable and accounts payable have been impacted by the
geographic mix of revenues and the timing of that revenue within
the half which has increased working capital by £32.6m.
During 2023, supply chains returned
to more normal conditions and, as a result, customers returned to
normal purchasing patterns. This has naturally led to both reduced
levels of inventory and product order backlogs. Our focus on
inventory control in 2023 delivered substantial reductions in both
Germany and North America, the two Segments where we experienced
the greatest inventory accumulation through 2022. The Group had
£271.2m of inventory as at 30 June 2024, a decrease of 14.0% on the
balance as at 30 June 2023 of £315.4m and an increase of 25.6% in
the six months since 31 December 2023 (£216.0m). The £55.2m
increase since 31 December 2023 is due to the timing of large
projects in North America, which have led to a temporary increase
due to the timing of completion of this activity. The closing
balance was materially lower than the high point of £532.6m seen as
at 30 September 2022 with a reduction of £261.4m since that
time. We expect that the stabilised levels of inventory will
continue to remain well-managed, with highs and lows remaining
within historical operational norms during the second half of
2024.
After interest, tax and gross
capital expenditure cashflows, our free cash outflow was £28.8m in
the period (H1 2023: £82.0m free cash inflow).
|
|
|
|
|
30 June
2024
£m
|
30 June
2023
£m
|
31 December
2023
£m
|
Adjusted operating
profit
|
81.1
|
118.5
|
271.5
|
Adjusting items
|
(2.7)
|
3.0
|
(2.7)
|
Operating profit
|
78.4
|
121.5
|
268.8
|
Other non-cash items and
adjustments
|
24.3
|
23.6
|
47.3
|
Change in working
capital
|
(89.7)
|
(3.4)
|
136.7
|
Change in pensions and
provisions
|
0.6
|
(1.2)
|
(0.8)
|
Depreciation of right-of-use
assets
|
20.3
|
20.9
|
41.4
|
Cash generated from
operations
|
33.9
|
161.4
|
493.4
|
Interest and payments related to
lease liabilities
|
(23.5)
|
(23.2)
|
(46.1)
|
Adjusted operating cash
flow
|
10.4
|
138.2
|
447.3
|
Net interest
received/(paid)
|
8.0
|
5.7
|
10.5
|
Tax paid
|
(32.5)
|
(44.9)
|
(82.8)
|
Gross capital
expenditure
|
(14.7)
|
(17.0)
|
(35.1)
|
Free cash flow
|
(28.8)
|
82.0
|
339.9
|
Dividends paid
|
-
|
-
|
(77.3)
|
Purchase of own shares net of
proceeds of exercise of employee share options
|
(7.5)
|
(22.9)
|
(28.8)
|
Acquisition of subsidiaries,
including contingent consideration and purchase of
non-controlling
interests
|
(14.7)
|
(19.3)
|
(19.3)
|
Disposal of assets
|
-
|
-
|
-
|
Net cash flow
|
(51.0)
|
39.8
|
214.5
|
Net debt repayment
|
(2.5)
|
(2.7)
|
(6.9)
|
Increase/(decrease) in cash and
cash equivalents
|
(53.5)
|
37.1
|
207.6
|
Effect of exchange rates on cash
and cash equivalents
|
(6.3)
|
0.1
|
(0.8)
|
Cash and cash equivalents at the
beginning of the period/year
|
471.2
|
264.4
|
264.4
|
Cash and cash equivalents at the
end of the period/year
|
411.4
|
301.6
|
471.2
|
|
|
|
|
Opening net funds
|
343.6
|
117.2
|
117.2
|
Increase/(decrease) in cash and
cash equivalents including impact of exchange rates
|
(59.8)
|
37.2
|
206.8
|
Movements in borrowings
|
2.7
|
3.6
|
7.9
|
Movements in lease
liabilities
|
1.3
|
6.8
|
11.7
|
Closing net funds
|
287.8
|
164.8
|
343.6
|
|
|
|
|
Opening adjusted net
funds
|
459.0
|
244.3
|
244.3
|
Increase/(decrease) in cash and
cash equivalents including impact of exchange rates
|
(59.8)
|
37.2
|
206.8
|
Movements in borrowings
|
2.7
|
3.6
|
7.9
|
Closing adjusted net
funds
|
401.9
|
285.1
|
459.0
|
Capital expenditure in the period
was £14.7m (H1 2023: £17.0m) primarily representing investments in
IT equipment and software tools, to enable us to deliver improved
service to our customers.
The Group's Employee Benefit Trust
(EBT) made market purchases of the Company's ordinary shares of
£10.2m (H1 2023: £26.1m) to satisfy maturing PSP awards and
Sharesave schemes and to reprovision the EBT in advance of future
maturities. During the period the Company received savings from
employees of £2.7m to purchase options within the Sharesave schemes
(H1 2023: £3.2m).
During the period, the Group made
additional further payments of £14.7m related to the previous BITS
acquisition, in accordance with the share purchase agreement,
during Q1 2024.
The Group reduced loans during the
period by a net £2.5m (H1 2023: £2.7m). We made regular repayments
towards the loan related to the construction of the German
headquarters in Kerpen and the customer financing facility in
Pivot.
The Group continued to manage its
cash and working capital positions appropriately, using standard
mechanisms, to ensure that cash levels remained within expectations
throughout the period. From time to time, some customers request
credit terms longer than our typical period of 30-60 days. In
certain instances, we will arrange for the sale of the receivables
on a true sale basis to a finance institution. We would typically
receive funds on 45-day terms from the finance institution, which
will then recover payment from the customer on terms agreed with
them. The cost of such an arrangement is borne by the customer,
either directly or indirectly, enabling us to receive the full
amount of payment in line with our standard terms.
The benefit to the cash and cash
equivalents position of such arrangements as at 30 June 2024 was
£26.7m (30 June 2023: £48.4m, 31 December 2023: £33.8m).
During June 2024, the Group engaged
in a limited factoring programme of trade receivables within the
German business, on a non-recourse basis, to provide assurance
against unforeseen liquidity issues which did not, in the event,
arise due to the continued aforementioned strength of cash receipts
in the final weeks of June 2024. This factoring was for £40.2m or
2.9% of the trade receivables after provisions balance as at 30
June 2024. The Group had no other debt factoring at the end of 30
June 2024, outside this normal course of business.
Cash and cash equivalents and net funds
Cash and cash equivalents as at 30
June 2024 were £411.4m compared to £301.6m as at 30 June 2023. Cash
and cash equivalents have decreased by £59.8m from £471.2m as at 31
December 2023 (H1 2023: increase of £37.2m from £264.4m as at 31
December 2022).
Net funds as at 30 June 2024 were
£287.8m, compared to net funds of £164.8m as at 30 June 2023 and
net funds of £343.6m as at 31 December 2023. The Group excluded
£114.1m, as at 30 June 2024 (30 June 2023: £120.3m and 31 December
2023: £115.4m), of lease liabilities from its non-GAAP adjusted net
funds measure, to allow an alternative view of the Group's overall
liquidity position excluding the effect of the lease liabilities
required to be capitalised under the IFRS 16 accounting
standard.
Adjusted net funds as at 30 June
2024 were £401.9m, compared to adjusted net funds of £285.1m as at
30 June 2023 and £459.0m as at 31 December 2023.
Net funds as at 30 June 2024, 30
June 2023 and 31 December 2023 were as follows:
|
30 June 2024
£m
|
30 June
2023
£m
|
31 December 2023
£m
|
Cash and short-term
deposits
|
411.4
|
301.6
|
471.2
|
Cash and cash
equivalents
|
411.4
|
301.6
|
471.2
|
Bank loans - Pivot customer
specific facility
|
(3.1)
|
(6.0)
|
(4.5)
|
Bank loans - Computacenter India
facility
|
-
|
(1.9)
|
-
|
Bank loans - Kerpen building
facility
|
(6.4)
|
(8.6)
|
(7.7)
|
Total bank loans
|
(9.5)
|
(16.5)
|
(12.2)
|
Adjusted net funds (excluding
lease liabilities)
|
401.9
|
285.1
|
459.0
|
Lease liabilities
|
(114.1)
|
(120.3)
|
(115.4)
|
Net funds
|
287.8
|
164.8
|
343.6
|
For a full reconciliation of net
funds and adjusted net funds, see note 12 to the to the summary
financial information within this announcement.
