RNS Number:7461J
Computacenter PLC
15 March 2005
Preliminary Results Announcement
Computacenter plc, the European IT infrastructure services provider, today
announces preliminary results for the twelve months ended 31 December 2004.
Financial Highlights:
* Group revenues broadly unchanged at #2.46 billion (2003: #2.48 billion)
* Profit before tax* up 3.2% to #67.3 million (2003: #65.2 million)
* Earnings per share* up 2.0% to 25.5p (2003: 25p)
* Diluted earnings per share* increased by 2.0% to 25.1p (2003: 24.6p)
* Final dividend of 5.2p per share, total dividend up 7.1% to 7.5p (2003: 7.0p)
* Strong operating cash flow and balance sheet with net funds of #80.0
million at year-end
*excluding non-operating exceptional charges of #2.6 million relating to the
disposal of the Austrian business and the dilution of the Biomni shareholding.
Operational Highlights:
* Strong UK Managed Services revenue growth of 16.6% (2003: 10.9%)
* Integration of Computacenter Germany on plan; operating profit up to
#9.0 million
* New management in place in France and Germany
* Substantial investment in France to restore profitability
* As previously announced, HP renegotiation likely to have #10 million adverse
impact on 2005 profit
Ron Sandler, Chairman of Computacenter plc, commented:
"2004 was a year of further good progress for Computacenter. In particular, our
Managed Services revenues in the UK grew by 16.6% and we began to see clear
evidence of success in our efforts to transfer our Managed Services best
practices to Computacenter Germany."
"We have intensified our focus on services growth and we are also seeking to
extend our penetration of the small and medium-size business sector."
"These developments, taken together with the prospects of growth in our German
operations and the potential for recovery in France, give me confidence that the
Group is well positioned to deliver attractive levels of earnings growth in the
years ahead."
For further information, please contact:
Computacenter plc.
Mike Norris, Chief Executive 01707 631 601
Tessa Freeman, Investor Relations 01707 631 514
www.computacenter.com
Tulchan Communications 020 7353 4200
Tim Lynch
www.tulchangroup.com
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Chairman's Statement
2004 was a year of further good progress for Computacenter. Whilst revenues for
the Group were broadly unchanged at #2.46 billion (2003: #2.48 billion), this
represents a considerable achievement in markets where core product prices
continued to decline in the order of 12% - 15%. Profit before tax rose 3.2% to
#67.3 million (2003: #65.2 million), excluding non-operating exceptional charges
relating to the disposal of the Austrian business and the dilution of our
interest in Biomni. Diluted earnings per share increased by 2.0% to 25.1p (2003:
24.6p). Including the exceptional charges, profit before tax was #64.6 million
and diluted earnings per share was 23.7p. Cash generation from operations was
extremely strong, and the Group ended the year with net funds of #80.0 million
(2003: #49.9 million).
I am pleased to recommend a final dividend of 5.2p per share, bringing the total
dividend for the year to 7.5p (2003: 7.0p), an increase of 7.1%. The final
dividend will be paid on 31 May 2005 to shareholders on the register as at 6 May
2005.
There are many encouraging features of Computacenter's performance in 2004. In
particular, our Managed Services revenues in the UK grew by 16.6% and we secured
a number of significant new contracts, in addition to extending the scope of
many existing engagements. Our Managed Services performance contributed to an
increase in UK operating profit of 4.2% to #64.4 million.
We also began to see clear evidence of success in our efforts to transfer our
Managed Services best practices to Computacenter Germany. We now have an
annualised Managed Services contract base in excess of #82 million in Germany,
and are confident that this will continue to grow strongly in the years ahead.
More generally, we are pleased with the overall progress made in integrating and
building our German business. Although operating profit in Computacenter Germany
rose only modestly to #9.0 million (2003: #8.7 million), this does not fully
reflect the achievements of the integration programme since the acquisition in
early 2003. The changes made to the management, organisation and working
practices have been considerable, and a sound platform has now been created for
future growth.
Early in 2005, we announced our decision to dispose of our loss-making Austrian
operation, which we acquired as a condition of the acquisition of our German
business in 2003. Computacenter Austria is to be acquired by S&T System
Integration & Technology Distribution AG, which will also become Computacenter's
international partner for service delivery in Austria and other countries across
Central and Eastern Europe. The disposal is expected to complete in March 2005.
