TIDMCCC
RNS Number : 2048Z
Computacenter PLC
13 March 2012
Computacenter plc
Annual Financial Report
Computacenter plc, the European IT infrastructure services
provider, today on 13 March 2012 at 7:00 am, announces final
results for the twelve months ended 31 December 2011.
"The sixth year of double digit profit growth"
FINANCIAL HIGHLIGHTS
Underlying performance
-- Group revenues increased 6.6 per cent to GBP2.85 billion
(2010: GBP2.68 billion), and 2.2 per cent prior to acquisitions
-- Adjusted* profit before tax increased 12.4 per cent to
GBP74.2 million (2010: GBP66.1million)
-- Adjusted* diluted earnings per share ('EPS') increased 13.3
per cent to 37.4 pence (2010: 33.0 pence)
-- Net cash prior to customer specific financing (CSF) was
GBP136.8 million (2010: GBP139.4 million)
Statutory Performance
-- Profit before tax increased 10.3 per cent to GBP72.1 million to (2010: GBP65.4 million)
-- Diluted EPS increased by 20.6 per cent to 39.3 pence (2010: 32.6 pence)
-- Net cash after CSF of GBP113.6million (2010: GBP111.0 million)
-- Total dividend for 2011 of 15.0 pence per share up 13.6 per cent (2010: 13.2 pence)
OPERATING HIGHLIGHTS
-- Strong revenue and profit growth in Germany and France as customers continue to upgrade IT infrastructure offsetting weaker Supply Chain demand in UK
-- Germany, France and Belgium now account for 49 per cent of
group adjusted operating profit (2010:33 per cent)
-- Group annual services contract base grew 6.0 per cent in
constant currency to a record GBP563.6 million (2010: GBP531.9
million) with several major contracts secured towards the end of
the year, and which are yet to contribute
-- Group-wide ERP project remains on track. Germany and UK
successfully migrated onto the new platform and France scheduled
for 2013
-- Acquisitions of Top Info, HSD and Damax, at a spend of GBP25
million, have consolidated and enhanced our geographic footprint,
added new services capabilities and are performing in-line with our
expectations
Mike Norris, Chief Executive of Computacenter plc,
commented:
"While this outcome in itself represents a strong performance,
it is worth noting that this is the sixth consecutive year that
Computacenter has delivered double digit profit growth. The Group's
adjusted* diluted earnings per share (EPS), increased by 13.3 per
cent to 37.4 pence, largely as a result of the increased
profitability. This takes the compound annual EPS growth over the
last five years to 22.1 per cent.
We are delighted with the strong customer demand for our service
offerings, which we confidently believe enable them to reduce their
operating costs in the long term. Our new business pipeline for
2012 looks potentially as exciting, if not more so, than that which
we achieved in 2011.
The Board believes that despite the current economic climate,
there would need to be further deterioration in this environment
for its expectations not to be met this year and the Board is
confident of achieving further progress during 2012.
The agenda we have set ourselves is ambitious and not without
risk, but we believe that the combination of strong customer
demand, our operational track record and the strength of our
balance sheet, all bode well for Computacenter's aspiration of
delivering sustainable EPS growth."
*Adjusted profit before tax and EPS is stated prior to
amortisation of acquired intangibles and exceptional items.
Adjusted operating profit is also stated after charging finance
costs on CSF.
For further information, please contact:
Computacenter plc.
Mike Norris, Chief Executive 01707 631 601
Tessa Freeman, Investor Relations 01707 631 514
www.computacenter.com
Tulchan Communications 020 7353 4200
Christian Cowley
James Macey White
www.tulchangroup.com
Chairman's statement
2011 was a good year for our Company, more so given the
extraordinary economic environment. Our German unit had an
outstanding year, growing revenue at 21.8 per cent in the face of
stiff competition. In the UK, our revenue declined by 12.9 per
cent, but we preserved our overall UK margin percentage and grew
our Services order book significantly, with six substantial
contracts closed in the last quarter alone. In France, continuous
improvement in operations, together with the acquisition of Top
Info, led to revenue growth of 33.1 per cent as well as enhanced
profitability. Our Belgian operation had its best year yet.
We continued to invest in our future, implementing our
Group-wide ERP system in the UK and Germany and further improving
our service delivery capabilities in all countries. We grew our
international service support operations in Barcelona and South
Africa and we acquired a significantly larger property in the UK
for our recycling operation, RDC. In total, we invested over GBP40
million of capital in strategic projects during 2011. These
investments, together with those made in the recent past, have
helped our results with adjusted* profit before tax growing by 12.4
per cent to GBP74.2 million and our annualised services contract
base growing by 6.0 per cent to GBP563.6 million.
We face 2012 with confidence, despite the unrelenting challenge
of slow, or even no growth in GDP in Western Europe. We are
focusing on those aspects we can control - customer support, margin
growth and cash generation in the main. We remain dedicated to
providing our customers with services that save them money and help
them be more competitive, and continue to invest in our ability to
support them.
In this report, you will find that we strive for clear and
meaningful description of all our activities and decisions, as well
as continue our commitment to uphold high standards of governance
in line with the UK Corporate Governance Code.
We are far from satisfied with anything we do. The competition
is fierce, the economic environment uncertain, but our employees
and customers have demonstrated resilience and loyalty, for which I
thank them whole heartedly. We shall work hard to earn that loyalty
and in doing so, continue to deliver results that we can be pleased
with.
Greg Lock
Chairman
12 March 2012
*Adjusted profit before tax is stated prior to amortisation of
acquired intangibles and exceptional items
CEO - Operating review - 2011
Group Overview
The Group's adjusted* profit before tax grew by 12.4 per cent to
GBP74.2 million (2010: GBP66.1 million). While this outcome in
itself represents a strong performance, it is worth noting that
this is the sixth consecutive year that Computacenter has delivered
double digit profit growth. The Group's adjusted* diluted earnings
per share (EPS), increased by 13.3 per cent to 37.4 pence (2010:
33.0 pence), largely as a result of the increased profitability.
This takes the compound annual EPS growth over the last five years
to 22.1 per cent.
On a statutory basis, taking into account amortisation of
acquired intangibles and exceptional items, Group profit before tax
increased by 10.3 per cent to GBP72.1 million (2010: GBP65.4
million) and diluted EPS increased by 20.6 per cent to 39.3 pence
(2010: 32.6 pence).
Group revenue, as reported, increased in 2011 by 6.6 per cent to
GBP2.85 billion (2010: GBP2.68 billion). The impact of currency on
the Group's revenue was not significant. Excluding acquisitions,
growth on the previous year was 2.2 per cent. Group revenue growth
was driven by the very strong volume improvements in France and
particularly in Germany, which more than compensated for the 12.9
per cent revenue decline in the UK, due to the adverse economic
climate.
Group Services revenue, as reported, increased by 6.2 per cent
and by 4.9 per cent, excluding acquisitions. Once again, the
drivers for this growth in Services revenue were our businesses in
Germany, France and also Belgium. Services revenue in the UK
declined by circa 2 per cent, although encouragingly, our
Contractual Services revenues increased by 3.3 per cent.
The positive story of the year, for the Group as a whole, is
that the annual Services contract base increased by 6.0 per cent in
constant currency, compared to last year's figures, to GBP563.6
million. This growth does not yet take account of several contracts
secured towards the end of the year, for which revenue generation
is only due to commence in 2012. Contractual Services make a
fundamental contribution to the long-term success of Computacenter,
since it delivers better visibility of revenue. The growth
experienced in 2011 bodes well for the future and leaves us
confident that we are continuing to meet the IT needs of our
customers.
Our Group operating expenses ('SG&A') increased by 9.6 per
cent. This increase is due to a number of factors, including the
impact of the acquisitions, additional depreciation and
amortisation charges related to our ERP platform, together with
some targeted investments, primarily in Germany, to support and
maintain the growth in Services. In addition, there was an
estimated increase of circa GBP7 million due to a reclassification
of costs, from cost of sales to SG&A, following the migration
in Germany and the UK, to our common ERP platform.
Our balance sheet has remained healthy. At the end of the year,
net cash prior to customer specific financing (CSF) was GBP136.8
million (2010: net cash of GBP139.4 million). Including CSF, net
funds were GBP113.6 million (2010: GBP111.0 million). The year-end
cash position continues to benefit, by approximately GBP45 million
(2010: GBP38 million), from the extended credit facility provided
by one of the major suppliers. As stated before, the sustainability
of these terms continues to remain uncertain.
Our net cash position is after a spend of GBP25 million on three
acquisitions during the year, as well as the purchase of a large UK
property for RDC, our recycling subsidiary, at a cost of GBP11
million.
The Board has decided to recommend a final dividend of 10.5
pence, bringing the total dividend paid for 2011 to 15.0 pence,
representing a 13.6 per cent increase on the 2010 total dividend
paid of 13.2 pence. The increase in dividend is consistent with our
stated policy of maintaining dividend cover within our target range
of 2 to 2.5 times. Subject to the approval of shareholders at the
Annual General Meeting (AGM) on 18 May 2012, the proposed dividend
will be paid on 15 June 2012 to shareholders on the register as at
18 May 2012.
We continue to invest for further growth and the increased
acquisition activity in the year is in support of this objective.
We added scale to the Supply Chain business through the Top Info
acquisition in France, as well as a new customer base for cross
selling our services. Our mobility offerings have been enhanced
through the HSD acquisition in Germany, while Damax in Switzerland
supports specific customers based within this region. While
acquisitions have added scale and enhanced our services, in line
with our goal of helping customers' competitiveness and saving them
money, we will continue to invest organically in strengthening our
existing offerings and improving our operational efficiency. For
instance, our tools for automating computer based processes have
been improved and advanced following a GBP10 million investment
over three years into our BMC based customer toolsuite. Our various
service desks were expanded significantly during 2011 to answer
increased demand from our Managed Services wins. Capacity at our
multi-lingual service desks in Barcelona have doubled to a total
potential capacity of 650 operators across two facilities.
Additionally, our service desk facilities in Erfurt, Berlin and
Cape Town have all been extended to accommodate a further circa 400
operators.
Although we were already well placed in the managed services
market, these investments will optimise our ability to respond to
the latest trends in IT outsourcing. There is a growing appetite
for selective outsourcing, rather than single provider outsourcing
deals. We are increasingly being trusted and selected by customers
with existing experience of outsourcing relationships and as such,
many of our contracts are second generation, or even more mature
outsourcing agreements. Our European head-quartered customers are
more frequently requiring us to deliver IT services on a global
basis, which means we must have a reliable and efficient global
network of delivery partners. Our native language, multi-lingual
service desk facility in Barcelona has been a critical resource in
support of this trend.
Similarly, our datacenter facilities also enhance our Managed
Services offerings and customer relevance. In 2011, we deployed
approximately 900 new servers, storage and network devices
primarily at our Tier IV secure facility in Romford, UK. We will
continue to expand and upgrade these offerings to meet ongoing
customer demand.
In 2011, our new ERP system was deployed in both Germany and the
UK. We anticipate that France will migrate during 2013, following
the completion of both an office and warehouse relocation during
2012. While much has been achieved, we are now in a 'bedding-in'
phase. As with all ERP deployments of this scale and given the huge
level of business change, there is still a significant volume of
work to be undertaken. We are however encouraged that the
experience we have gained from these two deployments will help
simplify the French migration.
