TIDMCCC
RNS Number : 6612C
Computacenter PLC
10 March 2011
Computacenter plc
Final results announcement
Computacenter plc, the European IT infrastructure services
provider, today announces final results for the twelve months ended
31 December 2010.
"Another year of strong progress"
FINANCIAL HIGHLIGHTS
Underlying performance
-- Ongoing^ revenues increased 10.7% to GBP2.68 billion (2009:
GBP2.42 billion)
-- Adjusted* profit before tax increased 21.8% to GBP66.1
million (2009: GBP54.2 million)
-- Adjusted* diluted earnings per share ('EPS') increased 19.1%
to 33.0 pence (2009: 27.7 pence)
-- Total dividend for 2010 of 13.2 pence per share (2009: 11.0
pence)
-- Net cash prior to customer specific financing (CSF) was
GBP139.4 million (2009: GBP86.4 million)
Statutory Performance
-- Group revenues increased 6.9% to GBP2.68 billion (2009:
GBP2.50 billion)
-- Profit before tax increased 35.1% to GBP65.4 million to
(2009: GBP48.4 million)
-- Diluted EPS increased by 30.9% to 32.6 pence (2009: 24.9
pence)
-- Net cash after CSF of GBP111.0 million (2009: GBP37.3
million)
OPERATING HIGHLIGHTS
-- Revenues improved significantly in all our major
geographies
-- Ongoing^ Group product revenue grew markedly, up 12.5% (14.7%
in constant currency) as a result of strong customer demand for
upgraded and improved IT infrastructure
-- Our Group annual services contract base grew over 7.1% (9.3%
in constant currency) to GBP539.4 million (2009: GBP503.6 million)
in excess of market growth predictions(#)
-- Our Group-wide ERP project remains on track with a successful
migration onto the new platform in Germany
-- On 15 February 2011 we announced, subject to the approval of
the French Competition Board, our agreement to acquire Top Info for
an initial debt free cash consideration of EUR21 million
-- Launch of C(3) Mail, the first in a suite of cloud based
offerings
Mike Norris, Chief Executive of Computacenter plc,
commented:
"Computacenter has delivered another strong set of results with
increased profits, EPS, dividends and an improved cash position. We
have delivered in excess of 20% compound annual EPS growth over the
last four years.
Over the last two years, we have done much to identify those
areas where we have competitive advantage and for which there is
market appetite. We believe that this is where our future success
lies.
We believe that 2011, as a whole, will be a year of continuing
improvement for Computacenter's performance. We are encouraged by
end user demand for new technology which is driving the requirement
for investment in corporate IT infrastructure, helped by economic
improvement within our customers' markets. Our services market
place continues to grow, albeit at a modest pace, but we feel
increasingly confident about our ability to continue to outperform
the market."
* Adjusted for exceptional items and amortisation of acquired
intangibles.
(#) Source: Gartner
^ Ongoing revenues exclude revenues from the disposed Trade
Distribution business
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
Lucy Legh
www.tulchangroup.com
Chairman's statement
2010 was another year of strong progress for our Company.
Adjusted* profit before tax once more grew by more than 20 per
cent. It is worth noting that Computacenter has delivered greater
that 20 per cent compound annual growth in earnings per share over
the last four years. We gained market share and grew our services
revenues by 6.5 per cent. The German business showed great
resilience in recovering from a poor first quarter, and our French
business became profitable again. We are pleased with this
performance, not least because it came as a result of the execution
of our strategy, rather than simply as a result of an improving
economic backdrop.
If 2009 was about cost and expense reduction and simplifying our
structure, then 2010 showed disciplined sales and service delivery.
Pleasing as it was, this only confirms that we have the opportunity
to do much more in growing share in our chosen markets and
improving our profitability in a sustainable way.
In 2011 we will continue to invest in our infrastructure, our
talents and skills as well as enhancing our customers' experience.
We are on course to successfully implement a single Group-wide ERP
system, the major benefits of which will not manifest themselves
until 2012 and beyond. Our efforts to 'industrialise' our services
are already showing margin improvement and better customer
satisfaction and are designed to create long-term competitive
advantage. The services contract base upon which these improvements
operate, grew by more than seven per cent in 2010 and the benefits
will increase as time passes. We will continue our relentless focus
on cost and expense management while supporting these significant
investments.
This year marks the 30(th) anniversary of the founding of
Computacenter. Since then the Company has grown considerably in
size and this evolution has required Computacenter to adapt to the
ever changing legislative environment. We have in place a
governance framework, aligned to the principles of the UK Corporate
Governance Code, not simply because we must do so, but rather
because it is the right thing to do. In this regard, I give you my
commitment to uphold the merits of the Code, as it applies to
Computacenter.
I thank all of our employees for their efforts and our customers
for their business. We have much to do in 2011, on our journey of
continuous improvement, to achieve our potential.
Greg Lock
Chairman
*Adjusted profit before tax and EPS is stated prior to
amortisation of acquired intangibles and exceptional items.
Operating review
Group Overview
Computacenter has again delivered a strong profit performance in
2010. Group adjusted* profit before tax grew by 21.8 per cent to
GBP66.1 million (2009: GBP54.2 million). The Group's adjusted*
diluted earnings per share (EPS) grew by 19.1 per cent to 33.0
pence (2009: 27.7 pence), primarily due to this increase in
profitability. We have delivered in excess of 20 per cent compound
annual EPS growth over the last four years.
On a statutory basis, taking into account amortisation of
acquired intangibles and exceptional items, Group profit before tax
increased by 35.1 per cent to GBP65.4 million (2009: GBP48.4
million) and diluted EPS increased by 30.9 per cent to 32.6 pence
(2009: 24.9 pence).
Group revenue, as reported, increased in 2010 by 6.9 per cent to
GBP2.68 billion (2009: GBP2.50 billion). After the significant
product revenue decline experienced in 2009, during 2010 customers
embarked on refreshing, upgrading and improving their IT
infrastructures. This resulted in strong Group product revenue
growth of 12.5 per cent, or 14.7 per cent in constant currency,
excluding the effect of the CCD disposal towards the end of 2009,
but including the acquisitions made late in 2009. This growth was
achieved steadily over the year as a whole and we also believe
that, subject to performance of the overall macroeconomic
conditions, growth should continue during 2011.