The performance of Computacenter France continued to disappoint, with operating
losses deepening to #6.2 million (2003: loss of #2.7 million). Whilst this
partly reflects the substantial investment we made during the year on various
business improvement initiatives, the benefits of which have yet to be realised,
this is clearly an unacceptable financial performance. A leading presence in the
French market remains a core part of our strategy, and we are determined to
restore Computacenter France to financial and competitive health. The management
team in this business has now been substantially re-constituted, and Chris Webb,
one of our most senior executives and previously responsible for our UK sales
and services delivery, has been placed in charge of the French business from the
start of 2005.
More encouragingly, growth in our BeLux business was strong, particularly in
Managed Services, and for the first time, the Belgium operation showed a profit.
In November, we announced that the outcome of the annual renegotiation of terms
with HP, our principal trading partner, would have a material adverse impact on
Computacenter's profits in 2005. This outcome reflects the intensity of
competition in the IT infrastructure market, which is unlikely to moderate in
the foreseeable future.
Trading in the first two months of 2005 has been subdued and below anticipated
levels. However, given Computacenter's seasonal sales patterns it is too early
to know whether this will have any impact on the overall result for the year.
Looking ahead, and in response to market developments, we have
intensified our efforts to accelerate the growth of the services side of our
business and to broaden the range of our services activities. We are also
determined to extend the penetration of our product sales into the small and
medium-sized business segment. In addition, we have stepped up our investments
in new technology to improve the efficiency of our core product sales processes.
These developments, taken together with the prospects of growth in our German
operations and the potential for recovery in France, give me confidence that the
Group is well positioned to deliver attractive levels of earnings growth in the
years ahead.
Computacenter has a long history of successfully adapting its business model to
meet changing market conditions. This has been possible due to the staff of
Computacenter, who have continued to demonstrate a deep commitment to the Group
and an enthusiasm to deliver ever higher levels of performance, and to whom I
offer my wholehearted thanks.
Review of Operations
UK
In 2004, we saw 16.6% growth in our Managed Services revenues as customers
continued to look to Computacenter to help them improve the quality and reduce
the cost of IT infrastructure management. This growth in Managed Services helped
to mitigate the impact of intense price competition in the technology supply
market. Consequently, whilst revenues in the UK declined slightly to #1.43
billion (2003: #1.46 billion), UK operating profit grew 4.2% to #64.4 million
(2003: #61.8 million).
Our commitment to reduce costs and improve service helped persuade EDF Energy,
in the second half of the year, to award us a major Managed Services contract.
Under the terms of the agreement, Computacenter will manage in excess of 10,000
desktops and laptops, as well as printers and servers, at more than 100 sites
across the UK. The contract is for three years, with an option to extend for a
further two years.
Improved end-user service was the main focus of the award of a seven-year
Managed Services contract, valued at #11 million, by South Lanarkshire Council.
Computacenter will be responsible for the entire lifecycle of the council's
5,000 desktops, laptops and printers, from procurement and installation to
maintenance and disposal.
Other Managed Services successes included a five-year contract with Channel 4
Television, valued at #7 million, for a full end-to-end Managed Service, and the
award of additional business worth #1.2 million per year on our current
five-year contract with BAA.
We also saw increased interest in our Infrastructure Integration services.
Particularly notable was a large-scale roll-out for English Welsh and Scottish
Railways, including server and desktop product supply and configuration, project
management and installation. Also notable was a project for the UK Government's
Prescription Pricing Authority, for which we deployed a consolidated enterprise
storage, server and support solution.
Our Technology Sourcing business performed well during 2004. Revenues declined
by 3.2%, although this is in the context of continued price erosion in the
market in the order of 12-15%. Product margins overall were stable. However, as
announced in November, the renegotiation of terms with HP, our principal trading
partner, is likely to have an adverse effect on UK profits in 2005 in the order
of #10 million.
Substantial new Technology Sourcing business in 2004 included an additional #19
million of product supply for BT Retail, arising out of our BT Managed Services
contract, and a three-year contract with Geest, covering vendor management and
supply, with order placement via our Computacenter Connect webshop.