Currency
The Group reports its results in
pounds sterling. The strength in the value of sterling against most
currencies during the first half of 2024, in particular the US
Dollar, has begun to impact our revenues and profitability, as a
result of the conversion of our increasingly substantial foreign
earnings.
Restating the first half of 2023 at
2024 exchange rates would decrease H1 2023 revenue by approximately
£75.1m, whilst H1 2023 adjusted profit before tax would reduce by
£2.7m. If the 30 June 2024 spot rates were to continue through the
remainder of 2024, the impact of restating 2023 at 2024 exchange
rates would be to decrease 2023 revenue by approximately £145.4m
and 2023 adjusted profit before tax by approximately £6.2m.
Restating H1 2024 results at the exchange rates seen in H1 2023
would result in an increase in H1 2024 revenue of £63.4m and an
increase in adjusted profit before tax of £2.4m
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 64 to 73 of the 2023 Annual Report
and Accounts, a copy of which is available on the Group's website
at investors.computacenter.com.
The Group's risk management
approach and the principal risks, potential impacts and primary
mitigating activities are unchanged from those set out in the 2023
Annual Report and Accounts. Our risk management approach operated
effectively in the six months to 30 June 2024, with systems and
controls functioning as designed. Whilst we have not identified any
new principal risks during the period, we acknowledge the
heightened level of overall risk across several risk categories,
due to the current macroeconomic uncertainty and its impact on our
operating environment in general.
This Strategic Report was approved
by the Board on 6 September 2024 and was signed on its behalf
by:
MJ Norris
|
MC Jehle
|
Chief Executive Officer
|
Chief Financial Officer
|
Directors' Responsibilities
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 for use in the UK;
• the interim management report
includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure
Guidance 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
Guidance 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.
MJ Norris
MC Jehle
Chief Executive
Officer
Chief Financial Officer
Independent review report to Computacenter
plc
Conclusion
We have been engaged by
Computacenter plc (the 'company') to review the condensed set of
financial statements in the half-yearly financial report for the
six months ended 30 June 2024 which comprises the Consolidated
Income Statement, Consolidated Statement of Comprehensive Income,
Consolidated Balance Sheet, Consolidated Statement of Changes in
Equity, Consolidated Cash Flow Statement, and related explanatory
notes. We have read the other information contained in the
half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial
statements.
Based on our review, nothing has
come to our attention that causes us to believe that the condensed
set of financial statements in the half-yearly financial report for
the six months ended 30 June 2024 is not prepared, in all material
respects, in accordance with UK-adopted International Accounting
Standard (IAS) 34, 'Interim Financial Reporting' and Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in
accordance with International Standard on Review Engagements (UK)
2410, "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by Financial Reporting
Council for use in the United Kingdom (ISRE (UK) 2410). A review of
interim financial information consists of making inquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 2, the annual
financial statements of the Group are prepared in accordance with
UK-adopted international accounting standards. The condensed set of
financial statements included in this half yearly financial report
has been prepared in accordance with UK- adopted International
Accounting Standard 34, 'Interim Financial Reporting'.
Conclusions relating to going concern
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Basis of conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or
that management have identified material uncertainties relating to
going concern that are not appropriately disclosed.
This conclusion is based on the
review procedures performed in accordance with this ISRE (UK),
however future events or conditions may cause the entity to cease
to continue as a going concern.
In our evaluation of the directors'
conclusions, we considered the inherent risks associated with the
group's business model including effects arising from
macro-economic uncertainties such as inflationary pressures and
interest rates, we assessed and challenged the reasonableness of
estimates made by the directors and the related disclosures and
analysed how those risks might affect the group's financial
resources or ability to continue operations over the going concern
period.
Directors' responsibilities
The half-yearly financial report is
the responsibility of, and has been approved by, the directors. The
directors are responsible for preparing the half-yearly financial
report in accordance with UK-adopted International Accounting
Standard (IAS) 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
In preparing the half-yearly
financial report, the directors are responsible for assessing the
company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic
alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly
report, we are responsible for expressing to the Company a
conclusion on the condensed set of financial statements in the
half-yearly financial report.
Our conclusion, including our
Conclusions relating to going concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion paragraph of this report.
Use of our report
This report is made solely to the
company in accordance with ISRE (UK) 2410. Our review work has been
undertaken so that we might state to the company those matters we
are required to state to it in an independent review report and for
no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company,
for our review work, for this report, or for the conclusion we have
formed.
Grant Thornton UK LLP
Statutory Auditor, Chartered
Accountants
London
6 September 2024
Consolidated Income Statement
For the six months ended 30 June 2024
|
Note
|
H1 2024
£m
|
H1 2023
£m
|
Year 2023
£m
|
Revenue
|
5
|
3,103.8
|
3,584.9
|
6,922.8
|
Cost of sales
|
|
(2,631.6)
|
(3,079.2)
|
(5,878.8)
|
Gross profit
|
5
|
472.2
|
505.7
|
1,044.0
|
|
|
|
|
|
Administrative expenses
|
|
(396.3)
|
(392.7)
|
(783.3)
|
Other income related to acquisition
of a subsidiary
|
8
|
-
|
5.3
|
5.3
|
Gain related to acquisition of a
subsidiary
|
8
|
2.5
|
3.2
|
2.8
|
Operating profit
|
|
78.4
|
121.5
|
268.8
|
|
|
|
|
|
Finance income
|
|
9.9
|
6.6
|
13.8
|
Finance costs
|
|
(4.3)
|
(5.3)
|
(10.5)
|
Profit before tax
|
|
84.0
|
122.8
|
272.1
|
|
|
|
|
|
Income tax expense
|
9
|
(25.5)
|
(33.4)
|
(72.7)
|
Profit for the
period/year
|
|
58.5
|
89.4
|
199.4
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity holders of the
Parent
|
|
60.3
|
87.7
|
197.6
|
Non-controlling
interests
|
|
(1.8)
|
1.7
|
1.8
|
Profit for the
period/year
|
|
58.5
|
89.4
|
199.4
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
- basic for profit for the
period/year
|
10
|
53.5p
|
77.3p
|
175.0p
|
- diluted for profit for the
period/year
|
10
|
52.9p
|
76.5p
|
173.2p
|
All of the activities of the Group
relate to continuing operations.