Group services revenue, as reported, increased by 6.5 per cent
and 8.7 per cent in constant currency. Different to the product
revenue growth, the services revenue growth was achieved, as
expected, largely during the second half of 2010. Particularly
pleasing, as this is fundamental to the long-term success of
Computacenter, is that the annual services contract base at
December 2010, has increased by 7.1 per cent on the services
contract base level at December 2009 and 9.3 per cent in constant
currency. This leaves us confident that Computacenter continues to
meet the IT investment needs of our customers and is evidence that
our customers rely on Computacenter to help them in reducing their
operating costs, over the longer term. The Group annual services
contract base stood at GBP539.4 million at the end of the year
(2009: GBP503.6 million).
In 2009, we reduced operating expenses ('SG&A') by over
GBP30 million in constant currency and the increase gained in
operational leverage has in no small way contributed to these
encouraging results. Furthermore, the early indication of improving
corporate capital expenditure, first detected some 12 months ago,
has persisted, to the extent that we have now gained a high level
of confidence that Computacenter's progress is sustainable and not
of a short-term nature. The Group incurred no exceptional costs
during 2010 and this should, in all likelihood, continue until the
ERP benefits start being realised.
Our balance sheet has further strengthened considerably. At the
end of the year, net cash prior to customer specific financing
(CSF) was GBP139.4 million (2009: net cash of GBP86.4 million).
Including CSF, net funds were GBP111.0 million (2009: GBP37.3
million). This material improvement in our cash position was
primarily due to increased profitability and prudent working
capital management, which we believe, is largely sustainable.
However, the figures are flattered by approximately GBP38 million
(2009: GBP30 million) with the continuation of extended credit
terms from one of our major vendors, which have been made available
to all of their business partners. These terms could return to
normal in the second half of 2011.
The Board has decided to recommend a final dividend of 9.7
pence, bringing the total dividend paid for 2010 to 13.2 pence,
representing a 20 per cent increase on the 2009 total dividend paid
of 11.0 pence. The increase in dividend is broadly consistent with
our stated policy of maintaining dividend cover within our target
range of 2 to 2.5 times. Subject to the approval by shareholders at
the Annual General Meeting (AGM) on 13 May 2011, the proposed
dividend will be paid on 10 June 2011 to shareholders on the
register as at 13 May 2011.
Our offerings continue to gain momentum in the market, as
customers choose to outsource IT infrastructure support
selectively, rather than opting for a comprehensive IT outsourcing
contract or undertaking the work in-house. Service desk offshoring
remains an attractive offering and we continue to invest in the
expansion of this resource. We currently employ in excess of 750
staff, outside of the UK, Germany and France, primarily within our
multi-language service desk in Barcelona and for an English
speaking desk in Cape Town. These facilities are making significant
contributions towards fuelling the growth in contractual services,
through addressing the increased demand from customers for global
and multi-lingual service delivery.
Over the last two years, we have done much to identify those
Computacenter offerings, where we have competitive advantage and
for which there is market appetite. We believe that this is where
our future success lies and our focus is on repeating delivery of
these offerings, in an efficient and high quality manner. We are
investing into tools and processes, which support repetitive
delivery of these services, whilst ensuring efficiency and
quality.
As the infrastructure demands of our customers grow, so their
appetite for increased efficiency solutions has also grown. This
has been the driving force behind the notable interest in cloud
related services. Computacenter has responded with the recent
launch of C(3) Mail, the first in a suite of cloud based
offerings.
We maintained good progress in preparing for our Group ERP
implementation. During the first week of February 2011, the Release
1 migration onto the new platform in Germany was delivered, without
material disruption. However, the remainder of 2011 will be
important, as migration of the UK system is scheduled to follow
during the third quarter. The Release 1 migration has significantly
reduced implementation risk, as the lessons we have learnt will
assist during the subsequent migrations. As our people become
familiar with the system, the benefits related to a single
Group-wide system, will start to materialise. Due to the
commencement of the ERP depreciation, we will incur an incremental
charge of GBP3 million in 2011.
We did not make any acquisitions during 2010, but on 15 February
2011, we announced that our French business had agreed to acquire
Top Info, subject to the approval of the French Competition Board.
Top Info will be acquired for an initial debt free cash
consideration of EUR21 million, with a further EUR1 million
payable, subject to the financial performance of the Top Info
business in the period to end December 2011. A further circa EUR15
million will be paid on the closing date, for the cash on Top
Info's balance sheet at that time. We believe that Top Info's
attractive customer portfolio in France will provide our French
business with new opportunities to deploy its services and
infrastructure solutions further, whilst at the same time,
strengthening its presence within the IT infrastructure supply
market to large French corporations and the Government.
UK
Excluding the effect of the exit of trade distribution in 2009,
UK revenues improved by 10.8 per cent in 2010, to GBP1.27 billion
(2009: GBP1.14 billion). This increase was delivered by healthy
revenue growth in both the product and services businesses and was
largely attributable to the continuing and increasing capital
expenditure of our customers. The rate of this increase in revenue
was broadly consistent over the year, without a significant revenue
spike in the fourth quarter and no obvious increased demand driven
by the VAT rate change, but certainty in this regard is
impossible.
Adjusted* operating profit in the UK increased by 14.5 per cent
to GBP43.3 million (2009: GBP37.8 million). This profit growth
flowed from the strong increase in revenues, as well as some
services margin improvement. We also continue to enjoy leverage
from the cost savings made in 2009.
SG&A in 2010 increased by GBP3.0 million, from the
significantly reduced base in 2009. This increase was largely due
to investment into our Services capability, aimed at improving our
delivery and as would be expected, higher commissions were also
earned by our sales teams during the year.