Revenues of CCD, our trade distribution division, declined slightly as a direct
result of changes to HP's reseller end-user pricing model. This affected all
similar distributors, but did not impact either our leading position with the
vendor nor our overall profitability.
RDC, our re-cycling and re-marketing arm, saw a 25% growth in throughput over
the full year and recorded its best ever half-year profit performance in H1
2004. This performance is partly attributable to organisations looking to
improve their waste management to conform to European Waste Electrical and
Electronic Equipment (WEEE) directives.
Germany
Despite continuing price pressure we saw increased demand for outsourcing
services in the second half of the year. As a result, and following a slightly
disappointing first half, we recorded 7.7% growth in German H2 revenues compared
to the same period in 2003, resulting in full year revenue growth of 3.2%. In
local currency this growth was 10.1% in H2 and 5.2% for the year. Full year
profits showed a modest increase of 3.1% to #9.0 million (2003: #8.7 million).
In June, and consistent with our determination to share senior management
expertise across the Group, we appointed Colin Brown as CEO of Computacenter
Germany (formerly CC CompuNet). Colin previously ran the highly successful UK
Government business.
Growing our services business and improving our ability to respond quickly to
changing customer requirements have been key priorities in Computacenter
Germany. This has led to a restructuring of our sales organisation to align it
more closely with the market, and the centralisation of our project management
and consulting resources. These initiatives are similar to changes that have
proved successful in the UK.
To reduce operational overheads and streamline our branch network, we
consolidated our premises in Essen and Cologne, creating a new sales
headquarters in Ratingen, near Dusseldorf.
There were a number of substantial Managed Services contract wins and extensions
in 2004, which helped to grow Computacenter Germany's Managed Services contract
base by 28.0% to #82.9 million. These include the award of a five-year Managed
Services contract by FinanzIT Servicegesellschaft, a major IT supplier to the
German Savings Banks Organisation, covering 4,500 users and valued at
approximately Euro12 million.
Other successes included the award of a three-year Managed Services contract by
DaimlerChrysler Services, and a contract for Managed Services and Technology
Sourcing with leading German insurance company R+V Versicherung. We were also
awarded a three-year Managed Services extension on our contract with BMW Group.
France
Our French business traded poorly throughout 2004 and was subject to some
extensive re-engineering, particularly in the second half. France recorded an
operating loss of #6.2 million (2003: #2.7 million) on revenues of #300.4
million (2003: #324.5 million). Excluding amortisation of negative goodwill, the
losses were broadly similar to those of the previous year.
These results reflect a substantial investment in a major transformation
project, the full benefits of which are still to be realised. Nevertheless, this
level of performance is clearly unsatisfactory and significant changes were made
during the year to improve the business and the effectiveness of the management
team. New managers were recruited to run our maintenance, finance and logistics
functions, and in January 2005 we appointed Chris Webb, formerly responsible for
UK sales and services delivery, as Managing Director of Computacenter France.
We continue to focus on the three core activities of product logistics,
implementation and maintenance. In these areas we are seeking to improve service
levels and delivery times, developing our capability for large project roll-outs
and investing in training to ensure we have the right mix of skills to support
future growth.
Significant improvements in operational performance in logistics are already
taking place. For example, a record 97% of shipments to customers were made from
our Roissy operations centre on the same day as the orders were received by us.
The efficiency of the operations centre has benefited from a design
reconfiguration and introduction of a new stock location management system. To
give us greater logistics flexibility and capacity we also opened a new 3,000m2
warehouse with its own Goods-In and Goods-Out facility.
We see the improved performance of our maintenance services as critical to
financial recovery in Computacenter France. This has led us to redesign our
maintenance organisation, which now reports directly to the Managing Director.
We have also successfully introduced into France our UK parts management system,
which has been a key contributor to the improved commercial performance of the
UK's maintenance business in recent years.
At the same time, we have substantially improved our financial management and
control disciplines. By the year-end, we succeeded in reducing accounts
receivable days by 33%.
Computacenter France continued to win significant new business. A new customer,
DIM, awarded us a Managed Services contract, covering help desk, asset
management, desktop support and management of moves and changes. We also won an
extension on our Managed Services contract with Elior, covering an off-site help
desk, maintenance and network and server administration. Other notable wins
included Infrastructure Integration consultancy and storage solutions for the
French government's Agence Centrale des Organismes de Securite Sociale, and a
major Technology Sourcing agreement with Biomerieux.