United Kingdom Operating Review 2011
In a particularly challenging market in the UK, total revenue
reduced by 12.9 per cent in 2011, to GBP1.10 billion (2010: GBP1.27
billion). While both our Supply Chain and Services revenues were
lower, the decline, at 17.7 per cent in the Supply Chain business,
to GBP728.0 million (2010: GBP884.9 million) was the primary driver
for the overall revenue reduction in the UK. Our Services revenue
decreased only marginally by 1.7 per cent, to GBP374.1 million
(2010: GBP380.5 million).
Encouragingly, adjusted* operating profit margin in the UK was
broadly maintained, with profit down by 14.0 per cent to GBP37.3
million (2010: GBP43.3 million). This is largely due to certain
higher volume one-off Supply Chain deals with low contribution
levels in the previous year. Profitability in the UK was further
protected from a greater decline by a 3.1 per cent reduction in
SG&A, as a result of lower commissions and bonuses.
The slight drop in UK Services revenue was primarily due to
fewer and smaller cabling projects and, following the normal trend,
the material decline in Supply Chain sales also led to a reduction
in Professional Services requirements.
The most encouraging development this year in the UK was the 3.3
per cent growth in Contractual Services revenue, coupled with
further contract wins in the latter part of the year. The level of
reported growth in the Services contract base of 1.6 per cent to
GBP244.8 million (2010:GBP241.0 million), does not reflect all the
contracts concluded during the latter part of the year, as billing
on a large portion of these deals will not commence until 2012.
This provides an early bolster for 2012 and improved predictability
in the years to come. The trend to conclude deals towards the end
of the year means it is too early to predict the potential for
further base growth in 2012, but the pipeline remains healthy.
The new Contractual Services wins demonstrate customer
confidence in our business model. In this challenging economy, our
Contractual Services offerings continue to succeed in attracting
customers who are looking for innovative and pragmatic ways to
reduce their IT cost and increase operational efficiency. While our
transactional Supply Chain and even Professional Services
businesses tend to mirror economic conditions, we achieved more
long-term revenue predictability during 2011. We secured a number
of significant deals, including a datacenter managed service with a
global manufacturer of fuels, lubricants and additives, which will
be delivered from our Tier IV facility in Romford. We also won a
managed service with a leading pharmacy-led high street health and
beauty chain, covering 29,000 desktops and 1,600 servers. This
contract, includes a Windows 7 transformation and started in
September 2011.
At an underlying level, the Supply Chain business was not
entirely disappointing, with improved margins preventing gross
margin decline and delivering a flat gross margin percentage
performance on 2010.
Although this improvement in contribution was partly due to the
absence of the previously mentioned high- volume, low-margin deals
seen in 2010, it was also influenced by an improvement in Solution
sales and the optimised terms that we have negotiated with our
major vendors. Vendor terms are not guaranteed and they must be
frequently renegotiated, so such benefits cannot be relied
upon.
Windows 7 and other new Microsoft offerings, continue to drive
IT transformation projects among our customer base and at an
increasing rate. We are well placed to meet this demand, which
provides us with comfort even in an economy where difficulties
remain. Customer desire to modernise their workplace and
Microsoft's operating system support changes, are expected to help
the Supply Chain and Professional Services businesses in 2012. John
Jester, General Manager of UK Enterprise and Partner Group at
Microsoft explains this encouraging opportunity:
"Microsoft Windows 7 is the world's fastest growing operating
system in history yet many enterprise customers' desktop PCs still
run on Windows XP - an eleven-year old operating system that is
approaching end-of-life in only two years. To encourage corporate
customers to upgrade their systems to a modern platform that will
reduce costs, improve productivity and enable future growth,
Microsoft is working closely with Computacenter, a key strategic
partner that has the expertise and capabilities to deliver great
value to our joint customers."
Customers increasingly wish to engage with Computacenter to
streamline their supply chain. For example, we were successful in
securing a multi-million pound per annum supplier consolidation
contract with a large broadcaster in the UK. We will help the
broadcaster reduce the time spent managing procurement, which will
improve the quality of service and enable cost savings.
The UK business has also experienced an increase in demand from
its customers to expand the delivery of IT services to global
locations - a trend we are seeing across the Group. This was
evidenced by a number of wins during 2011, including a managed
service with an American multinational conglomerate for 75,000
end-users in 36 countries. Astra Zeneca was another large new
international win last year and we will be providing service desk
and deskside support to their users in nine countries.
Our subsidiary RDC, which provides customers with secure and
environmentally appropriate solutions for their end-of-life IT
equipment, once again delivered strong performance, with revenue
growth of 18.4 per cent over 2010. While their profit margins
remained resilient in 2011, RDC's relocation in early 2012 to a
recently acquired larger and better single location in Braintree,
Essex, should improve efficiency and generate further performance
improvements in 2012 and beyond.
Germany Operating Review 2011
In the German segment, including acquisitions, overall adjusted*
operating profit for the year grew by a significant 39.2 per cent
to EUR31.9 million (2010: EUR22.9 million). Excluding the results
of acquisitions, HSD in Germany and Damax AG in Switzerland,
adjusted* operating profit grew by 26.1 per cent to EUR28.9 million
(2010: EUR22.9 million).
In contrast to the weak start experienced in 2010, 2011 began
buoyantly following a strong end to 2010 and we continued to
largely sustain this encouraging performance throughout 2011. Total
revenue in the year, for the segment as a whole, increased by 20.3
per cent to EUR1,415.3 million (2010: EUR1,176.7 million) and
excluding acquisitions, the revenue growth was 17.8 per cent. Much
of this growth was delivered by the Supply Chain business, with
workplace and networking equipment sales driving a large portion of
the volume increase. Supply Chain revenue, for the segment as a
whole, increased by a noteworthy 24.3 per cent and excluding
acquisitions, on a like-for-like basis, Supply Chain revenue for
the year grew by 21.4 per cent.
While encouraging in itself, this growth also stimulated our
Services business. Not only did a major supplier of electronic
components to the automotive industry award Computacenter Germany a
three-year workplace equipment supply contract, but the
relationship has evolved to include additional consultancy and
related support services.
Services revenue, overall, grew by a healthy 12.3 per cent to
EUR445.5 million (2010: EUR396.7 million) and excluding
acquisitions, growth in Services revenue was 10.6 per cent.
Applying the same exclusions, our Services contract base grew by
6.2 per cent to EUR308.0 million (2010: EUR290.0 million). However,
this contract base growth hides the materiality of the Services
wins concluded within the second half of the year, as most of these
contracts will only generate revenue from 2012 onwards. The total
lifetime contract value of all the Contractual Services wins
awarded in 2011 amounted to approximately EUR250 million. This
exceptional and sudden volume increase presented us with some
resource and business take-on challenges. Although this caused some
erosion to our Services margins, we started 2012 with an unhindered
opportunity to optimise this growth.
The material wins achieved in 2011 represent the investments we
made to enhance our Managed Services portfolio and deliver more
capability. These wins also reflect growing demand from our
existing customers for IT service delivery across a broader range
of geographies and our ability to respond to these
requirements.
These market drivers resulted in our largest value, service desk
contract win ever awarded by a global manufacturer within the
aerospace sector. This five year contract has an annual contract
value of EUR13 million and will draw on all the Group's core
capabilities across all its European operations. Additionally, a
large German re-insurance provider awarded Computacenter Germany a
four-year service desk contract, which will be supported
internationally from our expanded Berlin service desk.
Both these customers have extensive prior experience of
outsourcing critical IT functions to external providers and we
believe their decision to partner with Computacenter demonstrates
growing market confidence in the quality and maturity of our
Services.
This is further supported by independent market analysis
undertaken by Experton, which rated our offerings for managed
workplace services, as the most outstanding amongst our 13 primary
competitors.
The need to meet growing customer demand and fulfil a sudden
increase in Services business take-on requirements, while migrating
onto the ERP platform, unsurprisingly resulted in a rise of
SG&A.
However, more than half of the SG&A increase is due to a
combination of the reclassifications between cost of sales and
SG&A, the impact of acquisitions and expenses relating to
amortisation of our new ERP platform. Excluding these impacts and
at an underlying level, the SG&A in Germany grew by
approximately 7 per cent. We will continue to invest in improving
the efficiency of our take-on process, as well as our general
technical resources, to enable our future growth aspirations.
The HSD acquisition in April 2011 has enabled us to establish
our mobility and "bring-your-own" device offerings, resulting in
very positive responses from our existing customers, as well as the
wider market. This business has now been fully integrated into the
German business.
From January 2011, the activities of Computacenter Luxembourg
have been reported as part of the German business. Towards the end
of July 2011, Computacenter acquired a majority stake in Damax AG
in Switzerland and it was similarly considered appropriate to
report this business performance as part of Computacenter Germany.
Both of these businesses are already showing encouraging
contributions to our German reporting sector.
France Operating Review 2011
Computacenter France, including Top Info's contribution for
three quarters of 2011, delivered an adjusted* operating profit of
EUR6.9million (2010: EUR1.2million). More than half of this profit
improvement was delivered organically, which represents an
encouraging performance for both the pre and post-acquisition
business.
We achieved another year of good revenue growth with revenue in
our existing French business increasing by 6.5 per cent, again
outperforming the French market convincingly. Total reported
revenue, including the three quarters of Top Info, increased by
31.4 per cent to EUR551.3 million (2010:EUR419.4 million).
Including the Top Info acquisition, for three quarters of the
year, Supply Chain revenue increased significantly by 35.5 per
cent, with an increase of 7.1 per cent to the Supply Chain revenue
of the business, excluding Top Info. Services grew by 11.1 per cent
and without Top Info, Services revenue increased by 3.9 per
cent.
The significant opportunity of deploying Computacenter's
Services offerings to Top Info clients is only just beginning,
which bodes well for our Services business during 2012 and beyond.
Full exploration of this opportunity should improve the 13.9 per
cent (2010: 16.5 per cent) Services revenue mix.
The shift in business mix during 2011 is attributable to the
strong Supply Chain nature of Top Info. The material revenue growth
in the Supply Chain business came largely from improved sales of
software and enterprise equipment and to a lesser extent from
workplace Supply Chain sales. Supply Chain activity with the
primary national procurement agencies for the French public sector
has been encouraging and we feel very well placed to gain from
future government refresh initiatives.
We have increased the cross selling Services to our traditional
Supply Chain customers. For example, at the end of 2010, we
announced that we had been awarded a three year global software
licensing contract with a major energy utilities company. In 2011,
we went on to win a separate three-year Services contract,
extendable to eight years, for the delivery of a full managed
service.
This evolution is also occurring within the private sector as
evidenced by a three year contract win with a major corporate and
investment bank within the French financial sector. We will be
providing desk and desk-side support to their users.
Our annual Contractual Services base has grown to EUR58.4
million (2010: EUR47.1 million). However, a large proportion of
recent Managed Services wins will only commence revenue generation
during 2012 which, going forward will help boost the Services
business further and have not been included in the 2011 Contractual
Services base.
As can be expected with strong revenue growth, commission
earnings during the year were higher. This was the primary
contributor for the 3.6 per cent increase in the SG&A of the
existing business' SG&A, while the SG&A of the post
acquisition business increased by 28.8 per cent. We have also
continued to invest in strengthening our salesforce during the
year, with returns anticipated from 2012 onwards.