Computacenter UK's services revenue grew by 13.9 per cent to
GBP380.5 million (2009: GBP334.0 million), whereas services
revenues for the total UK market, declined by 0.1% in 2010,
according to Gartner figures. Revenue performance in contractual
services was encouraging, as anticipated, accelerating towards the
end of the year, as new contract wins became active. Particularly
pleasing was the increase in the contractual services base, as it
serves as an encouraging lead indicator for this business' revenue
into 2011 and beyond. A clear indication of the return of capital
expenditure into the market can, in part, be seen in the strong
revenue growth achieved in the Professional Services Business.
Together with growing the contract base, our focus on retaining
and, ideally, expanding our activities with existing customers, is
also delivering success. For example, we extended our desktop
managed services agreement with AEGON - to whom we've been
providing IT support for over 10 years - with a continued
end-to-end infrastructure outsource worth over GBP12 million, for a
further five years until October 2015. We have also renewed our
relationship with OB10, the global e-Invoicing company, for a
further five years. The scope of this contract, worth GBP6 million,
has been expanded to incorporate our multi-site datacenter
offering.
We were also successful in winning a number of new services
contracts. We signed a new five-year, GBP10 million infrastructure
management outsourcing contract with Gatwick Airport. The scope of
work includes managing two datacenters at the airport, along with
26 critical IT node rooms.
The infrastructure will be monitored and managed initially, from
our facility in Hatfield and in the future, from Cape Town, with an
onsite support presence at the airport. The airport operator will
have access to scalable and agile support models, as well as our
offshore capability, and in the future, access to 'utility' based
computer provisioning.
Waitrose, the leading high street retailer awarded us a
five-year support contract. Under the agreement, Computacenter will
provide hardware support to 269 stores, covering electronic point
of sale equipment, as well as back office IT and network devices.
The service will ensure availability of critical devices and also
deliver increased efficiency for Waitrose.
RDC, our subsidiary which provides its customers with secure and
environmentally appropriate solutions to their end-of-life IT
equipment, once again delivered exceptional performance, with
overall revenue up by 30.3 per cent to nearly GBP38.2 million
(2009: GBP29.3 million), while profits grew by 30.9 per cent.
To an increasing extent, IT infrastructure refreshes require
physical cabling solutions, prior and during projects. This is
evidenced by the 73 per cent increase in contribution of our
cabling business, on the previous year. A large global financial
institution is due to relocate a large number of its current
premises across Europe, the Middle East and Africa (EMEA) and
Computacenter's cabling team has been selected as the sole supplier
of cabling installation services to all the new EMEA locations.
Throughout 2010, Computacenter UK has continued to win and
deliver more critical contracts, enabling our customers to operate
a resilient infrastructure and to reduce their operating costs.
These contracts increase the opportunity of retaining such
customers over the longer term.
Germany
In Germany, overall adjusted* operating profit for the year,
grew by 8.8 per cent to EUR23.9 million (2009: EUR22.0 million).
This result represents a strong recovery from the slow start to the
year, when adjusted operating profit declined by 46.7 per cent,
compared to the 2009 first half result.
2010 can be viewed as a year of two halves. The expiry of some
larger contracts at the end of 2009, as well as general hesitancy
in the market for capital expenditure, resulted in reduced services
revenue in the first half of 2010, although there were early signs
of recovery towards the end of this period. Market confidence
improved substantially in the second half of the year, with IT
infrastructure investment into both services and products,
accelerating towards the end of the year, with a particularly
strong revenue performance in December 2010. For the year as a
whole, in local currency and including the acquired becom business,
revenue increased by 12.2 per cent to EUR1,173.1 million (2009:
EUR1,045.1 million) and by 6.2 per cent, excluding the becom
business which was acquired in 2009.
Our services contract base grew by 8.7 per cent to EUR290.0
million (2009: EUR266.8 million). Both new and existing customers
invested in high-end products, combined with our service
offerings.
We signed a three-year framework agreement, valued at circa EUR9
million with Dataport, for the supply and deployment of Cisco
datacenter hardware and related services, including consultation
work and maintenance provision.
Intelligent workplace and communication solutions also combine
our product and service offerings. Volkswagen commissioned
Computacenter Germany to implement the car manufacturer's Windows
7/Office 2010 strategy. The overall project lays the foundation for
the future workplaces at the Volkswagen Group, worldwide.
Union IT Services GmbH, as the IT services provider to the
financial service company Union Investment, a leading real estate
investment manager in Europe for private and institutional
investors, renewed the outsourcing contract with Computacenter
Germany, until 2017. This end-to-end outsourcing contract has been
expanded to include the implementation and operation of a new and
flexible IP telecommunication centre, as part of its unified
communication and collaboration solution.
The integrated becom business has started to deliver real value
to Computacenter Germany's overall business, especially within the
datacenter product business, which has seen much healthier activity
than last year. Additionally, a close relationship with Microsoft
has contributed to Computacenter Germany's recent certification as
a Microsoft Voice Specialist, in addition to the existing
certification as a Cisco Master Unified Communication Specialist.
It is the first time in Germany that any provider has been awarded
both certifications and our response to current market requirements
for multi-vendor communication solutions, has been materially
enhanced. Our overall relationship with Cisco continues to grow,
culminating in the award of "Cisco Enterprise Partner of the Year-
Europe"
Revenue growth in the second half of 2010 was in part derived
from our reorganisation activities in the first six months. The
managed services delivery structures were integrated them into a
new Managed Service Factory and the product and services portfolios
were merged. These changes enabled Computacenter Germany to
maximise its opportunities on the economic rebound and even grow in
excess of the German market in 2010.
We are pleased with our overall performance for the year,
especially as many of our senior staff members were focussed on the
design and implementation work for a smooth ERP system migration.
This was achieved in early January 2011, an event which will
provide lessons for the rest of the Group's future migrations.
France
Computacenter France delivered an operating profit of EUR1.2
million (2009: operating loss EUR3.1 million), flattered to the
extent of EUR1.0 million, when compared to 2009, by a change in
classification of certain French tax expenses, from administration
expenses in 2009, to income tax expense in 2010.