Belgium and Luxembourg
In 2004 our 'BeLux' operation became profitable for the first time, on the
strength of a 21.4% revenue growth to #21.0 million.
Managed Services activities made a strong and growing contribution, led by
ongoing contracts with SWIFT and Group Deutsche Boerse/Clearstream, as well as
significant technology refresh projects with customers such as Banksys, Eli
Lilly, and the King Baudouin Foundation.
New customer wins included server deployment projects for BT Global Services and
Campbell Foods. Significant services projects were undertaken for the National
Research Fund and the NATO Maintenance and Supply Agency.
We continue to look at opportunities for expanding our BeLux business. In
Luxembourg, following new legislation introduced for the financial sector, we
were licensed by the Ministry of Finance in March 2005 as a specialised IT
operator for banks and investment funds, where we see significant opportunities
for growth.
Disposals
Following a disappointing performance in 2004, we reached agreement in early
January 2005 to sell our Austrian subsidiary, Computacenter GmbH, to S&T System
Integration & Technology Distribution AG. S&T is a Central and Eastern European
regional market leader in IT, with revenues of approximately Euro230 million. The
company employs 1,300 people and is listed on the Austrian stock market.
We believe S&T's local scale and depth of resource will offer the best prospects
for our staff and our customers in Austria. S&T will also become Computacenter's
International Partner for service delivery in Austria and other countries across
Central and Eastern Europe, allowing Computacenter to offer an improved service
to our international customers in these geographies.The disposal is expected to
complete in March 2005.
During the year, we took the decision to invest no further funds in Biomni, our
e-commerce joint venture. At the year-end, our ownership interest in Biomni had
fallen to 41.7%, and subsequent to year end reduced further, producing a
non-operating exceptional net charge of #0.3 million.
Business Development
In the expectation of further pressure on our product margins, we have
intensified our focus on services growth. We are also seeking to extend our
penetration of the small and medium-size business sector. We are confident that
the competitive advantage we enjoy from our investment in high quality logistics
presents a significant opportunity for extending our product supply leadership
in the corporate and public sector markets to smaller organisations.
The Group continues to invest in systems and processes to support business
growth. The next version of our integrated Services Management Tool Suite (SMTS
v3.0) will begin to be deployed with UK Managed Services customers in H1 2005
and will ultimately be made available across the Group. SMTSv3.0 will
significantly enhance our Managed Services offering, improving our ability to
audit and manage our customers' technology assets on their behalf.
We are also focusing our efforts on further streamlining our sales processes,
aided by the introduction of a new web-enabled sales administration system in
the UK, to be implemented in H1 2005, and a major revision of our Computacenter
Connect web-shop. These new e-commerce systems will begin to be implemented
across the rest of the Group towards the end of 2005.
In addition, it remains our strategy to establish leading positions in each of
the major European markets for IT products and services. To that end, the
recovery of our business in France and further growth in Germany remain core
priorities.