The sales functions of Top Info and the original Computacenter
France have now been combined into a single operation and the
businesses were merged on 30 December 2011. This has completed the
integration of Top Info, which went smoothly, retaining all current
major customers.
Belgium Operating Review 2011
Our Belgium operation delivered an outstanding adjusted*
operating profit improvement of 264 per cent, recording an
operating profit of EUR1.8 million (2010: EUR0.5 million). After
taking into account certain unusual items in 2011, at an underlying
level, the operational profit improvement on last year was
approximately EUR1 million.
This result is particularly pleasing, as we maintained overall
revenues of EUR49.5 million (2010: EUR49.6 million). Our 2010
revenues were influenced to a significant extent, by a one-off
Supply Chain sale, at a low margin. Generally, the quality of the
revenue earned in the year improved.
Supply Chain revenue reduced by 2.9 per cent to EUR38.8 million
(2010: EUR40.0 million). However, on the upside, our Services
business grew by 10.3 per cent to EUR10.6 million (2010: EUR9.7
million), due to growth in both Professional and Managed Services.
Pleasingly, Professional Services revenue did not, as would be the
anticipated trend, follow the Supply Chain revenue. The
Professional Services revenue growth came from projects delivered
to new customers, while our Managed Services contract base grew by
more than 30 per cent. We also successfully extended our contract
with SWIFT for a further three years, based on our existing 10-year
relationship.
We are increasingly delivering a wider suite of services and
solutions to our customers. This expanding portfolio is
demonstrated by a turnkey project with the city of Wavre, which
includes virtualisation, storage, networking and IP telephony
services as well as Supply Chain.
As with the rest of the Group, we are experiencing growing
demand for our services to be delivered across a wider geographic
scale, as evidenced by a contract recently agreed with a
multinational biopharmaceutical manufacturer, headquartered in
Brussels. As part of the EUR3 million deal, we will be providing
the customer with workplace services across its European
locations.
Outlook Statement
The Board believes that despite the current economic climate,
there would need to be further deterioration in this environment
for its expectations not to be met this year and the Board is
confident about gaining further progress during 2012. The Group
enters 2012 buoyed by the recent contract wins, an improving
position in the UK and continuing growth rates in France and
Germany.
The high level of activity across the Group means that the
operational challenges facing us this year, should not be
underestimated. In the UK, we are incorporating last year's record
Managed Services wins. In France, we are centralising all our
logistics facilities into a single operation centre, relocating the
whole head office and sales functions, as well as preparing to
migrate the French operation to the Group ERP platform during 2013.
In Germany, the growth we experienced in 2011 and which has
continued in the early part of 2012 requires our facilities and
technical resources to expand. At a Group-level, customer demand
remains to drive the rapid expansion of our Group Service Desk, at
both existing and new locations.
We continue to invest to improve the services we offer customers
and maximise Computacenter's long-term growth potential. We are
delighted with the strong customer demand for our service
offerings, which we confidently believe enable them to reduce their
operating costs, in the long term. Our new business pipeline for
2012 looks potentially as exciting, if not more so, than that which
we achieved in 2011. The agenda we have set ourselves is ambitious
and not without risk, but we believe that the combination of strong
customer demand, our operational track record and the strength of
our balance sheet, all bode well for Computacenter's aspiration of
delivering sustainable EPS growth.
Mike Norris
Chief Executive
12 March 2012
*Adjusted profit before tax and EPS is stated prior to
amortisation of acquired intangibles and exceptional items.
Adjusted operating profit is also stated after charging finance
costs on CSF.
Finance Director's review 2011
Turnover and profitability
In 2011, Computacenter Group delivered turnover growth and the
sixth successive year of profit growth.
At a headline level, turnover grew by 6.6 per cent to GBP2.85
billion, although on a like-for-like basis (excluding
acquisitions), turnover growth was 2.2 per cent.
The overall Group performance resulted from a mixed performance
across our main geographies. Our German business was the main
growth driver with a buoyant market and share gains driving revenue
growth in all business lines, however weak infrastructure spending
in the UK drove a contraction in the UK supply chain and
professional services revenues.
Adjusted profit before tax improved by 12.4 per cent from
GBP66.1 million to GBP74.2 million. This increase was achieved
despite additional depreciation and amortisation charges of
approximately GBP3.4 million following the go-live of our German
and UK businesses onto our new ERP platform and related
infrastructure.
After taking account of exceptional items and increased
amortisation of acquired intangibles following our acquisitions in
the year, statutory profit before tax increased by 10.3 per cent
from GBP65.4 million to GBP72.1 million.
Adjusted operating profit
Statutory operating profit increased from GBP65.9 million to
GBP71.9 million. However, management measure the Group's operating
performance using adjusted operating profit, which is stated prior
to amortisation of acquired intangibles, exceptional items, and
after charging finance costs on customer specific financing ("CSF")
for which the Group receives regular rental income. Gross profit is
also adjusted to take account of CSF finance costs. The
reconciliation of statutory to adjusted results is further
explained in the segmental reporting note (Note 3) to the financial
statements. For the purposes of this statement, all subsequent
references are to adjusted measures.
Restatement and classification of costs
In the prior year financial statements, distribution costs were
shown below gross profit, however, management monitor the
performance of the business by including such costs within gross
profit. As a result, these costs have been included in cost of
sales in 2011, and 2010 has been restated accordingly.
From 1 January 2011, the management of Computacenter Luxembourg
has been transferred from Belgium to Germany. As a consequence, CC
Luxembourg is reported as part of the German segment. The
comparative segmental information in 2010 has been restated to
reflect this change.
United Kingdom
Due to weak demand for infrastructure spending, particularly
from Financial Services and Government customers, UK revenues
contracted in 2011 by 12.9 per cent, reducing to GBP1,102.2
million. Supply chain sales decreased by 17.7 per cent, although
the rate of decline slowed progressively in each quarter of the
year. A similar contraction in professional services revenues
resulted in a reduction in overall services revenues, by 1.7 per
cent. The growth in support and managed services revenues of 3.3
per cent does not fully reflect the progress made in 2011, with a
number of significant contracts won in Q4 that will not contribute
to our revenues and contract base until 2012.
Despite the reduction in revenues, gross margins remained
robust, with our adjusted gross profit margin increasing from 14.0
per cent to 15.2 per cent mainly due to a higher mix of services
sales and an improved supply chain margin rate due to the absence
of some large, low margin deals, particularly in software. Robust
management of our adjusted operating expenses ("SG&A") led to a
reduction of 3.1 per cent in 2011. This, together with our focus on
margin return, has ensured that overall adjusted operating profit
reduced broadly in line with revenue, by 14.0 per cent from GBP43.3
million to GBP37.3 million.
Germany
The pace of growth in our German business increased in 2011.
Revenue, as reported, grew in 2011 by 21.8 per cent to GBP1,228.6
million (2010: GBP1,008.9 million). The revenue impact of
acquisitions (HSD in Germany and Damax in Switzerland) and currency
movements were not significant.
Overall, supply chain revenues increased by 25.9 per cent
including acquisitions, with services revenues growing by 13.7 per
cent. Whilst the market in Germany was particularly buoyant in
2011, our share of the market has also increased. The gross margin
return of the business reduced, partly due to the increased mix of
supply chain revenues, and partly due to margin erosion in
services, where the pace of growth impacted our efficiency of
business take-on resources.
SG&A increased by GBP20.3 million to GBP129.6 million (2010:
GBP109.3 million). Approximately GBP7 million of this increase is
due to reclassifications between cost of sales and SG&A from
alignment arising from our ERP project. Approximately GBP5 million
arises from the impact of acquisitions and expenses relating to
amortisation of the new ERP platform. The underlying growth in the
German SG&A cost base of GBP8 million relates to investments in
the pre-sales and business take on teams to support the growth in
the services business. Overall, the German segment operating profit
increased by 40.9 per cent from GBP19.7 million to GBP27.7 million,
with the organic growth in our German business augmented by the
profit generated by our acquisitions (HSD in Germany and Damax in
Switzerland).
France
The revenue in the French segment increased by 33.1 per cent in
the year. In April 2011, the Group acquired Top Info SAS, which
contributed revenues of GBP90.7 million in the year. Encouragingly,
like-for-like revenues from our existing French business grew by
7.9 per cent. Supply chain revenue increased by 8.4 per cent prior
to acquisitions, mainly due to growth in software and enterprise
product sales. Services revenue grew by a more modest 5.2 per cent
consolidating the gains made in 2010.
Following a reduction in 2010, the gross profit return in France
recovered in 2011 to 10.6 per cent, due largely to a focus on
margin management in services together with the improved mix of
enterprise product sales. SG&A grew in France principally due
to the Top Info acquisition, with SG&A in our existing French
business increasing by 4.9 per cent, mainly due to increased
commission payments linked to the improvement in gross margin. The
operating profit of the combined business increased from GBP1.0
million to GBP6.0 million, with the contribution from Top Info
largely matching the organic growth in profits in the existing
Computacenter France business.
As a result of the improved profitability of the business, and
an improvement in management's view of the future performance of
the combined entity, a deferred tax asset of GBP2.0 million in
respect of losses has been recognised, and disclosed as an
exceptional gain.
At the end of 2011, the Computacenter and Top Info businesses
were merged, and no longer generate independent cash flows. The
goodwill arising from the Top Info purchase has therefore been
assessed on the combined cash flows of the enlarged Computacenter
France business.
During 2011, the French business committed to move to a new
warehouse and office premises and the combined business is expected
to move during the first half of 2012.
Belgium
Reported revenue increased by 0.9 per cent to GBP43.0 million.
(2010: GBP42.6 million). It is pleasing that the mix of revenue in
2011 generated healthy gross margin (2010 included a very large low
margin supply chain deal with a single customer).
Gross margin return on sales for Belgium overall improved from
7.6 per cent to 10.7 per cent. SG&A, however, increased by 7.8
per cent mainly due to increased commission costs on the increased
gross margin performance.
Overall therefore operating profit improved from GBP0.4 million
in 2010 to GBP1.6 million in 2011. Although approximately GBP0.3
million of this profit growth was due to factors that are not
expected to recur, the majority of the growth represents underlying
improvement in the business.
Exceptional items
In line with the requirements of IFRS3 Revised,
acquisition-related costs are expensed in the period in which they
are incurred. The group has recorded GBP1.0 million
acquisition-related costs for both successful and aborted
acquisitions within exceptional items.
Due to circumstances arising after the acquisition date, the
performance criteria required to trigger deferred consideration of
EUR1.0 million that were previously expected to be achieved, were
not met. As a result, the deferred consideration liability
recognised has been reversed and the GBP0.9 million gain in the
income statement has been recorded as an exceptional item.
Additionally, the statutory tax charge benefits from two items
of an exceptional nature. Firstly, the deferred tax asset in
respect of losses in Germany was re-assessed in line with
management's view of the entity's future performance. Where the
reassessment exceeds the losses utilised in the year, the change in
recoverable amount of the deferred tax asset is shown as an
exceptional item. Secondly, the improved profitability in France,
together with an improved outlook for the combined French entity's
future performance has resulted in the initial recognition of a
deferred tax asset in respect of losses. The combined impact in the
income statement is shown as an exceptional item.
Finance income and costs
Net finance income of GBP0.2 million was earned on a statutory
basis in 2011 (2010: net finance costs of GBP0.5 million). This
takes account of finance costs on CSF of GBP1.5 million (2010:
GBP2.1 million). On an adjusted basis, prior to the interest on
CSF, net finance income increased from GBP1.6 million in 2010 to
GBP1.7 million in 2011.