Consolidated Statement of Comprehensive
Income
For the six months ended 30 June 2024
|
Note
|
H1 2024
£m
|
H1 2023
£m
|
Year 2023
£m
|
Profit for the
period/year
|
|
58.5
|
89.4
|
199.4
|
Items that may be reclassified to
the Consolidated Income Statement:
|
|
|
|
|
Gain/(loss) arising on cash flow
hedge
|
|
1.9
|
2.5
|
2.8
|
Income tax effect
|
|
(0.6)
|
(0.9)
|
(0.9)
|
|
|
1.3
|
1.6
|
1.9
|
Exchange differences on translation
of foreign operations
|
|
(10.8)
|
(26.3)
|
(25.8)
|
|
|
(9.5)
|
(24.7)
|
(23.9)
|
Items not to be reclassified to the
Consolidated Income Statement:
|
|
|
|
|
Remeasurement of defined benefit
plan
|
|
-
|
-
|
(2.8)
|
Other comprehensive expense for the
period/year, net of tax
|
|
(9.5)
|
(24.7)
|
(26.7)
|
|
|
|
|
|
Total comprehensive income for the
period/year
|
|
49.0
|
64.7
|
172.7
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity holders of the
Parent
|
|
50.8
|
63.3
|
171.3
|
Non-controlling
interests
|
|
(1.8)
|
1.4
|
1.4
|
Total comprehensive income for the
period/year
|
|
49.0
|
64.7
|
172.7
|
Consolidated Balance Sheet
As
at 30 June 2024
|
Note
|
H1
2024
£m
|
H1
2023
£m
|
Year
2023
£m
|
Non-current assets
|
|
|
|
|
Property, plant and
equipment
|
|
92.4
|
93.0
|
96.1
|
Right-of-use assets
|
|
103.8
|
112.9
|
104.5
|
Intangible assets
|
|
319.7
|
328.6
|
322.4
|
Investment in associate
|
|
-
|
0.1
|
0.1
|
Deferred income tax
assets
|
|
11.3
|
11.4
|
11.6
|
Trade and other
receivables
|
|
20.1
|
16.0
|
21.1
|
Prepayments
|
|
7.0
|
16.5
|
10.3
|
|
|
554.3
|
578.5
|
566.1
|
Current assets
|
|
|
|
|
Inventories
|
|
271.2
|
315.4
|
216.0
|
Trade and other
receivables
|
|
1,387.5
|
1,261.4
|
1,498.1
|
Income tax receivable
|
|
23.3
|
12.2
|
12.5
|
Prepayments
|
|
162.6
|
154.9
|
139.7
|
Accrued income
|
|
166.9
|
178.7
|
151.9
|
Derivative financial
instruments
|
11
|
3.3
|
3.7
|
2.5
|
Cash and short-term
deposits
|
12
|
411.4
|
301.6
|
471.2
|
|
|
2,426.2
|
2,227.9
|
2,491.9
|
Total assets
|
|
2,980.5
|
2,806.4
|
3,058.0
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
|
1,571.2
|
1,421.1
|
1,674.5
|
Deferred income
|
|
224.2
|
249.8
|
230.3
|
Financial liabilities
|
|
4.6
|
6.7
|
4.8
|
Lease liabilities
|
|
35.6
|
36.7
|
37.3
|
Derivative financial
instruments
|
11
|
1.7
|
4.2
|
6.3
|
Income tax payable
|
|
15.3
|
22.7
|
16.9
|
Provisions
|
|
1.6
|
4.3
|
2.2
|
|
|
1,854.2
|
1,745.5
|
1,972.3
|
Non-current liabilities
|
|
|
|
|
Financial liabilities
|
|
4.9
|
9.8
|
7.4
|
Lease liabilities
|
|
78.5
|
83.6
|
78.1
|
Deferred income
|
|
-
|
5.5
|
4.3
|
Retirement benefit
obligation
|
|
26.3
|
22.4
|
26.2
|
Provisions
|
|
7.1
|
5.2
|
6.9
|
Deferred income tax
liabilities
|
|
12.7
|
15.1
|
13.4
|
|
|
129.5
|
141.6
|
136.3
|
Total liabilities
|
|
1983.7
|
1,887.1
|
2,108.6
|
Net assets
|
|
996.8
|
919.3
|
949.4
|
|
|
|
|
|
Capital and reserves
|
|
|
|
|
Issued share capital
|
|
9.3
|
9.3
|
9.3
|
Share premium
|
|
4.0
|
4.0
|
4.0
|
Own shares held
|
|
(138.2)
|
(131.4)
|
(140.4)
|
Translation and hedging
reserve
|
|
17.7
|
26.3
|
27.2
|
Retained earnings
|
|
1,098.1
|
1,003.4
|
1,041.6
|
Shareholders' equity
|
|
990.9
|
911.6
|
941.7
|
Non-controlling
interests
|
|
5.9
|
7.7
|
7.7
|
Total equity
|
|
996.8
|
919.3
|
949.4
|
Approved by the Board on 6
September 2024.
MJ Norris
|
MC Jehle
|
Chief Executive Officer
|
Chief Financial Officer
|
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2024
|
|
|
|
|
|
|
|
|
|
|
Attributable to equity holders of the Parent
|
|
|
|
|
Issued share capital £m
|
Share
premium £m
|
Capital
redemption reserve
£m
|
Own
shares
held
£m
|
Translation and hedging
reserves
£m
|
Retained earnings £m
|
Share-
holders' equity
£m
|
Non-controlling
interest
£m
|
Total
equity
£m
|
At 1 January 2023
|
9.3
|
4.0
|
75.0
|
(127.7)
|
50.7
|
854.4
|
865.7
|
6.3
|
872.0
|
Profit for the period
|
-
|
-
|
-
|
-
|
-
|
87.7
|
87.7
|
1.7
|
89.4
|
Other comprehensive
(expense)
|
-
|
-
|
-
|
-
|
(24.4)
|
-
|
(24.4)
|
(0.3)
|
(24.7)
|
Total comprehensive
(expense)/income
|
-
|
-
|
-
|
-
|
(24.4)
|
87.7
|
63.3
|
1.4
|
64.7
|
Transactions with
owners:
|
|
|
|
|
|
|
|
|
|
- Cost of share-based
payments
|
-
|
-
|
-
|
-
|
-
|
4.0
|
4.0
|
-
|
4.0
|
- Tax on share-based
payments
|
-
|
-
|
-
|
-
|
-
|
1.5
|
1.5
|
-
|
1.5
|
- Capital reduction
|
-
|
-
|
(75.0)
|
-
|
-
|
75.0
|
-
|
-
|
-
|
- Exercise of options
|
-
|
-
|
-
|
22.4
|
-
|
(19.2)
|
3.2
|
-
|
3.2
|
- Purchase of own shares
|
-
|
-
|
-
|
(26.1)
|
-
|
-
|
(26.1)
|
-
|
(26.1)
|
Total
|
-
|
-
|
(75.0)
|
(3.7)
|
-
|
61.3
|
(17.4)
|
-
|
(17.4)
|
At 30 June 2023
|
9.3
|
4.0
|
-
|
(131.4)
|
26.3
|
1,003.4
|
911.6
|
7.7
|
919.3
|
Profit for the period
|
-
|
-
|
-
|
-
|
-
|
109.9
|
109.9
|
0.1
|
110.0
|
Other comprehensive
(expense)/income
|
-
|
-
|
-
|
-
|
0.9
|
(2.8)
|
(1.9)
|
(0.1)
|
(2.0)
|
Total comprehensive
(expense)/income
|
-
|
-
|
-
|
-
|
0.9
|
107.1
|
108.0
|
-
|
108.0
|
Transactions with
owners:
|
|
|
|
|
|
|
|
|
|
- Cost of share-based
payments
|
-
|
-
|
-
|
-
|
-
|
3.7
|
3.7
|
-
|
3.7
|
- Tax on share-based
payments
|
-
|
-
|
-
|
-
|
-
|
1.6
|
1.6
|
-
|
1.6
|
- Exercise of options
|
-
|
-
|
-
|
2.9
|
-
|
3.1
|
6.0
|
-
|
6.0
|
- Purchase of own shares
|
-
|
-
|
-
|
(11.9)
|
-
|
-
|
(11.9)
|
-
|
(11.9)
|
- Equity dividends
|
-
|
-
|
-
|
-
|
-
|
(77.3)
|
(77.3)
|
-
|
(77.3)
|
Total
|
-
|
-
|
-
|
(9.0)
|
-
|
(68.9)
|
(77.9)
|
-
|
(77.9)
|
At 31 December 2023
|
9.3
|
4.0
|
-
|
(140.4)
|
27.2
|
1,041.6
|
941.7
|
7.7
|
949.4
|
Profit for the period
|
-
|
-
|
-
|
-
|
-
|
60.3
|
60.3
|
(1.8)
|
58.5
|
Other comprehensive
(expense)
|
-
|
-
|
-
|
-
|
(9.5)
|
-
|
(9.5)
|
-
|
(9.5)
|
Total comprehensive
(expense)/income
|
-
|
-
|
-
|
-
|
(9.5)
|
60.3
|
50.8
|
(1.8)
|
49.0
|
Transactions with
owners:
|
|
|
|
|
|
|
|
|
|
- Cost of share-based
payments
|
-
|
-
|
-
|
-
|
-
|
4.4
|
4.4
|
-
|
4.4
|
- Tax on share-based
payments
|
-
|
-
|
-
|
-
|
-
|
1.5
|
1.5
|
-
|
1.5
|
- Exercise of options
|
-
|
-
|
-
|
12.4
|
-
|
(9.7)
|
2.7
|
-
|
2.7
|
- Purchase of own shares
|
-
|
-
|
-
|
(10.2)
|
-
|
-
|
(10.2)
|
-
|
(10.2)
|
- Equity dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Total
|
-
|
-
|
-
|
2.2
|
-
|
(3.8)
|
(1.6)
|
-
|
(1.6)
|
At 30 June 2024
|