Group profit and loss account
For the year ended 31 December 2004
Restated
2004 2003
Note #'000 #'000
Turnover
Turnover: Group and share of joint venture's
turnover 2,456,575 2,482,713
Less: share of joint venture's turnover (823) (1,418)
Continuing operations 2,410,590 2,432,283
Discontinued operations 45,162 49,012
Group turnover 2 2,455,752 2,481,295
Cost of sales 3 (2,120,351) (2,136,647)
-------- --------
Gross profit 2 335,401 344,648
Other operating expenses (net) 3 (269,658) (278,710)
-------- --------
Operating profit 2
Continuing operations 67,290 67,440
Discontinued operations (1,547) (1,502)
-------- --------
Group operating profit 65,743 65,938
Share of operating loss in joint venture (411) (333)
Share of operating profit in associate 266 510
-------- --------
Total operating profit: Group and share of
associate and joint venture 65,598 66,115
Provision for loss on termination of operation 4 (2,356) -
Net loss on investment in joint venture 4 (286) -
-------- --------
Profit on ordinary activities before interest
and taxation 62,956 66,115
Interest receivable and similar income 5,262 3,249
Interest payable and similar charges (3,573) (4,203)
-------- --------
Profit on ordinary activities before taxation 64,645 65,161
Tax on profit on ordinary activities 5 (19,860) (18,902)
-------- --------
Profit on ordinary activities after taxation 44,785 46,259
Minority interests 69 45
-------- --------
Profit attributable to members of the parent
company 44,854 46,304
Dividends - ordinary dividends on equity
shares 6 (14,101) (13,011)
-------- --------
Retained profit for the period 30,753 33,293
======== ========
Earnings per share
- Basic 7 24.1p 25.0p
- Diluted 7 23.7p 24.6p
- Diluted (excluding effect of non-operating
exceptional items) 7 25.1p 24.6p
Dividends per ordinary share 6 7.5p 7.0p
Group statement of total recognised gains and losses
For the year ended 31 December 2004
2004 2003
#'000 #'000
Profit for the financial year excluding share of joint
venture and associate 45,168 46,231
Share of joint venture's loss for the year (474) (233)
Share of associate's profit for the year 160 306
-------- --------
Profit attributable to members of the parent company for
the financial year 44,854 46,304
Exchange differences on retranslation of net assets of
associated and subsidiary undertakings (911) 4,159
-------- --------
Total recognised gains for the year 43,943 50,463
======== ========
Group balance sheet
At 31 December 2004
2004 2003
#'000 #'000
Fixed assets
Intangible assets
Positive goodwill 4,474 4,755
Negative goodwill - (532)
-------- --------
4,474 4,223
Tangible assets 93,430 100,549
Investments 8 6,021 11,036
-------- --------
103,925 115,808
-------- --------
Current assets
Stocks 120,087 134,133
Debtors : gross 501,741 520,701
Less non returnable proceeds (39,043) (78,390)
-------- --------
Debtors 462,698 442,311
Cash at bank and in hand 139,182 96,997
-------- --------
721,967 673,441
Creditors: amounts falling due within one year (482,572) (466,816)
-------- --------
Net current assets 239,395 206,625
-------- --------
Total assets less current liabilities 343,320 322,433
Creditors: amounts falling due after more than one
year (3,017) (13,923)
Provision for joint venture deficit
Share of gross assets 222 385
Share of gross liabilities (6,341) (7,609)
-------- --------
(6,119) (7,224)
Provision for liabilities and charges (19,046) (18,403)
-------- --------
Total assets less liabilities 315,138 282,883
======== ========
Capital and reserves
Called up share capital 9,489 9,441
Share premium account 73,920 71,486
Capital redemption reserve 100 100
Investment in own shares (2,503) (2,503)
Profit and loss account 234,086 204,244
-------- --------
Shareholders' funds - equity 315,092 282,768
Minority interests - equity 46 115
-------- --------
315,138 282,883
======== ========
Approved by the Board on 14 March 2005
MJ Norris FA Conophy
Chief Executive Finance Director
Group statement of cash flows
For the year ended 31 December 2004
2004 2003
#'000 #'000
Cash inflow from operating activities 9 60,320 53,521
Returns on investments and servicing of finance 943 (954)
Taxation (12,296) (22,456)
Capital expenditure and financial investment (7,591) (14,562)
Acquisitions and disposals - (37,303)
Equity dividends paid (13,587) (14,437)
-------- --------
Cash inflow/(outflow) before financing 27,789 (36,191)
Financing 2,443 2,207
-------- --------
Increase/(decrease) in cash in the period 30,232 (33,984)
======== ========
Reconciliation of net cash flow to movement in net funds
2004 2003
#'000 #'000
Net funds at 1 January 2004 49,925 83,430
Increase/(decrease) in cash in the year 30,232 (33,984)
Cash outflow from repayment of debt and lease finance 39 479
-------- --------
Change in net cash resulting from cash flows 30,271 (33,505)
Exchange movement (149) -
Net funds at 31 December 2004 80,047 49,925
======== ========
Notes to the financial statements
1 Accounting policies
Basis of preparation
The financial statements are prepared under the historical cost convention and
in accordance with applicable accounting standards.