Taxation
The effective adjusted tax rate for 2011 was 21.7 per cent
(2010: 23.1 per cent). The Group's tax rate continues to benefit
from losses utilised on earnings in Germany and this year in France
and further benefits from the reducing corporation tax rate in the
UK.
Deferred tax assets that have been recognised in respect of
losses carried forward increased to GBP15.4 million (2010: GBP11.3
million). In addition, at 31 December 2011, there were unused tax
losses across the Group of GBP125.6 million (2010: GBP171.2
million) for which no deferred tax asset has been recognised. Of
these losses, GBP68.5 million (2010: GBP99.4 million) arise in
Germany, albeit a significant proportion have been generated in
statutory entities that no longer have significant levels of trade.
The remaining unrecognised tax losses relate to other loss-making
overseas subsidiaries.
Earnings per share and dividend
The adjusted* diluted earnings per share has increased in line
with profit growth by 13.3 per cent from 33.0 pence in 2010 to 37.4
pence in 2011. The statutory diluted earnings per share growth of
20.6 per cent was greater due to exceptional tax items in 2011.
The Board is recommending a final dividend of 10.5 pence per
share, bringing the total dividend for the year to 15.0 pence
(2010: 13.2 pence). Subject to the approval of shareholders at the
Annual General Meeting (AGM) on 18 May 2012, the proposed dividend
will be paid on 15 June 2012 to shareholders on the register as at
18 May 2012.
Acquisitions
During 2011, the Group acquired three subsidiaries. On 1 April
2011, the Group acquired 100 per cent of Top Info SAS in France.
The Top Info business was merged with our Computacenter France
business on 30 December 2011, and as a consequence no longer has
its own separable cash flows. Accordingly the goodwill arising on
the acquisition has been tested against the combined Computacenter
France cash generating unit ("CGU").
On 11 April the Group acquired 100 per cent of HSD Consult GmbH,
which has been combined in the year within the Computacenter
Germany CGU.
On 21 July 2011, the Group acquired 80 per cent of Damax AG in
Switzerland, and agreed to purchase the remaining 20 per cent by
mid 2015 for a consideration dependent upon the achievement of
agreed performance criteria over the next three and a half years.
Due to the nature of the transaction, the Group has present access
to the benefits associated with the remaining 20 per cent of Damax.
The Group has recorded this acquisition as a linked transaction,
and has accordingly consolidated 100 per cent of the results of
Damax since the acquisition date and estimated the fair value
deferred consideration payable.
Cash flow
The Group's trading net funds position takes account of factor
financing and current asset investments but excludes customer
specific financing. There is an adjusted cash flow statement
provided in note 10 that restates the statutory cash flow to take
account of this definition.
Net funds excluding CSF reduced marginally from GBP139.4 million
to GBP136.8 million by the end of the year. The Group continued to
deliver strong cash generation from its operations in 2011, with
adjusted operating cash flow of GBP95.5 million (2010: GBP108.2
million). In the year our outflow of cash included over GBP40
million on specific strategic cash investments, such as the
remaining expenditure on our ERP implementation, the purchase of a
new freehold facility for our RDC recycling business for
approximately GBP11 million, and net cash outflow on acquisitions
of GBP25.3 million.
When taking these investments into account together with tax and
dividends, our net funds excluding CSF reduced marginally in the
year.
Whilst the cash position remains robust, the Group continued to
benefit from the extension of a temporary improvement in credit
terms with a significant vendor, equivalent to GBP45 million at 31
December 2011, an increase of approximately GBP7 million from
December 2010.
CSF reduced in the year from GBP28.4 million to GBP23.1 million
partially due to a decision to restrict this form of financing in
the light of the credit environment and reduced customer demand.
Taking CSF into account, total net cash at the end of the year was
GBP113.6 million, compared to GBP111.0 million at the start of the
year.
Customer specific financing
In certain circumstances, the Group enters into customer
contracts that are financed by leases or loans. The leases are
secured only on the assets that they finance. Whilst the
outstanding balance of CSF is included within the net funds for
statutory reporting purposes, the Group excludes CSF when managing
the net funds of the business, as this CSF is matched by contracted
future receipts from customers.
Whilst CSF is repaid through future customer receipts,
Computacenter retains the credit risk on these customers and
ensures that credit risk is only taken on customers with a strong
credit rating.
The committed CSF financing facilities, are thus outside of the
normal working capital requirements of the Group's product resale
and service activities.
Capital Management
Details of the Group's capital management policies are included
within the financial statements.
Financial instruments
The Group's financial instruments comprise borrowings, cash and
liquid resources, and various items that arise directly from its
operations. The Group enters into hedging transactions, principally
forward exchange contracts or currency swaps. The purpose of these
transactions is to manage currency risks arising from the Group's
operations and its sources of finance. The Group's policy remains
that no trading in financial instruments shall be undertaken.
The main risks arising from the Group's financial instruments
are interest rate, liquidity and foreign currency risks. The
overall financial instruments strategy is to manage these risks in
order to minimise their impact on the financial results of the
Group. The policies for managing each of these risks are set out
below. Further disclosures in line with the requirements of IFRS 7
are included in the financial statements.
Interest rate risk
The Group finances its operations through a mixture of retained
profits, cash and short-term deposits, bank borrowings and finance
leases and loans for certain customer contracts. The Group's bank
borrowings, other facilities and deposits are at floating rates. No
interest rate derivative contracts have been entered into.
Liquidity risk
The Group's policy is to ensure that it has sufficient funding
and facilities in place to meet any foreseeable peak in borrowing
requirements. The Group's positive net funds position was
maintained throughout 2011, and at the year-end was GBP136.8
million excluding CSF, and GBP113.6 million including CSF.
Due to strong cash generation over the past three years, the
Group is now in a position where it can finance its requirements
from its cash balance. As a result, the Group has not renewed a
number of overdraft and factoring facilities during 2010 and 2011,
but has implemented a cash pooling arrangement for the majority of
Group entities.
At 31 December 2011, the Group had available uncommitted
overdraft of GBP15.9 million (2010 uncommitted overdraft and
factoring facilities of GBP15.5 million). The Group's committed
facility expired in May 2011, and was not renewed.
The Group manages its counterparty risk by placing cash on
deposit across a panel of reputable banking institutions, with no
more than GBP50.0 million deposited at any one time except for UK
Government backed counterparties where the limit is GBP70.0
million.
Customer specific financing facilities are committed.
Foreign currency risk
The Group operates primarily in the UK, Germany, France, and
with smaller operations in Belgium, Switzerland, Spain and South
Africa. The Group uses a cash pooling facility to ensure that its
operations outside of the UK are adequately funded, where principal
receipts and payments are denominated in Euros. In each country a
small proportion of the sales are made to customers outside those
countries. For those countries within the Euro zone, the level of
non-Euro denominated sales is very small and, if material, the
Group's policy is to eliminate currency exposure through forward
currency contracts. For the UK, the majority of sales and purchases
are denominated in Sterling and any material trading exposures are
eliminated through forward currency contracts.
The value of contracts where service is provided in multiple
countries has increased. The Group aims to minimize this exposure
by invoicing the customer in the same currency in which the costs
are incurred. For certain contracts, the Group's committed contract
costs are not denominated in the same currency as its sales. In
such circumstances, for example where contract costs are
denominated in South African Rand, the Group eliminates currency
exposure for a foreseeable future period on these future cash flows
through forward currency contracts. In 2011, the Group recognised a
charge of GBP0.5 million through other comprehensive income in
relation to the changes in fair value of related forward currency
contracts, where the cash flow hedges relating to firm commitments
were assessed to be highly effective.
Credit risk
The Group principally manages credit risk through management of
customer credit limits. The credit limits are set for each customer
based on the creditworthiness of the customer and the anticipated
levels of business activity. These limits are initially determined
when the customer account is first set up and are regularly
monitored thereafter. In France, credit risk is mitigated through a
credit insurance policy which applies to non-Government customers
and provides insurance for approximately 50 per cent of the
relevant credit risk exposure.
There are no significant concentrations of credit risk within
the Group. The Group's major customer, disclosed in note 3 to the
financial statements consists of entities under the control of the
UK Government. The maximum credit risk exposure relating to
financial assets is represented by carrying value as at the balance
sheet date.
Going concern
As disclosed in the Directors' Report, the directors have a
reasonable expectation that the Group has adequate resources to
continue its operations for the foreseeable future. Accordingly
they continue to adopt the going concern basis in preparing the
consolidated financial statements.
Tony Conophy
Finance Director
12 March 2012
Risk management
The ongoing identification and monitoring of risks are
undertaken by our Group Risk Committee ('GRC'), the members of
which include: the Group Chief Executive, Group Finance Director,
Managing Director UK Sales, Managing Director UK Operations,
Company Secretary and Group Risk Manager, Chief Executive of
Germany, Director General of France and the Group Internal
Auditor.
The GRC is responsible for compiling the Strategic Risk Log
('SRL') annually, a 'top down' list of unwanted situations which
could prevent the strategic objectives, as established by the
Board, from reaching the desired outcome. These risks also include
the possibility for failure in maximising upside potential. The SRL
is compiled by the Committee with facilitated guidance from an
external risk consultancy, every two years, as well as the 'bottom
up' Business Risk Assessment ('BRA'), as delivered by all the
business leaders across the Group. Ownership for the top 20
strategic risks is allocated across the GRC and monitored at
quarterly scheduled meetings.
The agenda of items considered at a GRC meeting also includes:
Health and Safety, Insurance and Liabilities, Business Continuity
and IT Disaster Recovery, Corporate Sustainable Development and
Internal Audit reports. The Group Internal Auditor aims to provide
the Group Audit Committee with feedback on the risk control
measures being monitored and assurance that the assessment of risk
remains active, at a senior level. The Group Internal Auditor
additionally reports on findings, following internal audits of
areas impacted by risks captured on the risk logs.
Assessing risk is not only about what is foreseeable. An
exercise was undertaken this year by the Committee to consider the
unthinkable risks, or 'black swans' and to contemplate their impact
on business objectives and how best to mitigate. The disaster
recovery plans have undergone review following this study, as
further opportunity of minimising post-disaster chaos have, in
certain instances, been identified.