We achieved strong revenue growth, materially outperforming the
French market, with reported revenue increasing by 16.9 per cent to
EUR419.4 million (2009: EUR358.7 million). Although both services
and product revenue growth outperformed their respective markets,
product revenue grew by an impressive 19.7 per cent, whilst
services revenue growth was lower, at 4.6 per cent. Services now
represent 16.5 per cent (2009: 18.4 per cent) of the total
business.
Product growth resulted mainly from increased higher-end
enterprise and software sales. Enterprise revenue growth, in the
year, by 53 per cent, was partly due to the success in up-scaling
our enterprise service offerings. The French Army, an existing
customer, additionally awarded us a comprehensive hardware supply
contract to support their storage consolidation and virtualisation
project, from conception to roll-out and training, which supply is
due to continue through 2011. There was further evidence of
encouraging growth in enterprise sales in the product supply
contract win for the virtualised workplace environment of Europ
Assistance, a major international provider of insurance and
assurance services.
Towards the end of 2010, we won a four-year product supply
contract with SAE, the Government Purchasing Agency, led by the
Minister of Finance. EDF, a major energy utilities company, has
also awarded Computacenter France a three-year global software
licensing contract, with two extension options of one year
each.
Our services business in 2010 grew at a slower rate than in
2009. However, while no significant existing contracts were lost
during 2010, we experienced a natural erosion of revenue from older
maintenance contracts and new wins had not yet started contributing
revenue. This resulted in a marginal decline by 0.1 per cent in
local currency, in contractual services. Encouraging though was the
15.3 per cent growth in professional services revenue, which should
be a natural consequence of strong product revenue growth, but
which has not previously been realised in France, to this
extent.
SG&A expenses were held flat through effective controls and
external costs were reduced sufficiently, to allow for investment
in enhancing and up-skilling our salesforce. We rolled out an
opportunity management tool to enhance potential customer
engagement across the Company and we created a sales specialist
team to provide technical support to the salesforce.
Additionally, we comprehensively reviewed the salesforce
incentivisation mechanisms, resulting in changes to individual
targets and other incentive structures. Whilst this investment was
aimed at sales acceleration into 2011 and beyond, there have been
clear signs of early successes, making us confident of further
organic growth and profitability in 2011. In addition, the proposed
acquisition of Top Info, subject to approval by the French
Competition Authority, is anticipated to deliver further revenue
enhancement in 2011.
Benelux
The Benelux operation showed an adjusted operating loss of
EUR0.46 million in 2010 (2009: loss of EUR0.85 million), resulting
from an operating profit for Belgium and the Netherlands of EUR0.49
million (2009: loss of EUR0.45 million) and an operating loss for
Luxembourg of EUR 0.95 million (2009: loss of EUR0.39 million).
The business in Belgium and the Netherlands delivered
significantly increased revenue, up by 90.8 per cent to EUR49.6
million (2009: EUR26.0 million), largely derived through product
sales. However, a material proportion of this revenue was derived
from a single, one-off sale. Services revenues increased by 3.3 per
cent to EUR9.6 million (2009: EUR9.3 million) and our managed
services business maintained a stable long-term contract base.
This business has strengthened its competitive position by
combining its local presence with international shared services
facilities for licensing, service desk and datacenter activities.
This has allowed the business to compete for and win, major product
and licensing contracts, as is evidenced by a EUR10.2 million
datacenter project to a high profile wireless technology provider,
as well as a licensing contract with a market leader in the field
of local search and advertising, valued at circa EUR1.2
million.
Continued investment into our Professional Services offering
enabled some project contract wins in the fields of unified IP
communications, for example, a EUR0.14 million VOIP project for the
Red Cross Flanders, as well as in Microsoft technologies, as
evidenced by a EUR0.12 million MS System Center project for De
Lijn, a regional public transport provider.
Additionally, a datacenter technology related contract, for
storage implementation, with a value of EUR0.23 million was awarded
by Pentair Europe, a leading provider of water solutions and
related technical products.
In Luxembourg, a restructuring project, at a cost to the profit
and loss account of circa EUR0.48 million, was undertaken to reduce
the future cost base significantly and to enhance focus on growing
the long-term managed services contract base. An early success, in
this context, is evident from having been awarded a two-year
contract, valued at EUR0.47 million, by Enovos, a gas and
electricity utilities company.
In recognising the business needs of our local customers, we
integrated our Luxembourg team structure in the German
organisation, effective from 1 January 2011. Going forward,
performance of the Belgium and Netherlands based businesses will be
reported separately from the Luxembourg business, the latter which
will be reported as part of the German business performance.
Outlook statement
We believe that 2011, as a whole, will be a year of continuing
improvement for Computacenter's performance. As we state every
year, it is always a challenge drawing any meaningful conclusions
about the new financial year until we have completed at least the
first quarter. This year, drawing conclusions from comparisons with
prior first quarter results, will be particularly difficult. In the
first quarter of 2010 in the UK, we had very buoyant market
conditions and a large one-off contract, which flattered revenue to
a greater extent than profit. This is a marked contrast to Germany,
where the comparison is materially easier, due to their challenging
start to 2010.
Looking further ahead, we believe there are a number of growth
drivers which Computacenter will be able to take advantage of. End
user demand for new technology is driving the requirement for
investment in corporate IT infrastructure, helped by economic
improvement within our customers' markets. Our services market
place continues to grow, albeit at a modest pace, but we feel
increasingly confident about our ability to continue to outperform
the market. This reflects our customers' desire not to outsource to
a single supplier, but to 'smart source' best of breed suppliers,
playing to Computacenter's strengths. We believe that these growth
drivers, coupled with the opportunity to further reduce our
operating cost over time due to our investment in systems, will
enable Computacenter to continue our earnings momentum.
*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.
Mike Norris
Chief Executive
Finance Director's review
Turnover and profitability
In 2010, Computacenter Group delivered a strong turnover and
profit, across all our main geographies with revenue growth in all
business lines. Our 2009 revenues included GBP84.6 million from the
trade distribution ('CCD') business in the UK, which was disposed
in 2009. Excluding CCD, turnover increased by 10.7 per cent, with
product revenues increasing by 12.5 per cent and service revenues
increasing by 6.5 per cent.