The format of the Group Profit and Loss Account has been changed to Format 1 of
schedule 4 of the Companies Act 1985. Operating costs, as reported in prior
years under Format 2, have been split between cost of sales and other operating
expenses (net). It is the Directors' opinion that a change in the format is
appropriate to provide additional disclosure of gross profit and that the
allocation between cost of sales and other operating expenses (net) is
consistent across the Group.
2. Turnover and segmental analysis
The Group operates in one principal activity, that of the provision of
distributed information technology and related services. Turnover represents the
amounts derived from the provision of goods and services which fall within the
Group's ordinary activities, stated net of VAT.
An analysis of turnover, gross profit, operating profit and net assets is given
below:
2004 2003
#'000 #'000
Turnover by origin
UK 1,433,685 1,455,296
Germany 655,501 635,150
France 300,380 324,517
Belgium & Luxembourg 21,024 17,320
--------- --------
Continuing operations 2,410,590 2,432,283
Austria - discontinued 45,162 49,012
--------- --------
Total 2,455,752 2,481,295
========= ========
Turnover by destination is not materially different to turnover by origin and
has, therefore, not been disclosed.
Restated
2004 2003
#'000 #'000
Gross profit
UK 205,657 201,573
Germany 90,479 95,695
France 31,771 39,793
Belgium & Luxembourg 2,291 1,924
-------- --------
Continuing operations 330,198 338,985
Austria - discontinued 5,203 5,663
-------- --------
Total 335,401 344,648
======== ========
The gross profit for 2003 has been restated to account for distribution costs
within other operating expenses, as prescribed in Format 1 of schedule 4 of the
Companies Act 1985. Previously these amounts were included in the calculation of
gross profit, as described in note 1.
2004 2003
#'000 #'000
Operating profit/(loss)
UK 64,426 61,829
Germany 8,999 8,728
France (6,151) (2,727)
Belgium & Luxembourg 16 (390)
-------- --------
Continuing operations 67,290 67,440
Austria - discontinued (1,547) (1,502)
-------- --------
Total Group excluding associate & joint venture
undertakings 65,743 65,938
Share of operating result of German associate and UK joint
venture (145) 177
-------- --------
Total 65,598 66,115
======== ========
2004 2003
#'000 #'000
Net assets/(liabilities) employed
UK 178,854 187,167
Germany 34,596 21,042
France 32,234 33,326
Belgium & Luxembourg (7,250) (6,397)
-------- --------
238,434 235,138
Austria - discontinued (3,716) (2,690)
-------- --------
Subtotal 234,718 232,448
Net assets of associated undertaking 373 510
-------- --------
Net assets employed 235,091 232,958
Net funds 80,047 49,925
-------- --------
Total 315,138 282,883
======== ========
3 Cost of sales and operating costs
Restated
2004 2003
#'000 #'000
Cost of sales 2,120,351 2,136,647
--------- ---------
Distribution costs 20,759 22,606
Administrative costs 248,899 256,104
--------- ---------
Other operating expenses (net) 269,658 278,710
========= =========
The total figures for 2004 include the following amounts in relation to the
discontinued operation Computacenter Austria: cost of sales #39,959,000 (2003: #
43,349,000), distribution costs #133,000 (2003 #156,000), administrative
expenses #6,617,000 (2003 #7,009,000) and other operating expenses #6,750,000
(2003: #7,165,000).