9.3
|
4.0
|
-
|
(138.2)
|
17.7
|
1,098.1
|
990.9
|
5.9
|
996.8
|
Consolidated Cash Flow Statement
For the six months ended 30 June 2024
|
Note
|
H1 2024
£m
|
H1 2023
£m
|
Year 2023
£m
|
Operating activities
|
|
|
|
|
Profit before taxation
|
|
84.0
|
122.8
|
272.1
|
Net finance
(income)/cost
|
|
(5.6)
|
(1.3)
|
(3.3)
|
Depreciation of property, plant and
equipment
|
|
10.4
|
10.0
|
20.4
|
Depreciation of right-of-use
assets
|
|
20.3
|
20.9
|
41.4
|
Amortisation of intangible
assets
|
|
9.3
|
9.4
|
18.9
|
Share-based payments
|
|
4.4
|
4.0
|
7.7
|
Loss on disposal of property, plant
and equipment
|
|
0.2
|
-
|
0.2
|
Gain on disposal of
intangibles
|
|
(0.2)
|
-
|
-
|
Net cash flow from
inventories
|
|
(57.1)
|
90.6
|
189.2
|
Net cash flow from trade and other
receivables (including contract assets)
|
|
56.1
|
293.6
|
107.7
|
Net cash flow from trade and other
payables (including contract liabilities)
|
|
(88.7)
|
(387.6)
|
(160.2)
|
Net cash flow from provisions and
employee benefits
|
|
0.6
|
(1.2)
|
(0.8)
|
Other adjustments
|
|
0.2
|
0.2
|
0.1
|
Cash generated from
operations
|
|
33.9
|
161.4
|
493.4
|
Income taxes paid
|
|
(32.5)
|
(44.9)
|
(82.8)
|
Net cash flow from operating
activities
|
|
1.4
|
116.5
|
410.6
|
Investing activities
|
|
|
|
|
Interest received
|
|
9.3
|
6.7
|
13.1
|
Acquisition of subsidiaries, net of
cash acquired
|
|
-
|
(1.9)
|
-
|
Contingent consideration
|
11
|
(14.7)
|
(17.4)
|
(17.4)
|
Purchases of property, plant and
equipment
|
|
(8.3)
|
(11.3)
|
(21.9)
|
Purchases of intangible
assets
|
|
(6.4)
|
(5.7)
|
(13.2)
|
Net cash flow from investing
activities
|
|
(20.1)
|
(29.6)
|
(39.4)
|
Financing activities
|
|
|
|
|
Interest paid
|
|
(1.3)
|
(1.0)
|
(2.6)
|
Interest paid on lease
liabilities
|
|
(2.6)
|
(2.3)
|
(4.7)
|
Purchase of non-controlling
interest
|
|
-
|
-
|
(1.9)
|
Dividends paid to equity
shareholders of the Parent
|
|
-
|
-
|
(77.3)
|
Proceeds from exercise of share
options
|
|
2.7
|
3.2
|
9.2
|
Purchase of own shares
|
|
(10.2)
|
(26.1)
|
(38.0)
|
Repayment of loans and credit
facility
|
|
(2.5)
|
(64.6)
|
(69.8)
|
Payment of capital element of lease
liabilities
|
|
(20.9)
|
(20.9)
|
(41.4)
|
Drawdown of borrowings
|
|
-
|
61.9
|
62.9
|
Net cash flow from financing
activities
|
|
(34.8)
|
(49.8)
|
(163.6)
|
|
|
|
|
|
Increase/(decrease) in cash and
cash equivalents
|
|
(53.5)
|
37.1
|
207.6
|
Effect of exchange rates on cash
and cash equivalents
|
|
(6.3)
|
0.1
|
(0.8)
|
Cash and cash equivalents at the
beginning of the period/year
|
|
471.2
|
264.4
|
264.4
|
Cash and cash equivalents at the
end of the period/year
|
12
|
411.4
|
301.6
|
471.2
|
Notes to the Condensed Consolidated Financial
Statements
For the six months ended 30 June 2024
1
General information
The Interim Condensed Consolidated
Financial Statements (Financial Statements) of Computacenter plc
(Parent Company or the Company) and its subsidiaries (the Group)
for the six months ended 30 June 2024 were authorised for issue in
accordance with a resolution of the Directors on 6 September 2024.
The Consolidated Balance Sheet was signed on behalf of the Board by
MJ Norris and MC Jehle.
Computacenter plc is a limited
company incorporated and domiciled in England whose shares are
publicly traded. Its registered address is Hatfield Business Park,
Hatfield Avenue, Hatfield, AL10 9TW.
2
Basis of preparation
The Financial Statements for the
six months ended 30 June 2024 contained in this announcement have
been prepared in accordance with International Accounting Standard
34 'Interim Financial Reporting', as adopted by the United Kingdom.
They do not include all the information and disclosures required in
the annual financial statements and should be read in conjunction
with the Group's 2023 Annual Report and Accounts which have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the United Kingdom. The Financial
Statements contained in this announcement are unaudited.
The Financial Statements are
prepared on the historical cost basis, other than derivative
financial instruments and contingent consideration, which are
stated at fair value.
The Financial Statements are
presented in pound sterling (£) and all values are rounded to the
nearest hundred thousand, except when otherwise
indicated.
In determining whether it is
appropriate to prepare the Financial Statements on a going concern
basis, the Group prepares a three-year Plan (the 'Plan') annually
by aggregating top-down expectations of business performance across
the Group in the second and third year of the Plan with a detailed
12-month bottom-up budget for the first year, which was approved by
the Board. The forecast cash flows from the Plan are aggregated
with the current position to provide a total three-year cash
position against which the impact of potential risks and
uncertainties can be assessed. In the absence of significant
external debt, the analysis also considers access to available
committed and uncommitted finance facilities, the ability to raise
new finance in most foreseeable market conditions and the ability
to restrict dividend payments.
The Directors have identified a
period of not less than 12 months from the date of signing the
Financial Statements contained in this announcement, through to 30
September 2025, as the appropriate period for the going concern
assessment and have based their assessment on the relevant
forecasts from the Plan for that period. No events or conditions
beyond the assessment period that may cast significant doubt on the
Group's ability to continue as a going concern have been
identified.
The potential impact of the
principal risks and uncertainties, as set out on pages 64 to 77 of
the 2023 Annual Report and Accounts, is then applied to the Plan.
This assessment includes only those risks and uncertainties that,
individually or in plausible combination, would threaten the
Group's business model, future performance, solvency or liquidity
over the assessment period and which are considered to be severe
but reasonable scenarios. It also takes into account an assessment
of how the risks are managed and the effectiveness of any
mitigating actions.