This growth was partially achieved due to the impact of the
acquisitions of becom and Thesaurus, which were both made in
November 2009, offset by a small dilution in growth due to
movements in currency. The like-for-like turnover growth, which
excludes currency fluctuations, the CCD disposal and the impact of
acquisitions, was 10.3 per cent. On this measure, product revenue
growth was 11.4 per cent, and services growth 7.7 per cent. The
turnover growth reflects the strong rebound in corporate
infrastructure spending in 2010 across UK, Germany and France.
Adjusted profit before tax improved by 21.8 per cent from
GBP54.2 million to GBP66.1 million, albeit GBP0.9 million of this
improvement is generated from a change in classification of certain
French tax expenses from administration expenses in 2009 to income
tax expense in 2010. Without this classification change, adjusted
profit before tax increased by 20.1 per cent.
After taking account of exceptional items, in 2009, and
amortisation of acquired intangibles, statutory profit before tax
increased by 35.1 per cent from GBP48.4 million to GBP65.4
million.
Adjusted operating profit
Statutory operating profit increased from GBP52.1 million to
GBP65.9 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 the
transfer of internal ERP implementation costs 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.
UK
UK revenues, excluding the CCD disposal, grew strongly in 2010
by 10.8 per cent overall. Product sales increased by 9.5 per cent
and services revenues also increased by 13.9 per cent. Revenue
decline in the Government Sector was more than offset by growth in
other sectors, particularly Financial Services. Adjusted gross
profit margin moved from 14.8 per cent to 15.0 per cent with the
loss of low margin CCD revenues replaced by higher revenues on
corporate product sales.
At a headline level, adjusted operating expenses ('SG&A')
increased by GBP3.0 million as reported. However, we incurred
operating expenses of GBP3.5 million in 2009 in the CCD business.
Following the cost reductions realised in 2009, the UK business
entered into certain targeted SG&A investments to improve
efficiency, repeatability and industrialisation of our service
operations function.
Germany
Revenue, as reported, grew in 2010 by 8.1 per cent to GBP1,005.8
million (2009: GBP930.7 million), although approximately GBP54.3
million (or 72.3 per cent) of the growth can be attributed to the
acquisition of becom Informationsysteme Gmbh ('becom').
In local currency, revenue grew by 12.2 per cent, with product
and services revenues increasing by 16.8 per cent and 4.1 per cent
respectively. The adjusted gross profit percentage for Germany as a
whole decreased from 13.4 per cent to 13.1 per cent of sales, due
to a higher product revenue mix.
SG&A increased by GBP6.2 million to GBP111.0 million (2009:
GBP104.8 million), albeit excluding the SG&A increase
associated with the acquisition of becom and taking into account
the effects of currency, the like-for-like SG&A growth is 2.6
per cent.
France
The rebound in revenue was most pronounced in France, with
revenue increasing by 12.6 per cent or 16.9 per cent in local
currency.
Product revenue increased by 19.7 per cent in local currency
mainly due to a relatively buoyant product market and strong growth
in the Enterprise product sector. Following two years of double
digit growth, services revenue grew by a more modest 4.6 per cent,
with professional services up 15.3 per cent and managed services
down by 0.1 per cent in local currency.
Due to the high product sales growth, gross profit percentage
reduced from 11.7 per cent to 10.5 per cent. This led to an overall
gross profit increase of GBP0.4 million, with SG&A down by
GBP3.3 million. The operating profit is flattered by the change in
the basis of the calculation of certain tax payments. In 2010,
GBP0.9m has been charged in income tax expense that in previous
periods was classified within administration expenses.
The operating result turned around from a loss of GBP2.7 million
in 2009 to an operating profit of GBP1.0 million in 2010. This is a
particularly pleasing performance, being the first time our French
business has generated an operating profit since 2001.
Benelux
Reported revenue increased by 74.0 per cent to GBP45.6 million
(2009: GBP26.2 million), translating to an increase of 80.8 per
cent in local currency. In local currency, product revenue
increased by 130.5 per cent whilst service revenue grew more
modestly by 6.2 per cent. This is driven by a large product win
during 2010 in Belgium and the Netherlands, that is not expected to
be repeated in 2011.
Our business in Belgium returned to profitability in 2010,
reporting an operating profit of GBP0.4 million (2009: operating
loss of GBP0.4 million). The business in Luxembourg however, was
once again loss-making, and as a consequence we incurred GBP0.4
million of redundancy costs within an operating loss of GBP0.8
million (2009: GBP0.4 million). From 2011, the Luxembourg business
will be managed and reported through our German business and going
forward, will form part of the German geographical segment.
The operating loss generated in the Benelux segment was
therefore GBP0.4 million (2009: GBP0.8 million).
Exceptional items
Following exceptional items of GBP5.3 million in 2009, no
exceptional items were recorded during 2010. Further details of the
prior year exceptional items are provided in note 4.
Finance income and costs
Net finance costs on a statutory basis reduced from GBP3.7
million in 2009 to GBP0.5 million in 2010. This takes account of
finance costs on CSF of GBP2.1 million (2009: GBP4.0 million). On
an adjusted basis, prior to the interest on CSF, net finance income
recovered from GBP0.3 million in 2009 to GBP1.6 million in 2010,
mainly due to the significant improvement in net funds.
Taxation
The effective adjusted tax rate for 2010 was 23.1 per cent
(2009: 22.6 per cent). The Group's tax rate continues to benefit
from losses utilised on earnings in Germany and will benefit from
the reducing corporation tax rate in the UK.
Deferred tax assets of GBP11.3 million (2009: GBP11.4 million)
have been recognised in respect of losses carried forward. In
addition, at 31 December 2010, there were unused tax losses across
the Group of GBP171.2 million (2009: GBP188.1 million) for which no
deferred tax asset has been recognised. Of these losses, GBP99.4
million (2009: GBP111.1 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 19.1 per cent from 27.7 pence in 2009 to 33.0
pence in 2010. The statutory diluted earnings per share growth of
30.9 per cent takes into account exceptional items reported in
2009.