The Committee this year benchmarked the SRL against an external
Global Risk Management Survey and of the top 10 external findings;
the SRL had captured eight, which provides some comfort that our
identification process is aligned to that being undertaken in other
organisations. Those generic risks more widely identified and also
listed on our SRL include: business continuity risks associated
with IT operational failures; our obligations under regulatory and
compliance legislation; data protection exposures; and the
consequences of expanding the delivery of our offerings to our
customers, globally. Certain risks on the SRL have been identified
as posing potential threat to our strategic objectives and some of
these are detailed below:
Strategic Accelerating the Reducing cost Maximising the Growing our Ensuring the
objectives growth of our through increased return on working profit margin successful
contractual efficiency and capital and through increased implementation of
services business industrialisation freeing working services and the Group-wide
of our service capital where not high-end product ERP system
operations optimally used sales
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Principal risks -- Our offerings -- There may be -- Following -- Resource -- With a project
may transpire to an absence of significant demands could of this scale
be uncompetitive appropriate progress over the arise when there is the
within the market investment into years in reducing transitioning potential that
or an unforeseen automated tools working capital multiple new during early
technology and other through the service business transition
shift occurs efficiency disposal opportunities operational
where the market measures, which of the at or around the issues could
develops appetite effectively fails distribution same time. occur which
for different to reduce the business, as well -- Our sales impact on
equipment and need for manual as other working teams could lose customer service
solutions to intervention capital focus on our levels and
those activity and optimisation defined ultimately,
offered. thus could impact initiatives, a propositions and overall financial
-- We potentially upon our material increase target market performance of
do not dedicate competitive in working resulting the Company.
correct levels of position or a capital demand in the 'over -- After the ERP
resource to suitable return could harm promising' on the system is fully
satisfy our on these further progress scope of services embedded there is
customers' investments is in this regard. offered to new the potential
varying not achieved. customers or that the full
needs for making return on this
innovation. non-standard investment is not
-- Our growth offerings during realised.
aspirations are the life of a
impacted by the contract. This
economic climate could result in
and with a margin erosion,
certain level of customer
uncertainty about dissatisfaction
a full return to or delays in the
economic initial phases of
stability in the the contract.
short-term; there -- Our vendor
is the potential partners compete
for reduced in the high-end
capital sales environment
expenditure from and approach our
customers. customers
directly.
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Principal -- We formally -- The -- There is -- We have an -- The transition
mitigations review all lost industrialisation continued focus established of the various
bids and most won and investment on working transition and systems have been
bids to ensure review board capital controls transformational phased over a
that we keep convenes monthly in each country activity period of circa
abreast of and monitors the at all levels, programme with three years,
customer return supplemented by access to with the other
expectation from on investment as rigorous target additional countries
their IT services well as the based resources as providing back-up
and solutions planned KPI incentivisation necessary support to the
provider. We improvements and system. In utilising our transitioning
formally review considers future future, the ERP Master Vendor country. Lessons
our internal investments and system will relationship learnt
service providers improvements facilitate a which caters for from 2011
against price taking account of common approach bridging any transitions in
points and feedback from to working capability and Germany and the
benchmarked multiple sources capital capacity concerns UK will be
service quality within the management, that may arise. deployed in
standards. business. across the Group, -- Governance future countries.
-- We launched a through best boards and a -- Return on
Customer Value practice and tool, through investment plans
Scorecard other working which all have been
to identify our capital control relevant parties developed and
larger customers' adoption. have to engage, will be built
innovation aim to into the internal
needs and we are prevent any governance
currently non-standard structure at all
implementing offerings. All relevant levels,
the 'continual change management and targets have
improvement will be reviewed already been
framework' to by a governance included in
detect where board and if senior management
innovation needs material, the pay plans.
are arising. same approval
-- We operate process as for
within different new contracts
economies that will be
are affected initiated.
differently at -- Senior
different times. management work
We also believe very closely with
that our our leading
offerings are partners and
targeted customers in
specifically order to
towards being continually
beneficial to our promote and
customers who are protect the value
looking to reduce we bring to the
costs. customer.
Computacenter's
customers
demand
optimisation of
their IT
infrastructures
and to this end,
vendor
independent
solutions
are imperative.
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Directors' responsibility statement
-- The financial statements, prepared in accordance with
International Financial Reporting Standards, as adopted by the EU,
give a true and fair view of the assets, liabilities, financial
position and profit for the Company and undertakings included in
the consolidation taken as a whole; and
-- Pursuant to the Disclosure and Transparency Rules the
Company's annual report and accounts include a fair review of the
development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face.
On behalf of the Board
Mike Norris Tony Conophy
Chief Executive Finance Director
12 March 2012
Consolidated income statement
For the year ended 31 December 2011
Restated
2011 2010
Notes GBP'000 GBP'000
Revenue 3 2,852,303 2,676,495
Cost of sales (2,470,932) (2,329,660)
Gross profit 381,371 346,835
Administrative expenses (307,377) (280,288)
Operating profit:
-------------------------------------------- ----- ----------- -----------
Before amortisation of acquired intangibles
and exceptional items 73,994 66,547
Amortisation of acquired intangibles (1,986) (655)
Exceptional items (131) -
-------------------------------------------- ----- ----------- -----------
Operating profit 71,877 65,892
Finance income 2,361 2,329
Finance costs (2,136) (2,823)
Profit before tax:
-------------------------------------------- ----- ----------- -----------
Before amortisation of acquired intangibles
and exceptional items 74,219 66,053
Amortisation of acquired intangibles (1,986) (655)
Exceptional items 4 (131) -
-------------------------------------------- ----- ----------- -----------
Profit before tax 72,102 65,398
Income tax expense:
-------------------------------------------- ----- ----------- -----------
Before amortisation of acquired intangibles
and exceptional items (16,125) (15,265)
Tax on amortisation of acquired intangibles 433 187
Tax on exceptional items 4 174 -
Exceptional tax items 4 4,427 -
-------------------------------------------- ----- ----------- -----------
Income tax expense 5 (11,091) (15,078)
----------- -----------
Profit for the year 61,011 50,320
----------- -----------
Attributable to:
Equity holders of the parent 61,013 50,321
Non-controlling interests (2) (1)
----------- -----------
61,011 50,320
----------- -----------
Earnings per share
- basic 6 41.0p 34.1p
- diluted 6 39.3p 32.6p
Consolidated statement of comprehensive income
For the year ended 31 December 2011
2011 2010
GBP'000 GBP'000
Profit for the year 61,011 50,320
Loss arising on cash
flow hedge (464) -
Income tax effect 116 -
Exchange differences on translation
of foreign operations (4,495) (4,076)
-------- --------
Total comprehensive income for
the period 56,168 46,244
-------- --------
Equity holders of the
parent 56,166 46,250
Non-controlling interests 2 (6)
-------- --------
56,168 46,244
-------- --------
Consolidated balance sheet
As at 31 December 2011
2011 2010
Notes GBP'000 GBP'000
Non-current assets
Property, plant and equipment 98,261 88,882
Intangible assets 104,242 78,531
Investment in associates 497 47
Deferred income tax asset 5 15,928 15,577
========= ========
218,928 183,037
Current assets
Inventories 97,440 81,569
Trade and other receivables 548,968 471,133
Prepayments 43,042 44,219
Accrued income 47,019 39,971
Forward currency contracts 296 562
Current asset investment 9 10,000 -
Cash and short-term deposits 9 128,437 159,269
========= ========
875,202 796,723
========= ========
Total assets 1,094,130 979,760
========= ========
Current liabilities
Trade and other payables 530,953 440,790
Deferred income 115,350 100,840
Financial liabilities 12,247 37,936
Forward currency contracts 464 -
Income tax payable 4,700 5,941
Provisions 2,689 2,644
========= ========
666,403 588,151
Non-current liabilities
Financial liabilities 12,554 10,320
Provisions 9,059 10,749
Other non-current liabilities 831 -
Deferred income tax liabilities 5 1,536 978
23,980 22,047
========= ========
Total liabilities 690,383 610,198
========= ========
Net assets 403,747 369,562
========= ========
Capital and reserves
Issued capital 9,233 9,233
Share premium 3,717 3,697
Capital redemption reserve 74,957 74,957
Own shares held (10,962) (10,146)
Foreign currency translation reserve 7,638 12,137
Retained earnings 319,152 279,674
Shareholders' equity 403,735 369,552
========= ========
Non-controlling interests 12 10
========= ========
Total equity 403,747 369,562
========= ========
Approved by the Board on 12 March 2012
MJ Norris FA Conophy
Chief Executive Finance Director
Consolidated statement of changes in equity
For the year ended 31 December 2011
Attributable to equity holders
of the parent
Foreign
Capital Own currency
Issued Share redemption shares translation Retained Non-controlling
capital premium reserve held reserve earnings Total interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- -------- -------- ----------- -------- ----------- --------- -------- --------------- --------
At 1 January
2011 9,233 3,697 74,957 (10,146) 12,137 279,674 369,552 10 369,562
Profit for
the year - - - - - 61,013 61,013 (2) 61,011
Other
comprehensive
income - - - - (4,499) (348) (4,847) 4 (4,843)
-------------- -------- -------- ----------- -------- ----------- --------- -------- --------------- --------
Total
comprehensive
income - - - - (4,499) 60,665 56,166 2 56,168
Cost of
share-based
payments - - - - - 2,476 2,476 - 2,476
Tax on
share-based
payment
transactions - - - - - 296 296 - 296
Exercise of
options - 20 - 2,790 - (2,790) 20 - 20
Purchase of
own shares - - - (3,606) - - (3,606) - (3,606)
Equity
dividends - - - - - (21,169) (21,169) - (21,169)
-------------- -------- -------- ----------- -------- ----------- --------- -------- --------------- --------
At 31 December
2011 9,233 3,717 74,957 (10,962) 7,638 319,152 403,735 12 403,747
-------------- -------- -------- ----------- -------- ----------- --------- -------- --------------- --------
At 1 January
2010 9,186 2,929 74,950 (9,657) 16,208 244,940 338,556 16 338,572
Profit for
the year - - - - - 50,321 50,321 (1) 50,320
Other
comprehensive
income - - - - (4,071) - (4,071) (5) (4,076)
-------------- -------- -------- ----------- -------- ----------- --------- -------- --------------- --------
Total
comprehensive
income - - - - (4,071) 50,321 46,250 (6) 46,244
Cost of
share-based
payments - - - - - 2,620 2,620 - 2,620
Deferred tax
on
share-based
payment
transactions - - - - - 789 789 - 789
Exercise of
options 46 264 - 1,563 - (1,563) 310 - 310
Issue of share
capital 8 504 - - - - 512 - 512
Purchase of
own shares - - - (2,501) - - (2,501) - (2,501)
Cancellation
of own shares (7) - 7 449 - (449) - - -
Equity
dividends - - - - - (16,984) (16,984) - (16,984)
-------------- -------- -------- ----------- -------- ----------- --------- -------- --------------- --------
At 31 December
2010 9,233 3,697 74,957 (10,146) 12,137 279,674 369,552 10 369,562
-------------- -------- -------- ----------- -------- ----------- --------- -------- --------------- --------
Consolidated cash flow statement
For the year ended 31 December 2011
2011 2010
Notes GBP'000 GBP'000
Operating activities
Profit before taxation 72,102 65,398
Net finance (income)/costs (225) 494
Depreciation 27,417 31,722
Amortisation 7,844 6,550
Impairment reversal (398) -
Share-based payments 2,476 2,620
Loss on disposal of property, plant
and equipment 545 815
Loss on disposal of intangibles 33 -
Increase in inventories (13,698) (16,400)
Increase in trade and other receivables (67,372) (3,660)
Increase in trade and other payables 87,687 46,435
Other adjustments (3) (49)
======== ========
Cash generated from operations 116,408 133,925
Income taxes paid (14,384) (11,281)
======== ========
Net cash flow from operating activities 102,024 122,644
======== ========
Investing activities
Interest received 2,316 2,284
Increase in current asset investment (10,000) -
Acquisition of subsidiaries, net
of cash acquired 8 (24,840) -
Acquisition of associate (500) -
Proceeds from sale of property, plant
and equipment 1,449 372
Purchases of property, plant and
equipment (24,181) (12,856)
Purchases of intangible assets (10,487) (12,774)
======== ========
Net cash flow from investing activities (66,243) (22,974)
======== ========
Financing activities
Interest paid (2,513) (3,200)
Dividends paid to equity shareholders
of the parent 7 (21,169) (16,984)
Proceeds from share issues 20 822
Purchase of own shares (3,606) (2,501)
Repayment of capital element of finance
leases (17,415) (20,641)
Repayment of loans (1,971) (12,622)
New borrowings - 5,957
(Decrease)/increase in factor financing (16,500) 1,568
======== ========
Net cash flow from financing activities (63,154) (47,601)
======== ========
(Decrease)/increase in cash and cash
equivalents (27,373) 52,069
Effect of exchange rates on cash
and cash equivalents (1,776) (1,090)
Cash and cash equivalents at the
beginning of the year 9 155,933 104,954
======== ========
Cash and cash equivalents at the
year-end 9 126,784 155,933
======== ========
Notes to the consolidated financial statements
For the year ended 31 December 2011
1 Authorisation of financial statements and statement of compliance with IFRS
The consolidated financial statements of Computacenter plc for
the year ended 31 December 2011 were authorised for issue in
accordance with a resolution of the Directors on 12 March 2012. The
balance sheet was signed on behalf of the Board by MJ Norris and FA
Conophy. Computacenter plc is a limited company incorporated and
domiciled in England whose shares are publicly traded.