The combined effect of the
potential occurrence of several of the most impactful risks and
uncertainties is represented by a large adjustment to the cash
flows over the assessment period which is then compared to the cash
position generated by the Plan, throughout the assessment period,
to model whether the business will be able to continue in
operation. This application of the risk impact adjustment is
performed under a sensitivity scenario. The supporting models of
the Plan are subject to rigorous downside sensitivity analysis
which involves flexing a number of the main assumptions underlying
the forecasts within the Plan.
For the current period, the primary
downside sensitivity relates to a modelled, but not predicted,
severe downturn in Group revenues, beginning in the second half of
2024, simulating a continued impact for some of our customers from
a reduction in customer demand due to the current economic crisis,
and ongoing impact on the Group's revenues from this macroeconomic
instability. This sensitivity analysis models a continued market
downturn scenario, with slower-than-predicted recovery estimates,
for some of our customers whose businesses have been affected by
the downturn occurring for our customer base as a result of the
emerging negative global macroeconomic environment due to the
current economic crisis. Under the sensitivity scenario, the
business demonstrates modelled solvency and liquidity over the
assessment period.
Our cash and borrowing capacity
provide sufficient funds to meet the foreseeable needs of the
Parent and Group. At 30 June 2024, the Group had cash and
short-term deposits of £411.4m and bank debt, primarily related to
the recently built headquarters in Germany and operations in North
America, of £9.5m. On 9 December 2022, the Group entered a new
unsecured multi-currency revolving loan facility of £200.0m in
order to rationalise its treasury operations. The new facility has
a term of five years plus two one-year extension options
exercisable on the first and second anniversary of the facility.
The Group has exercised the extension option on the first
anniversary, extending the term to six years with one further
one-year extension option available.
The Group has a resilient balance
sheet position, with net assets of £996.8m as at 30 June 2024. The
Group made a profit after tax of £58.5m and delivered net cash
flows from operating activities of £1.4m, for the period ended 30
June 2024.
As the analysis continues to show a
strong forecast cash position, even under the severe economic
conditions modelled in the sensitivity scenario, the Directors
continue to consider that the Parent and Group are well placed to
manage business and financial risks in the current economic
environment. Based on this assessment, the Directors confirm that
they have a reasonable expectation that the Parent and Group will
be able to continue in operation and meet their liabilities as they
fall due over the period of not less than 12 months from the date
of signing the Financial Statements contained in this announcement
and therefore have prepared the Financial Statements on a going
concern basis.
3
Significant accounting policies
The accounting policies adopted are
consistent with those of the previous financial year as applied in
the Group's 2023 Annual Report and Accounts, except for the
estimation of income tax (see note 9).
4
Adjusted measures
The Group uses several
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, set out below,
assist in providing additional useful information on the underlying
trends, performance and position of the Group. The non-GAAP
measures are also used to enhance the comparability of information
between reporting periods by adjusting for non-recurring or
uncontrollable factors which affect IFRS measures, to aid the user
in understanding the Group's performance.
Consequently, non-GAAP measures are
used by the Directors and Management for performance analysis,
planning, reporting and incentive-setting purposes. Adjusted
measures have remained consistent with the prior period. However,
as with all non-GAAP alternative performance measures, these
adjusted measures present some natural limitations in their usage
to understand the Group's performance. These limitations include
the lack of comparability with non-GAAP and GAAP measures used by
other companies and the fact that the results may, from
time-to-time, contain the benefit of acquisitions made but exclude
the significant costs associated with that acquisition or the
amortisation of acquired intangibles. It is therefore not a
complete record of the Group's financial performance as compared to
its GAAP results. The exclusion of other adjusting items may result
in adjusted earnings being materially higher or lower than reported
earnings. In particular, when significant acquisition related
charges are excluded, adjusted earnings will be higher than
reported GAAP-compliant earnings.
These non-GAAP measures comprise
gross invoiced income, adjusted administrative expenses, adjusted
operating profit or loss, adjusted profit or loss before tax,
adjusted tax, adjusted profit or loss for the period/year, adjusted
earnings per share and adjusted diluted earnings per
share.
The Appendix to this announcement
sets out the description and basis of calculation of the
Alternative Performance Measures and the rationale for their
use.
A reconciliation to adjusted
measures is provided in the Chief Financial Officer's Review
contained in this announcement which details the impact of
exceptional and other adjusting items when comparing to the
non-GAAP financial measures, in addition to those reported in
accordance with IFRS. Further detail is also provided within note
5, Segment information.
5
Segment information
The Segment information is reported
to the Board and the Chief Executive Officer. The Chief Executive
Officer is the Group's Chief Operating Decision Maker
(CODM).
As disclosed in the 2023 Annual
Report and Accounts, the Group reported six segments: UK, Germany,
France, North America, International, along with Central Corporate
Costs. During the first half of the year, Management reviewed the
way it reported Segmental performance to the Board and the CODM. In
accordance with IFRS 8, changes to the operating segments were made
to better reflect recent changes in management responsibility and
how the Board and CODM will review information about the Group.
These operating segment changes are explained below:
·
The entities within Belgium, the Netherlands and
Switzerland have been transferred from the previously reported
"International" Segment and into the France Segment which has been
renamed "Western Europe". This change removes these entities that
actively sell to local customers (selling entities) from the
International Segment, placing them in a segment that is a purely
selling entity segment.
The previously reported International segment aggregated selling
entities with a number of purely operational support entities that
provide Services to the Group's global customers. The change makes
a clearer distinction between the countries in which we sell to
customers and the other countries in which we operate directly to
support those customers.
The change anticipates further alignment of operations between
teams within Belgium, the Netherlands and France.
As a result, we now have four segments describing the countries in
which we actively sell i.e. our markets: United Kingdom, Germany,
Western Europe (France, Belgium, Netherlands and Switzerland) and
North America (USA & Canada).
·
The revised International segment now consolidates
the other countries in which we operate in support of our global
customers.
·
Finally, we have retained the Central Corporate
Cost segment and continues to be disclosed as a separate
column.
In addition to the above Segmental
changes, the Group also performed an analysis of business
activities included within the Services business. As a result of
this analysis, from 1 January 2024 the Group has reallocated
revenue of certain business activities from Managed Services to
Professional Services. This reflects better where the customer
relationship and operational responsibility lies and where the
benefits should accrue. This change has no impact on the reported
Group or total Services revenue, however, Professional services
revenue increased and Managed Services decreased by £14.6m,
primarily in the Germany segment for H1 2023 (Year ended 31
December 2023: £32.4m).
The above changes in reporting of
segments and business activities within the Services business has
no impact on reported Group results. To enable comparisons with
prior period performance, comparative information for H1 2023 and
the year ended 31 December 2023 has been restated in accordance
with the revised Segmental and business reporting
structure.
The Group has the same operating
Segments and reporting Segments. The new Segmental reporting
structure is the basis on which internal reports are now provided
to the Chief Executive Officer, as the CODM, for assessing
performance and determining the allocation of resources within the
Group, in accordance with IFRS 8.25. Segmental performance is
measured based on external revenues, adjusted gross profit,
adjusted operating profit and adjusted profit before
tax.