The Board is recommending a final dividend of 9.7 pence per
share, bringing the total dividend for the year to 13.2 pence
(2009: 11.0 pence). This will be payable on 10 June 2011 to
registered shareholders as at 13 May 2011.
Cash flow
The Group's trading net funds position takes account of factor
financing, but excludes CSF. There is an adjusted cash flow
statement provided in note 9 that restates the statutory cash flow
to take account of this definition.
The net funds (excluding CSF) improved from GBP86.4 million to
GBP139.4 million by the end of the year. The Group has a history of
strong cash generation however, the increase in 2010 was unusual,
given the increase in product revenues, due to a number of factors.
Firstly, following the exit from the CCD business in the UK in late
2009, the UK increased the mix of its purchases via distributors,
resulting in lower stock holdings and increased creditor payment
terms. Secondly the Group continued to benefit from the extension
of a temporary improvement in credit terms with a significant
vendor, equivalent to GBP38 million at 31 December 2010, an
increase of approximately GBP8 million over the course of the year.
These terms will continue until at least 30 June 2011.
These factors combined to generate a GBP21.4 million working
capital inflow, despite a 7.1 per cent increase in product sales
compared to 2009. This, together with the post tax earnings in the
period of GBP50.3 million, improved the cash position, by over
GBP50 million in the year, despite continued investment in the ERP
system, investment in our datacenters and dividends of GBP17.0
million paid.
Whilst the increase in net cash in the year is particularly
strong, changes in future periods are more likely to be in line
with the underlying earnings of the business, except if the
improvement in credit terms with a significant vendor is
reversed.
CSF reduced in the year from GBP49.1 million to GBP28.4 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
GBP111.0 million, compared to GBP37.3 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 occasionally 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, bank borrowings, invoice factoring in France and the UK
and finance leases and loans for certain customer contracts. The
Group's bank borrowings, other facilities and deposits are at
floating rates. No interest rate derivative contracts have been
entered into. When long-term borrowings are utilised, the Group's
policy is to maintain these borrowings at fixed rates to limit the
Group's exposure to interest rate fluctuations.
Liquidity risk
The Group's policy is to ensure that it has sufficient funding
and committed bank facilities in place to meet any foreseeable peak
in borrowing requirements. The Group's net funds position improved
substantially during 2010, and at the year-end was GBP139.4 million
excluding CSF, and GBP111.0 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
consequently the uncommitted overdraft and factoring facilities
available to the Group has reduced to GBP15.5 million at 31
December 2010 (2009: GBP100.3 million).
At 31 December 2010, the Group still has access to a GBP60.0
million three-year committed facility established in May 2008, of
which GBP43.5 million (2009: GBP42.9 million) is not utilised at
the balance sheet date. This facility is due to expire in May 2011,
and is not expected to be 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. CSF facilities are committed.
Foreign currency risk
The Group operates primarily in the UK, Germany, France, and the
'Benelux' countries, using local borrowings to fund its operations
outside of the UK, 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 vast majority of sales and purchases are denominated in
Sterling and any material trading exposures are eliminated through
forward currency contracts.
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.
Events after the balance sheet date
On 15 February 2011, the Group announced its agreement to
acquire TOP Info SAS and its subsidiaries ('Top Info'), an
information technology reseller of hardware, software and services
based in Paris, France. The acquisition is still subject to
competition clearance in France, with the closing date not expected
before the end of March 2011. The expected consideration totals
EUR21 million payable on the closing date with an additional EUR1
million dependant upon the performance of Top Info in the period to
31 December 2011. The management and exercise of control over Top
Info will not pass to Computacenter until the closing 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
Risk Report
Computacenter's Group Risk Department facilitates a process
through which the Group's most senior management team identify all
the significant risks posed to the strategic goals. During 2010,
the Strategic Risk Profiling Project ('SRPP'), or 'top-down' risk
identification, was additionally facilitated by an external risk
consultancy and the result of this exercise was adopted by the
Board and shared with all the business unit leaders across the
Group.
The annual 'bottom-up' risk assessment process involves all
business unit leaders across the Group, to identify and prioritise,
in accordance with a pre-approved risk matrix of severity and
likelihood values, those risks posed to the objectives and targets
set for their individual business units. The output of this process
presents a risk footprint for each business unit, as well as, a
collated top risks log for the Group, which is compared to the SRPP
log.
Safeguards already in place and further required mitigations for
each identified risk are identified and included in the risk logs,
together with the owners of the risks. The frequencies for
reviewing the effectiveness of the safeguards, as well as the date
by which mitigation plans need to be progressed, are added to
complete the risk plans.
The Group Risk Committee, chaired by the Chief Executive,
convenes quarterly to review progress against the risk plans.
Additionally, the Committee considers any new risks of potential
significance which may be added to the appropriate risk log and for
which a risk plan is required.
Strategic Objectives Principal risks Principal mitigations
========================= ======================== =========================
Accelerating the growth Our offerings transpire We formally review all
of our contractual to be uncompetitive lost bids and most won
services business. within the market, or bids to ensure that we
an unforeseen keep abreast of customer
technology shift occurs expectation from their
where the market IT services and
develops appetite for solutions partner. We
different equipment and formally review our
solutions to those internal service
offered. We potentially providers against price
do not dedicate correct points and benchmarked
levels of resource to service quality
satisfy our customers' standards. We have
varying needs for launched a Customer
innovation. Our growth Value Scorecard to
aspirations are identify our larger
impacted by the customer's innovation
economic climate and needs and we are
with a certain level of currently implementing
uncertainty about a the "Continual
full return to economic Improvement Framework"
stability in the short to detect where
term; there is the innovation needs are
potential for reduced arising. We operate
capital expenditure within different
from customers. economies that are
affected differently at
different times. We also
believe that our
offerings are targeted
specifically towards
being beneficial to our
customers who are in
need of reducing cost.