The Group's financial statements have been prepared in
accordance with International Financial Reporting Standards
('IFRS'), as adopted by the European Union as they apply to the
financial statements of the Group for the year ended 31 December
2011 and applied in accordance with the Companies Act 2006.
2 Summary of significant accounting policies
Basis of preparation
The consolidated financial statements are presented in Sterling
and all values are rounded to the nearest thousand (GBP'000) except
when otherwise indicated.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of Computacenter plc and its subsidiaries as at 31
December each year. The financial statements of subsidiaries are
prepared for the same reporting year as the Parent Company, using
existing GAAP in each country of operation. Adjustments are made on
consolidation translating any differences that may exist between
the respective local GAAPs and IFRS.
All intra-Group balances, transactions, income and expenses and
profit and losses resulting from intra-Group transactions have been
eliminated in full.
Subsidiaries are consolidated from the date on which the Group
obtains control and cease to be consolidated from the date on which
the Group no longer retains control.
Non-controlling interests represent the portion of profit or
loss and net assets in subsidiaries that is not held by the Group
and is presented separately within equity in the consolidated
balance sheet, separately from parent shareholders' equity.
Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the
previous financial year except as follows:
The Group has adopted the following new and amended IFRS and
IFRIC interpretations during the year. Except where noted below,
adoption of these standards did not have any effect on the
financial performance or position of the Group.
IAS 24 Related Party Transactions (Amendment)
The IASB has issued an amendment to IAS 24 that clarifies the
definitions of a related party. The new definitions emphasise a
symmetrical view of related party relationships as well as
clarifying in which circumstances persons and key management
personnel affect related party relationships of an entity.
Secondly, the amendment introduces an exemption from the general
related party disclosure requirements for transactions with a
government and entities that are controlled, jointly controlled or
significantly influenced by the same government as the reporting
entity. The adoption of the amendment did not have any impact on
the financial position or performance of the Group.
IAS 32 Financial Instruments: Presentation (Amendment)
The IASB issued an amendment that alters the definition of a
financial liability in IAS 32 to enable entities to classify rights
issues and certain options or warrants as equity instruments. The
amendment is applicable if the rights are given pro rata to all of
the existing owners of the same class of an entity's non-derivative
equity instruments, to acquire a fixed number of the entity's own
equity instruments for a fixed amount in any currency. The
amendment has had no effect on the financial position or
performance of the Group because the Group does not have these type
of instruments.
IFRIC 14 Prepayments of a Minimum Funding Requirement
(Amendment)
The amendment removes an unintended consequence when an entity
is subject to minimum funding requirements and makes an early
payment of contributions to cover such requirements. The amendment
permits a prepayment of future service cost by the entity to be
recognised as a pension asset. The Group is not subject to minimum
funding requirements in Euroland, therefore the amendment of the
interpretation has no effect on the financial position nor
performance of the Group.
Improvements to IFRS
In May 2010, the IASB issued its third omnibus of amendments to
its standards, primarily with a view to removing inconsistencies
and clarifying wording. There are separate transitional provisions
for each standard. The adoption of the following amendments
resulted in changes to accounting policies, but no impact on the
financial position or performance of the Group.
IAS 1 Presentation of Financial Statements: The amendment
clarifies that an entity may present an analysis of each component
of other comprehensive income maybe either in the statement of
changes in equity or in the notes to the financial statements.
Other amendments resulting from improvements to IFRSs to the
following standards did not have any impact on the accounting
policies, financial position or performance of the Group:
IFRS 3 Business Combinations: The measurement options available
for non-controlling interest (NCI)
IFRS 3 Business Combinations (Contingent consideration arising
from business combination prior to adoption of IFRS 3 (as revised
in 2008))
IFRS 3 Business Combinations (Un-replaced and voluntarily
replaced share-based payment awards)
IFRS 7 Financial Instruments - Disclosures
IAS 27 Consolidated and Separate Financial Statements
IAS 34 Interim Financial Statements
The following interpretation and amendments to interpretations
did not have any impact on the accounting policies, financial
position or performance of the Group:
IFRIC 13 Customer Loyalty Programmes(determining the fair value
of award credits)
IFRIC 19 Extinguishing Financial Liabilities with Equity
Instruments
The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
Standards issued but not yet effective
Standards issued but not yet effective up to the date of
issuance of the Group's financial statements that the Group
reasonably expects to have an impact on disclosures, financial
position or performance when applied at a future date are listed
below. The Group intends to adopt these standards when they become
effective.
IAS 1 Financial Statement Presentation - Presentation of Items
of Other Comprehensive income
IFRS 9 Financial Instruments: Classification and Measurment
IFRS 10 Consolidated Financial Statements
IFRS 12 Disclosure of Involvement with Other Entities
IFRS 13 Fair Value Measurement
3 Segmental analysis
For management purposes, the Group is organised into
geographical segments and the management thereof. The Group's
business in each geography is managed separately and can constitute
several separate statutory entities.
No operating segments have been aggregated to form the below
reportable operating segments.
Management monitor the operating results of its geographical
segments separately for the purposes of making decisions about
resource allocation and performance assessment. Segment performance
is evaluated based on adjusted operating profit or loss which is
measured differently from operating profit or loss in the
consolidated financial statements. At a Group level however,
management measure performance on adjusted profit before tax.
Adjusted operating profit or loss takes account of the interest
paid on customer specific financing ('CSF') which management
consider to be a cost of sale for management reporting purposes.
Excluded from adjusted operating profit is the amortisation of
acquired intangibles and exceptional items as management do not
consider these items when reviewing the underlying performance of a
segment.
Restatement and classification of costs
In the prior year consolidated financial statements,
distribution costs were shown below gross profit, however,
management monitor the performance of the business by including
such costs within gross profit, and reports accordingly to the
Chief Operating Decision Maker. As a result, these costs have been
included in cost of sales in 2011, and 2010 has been restated
accordingly.
From 1 January 2011, the management of Computacenter Luxembourg
has been transferred from Belgium to Germany. As a consequence, CC
Luxembourg is reported as part of the German segment. The
comparative segmental information has been restated to reflect this
change. An adjusted operating loss of GBP820,343 has been
reclassified from the Belgium segment to the Germany segment in the
2010 comparative information.
Following our ERP implementation in the UK and Germany, the
Group has been able to further align its structure and therefore
how it classifies departmental costs between cost of sales and
administrative expenses. The Group estimates that the net impact of
these changes, principally related to pre-sales costs in Germany,
has resulted in approximately GBP7m costs being reported in
administrative expenses in 2011 that were previously reported in
cost of sales in 2010. This represents the Group's best estimate of
the impact of the changes made in the 2011 reported results. 2010
has not been restated to reflect this change.
Segmental performance for the years ended 31 December 2011 and
2010 was as follows:
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========== ========== ======== ======== ==========
For the year ended 31
December 2011
Revenue 1,102,184 1,228,574 478,583 42,962 2,852,303
========== ========== ======== ======== ==========
Results
Adjusted gross profit 167,305 157,355 50,636 4,610 379,906
Adjusted net operating
expenses (130,040) (129,633) (44,651) (3,053) (307,377)
========== ========== ======== ======== ==========
Adjusted segment operating
profit 37,265 27,722 5,985 1,557 72,529
========== ========== ======== ========
Adjusted net interest 1,690
==========
Adjusted profit before
tax 74,219
==========
Other segment information
Capital expenditure:
========== ========== ======== ======== ==========
Property, plant and equipment 18,403 19,034 1,136 136 38,709
Goodwill and acquired
intangible assets - 10,074 14,629 - 24,703
Software 8,951 1,428 108 - 10,487
========== ========== ======== ======== ==========
Depreciation 15,783 11,153 410 71 27,417
Amortisation of software 2,886 2,879 93 - 5,858
Amortisation of acquired
intangible assets 481 765 740 - 1,986
Impairment reversal - - (398) - (398)
Share-based payments 1,842 471 163 - 2,476
========== ========== ======== ======== ==========
Restated Restated Restated Restated Restated
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========= ========= ======== ======== =========
For the year ended 31
December 2010
Revenue 1,265,431 1,008,889 359,611 42,564 2,676,495
========= ========= ======== ======== =========
Results
Adjusted gross profit 177,545 128,949 35,238 3,256 344,988
Adjusted net operating
expenses (134,208) (109,272) (34,248) (2,833) (280,561)
========= ========= ======== ======== =========
Adjusted segment operating
profit 43,337 19,677 990 423 64,427
========= ========= ======== ========
Adjusted net interest 1,626
=========
Adjusted profit before
tax 66,053
=========
Other segment information
Capital expenditure:
========= ========= ======== ======== =========
Property, plant and equipment 10,552 5,967 491 108 17,118
Software 11,935 701 138 - 12,774
========= ========= ======== ======== =========
Depreciation 21,142 9,971 491 118 31,722
Amortisation of software 3,591 2,072 138 - 5,801
Amortisation of acquired
intangible assets 482 267 - - 749
Share-based payments 1,918 489 213 - 2,620
========= ========= ======== ======== =========
Reconciliation of adjusted results
Management review adjusted measures of performance as shown in
the tables above. Adjusted profit before tax excludes exceptional
items and the amortisation of acquired intangibles as shown
below:
2011 2010
GBP'000 GBP'000
======== ========
Adjusted profit before tax 74,219 66,053
Amortisation of acquired intangibles (1,986) (655)
Exceptional items (131) -
======== ========
Profit before tax 72,102 65,398
======== ========
Management also review adjusted measures for gross profit,
operating expenses, operating profit and net interest, which in
addition takes account of interest costs of CSF within cost of
sales (as these are considered to form part of the gross profit
performance of a contract). The reconciliation for adjusted
operating profit to operating profit, as disclosed in the
Consolidated Income Statement, is as follows:
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======== ======== ======== ======== ========
For the year ended 31
December 2011
Adjusted segment operating
profit 37,265 27,722 5,985 1,557 72,529
Add back interest on CSF 585 880 - - 1,465
Amortisation of acquired
intangibles (481) (764) (741) - (1,986)
Exceptional items (656) (82) 607 - (131)
======== ======== ======== ======== ========
Segment operating profit 36,713 27,756 5,851 1,557 71,877
======== ======== ======== ======== ========
For the year ended 31
December 2010
Adjusted segment operating
profit 43,337 19,677 990 423 64,427
Add back interest on CSF 1,442 678 - - 2,120
Amortisation of acquired
intangibles (519) (136) - - (655)
======== ======== ======== ======== ========
Segment operating profit 44,260 20,219 990 423 65,892
======== ======== ======== ======== ========
Sources of revenue
Within each geographical segment the Group has three sources of
revenue, which are aggregated and shown in the table below. The
sale of goods is recorded within Supply chain revenues and the
rendering of services is split into Professional and Support and
Managed Services.