Segmental performance for the
periods ended 30 June 2024, 30 June 2023 and 31 December 2023 was
as follows:
Six months ended
30
June 2024
|
|
UK
£m
|
Germany £m
|
Western Europe
£m
|
North America *£m
|
International £m
|
Central
Corporate Costs
£m
|
Total
£m
|
Revenue
|
|
|
|
|
|
|
|
|
Technology Sourcing
revenue
|
|
|
|
|
|
|
|
|
Gross invoiced income
|
|
864.6
|
812.9
|
480.1
|
1,579.6
|
2.9
|
-
|
3,740.1
|
Adjustment to gross invoiced income
for income recognised as agent
|
|
(542.5)
|
(287.3)
|
(180.9)
|
(422.1)
|
-
|
-
|
(1,432.8)
|
Total Technology Sourcing
revenue
|
|
322.1
|
525.6
|
299.2
|
1,157.5
|
2.9
|
-
|
2,307.3
|
Services revenue
|
|
|
|
|
|
|
|
|
Professional Services
|
|
71.0
|
201.5
|
32.0
|
61.2
|
-
|
-
|
365.7
|
Managed Services
|
|
149.1
|
174.9
|
82.1
|
13.0
|
11.7
|
-
|
430.8
|
Total Services revenue
|
|
220.1
|
376.4
|
114.1
|
74.2
|
11.7
|
-
|
796.5
|
Total Revenue
|
|
542.2
|
902.0
|
413.3
|
1,231.7
|
14.6
|
-
|
3,103.8
|
|
|
|
|
|
|
|
|
|
Results
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
107.8
|
167.3
|
51.7
|
127.8
|
17.6
|
-
|
472.2
|
Adjusted administrative
expenses
|
|
(94.4)
|
(107.8)
|
(49.6)
|
(101.7)
|
(11.8)
|
(25.8)
|
(391.1)
|
Adjusted operating
profit/(loss)
|
|
13.4
|
59.5
|
2.1
|
26.1
|
5.8
|
(25.8)
|
81.1
|
Adjusted net interest
|
|
2.6
|
2.6
|
-
|
1.1
|
(0.2)
|
-
|
6.1
|
Adjusted profit/(loss) before
tax
|
|
16.0
|
62.1
|
2.1
|
27.2
|
5.6
|
(25.8)
|
87.2
|
Exceptional items:
|
|
|
|
|
|
|
|
|
- unwinding of discount relating to
acquisition of a subsidiary
|
|
|
|
|
|
|
|
(0.5)
|
|
- gain relating to acquisition of a
subsidiary
|
|
|
|
|
|
|
|
2.5
|
|
Total exceptional items
|
|
|
|
|
|
|
|
2.0
|
Amortisation of acquired
intangibles
|
|
|
|
|
|
|
|
(5.2)
|
Profit before tax
|
|
|
|
|
|
|
|
84.0
|
* Included within the North America
Segment total revenue of £1,231.7m is an amount of £1,200.6m
revenue for the United States of America.
The reconciliation of adjusted
operating profit to operating profit as disclosed in the
Consolidated Income Statement is as follows:
Six months ended
30
June 2024
|
Total
£m
|
Adjusted operating
profit
|
81.1
|
Amortisation of acquired
intangibles
|
(5.2)
|
Exceptional items
|
2.5
|
Operating profit
|
78.4
|
Six months ended
30
June 2023
|
UK
£m
|
Germany £m
|
Western Europe
(restated) £m
|
North
America* £m
|
International (restated)
£m
|
Central Corporate Costs
£m
|
Total
£m
|
Revenue
|
|
|
|
|
|
|
|
Technology Sourcing
revenue
|
|
|
|
|
|
|
|
Gross invoiced income
|
1,051.0
|
1,042.5
|
441.2
|
1,805.6
|
1.4
|
-
|
4,341.7
|
Adjustment to gross invoiced income
for income recognised as agent
|
(585.1)
|
(449.7)
|
(131.5)
|
(407.0)
|
-
|
-
|
(1,573.3)
|
Total Technology Sourcing
revenue
|
465.9
|
592.8
|
309.7
|
1,398.6
|
1.4
|
-
|
2,768.4
|
Services revenue
|
|
|
|
|
|
|
|
Professional Services
(restated)
|
65.8
|
194.5
|
32.1
|
55.7
|
0.2
|
-
|
348.3
|
Managed Services
(restated)
|
154.4
|
186.4
|
99.6
|
14.6
|
13.2
|
-
|
468.2
|
Total Services revenue
|
220.2
|
380.9
|
131.7
|
70.3
|
13.4
|
-
|
816.5
|
Total revenue
|
686.1
|
973.7
|
441.4
|
1,468.9
|
14.8
|
-
|
3,584.9
|
Results
|
|
|
|
|
|
|
|
Gross profit
|
127.2
|
179.1
|
56.0
|
132.7
|
10.7
|
-
|
505.7
|
Adjusted administrative
expenses
|
(101.7)
|
(105.8)
|
(50.1)
|
(103.4)
|
(7.1)
|
(19.1)
|
(387.2)
|
Adjusted operating
profit/(loss)
|
25.5
|
73.3
|
5.9
|
29.3
|
3.6
|
(19.1)
|
118.5
|
Adjusted net interest
|
3.8
|
0.3
|
(0.7)
|
0.2
|
(0.3)
|
-
|
3.3
|
Adjusted profit/(loss) before
tax
|
29.3
|
73.6
|
5.2
|
29.5
|
3.3
|
(19.1)
|
121.8
|
Exceptional items:
|
|
|
|
|
|
|
|
- unwinding of discount relating to
acquisition of a subsidiary
|
|
|
|
|
|
|
(2.0)
|
- gain relating to acquisition of a
subsidiary
|
|
|
|
|
|
|
3.2
|
- other income relating to
acquisition of a subsidiary
|
|
|
|
|
|
|
5.3
|
Total exceptional items
|
|
|
|
|
|
|
6.5
|
Amortisation of acquired
intangibles
|
|
|
|
|
|
|
(5.5)
|
Profit before tax
|
|
|
|
|
|
|
122.8
|
|
|
|
|
|
|
|
|
| |
* Included within the North America
Segment total revenue of £1,468.9m is an amount of £1,444.7m
revenue for the United States of America.
The reconciliation of adjusted
operating profit to operating profit as disclosed in the
Consolidated Income Statement is as follows:
Six months ended
30
June 2023
|
Total
£m
|
|
Adjusted operating
profit
|
118.5
|
|
Amortisation of acquired
intangibles
|
(5.5)
|
|
Exceptional items
|
8.5
|
|
Operating profit
|
121.5
|
|
|
|
|
|
|
|
|
|
|
Year ended
31
December 2023
|
UK
£m
|
Germany
£m
|
Western Europe
(restated) £m
|
North
America*
£m
|
International
(restated)
£m
|
Central
Corporate Costs
£m
|
Total
£m
|
|
Revenue
|
|
|
|
|
|
|
|
|
Technology Sourcing
revenue
|
|
|
|
|
|
|
|
|
Gross invoiced income
|
1,938.1
|
2,111.5
|
929.7
|
3,454.4
|
11.2
|
-
|
8,444.9
|
|
Adjustment to gross invoiced income
for income recognised as agent
|
(1,166.3)
|
(849.7)
|
(290.0)
|
(851.8)
|
(0.8)
|
-
|
(3,158.6)
|
|
Total Technology Sourcing
revenue
|
771.8
|
1,261.8
|
639.7
|
2,602.6
|
10.4
|
-
|
5,286.3
|
|
Services revenue
|
|
|
|
|
|
|
|
Professional Services
(restated)
|
132.5
|
394.4
|
65.6
|
118.7
|
-
|
-
|
711.2
|
Managed Services
(restated)
|
309.4
|
371.3
|
196.0
|
27.4
|
21.2
|
-
|
925.3
|
Total Services revenue
|
441.9
|
765.7
|
261.6
|
146.1
|
21.2
|
-
|
1,636.5
|
Total revenue
|
1,213.7
|
2,027.5
|
901.3
|
2,748.7
|
31.6
|
-
|
6,922.8
|
|
|
|
|
|
|
|
|
|
Results
|
|
|
|
|
|
|
|
|
Gross profit
|
250.8
|
374.5
|
118.7
|
267.5
|
32.5
|
-
|
1,044.0
|
|
Adjusted administrative
expenses
|
(192.0)
|
(211.5)
|
(103.8)
|
(202.5)
|
(18.9)
|
(43.8)
|
(772.5)
|
|
Adjusted operating
profit/(loss)
|
58.8
|
163.0
|
14.9
|
65.0
|
13.6
|
(43.8)
|
271.5
|
|
Adjusted net interest
|
5.5
|
1.0
|
(1.0)
|
1.7
|
(0.7)
|
-
|
6.5
|
|
Adjusted profit/(loss) before
tax
|
64.3
|
164.0
|
13.9
|
66.7
|
12.9
|
(43.8)
|
278.0
|
|
Exceptional items:
|
|
|
|
|
|
|
|
|
- unwinding of discount relating to
acquisition of a subsidiary
|
|
|
|
|
|
|
(3.2)
|
|
- gain relating to acquisition of a
subsidiary
|
|
|
|
|
|
|
2.8
|
|
- other income relating to
acquisition of a subsidiary
|
|
|
|
|
|
|
5.3
|
|
Total exceptional items
|
|
|
|
|
|
|
4.9
|
|
Amortisation of acquired
intangibles
|
|
|
|
|
|
|
(10.8)
|
|
Profit before tax
|
|
|
|
|
|
|
272.1
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
* Included within the North America
Segment total revenue of £2,748.7m is an amount of £2,703.4m
revenue for the United States of America.