========================= ======================== =========================
Reducing cost through There is an absence of The Industrialisation
increased efficiency and appropriate investment and Investment review
industrialisation of our into automated tools board convenes monthly
service operations and other efficiency and monitors the return
measures, which on investment as well as
effectively fails to the planned KPI
reduce the need for improvements.
manual intervention
activity, or a suitable
return on these
investments is not
realised.
========================= ======================== =========================
Maximising the return Following significant There is continued focus
on working capital and progress over the last on strict cost control
freeing working capital years in freeing and in future, the ERP
where not optimally working capital, system will facilitate a
used through the disposal of common approach to
the distribution working capital
business, as well as management, across the
other working capital Group, through best
optimisation practice and other
initiatives, a working capital control
significant increase in adoption.
working capital demand
could harm the need for
further progress in
this regard.
========================= ======================== =========================
Growing our profit Our sales teams do not Governance boards and a
margin through increased focus on our defined tool through which all
services and high end propositions and target relevant parties have to
product sales market, resulting in engage, will aim to
"over-promising" on the prevent any non-standard
scope of services offerings. All change
offered to new management will be
customers, or making reviewed by a governance
non-standard offerings board and if material,
during the life of a the same approval
contract, resulting in process as for new
margin erosion, contracts, will be
customer initiated. Senior
dissatisfaction or management work very
delays in the initial closely with our leading
phases of the contract. vendor partners and
Our vendor partners customers, in order to
compete in the high end continually promote and
sales environment and protect the value we
approach our customers bring to the sale.
directly. Computacenter's
customers demand
optimisation of their IT
infrastructures and to
this end, vendor
independent solutions
are imperative.
========================= ======================== =========================
Ensuring the successful With a project of this The transition of the
implementation of the scale, there is the various systems have
Group-wide ERP system potential that during been phased over a
early transition, period of circa three
operational issues years, with the other
could occur, which may countries providing
impact on customer back-up support to the
service levels and transitioning country.
ultimately, overall Lessons learnt from the
financial performance early 2011 transition in
of the Company. After Germany will be deployed
the ERP system is in the UK and France.
embedded, there is the Return on investment
potential that the full plans have been
return on this developed and will be
investment is not built into the internal
realised. governance structure, at
all relevant levels and
targets have already
been added to senior
management pay plans.
========================= ======================== =========================
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
9March 2011
Consolidated income statement
For the year ended 31 December 2010
2010 2009
Note GBP'000 GBP'000
---------------------------------------------- ---- ----------- -----------
Revenue 3 2,676,495 2,503,198
---------------------------------------------- ---- ----------- -----------
Cost of sales (2,310,682) (2,153,395)
---------------------------------------------- ---- ----------- -----------
Gross profit 365,813 349,803
---------------------------------------------- ---- ----------- -----------
Distribution costs (18,978) (19,032)
---------------------------------------------- ---- ----------- -----------
Administrative expenses (280,288) (272,876)
---------------------------------------------- ---- ----------- -----------
Operating profit:
---------------------------------------------- ---- ----------- -----------
Before amortisation of acquired intangibles
and exceptional items 66,547 57,895
---------------------------------------------- ---- ----------- -----------
Amortisation of acquired intangibles (655) (517)
---------------------------------------------- ---- ----------- -----------
Exceptional items 4 - (5,299)
---------------------------------------------- ---- ----------- -----------
Operating profit 65,892 52,079
---------------------------------------------- ---- ----------- -----------
Finance income 2,329 1,307
---------------------------------------------- ---- ----------- -----------
Finance costs (2,823) (4,977)
---------------------------------------------- ---- ----------- -----------
Profit before tax:
---------------------------------------------- ---- ----------- -----------
Before amortisation of acquired intangibles
and exceptional items 66,053 54,225
---------------------------------------------- ---- ----------- -----------
Amortisation of acquired intangibles (655) (517)
---------------------------------------------- ---- ----------- -----------
Exceptional items - (5,299)
---------------------------------------------- ---- ----------- -----------
Profit before tax 65,398 48,409
---------------------------------------------- ---- ----------- -----------
Income tax expense:
---------------------------------------------- ---- ----------- -----------
Before exceptional items (15,078) (12,113)
---------------------------------------------- ---- ----------- -----------
Tax on exceptional items 4 - 1,415
---------------------------------------------- ---- ----------- -----------
Income tax expense 5 (15,078) (10,698)
---------------------------------------------- ---- ----------- -----------
Profit for the year 50,320 37,711
---------------------------------------------- ---- ----------- -----------
Attributable to:
---------------------------------------------- ---- ----------- -----------
Equity holders of the parent 6 50,321 37,703
---------------------------------------------- ---- ----------- -----------
Non-controlling interests (1) 8
---------------------------------------------- ---- ----------- -----------
50,320 37,711
---------------------------------------------- ---- ----------- -----------
Earnings per share 6
---------------------------------------------- ---- ----------- -----------
- basic 34.1p 25.7p
---------------------------------------------- ---- ----------- -----------
- diluted 32.6p 24.9p
---------------------------------------------- ---- ----------- -----------
Consolidated statement of comprehensive income
For the year ended 31 December 2010
2010 2009
GBP'000 GBP'000
---------------------------------------------------------- -------- --------
Profit for the year 50,320 37,711
---------------------------------------------------------- -------- --------
Exchange differences on translation of foreign operations (4,076) (10,173)
---------------------------------------------------------- -------- --------
Total comprehensive income for the period 46,244 27,538
---------------------------------------------------------- -------- --------
Equity holders of the parent 46,250 27,543
---------------------------------------------------------- -------- --------
Non-controlling interests (6) (5)