4 Exceptional items
2004 2003
#'000 #'000
Recognised below operating profit:
Austria
Provision for loss on disposal 2,356 -
Joint venture
Deemed disposal on dilution of share holding (1,516) -
Provision for impairment of investment 1,802 -
-------- --------
2,642 -
======== ========
5 Taxation
a) The charge based on the profit for the year comprises:
2004 2003
#'000 #'000
UK Corporation Tax 21,374 17,612
Tax overprovided in previous years (2,701) (621)
-------- --------
18,673 16,991
Foreign tax current year 4 20
Foreign tax prior year (548) -
-------- --------
Group current tax 18,129 17,011
Share of joint venture's tax 63 (100)
-------- --------
Total current tax 18,192 16,911
Deferred tax
Origination and reversal of timing differences 1,797 1,542
Prior year adjustments (129) 449
-------- --------
Group deferred tax 1,668 1,991
-------- --------
Tax on profit on ordinary activities 19,860 18,902
======== ========
b) Factors affecting the current tax charge
The tax charge for the year is different than the standard rate of Corporation
Tax in the UK of 30%. The principal reasons for this difference are set out
below:
2004 2003
#'000 #'000
Total profit before taxation 64,645 65,161
======== ========
At 30% 19,393 19,548
Expenses not deductible for tax purposes 234 640
Relief on share option gains (54) (2,845)
Goodwill amortised (75) (919)
Impairment of goodwill - 11
Adjustments in respect of previous periods (616) -
Adjustment following agreement of certain items for
earlier years (2,447) -
Higher tax on overseas earnings 1 -
Provision for loss on disposal of subsidiary 686 -
Provision for net loss on investment in joint venture 86 -
Disposal of investment (569) -
Accounting depreciation in excess of tax depreciation 80 (284)
Other timing differences 238 -
Profits of overseas undertakings not taxable due to
brought forward loss offset (1,887) (2,590)
Losses of overseas undertakings not available for relief 3,122 3,350
-------- --------
Current tax charge 18,192 16,911
======== ========
6 Dividends
2004 2003
#'000 #'000
Equity dividends on ordinary shares :
interim paid 2.3p (2003 : 2.0p) 4,316 3,775
final proposed 5.2p (2003 : 5.0p) 9,785 9,236
-------- --------
14,101 13,011
======== ========
The Computacenter ESOP trust has waived the dividends payable in respect of
1,427,042 (2003: 1,427,042) ordinary shares that it owns which are not allocated
to employees. The Computacenter Trustees Limited have waived dividends in
respect of 457,796 (2003:457,796) shares which it owns which are not allocated
to employees and the Computacenter Quest ("Qualifying Employee Scheme Trust")
has similarly waived dividends in respect of 927,640 (2003: 1,031,134) shares
that it owns.
7 Earnings per share
The calculation of earnings per ordinary share is based on profit attributable
to members of the holding Company of #44,854,000 (2003: #46,304,000) and on
186,441,000 (2003: 184,853,000) ordinary shares, being the weighted average
number of ordinary shares in issue during the year after excluding the shares
owned by the Computacenter Employee Share Trust, Computacenter Trustees Limited
and the Computacenter Quest.
The diluted earnings per share is based on the same earnings figure of #44,854
,000 (2003: #46,304,000) and on 188,979,000 (2003: 188,610,000) ordinary shares,
calculated as the basic weighted average number of ordinary shares, plus
2,537,346 (2003: 3,757,000) dilutive share options.
An additional earnings per share ratio of 25.1p was presented to provide a
measure of Group operating activities, excluding the exceptional items. This
additional earnings per share ratio is based on earnings of #47,496,000, which
comprises the profit attributable to members of the holding company of
#44,854,000, excluding the exceptional loss of #2,642,000, and on 188,979,000
ordinary shares.
8 Investments
2004 2003
#'000 #'000
Group
Loan to joint venture (a) 5,648 7,450
Associated undertakings (b) 373 539
Other listed investments (c) - 3,047
-------- --------
6,021 11,036
======== ========
(a) Loan to joint venture
#'000
Cost
At 1 January 2004 and 31 December 2004 7,450
Provision
At 1 January 2004 -
Charge in the year 1,802
----------
At 31 December 2004 1,802
==========
Net book value
At 31 December 2004 5,648
==========
At 31 December 2003 7,450
==========
(b) Associated undertakings
Share of net
tangible assets
#'000
At 1 January 2004 510
Increase in investment 110
Dividend received (509)
Share of profit of associated undertaking 266
Exchange adjustments (4)
--------
At 31 December 2004 373
========
(c) Other listed investments
#'000
Cost
At 1 January 2004 4,617
Disposal (4,617)
--------
At 31 December 2004 -
========
Provision
At 1 January 2004 1,573
Disposal (1,573)
--------
At 31 December 2004 -
========
Net Book Value
At 31 December 2004 -
========
At 31 December 2003 3,047
========
Details of the principal investments at 31 December 2004 in which the Group or
the Company holds more than 20% of the nominal value of ordinary share capital
are as follows:-
Subsidiary and associated Country of Nature of Proportion
undertaking registration Business Held
Computacenter (UK) Limited England IT 100%
Infrastructure
services
Computacenter France SA France IT 99.4%
Infrastructure
services
Computacenter Holding GmbH Germany IT 100%
Infrastructure
services
Computacenter GmbH Germany IT 100%
Infrastructure
services
CC Managed Services GmbH Germany IT 100%
Infrastructure
services
Computacenter NV/SA Belgium IT 100%
Infrastructure
services
RD Trading Limited England IT Asset *100%
Management
Computacenter NV Luxembourg IT 100%
Infrastructure
Services
Biomni Limited England Software 41.7%
development
HelpByCom GmbH Germany IT **49%
Infrastructure
services
ICG Services Limited England International ***100%
IT
Infrastructure
services
* includes indirect holdings of 100% via Computacenter (UK) Limited
** includes indirect holdings of 49% via Computacenter Holding GmbH
*** includes indirect holdings of 35.7% via Computacenter Holding GmbH
During the period CC CompuNet was renamed Computacenter Germany.