The reconciliation of adjusted
operating profit to operating profit as disclosed in the
Consolidated Income Statement is as follows:
Year ended
31
December 2023
|
Total
£m
|
Adjusted operating
profit
|
271.5
|
Amortisation of acquired
intangibles
|
(10.8)
|
Exceptional items
|
8.1
|
Operating profit
|
268.8
|
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.
The Company saw the historical
patterns of seasonality change due to the unpredictability created
first by the impact of Covid-19, beginning in 2020, and then the
more recent impact of supply shortages. Both of these events
materially impacted customer buying behaviours impacting the timing
of sales volumes between the first and second halves of the year
for 2020 and 2021 and therefore our historical seasonality of
operations patterns. During 2022 and 2023 we have seen these
unusual buying patterns reversing and the re-emergence of
seasonality that is closer to our historical norms.
During 2024 this trend has
continued, and we expect customer buying to be more weighted
towards the second half of the year leading, once again, to a more
pronounced effect on operating profit in the second half which we
expect to have a higher proportion of the full-year operating
profit than we have seen over the period from 2020 to
2023.
7
Dividends paid and proposed
A final dividend for 2023 of 47.4
pence per ordinary share was paid on 5 July 2024. An interim
dividend in respect of 2024 of 23.3 pence per ordinary share,
amounting to a total dividend of £26.6m, was declared by the
Directors at their meeting on 6 September 2024. The expected
payment date of the dividend declared is 25 October 2024. This
announcement does not reflect this dividend payable.
8
Exceptional items
|
H1 2024
£m
|
H1 2023
£m
|
Year 2023
£m
|
Operating profit
|
|
|
|
Other income related to acquisition
of a subsidiary
|
-
|
5.3
|
5.3
|
Gain related to acquisition of a
subsidiary
|
2.5
|
3.2
|
2.8
|
Exceptional operating
profit/(loss)
|
2.5
|
8.5
|
8.1
|
Interest cost relating to
acquisition of a subsidiary
|
(0.5)
|
(2.0)
|
(3.2)
|
Profit/(loss) on exceptional items
before taxation
|
2.0
|
6.5
|
4.9
|
|
|
|
|
Income tax
|
|
|
|
Tax relating to exceptional
items
|
-
|
-
|
-
|
Profit/(Loss) on exceptional items
after taxation
|
2.0
|
6.5
|
4.9
|
Included within H1 2024 are the
following exceptional items:
·
£0.5m relating to the unwinding of the discount on
the contingent payment for the purchase of BITS has been classified
as exceptional interest costs. This is consistent with our
prior-year treatment.
·
£2.5m relating to a release of contingent
consideration in relation to the BITS acquisition (note 11). As
this release is related to the acquisition and not operational
activity within BITS and is of a one-off nature, it was classified
as an exceptional item.
Included within the 12 months to 31
December 2023 are the following exceptional items:
·
£3.2m relating to the unwinding of the discount on
the contingent payment for the purchase of BITS has been classified
as exceptional interest costs. This is consistent with our
prior-year treatment.
·
A $9.3m (£7.4m) settlement was received on 8 May
2023 from the Washington State Department of Revenue. The
settlement related to litigation contesting a historic,
pre-acquisition, sales tax assessment that was paid by antecedent
companies related to the acquired Pivot group of companies. Of this
amount, $6.7m (£5.3m) has been recognised as other income relating
to acquisition of a subsidiary for the refunded sales tax amount.
This other income is non-operational in nature, material in size
and unlikely to recur, and has therefore been classified as
exceptional. Further amounts of $1.6m (£1.3m) and $1.0m (£0.8m)
have been credited to adjusted interest income, for the refund of
statutory overpayment interest receivable on the original payment,
and adjusted administrative expenses, to reimburse legal expenses
incurred since acquisition, respectively.
·
£2.8m relating to a release of contingent
consideration in relation to the BITS acquisition. As this release
is related to the acquisition and not operational activity within
BITS and is of a one-off nature, it was classified as an
exceptional item.
9
Income tax
Tax for the six-month period is
charged at 30.4% (six months ended 30 June 2023: 27.2%; year ended
31 December 2023: 26.7%), 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.
OECD Pillar two model
The Group is within the scope of
the OECD Pillar Two model rules. Pillar Two legislation was enacted
in the UK, the jurisdiction in which Computacenter Plc is
incorporated, and came into effect from 1 January 2024. As the
Pillar Two legislation is effective at the reporting date, the
Group has now assessed its current tax exposure. The Group applies
the IAS 12 exception to recognising and disclosing information
about deferred tax assets and liabilities related to Pillar Two
income taxes.
Under the legislation, the Group is
liable to pay a top-up tax for the difference between the Pillar
Two Global anti-Base Erosion (GloBE) effective tax rate per
jurisdiction and the 15% minimum rate.
Our interim assessment, based on
the full year forecast of profits, indicates that the Group does
not expect a material impact on its effective tax rate as a result
of the OECD Pillar Two model rules. For all material jurisdictions
in which it operates, the Group has estimated weighted average
effective tax rates that exceed 15%.
10
Earnings per share
Earnings per share amounts are
calculated by dividing profit attributable to ordinary equity
holders by the weighted average number of ordinary shares
outstanding during the period/year (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/year are considered to be dilutive potential
shares.
|
H1 2024
£m
|
H1 2023
£m
|
Year 2023
£m
|
Profit attributable to equity
holders of the Parent
|
60.3
|
87.7
|
197.6
|
|
H1 2024
£m
|
H1 2023
£m
|
Year 2023
£m
|
Basic weighted average number of
shares (excluding own shares held)
|
112.9
|
113.4
|
112.9
|
Effect of dilution:
|
|
|
|
Share options
|
1.3
|
1.3
|
1.2
|
Diluted weighted average number of
shares
|
114.2
|
114.7
|
114.1
|
|
H1 2024
Pence
|
H1 2023
pence
|
Year 2023
pence
|
Basic earnings per
share
|
53.5
|
77.3
|
175.0
|
Diluted earnings per
share
|
52.9
|
76.5
|
173.2
|
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:
·
Level 1 fair value measurements are those derived
from quoted prices (unadjusted) in active markets for identical
assets or liabilities;
·
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
·
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 2024 the Group had
forward currency contracts, which were measured at Level 2 fair
value subsequent to initial recognition, to the value of an asset
of £3.3m and a liability of £1.7m (30 June 2023: asset of £3.7m and
liability of £4.2m; 31 December 2023: asset of £2.5m and liability
of £6.3m). The net realised loss from forward currency contracts,
designated as cashflow hedges, in the period to 30 June 2024 of
£0.2m (30 June 2023: £0.5m; 31 December 2023: £3.0m) are offset by
broadly equivalent realised losses/gains on the related underlying
transactions.