2011 2010
GBP'000 GBP'000
========= ==========
Sources of revenue
Total supply chain revenue 2,015,582 1,888,362
Services revenue
Professional services 216,906 192,448
Support and managed services 619,815 595,685
========= ==========
Total services revenue 836,721 788,133
========= ==========
Total revenue 2,852,303 2,676,495
========= ==========
Information about major customers
Included in revenues arising from the UK segment are revenues of
approximately GBP254 million (2010: GBP311 million) which arose
from sales to the Group's largest customer. For the purposes of
this disclosure a single customer is considered to be a group of
entities known to be under common control. This customer consists
of entities under control of the UK Government, and includes the
Group's revenues with central government, local government and
certain government controlled banking institutions.
4 Exceptional items
2011 2010
GBP'000 GBP'000
Operating profit
Acquisition related costs (999) -
Deferred consideration reversed 868 -
======== ========
(131) -
======== ========
Income tax
Exceptional tax items 4,427 -
Tax on exceptional items included in operating
profit 174 -
======== ========
4,601 -
======== ========
Exceptional items after taxation 4,470 -
======== ========
Included within the current year are:
-- acquistion related costs of GBP1.0 million (2010: GBPnil),
incurred in the period for both successful and aborted
acquisitions. This cost comprised of consultancy, legal and
professional and tax fees regarding the acquisitions; and
-- due to circumstances arising after the acquisition date, the
performance criteria required to trigger deferred consideration of
EUR1.0 million that were previously expected to be achieved, were
not met. As a result, the deferred consideration liability
recognised has been reversed, with the gain in the income statement
disclosed as an exceptional item.
The exceptional income tax credit for the year comprises two
items which, due to their size are disclosed separately as
follows:
-- the deferred tax asset in respect of losses in Germany was
re-assessed in line with management's view of the entity's future
performance. Where the reassessment exceeds the losses utilised in
the year, the change in the recoverable amount of the deferred tax
asset is shown as an exceptional item.
-- a deferred tax asset in respect of losses in France was recognised for the first time.
The income statement impact of both items has been shown as an
exceptional tax item.
5 Income tax
a) Tax on profit on ordinary activities
2011 2010
GBP'000 GBP'000
======== ========
Tax charged in the income statement
Current income tax
UK corporation tax 10,484 12,917
Foreign tax 5,122 3,306
Adjustments in respect of prior periods (1,425) (1,682)
======== ========
Total current income tax 14,181 14,541
======== ========
Deferred tax
Origination and reversal of temporary differences 294 (2,312)
Exceptional changes in recoverable amounts
of deferred tax assets (4,427) -
Adjustments in respect of prior periods 1,043 2,849
======== ========
Total deferred tax (3,090) 537
======== ========
Tax charge in the income statement 11,091 15,078
======== ========
b) Reconciliation of the total tax charge
2011 2010
GBP'000 GBP'000
======== ========
Accounting profit before income tax 72,102 65,398
At the UK standard rate of corporation
tax of 26.5 per cent (2010: 28.0 per cent) 19,107 18,311
Expenses not deductible for tax purposes 869 537
Non-deductible element of share-based payment
charge 168 490
Relief on share option gains (20) (607)
Adjustments in respect of current income
tax of previous periods (382) 1,167
Higher tax on overseas earnings 284 110
Other differences 697 1,010
Effect of changes in tax rate 270 197
Utilisation of previously unrecognised
deferred tax assets (6,834) (7,046)
Exceptional changes in recoverable amounts
of deferred tax assets (4,427) -
Overseas tax not based on earnings 1,359 909
======== ========
At effective income tax rate of 15.4 per
cent (2010: 23.1 per cent) 11,091 15,078
======== ========
There are no income tax consequences attaching to the payment of
dividends by the Group to its shareholders.
c) Tax losses
Deferred tax assets of GBP15.4 million (2010: GBP11.3 million)
have been recognised in respect of losses carried forward.
In addition, at 31 December 2011, there were unused tax losses
across the Group of GBP125.6 million (2010: GBP171.2 million) for
which no deferred tax asset has been recognised. Of these losses,
GBP68.5 million (2010: GBP99.4 million) arise in Germany, albeit a
significant proportion have been generated in statutory entities
that no longer have significant levels of trade. The remaining
unrecognised tax losses relate to other loss-making overseas
subsidiaries.
d) Deferred tax
Deferred income tax at 31 December relates to the following:
Consolidated Consolidated
balance sheet income statement
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
======== ======== ========= ========
Deferred income tax liabilities
Accelerated capital allowances 653 922 (269) (752)
Revaluations of foreign exchange
contracts to fair value 74 56 18 56
Effect of changes in tax rate
on opening liability - - (234) (45)
Arising on acquisition 2,581 - (244) -
======== ========
Gross deferred income tax liabilities 3,308 978
======== ========
Deferred income tax assets
Relief on share option gains 1,465 2,266 207 (568)
Other temporary differences 699 2,049 1,504 1,478
Effect of changes in tax rate
on opening asset - - 153 234
Revaluations of foreign exchange
contracts to fair value 116 - - (27)
Losses available for offset
against future taxable income 15,420 11,262 (4,225) 161
======== ========
Gross deferred income tax assets 17,700 15,577
======== ======== ========= ========
Deferred income tax charge (3,090) 537
========= ========
Net deferred income tax asset 14,392 14,599
======== ========
Disclosed on the balance sheet
Deferred income tax asset 15,928 15,577
Deferred income tax liability (1,536) (978)
======== ========
Net deferred income tax asset 14,392 14,599
======== ========
At 31 December 2011, there was no recognised or unrecognised
deferred income tax liability (2010: GBPnil) for taxes that would
be payable on the unremitted earnings of the Group's subsidiaries
as the Group expects that future remittances of earnings from its
overseas subsidiaries will be covered by the UK dividend
exemption.
e) Impact of rate change
The main rate of UK Corporation tax was reduced to 26 per cent
from 1 April 2011. Finance Act 2011 further reduced the main rate
of UK Corporation tax to 25 per cent from 1 April 2012. Deferred
tax has been restated accordingly in these financial
statements.
Additional changes to the main rate of UK Corporation Tax are
proposed, to reduce the rate by 1 per cent per annum to 23 per cent
by 1 April 2014. These changes had not been substantively enacted
at the balance sheet date and consequently are not included in
these financial statements. The effect of these proposed reductions
would be to reduce the UK net deferred tax asset by GBP0.1m.
6 Earnings per Ordinary Share
Earnings per share ('EPS') amounts are calculated by dividing
profit attributable to ordinary equity holders by the weighted
average number of Ordinary Shares outstanding during the year
(excluding own shares held).
Diluted earnings per share amounts are calculated by dividing
profit attributable to ordinary equity holders by the weighted
averagenumber of Ordinary Shares outstanding during the year
(excluding own shares held) adjusted for the effect of dilutive
options.
Adjusted basic and adjusted diluted EPS are presented to provide
more comparable and representative information. Accordingly the
adjusted basic and adjusted diluted EPS figures exclude
amortisation of acquired intangibles and exceptional items.
2011 2010
GBP'000 GBP'000
======== ========
Profit attributable to equity holders of
the parent 61,013 50,321
Amortisation of acquired intangibles 1,986 655
Tax on amortisation of acquired intangibles (433) (187)
Exceptional items within operating profit 131 -
Tax on exceptional items included in operating
profit (174) -
Exceptional tax items (4,427) -
======== ========
Profit before amortisation of acquired
intangibles and exceptional items 58,096 50,789
======== ========
2011 2010
000's 000's
======= =======
Basic weighted average number of shares
(excluding own shares held) 148,793 147,752
Effect of dilution:
Share options 6,639 6,370
======= =======
Diluted weighted average number of shares 155,432 154,122
======= =======
2011 2010
pence pence
====== ======
Basic earnings per share 41.0 34.1
Diluted earnings per share 39.3 32.6
Adjusted basic earnings per share 39.0 34.4
Adjusted diluted earnings per share 37.4 33.0
====== ======
7 Dividends paid and proposed
2011 2010
GBP'000 GBP'000
Declared and paid during the year:
Equity dividends on Ordinary Shares:
Final dividend for 2010: 9.7 pence (2009:
nil pence) 14,460 -
Interim dividend for 2011: 4.5 pence (2010:
3.5 pence) 6,709 5,173
Additional interim dividend for 2010: nil
pence (2009: 8.0 pence) - 11,811
======== ========
21,169 16,984
======== ========
Proposed (not recognised as a liability
as at 31 December)
Equity dividends on Ordinary Shares:
Final dividend for 2011: 10.5 pence (2010:
9.7 pence) 16,157 14,926
======== ========
8 Business combinations
Top Info SAS ('Top Info')
On 1 April 2011 the Group acquired 100 per cent of the voting
shares of Top Info SAS for an initial consideration of EUR37.7
million and a maximum deferred consideration of EUR1.0 million
dependant on performance in 2011, on a debt free basis. The net
book value of the assets acquired included EUR18.7 million of net
cash and short-term deposits. The costs of acquisition amounted to
EUR301,000 and are included in the income statement as an
exceptional item. Top Info SAS is based in France and is an
information technology reseller of hardware, software and services.
The acquisition has been accounted for using the purchase method of
accounting. The 2011 consolidated financial statements include the
results of Top Info for the period from the acquisition date.
The book and provisional fair values of the net assets at date
of acquisition were as follows:
2011
Provisional
2011 fair
Book value
value to Group
GBP'000 GBP'000
Intangible assets
Comprising:
Existing customer relationships - 5,019
======== ============
Total intangible assets - 5,019
Property, plant and equipment 125 125
Inventories 1,203 3,125
Trade and other receivables 22,146 19,564
Prepayments 324 324
Cash and short-term deposits 16,511 16,511
Trade and other payables (18,031) (18,044)
Deferred income (328) (328)
Deferred tax liability - (1,706)
======== ============
Net assets 21,950 24,590
Goodwill arising on acquisition 9,610
============
34,200
============
Discharged by:
Cash paid 33,317
Deferred consideration 883
============
34,200
============
Cash and cash equivalents acquired
Cash and short-term deposits (16,511)
============
Cash outflow on acquisition 17,689
============
From the date of acquisition to 31 December 2011, Top Info
contributed GBP 90,659,300 to the Group's revenue and GBP1,975,294
to the Group's profit after tax.
The provisional fair values include adjustments to the book
values to recognise differences in accounting policies between Top
Info and the Group principally relating to revenue recognition, the
principal effect of which is a reclassification from trade
receivables to inventory.
Included in the GBP9,610,000 of goodwill that arose on
acquisition are certain intangible assets that cannot be
individually separated and reliably measured from the acquiree due
to their nature. These items include the expected value of
synergies and an assembled workforce.