Update on acquisitions - Germany and Austria
On 2 January 2003, the Group acquired the trade and assets of GE CompuNet in
Germany and GECITS in Austria for an initial consideration of #38,134,000.
There has been no change in the circumstances that has resulted in a change to
the Board's view of the value of goodwill to the Group.
Because the audited value of the net assets at completion was lower than
stipulated in the purchase agreement, Computacenter anticipates receiving a
repayment of #32,448,000 from GE Capital, the vendors, resulting in a net
consideration for the acquisition of #4,683,000. Elements of this repayment
calculation are disputed by GE Capital and in accordance with the purchase
agreement, PricewaterhouseCoopers has been appointed, as an independent expert,
to settle the matter. The Board has reviewed the likely outcome, taking account
of the proceedings to date, and is still of the view that this is properly
reflected in the Group's accounts.
The assets of each of the acquired companies have been included in the Group's
balance sheet at their fair values at the date of acquisition. Further
consideration may be payable to the vendor, contingent on the result of the
acquired businesses in 2004. No provision has been made for further payments,
based on the actual performance in 2004.
Update on contingent liability
On 15 October 2003 the vendors claimed that the Group had breached a provision
of the German purchase agreement concerning an adjustment relating to tax
assets, and have issued a claim for Euro52,165,292 (#36,892,000), plus interest,
for upfront payment for the tax assets as opposed to payment as the assets are
utilised. The Group rejects this adjustment and legal proceedings are now
pending between the parties. On the basis of legal advice received, the Board is
confident that this claim is without merit and will be defended accordingly. No
provision for this claim has been made in the Group's accounts.
Analysis of the acquisition of GE CompuNet and GECITS Austria:
Net assets at date of acquisition:
Book value Adjustments Provisional
fair value to
Group
#'000 #'000 #'000
Tangible fixed
assets 15,457 (4,003) 11,454
Investments 81 - 81
Stocks 34,438 (1,074) 33,364
Debtors 103,881 5,380 109,261
Creditors due
within one year (132,704) (4,948) (137,652)
Creditors due
after one year - (2,690) (2,690)
Provisions for
liabilities and
charges - (9,135) (9,135)
-------- --------- --------
21,153 (16,470) 4,683
======== ========= ========
Discharged by:
Fair value of net
consideration 4,683
--------
Goodwill arising on acquisition -
========
Adjustments relate to the adoption of Computacenter's Group accounting policies
and recognition of property provisions.
9 Reconciliation of operating profit to operating cash flows
2004 2003
#'000 #'000
Operating profit 65,743 65,938
Depreciation 18,382 22,665
Amortisation of positive goodwill 281 544
Impairment of positive goodwill - 46
Amortisation of negative goodwill (532) (4,261)
Revaluation of listed investment - (292)
Loss on disposal of fixed assets 804 914
Profit on disposal of investment (1,603) -
Dividend received from associate 509 -
Increase in debtors (23,081) (16,963)
Decrease / (increase) in stocks 14,278 (4,908)
Decrease in creditors (13,532) (8,432)
Currency and other adjustments (929) (1,730)
-------- --------
Net cash inflow from operating activities 60,320 53,521
======== ========
10 Publication of non statutory accounts
The financial information contained in this preliminary statement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. The financial information set out in this announcement is extracted from
the full Group financial statements for the year ended 31 December 2004, the
auditor's report on which has yet to be signed.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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