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 Financial Statements is not
materially different from their carrying amount.
Contingent consideration
On 1 July 2022, the Group acquired
100% of the voting shares of Business IT Source Holdings, Inc.
(BITS) and the acquisition has been accounted for using the
purchase method of accounting. In accordance with the share
purchase agreement, the Group made its first earn-out payment
amounting to £17.4m ($21.2m) in 2023.
On 30 June 2023, a renegotiated
agreement was signed with the former owners following which, the
second earn-out is based on BITS's 2023 EBITDA, H1 2024 EBITDA, and
indebtedness over these periods. Accordingly, during the period,
the Group made payments against the second earn-out amounting to
£14.7m ($18.6m).
The contingent consideration that
resulted from the acquisition of BITS, was measured at Level 3 fair
value, subsequent to initial recognition. The Group used discounted
cash flows (DCF) as a valuation technique to derive the fair value
of the contingent consideration. Based on the H1 2024 results for
BITS, Management has determined that an accrual of $4.7m,
discounted to $4.5m using a weighted average discount rate of 12%,
should be recorded for the remaining balance of the second
earn-out. Compared to previous forecasts, this has resulted in a
release during the period of £2.5m, which has been recognised as an
exceptional item. The carrying value at 30 June 2024 of £3.6m (30
June 2023: £19.2m; 31 December 2023: £20.2m) is included within
Trade and other payables.
12
Net funds
|
H1 2024
£m
|
H1 2023
£m
|
Year 2023
£m
|
Cash and short-term
deposits
|
411.4
|
301.6
|
471.2
|
Cash and cash equivalents
|
411.4
|
301.6
|
471.2
|
Bank loans and credit
facility
|
(9.5)
|
(16.5)
|
(12.2)
|
Adjusted net funds (excluding lease
liabilities)
|
401.9
|
285.1
|
459.0
|
Lease liabilities
|
(114.1)
|
(120.3)
|
(115.4)
|
Net funds
|
287.8
|
164.8
|
343.6
|
|
|
|
|
Current
|
|
|
|
Financial liabilities: Bank and
other loans
|
(4.6)
|
(6.7)
|
(4.8)
|
Lease liabilities
|
(35.6)
|
(36.7)
|
(37.3)
|
|
|
|
|
Non-current
|
|
|
|
Financial liabilities: Bank and
other loans
|
(4.9)
|
(9.8)
|
(7.4)
|
Lease liabilities
|
(78.5)
|
(83.6)
|
(78.1)
|
13
Publication of non-statutory accounts
The Financial Statements contained
in this announcement 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 2023 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.
Appendix:
Alternative performance measures
Alternative Performance Measures
are used by the Group to understand and manage performance. These
are not defined under International Financial Reporting
Standards (IFRS) or UK-adopted International Accounting Standards
(UK-IFRS) and are not intended to be a substitute for any IFRS or
UK-IFRS measures of performance but have been included as
Management considers them to be important measures, alongside the
comparable Generally Accepted Accounting Practice (GAAP) financial
measures, in assessing underlying performance. Wherever appropriate
and practical, we provide reconciliations to relevant GAAP
measures. The table below sets out the basis of calculation of the
Alternative Performance Measures and the rationale for their
use.
|
|
|
Measure
|
Description
|
Rationale
|
Adjusted net funds and net
funds
|
Adjusted net funds or adjusted net
debt includes cash and cash equivalents, other short- or long-term
borrowings and current asset investments. Following the adoption of
IFRS 16, this measure excludes all lease liabilities recognised
under IFRS 16.
Net funds is adjusted net funds
including all lease liabilities recognised under IFRS
16.
|
A table reconciling this measure,
including the impact of lease liabilities, is provided within note
12 to the summary financial information within this
announcement.
|
Adjusted (expense and profit)
measures
|
Adjusted administrative expense,
adjusted operating profit or loss, adjusted profit or loss before
tax, adjusted tax, adjusted profit or loss, adjusted earnings per
share and adjusted diluted earnings per share are, as appropriate,
are each stated before: exceptional and other adjusting items,
including gains or losses on business acquisitions and disposals,
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.
Recurring items include purchase
price adjustments, including amortisation of acquired intangible
assets and adjustments made to reduce deferred income arising on
acquisitions and acquisition-related items. Recurring items are
adjusted each period irrespective of materiality, to ensure
consistent treatment.
Non-recurring items are those that
Management judge to be one-off or non-operational, such as gains
and losses on the disposal of assets, impairment charges and
reversals, and restructuring related costs.
|
Adjusted measures exclude items
which in Management's judgement need to be disclosed separately by
virtue of their size, nature or frequency to aid understanding of
the performance for the period/year or comparability between
periods.
Adjusted measures allow Management
and investors to compare performance without these recurring or
non-recurring items.
Management does not consider these
items when reviewing the underlying performance of the Segment or
the Group as a whole. A reconciliation to adjusted measures is
provided within the Chief Financial Officer's review, which details
the impact of exceptional and other adjusted items when compared to
the non-GAAP financial measures, in addition to those reported in
accordance with IFRS. Further detail is provided within note 5 to
the summary financial information within this
announcement.
|
Constant currency
|
We evaluate the long-term
performance and trends within our strategic KPIs on a
constant-currency basis. The performance of the Group and its
overseas Segments are also 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.
|
Free cash flow
|
Free Cash Flow is Cash Flow from
Operations minus net interest received, interest and payments
related to lease liabilities, income tax paid and gross capital
expenditure.
|
To measure the cash generated by
the operating activities during the period that is available to
repay debt, undertake acquisitions or distribute to
shareholders.
|
Gross invoiced income and IFRS
revenue
|
Gross invoiced income is based on
the value of invoices raised to customers, net of the impact of
credit notes and excluding VAT and other sales taxes. Gross
invoiced income includes all items recognised on an 'agency' basis
within revenue, on a gross income billed to customers basis, as
adjusted for deferred and accrued revenue. A reconciliation of
revenue to gross invoiced income is provided within note 5 to the
summary financial information within this announcement.
IFRS revenue refers to revenue
recognised in accordance with International Financial Reporting
Standards including IFRS 15 'Revenue from Contracts with Customers'
and IFRS 16 'Leases'.
|
Gross invoiced income reflects the
cash movements to assist Management and the users of the Annual
Report and Accounts in understanding revenue growth on a
'principal' basis and to assist in their assessment of working
capital movements in the Consolidated Balance Sheet and
Consolidated Cash Flow Statement. This measure allows an
alternative view of growth in adjusted gross profit, based on the
product mix differences and the accounting treatment
thereon.
|
Organic (revenue and profit)
measures
|
In addition to the adjustments made
for adjusted measures, organic measures:
· exclude the contribution from discontinued operations,
disposals and assets held for sale of standalone businesses in the
current and prior period;
· exclude the contribution from acquired businesses until the
year after the first full year following acquisition;
and
· adjust the comparative period to exclude prior-period acquired
businesses if they were acquired part-way through the prior
period.
Acquisitions and disposals where
the revenue and contribution impact would be immaterial are not
adjusted.
|
Organic measures allow management
and investors to understand the like-for-like revenue and
current-period margin performance of the continuing
business.
The results for the half year did
not benefit from any acquisitions made since 1 January 2023, with
organic revenue and reported revenue being equivalent.
|
Product order backlog
|
The total value of committed
outstanding purchase orders placed with our technology vendors
against non-cancellable sales orders received from our customers
for delivery within 12 months, on a gross invoiced income
basis.
|
The Technology Sourcing backlog,
alongside the Managed Services Contract Base and the Professional
Services forward order book, allows us visibility of future
revenues in these
areas.
|
Return on capital employed
(ROCE)
|
ROCE is calculated as adjusted
operating profit, divided by capital employed, which is the closing
total net assets excluding adjusted net funds.
|
As an indicator of the current
period financial return on the capital invested in the
company.
|