Deferred consideration
Due to circumstances arising after the acquisition date, the
performance criteria required to trigger deferred consideration of
EUR1.0 million that were previously expected to be achieved, were
not met. As a result, the deferred consideration liability
recognised has been reversed, with the gain in the income statement
disclosed as an exceptional item.
HSD Consult GmbH ('HSD')
On 11 April 2011 the Group acquired 100 per cent of the voting
shares of HSD Consult GmbH for an initial consideration of EUR4.9
million and a deferred consideration of EUR0.5 million dependant on
certain performance conditions in 2011. The costs of acquisition
amounted to EUR94,000 and are included in the income statement as
an exceptional item. HSD is based in Germany and is an Apple
Integrator. The acquisition has been accounted for using the
purchase method of accounting. The 2011 consolidated financial
statements include the results of HSD for the period from the
acquisition date.
The book and provisional fair values of the net assets acquired
were as follows:
2011
Provisional
2011 fair
Book value
value to Group
GBP'000 GBP'000
======== ============
Intangible assets
Comprising:
Existing customer relationships 36 402
Other intangibles 46 46
======== ============
Total intangible assets 82 448
Property, plant and equipment 146 146
Inventories 940 940
Trade and other receivables 2,140 2,140
Cash and short-term deposits 190 190
Trade and other payables (2,726) (2,726)
Deferred tax liabilities - (110)
======== ============
Net assets 772 1,028
Goodwill arising on acquisition 3,738
============
4,766
============
Discharged by:
Cash paid 4,325
Deferred consideration 441
============
4,766
============
Cash and cash equivalents acquired
Cash and short-term deposits (190)
============
Cash outflow on acquisition 4,576
============
From the date of acquisition to 31 December 2011, HSD
contributed GBP 21,649,488 to the Group's revenue and GBP251,826 to
the Group's profit after tax.
There were no differences between the provisional fair values
and the book values at acquisition other than the recognition of
intangible assets at acquisition and the related deferred tax
liabilities.
Included in the GBP3,738,000 of goodwill that arose on
acquisition are certain intangible assets that cannot be
individually separated and reliably measured from the acquiree due
to their nature. These items include the expected value of
synergies and an assembled workforce.
Deferred consideration
The criteria required to trigger the further payment for the HSD
business have been met. Accordingly, the full deferred
consideration was recognised as at 31 December 2011 in the
provisional fair value to the Group.
Damax AG ("Damax")
On 21 July 2011, the Group acquired 80 per cent of Damax AG in
Switzerland for an initial consideration of 7.2 million CHF, and
agreed to purchase the remaining 20 per cent by mid 2015 for a
maximum consideration of 3.2 million CHF dependent upon the
achievement of agreed performance criteria over the next three and
a half years. Due to the nature of the transaction, that the Group
has present access to the benefits associated with the remaining 20
per cent of Damax, the Group has recorded this acquisition as a
linked transaction, and has accordingly consolidated 100 per cent
of the results of Damax since the acquisition date and estimated
the fair value of the deferred consideration payable. The costs of
acquisition amounted to GBP221,000 and are included in the income
statement as an exceptional item. Damax is based in Switzerland and
is a Swiss IT service provider. The acquisition has been accounted
for using the purchase method of accounting.
The book and provisional fair values of the net assets acquired
were as follows:
2011
Provisional
2011 fair
Book value
value to Group
GBP'000 GBP'000
======== ============
Intangible assets
Comprising:
Existing customer relationships - 4,974
======== ============
Total intangible assets - 4,974
Property, plant and equipment 49 49
Inventories 26 26
Trade and other receivables 4,303 4,303
Cash at bank 1,491 1,491
Trade and other payables (3,824) (3,824)
Deferred tax liabilities - (1,045)
======== ============
Net assets 2,045 5,974
Goodwill arising on acquisition 996
============
6,970
============
Discharged by:
Cash 5,390
Deferred consideration 1,580
============
6,970
============
Cash and cash equivalents acquired
Cash and short-term deposits (1,491)
============
Cash outflow on acquisition 5,479
============
From the date of acquisition to 31 December 2011, Damax
contributed GBP3,825,496 to the Group's revenue and GBP1,729,624 to
the Group's profit after tax.
There were no differences between the provisional fair values
and the book values at acquisition other than the recognition of
intangible assets at acquisition and the related deferred tax
liabilities.
Included in the GBP996,000 of goodwill that arose on acquisition
are certain intangible assets that cannot be individually separated
and reliably measured from the acquiree due to their nature. These
items include the expected value of synergies and an assembled
workforce.
Deferred consideration
Based on the performance of the business in 2011 and the
forecasted performance for the next 3 years, management's
assessment is that it is highly probable that the maximum deferred
consideration will become payable and accordingly it has been
included in the provisional fair value to the Group.
If the acquisition of Top Info, HSD and Damax had taken place at
the beginning of 2011, Group revenues for the period ended 31
December 2011 would have been GBP 2,895,960,399 and profit after
tax would have been GBP62,976,417.
9 Analysis of changes in net funds
At 1 Cash At
January flows Non-cash Exchange 31 December
2011 in year flow differences 2011
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======== ======== ======== ============ ============
Cash and short-term deposits 159,269 (29,014) - (1,818) 128,437
Bank overdraft (3,336) 1,641 - 42 (1,653)
======== ======== ======== ============ ============
Cash and cash equivalents 155,933 (27,373) - (1,776) 126,784
Current asset investment - 10,000 - - 10,000
Factor financing (16,494) 16,500 - (6) -
======== ======== ======== ============ ============
Net funds excluding customer
specific financing 139,439 (873) - (1,782) 136,784
Customer specific finance
leases (24,894) 17,415 (14,528) 383 (21,624)
Customer specific other
loans (3,532) 1,971 - 37 (1,524)
======== ======== ======== ============ ============
Total customer specific
financing (28,426) 19,386 (14,528) 420 (23,148)
======== ======== ======== ============ ============
Net funds 111,013 18,513 (14,528) (1,362) 113,636
======== ======== ======== ============ ============
At 1 Cash At
January flows Non-cash Exchange 31 December
2010 in year flow differences 2010
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======== ======== ======== ============ ============
Cash and short-term deposits 108,017 52,452 - (1,200) 159,269
Bank overdraft (3,063) (383) - 110 (3,336)
======== ======== ======== ============ ============
Cash and cash equivalents 104,954 52,069 - (1,090) 155,933
Other loans and leases
non-CSF (3,705) 3,705 - - -
Factor financing (14,846) (1,568) - (80) (16,494)
======== ======== ======== ============ ============
Net funds excluding customer
specific financing 86,403 54,206 - (1,170) 139,439
Customer specific finance
leases (42,567) 20,641 (3,468) 500 (24,894)
Customer specific other
loans (6,488) 2,960 - (4) (3,532)
======== ======== ======== ============ ============
Total customer specific
financing (49,055) 23,601 (3,468) 496 (28,426)
======== ======== ======== ============ ============
Net funds 37,348 77,807 (3,468) (674) 111,013
======== ======== ======== ============ ============
10 Adjusted management cash flow statement
The adjusted management cash flow has been provided to explain
how management view the cash performance of the business. The
primary differences to this presentation compared to the statutory
cash flow statement are as follows:
1) Factor financing and current asset investment, where cash is
placed on deposit but is not available on demand, is not included
within the statutory definition of cash and cash equivalents, but
operationally is managed within the total net funds/borrowings of
the businesses; and
2) Items relating to customer specific financing are adjusted
for as follows:
a. Interest paid on customer specific financing is reclassified
from interest paid to adjusted operating profit; and
b. Where customer specific assets are financed by finance leases
and the liabilities are matched by future amounts receivable under
customer operating lease rentals, the depreciation of leased assets
and the repayment of the capital element of finance leases are
offset within net working capital; and
c. Where assets are financed by loans and the liabilities are
matched by amounts receivable under customer operating lease
rentals, the movement on loans within financing activities is
offset within working capital.
3) Net funds excluding CSF is stated inclusive of current asset
investments. Current asset investments consists of a deposit held
for a term of greater than 3 months from the date of deposit which
is available to the Group with 30 days notice. The fair value of
the current asset investment as at 31 December 2011 is not
materially different to the carrying value.
2011 2010
GBP'000 GBP'000
Adjusted profit before taxation 74,219 66,053
Net finance income (1,690) (1,626)
Depreciation and amortisation 20,596 19,506
Share-based payment 2,476 2,620
Working capital movements 281 21,358
Other adjustments (358) 293
======== ========
Adjusted operating cash inflow 95,524 108,204
Net interest received 1,268 1,204
Income taxes paid (14,384) (11,281)
Capital expenditure and disposals (33,186) (25,258)
Acquisitions and disposals (25,340) -
Equity dividends paid (21,169) (16,984)
======== ========
Cash inflow before financing 2,713 55,885
Financing
Proceeds from issue of shares 20 822
Purchase of own shares (3,606) (2,501)
======== ========
(Decrease)/increase in net funds excluding
CSF in the period (873) 54,206
======== ========
(Decrease)/increase in net funds excluding
CSF (873) 54,206
Effect of exchange rates on net funds excluding
CSF (1,782) (1,170)
Net funds excluding CSF at beginning of
period 139,439 86,403
======== ========
Net funds excluding CSF at end of period 136,784 139,439
======== ========
11 Related party transactions
During the year the Group entered into transactions, in the
ordinary course of business, with related parties. Transactions
entered into are as described below:
Biomni provides the Computacenter e-procurement system used by
many of Computacenter's major customers. An annual fee has been
agreed on a commercial basis for use of the software for each
installation. Both PJ Ogden and PW Hulme are Directors of and have
a material interest in Biomni Limited.
The table below provides the total amount of transactions that
have been entered into with related parties for the relevant
financial year:
Amounts Amounts
Sales Purchases owed owed
to from by to
related related related related
parties parties parties parties
GBP'000 GBP'000 GBP'000 GBP'000
======== ========= ======== ========
Biomni Limited 24 519 - 5
======== ========= ======== ========
Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made on terms
equivalent to those that prevail in arm's length transactions.
Outstanding balances at the year-end are unsecured and settlement
occurs in cash. There have been no guarantees provided or received
for any related party receivables. The Group has not recognised any
provision for doubtful debts relating to amounts owed by related
parties. This assessment is undertaken each financial year through
examining the financial position of the related party and the
market in which the related party operates.
12. Publication of non-statutory accounts
The financial information in the preliminary statement of
results does not constitute the Group's statutory accounts for the
year ended 31 December 2011 but is derived from those accounts and
the accompanying Directors' report. Statutory accounts for the year
ended 31 December 2011 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting. The
auditors have reported on those accounts; their report was
unqualified and did not contain statements under Section 498 (2) or
Section 498 (3) of the Companies Act 2006.
The financial statements, and this preliminary statement, of the
Group for the year ended 31 December 2011 were authorised for issue
by the Board of Directors on 12 March 2012 and the balance sheet
was signed on behalf of the Board by MJ Norris and FA Conophy.
The statutory accounts have been delivered to the Registrar of
Companies in respect of the year ended 31 December 2010. The report
of the auditors was unqualified and did not contain statements
under Section 498 (2) or Section 498 (3) of the Companies Act
2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BIGDXDSBBGDD
Computacenter (LSE:CCC)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Computacenter (LSE:CCC)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024