---------------------------------------------------------- -------- --------
46,244 27,538
---------------------------------------------------------- -------- --------
Consolidated balance sheet
As at 31 December 2010
2010 2009
Notes GBP'000 GBP'000
------------------------------------- ----- -------- --------
Non-current assets
------------------------------------- ----- -------- --------
Property, plant and equipment 88,882 105,290
------------------------------------- ----- -------- --------
Intangible assets 78,531 72,965
------------------------------------- ----- -------- --------
Investment in associate 47 57
------------------------------------- ----- -------- --------
Deferred income tax asset 15,577 16,444
------------------------------------- ----- -------- --------
183,037 194,756
------------------------------------- ----- -------- --------
Current assets
------------------------------------- ----- -------- --------
Inventories 81,569 67,086
------------------------------------- ----- -------- --------
Trade and other receivables 471,133 475,646
------------------------------------- ----- -------- --------
Prepayments 44,219 55,785
------------------------------------- ----- -------- --------
Accrued income 39,971 29,538
------------------------------------- ----- -------- --------
Forward currency contracts 562 726
------------------------------------- ----- -------- --------
Cash and short-term deposits 8 159,269 108,017
------------------------------------- ----- -------- --------
796,723 736,798
------------------------------------- ----- -------- --------
Total assets 979,760 931,554
------------------------------------- ----- -------- --------
Current liabilities
------------------------------------- ----- -------- --------
Trade and other payables 440,790 378,929
------------------------------------- ----- -------- --------
Deferred income 100,840 123,861
------------------------------------- ----- -------- --------
Financial liabilities 37,936 48,647
------------------------------------- ----- -------- --------
Income tax payable 5,941 3,815
------------------------------------- ----- -------- --------
Provisions 2,644 2,202
------------------------------------- ----- -------- --------
588,151 557,454
------------------------------------- ----- -------- --------
Non-current liabilities
------------------------------------- ----- -------- --------
Financial liabilities 10,320 22,022
------------------------------------- ----- -------- --------
Provisions 10,749 11,605
------------------------------------- ----- -------- --------
Other non-current liabilities - 227
------------------------------------- ----- -------- --------
Deferred income tax liabilities 978 1,674
------------------------------------- ----- -------- --------
22,047 35,528
------------------------------------- ----- -------- --------
Total liabilities 610,198 592,982
------------------------------------- ----- -------- --------
Net assets 369,562 338,572
------------------------------------- ----- -------- --------
Capital and reserves
------------------------------------- ----- -------- --------
Issued capital 9,233 9,186
------------------------------------- ----- -------- --------
Share premium 3,697 2,929
------------------------------------- ----- -------- --------
Capital redemption reserve 74,957 74,950
------------------------------------- ----- -------- --------
Own shares held (10,146) (9,657)
------------------------------------- ----- -------- --------
Foreign currency translation reserve 12,137 16,208
------------------------------------- ----- -------- --------
Retained earnings 279,674 244,940
------------------------------------- ----- -------- --------
Shareholders' equity 369,552 338,556
------------------------------------- ----- -------- --------
Non-controlling interests 10 16
------------------------------------- ----- -------- --------
Total equity 369,562 338,572
------------------------------------- ----- -------- --------
Approved by the Board on 9 March 2011
MJ Norris FA Conophy
Chief Executive Finance Director
Consolidated statement of changes in equity
For the year ended 31 December 2010
Non-controlling Total
Attributable to equity holders of the Total interests equity
parent GBP'000 GBP'000 GBP'000
-------------- -------- --------------- --------
Foreign
Capital Own currency
Issued Share redemption shares translation Retained
capital premium reserve held reserve earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------- ------- ---------- -------- ----------- --------- -------- --------------- --------
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
-------------- ------- ------- ---------- -------- ----------- --------- -------- --------------- --------
At 1 January
2009 9,181 2,890 74,950 (11,169) 26,368 218,970 321,190 21 321,211
-------------- ------- ------- ---------- -------- ----------- --------- -------- --------------- --------
Profit for the
year - - - - - 37,703 37,703 8 37,711
-------------- ------- ------- ---------- -------- ----------- --------- -------- --------------- --------
Other
comprehensive
income - - - - (10,160) - (10,160) (13) (10,173)
-------------- ------- ------- ---------- -------- ----------- --------- -------- --------------- --------
Total
comprehensive
income - - - - (10,160) 37,703 27,543 (5) 27,538
-------------- ------- ------- ---------- -------- ----------- --------- -------- --------------- --------
Cost of
share-based
payments - - - - - 2,555 2,555 - 2,555
-------------- ------- ------- ---------- -------- ----------- --------- -------- --------------- --------
Deferred tax
on
share-based
payment
transactions - - - - - 298 298 - 298
-------------- ------- ------- ---------- -------- ----------- --------- -------- --------------- --------
Exercise of
options 5 39 - 2,072 - (2,072) 44 - 44
-------------- ------- ------- ---------- -------- ----------- --------- -------- --------------- --------
Purchase of
own shares - - - (560) - - (560) - (560)
-------------- ------- ------- ---------- -------- ----------- --------- -------- --------------- --------
Equity
dividends - - - - - (12,514) (12,514) - (12,514)
-------------- ------- ------- ---------- -------- ----------- --------- -------- --------------- --------
At 31 December
2009 9,186 2,929 74,950 (9,657) 16,208 244,940 338,556 16 338,572
-------------- ------- ------- ---------- -------- ----------- --------- -------- --------------- --------
Consolidated cash flow statement
For the year ended 31 December 2010
2010 2009
Notes GBP'000 GBP'000
--------------------------------------------------- ----- -------- --------
Operating activities
--------------------------------------------------- ----- -------- --------
Profit before taxation 65,398 48,409
--------------------------------------------------- ----- -------- --------
Net finance costs 494 3,670
--------------------------------------------------- ----- -------- --------
Depreciation 31,722 35,326
--------------------------------------------------- ----- -------- --------
Amortisation 6,550 4,631
--------------------------------------------------- ----- -------- --------
Share-based payments 2,620 2,555
--------------------------------------------------- ----- -------- --------
Loss on disposal of property, plant and equipment 815 23
--------------------------------------------------- ----- -------- --------
Profit on disposal of business 4 - (1,879)
--------------------------------------------------- ----- -------- --------
(Increase)/decrease in inventories (16,400) 34,126
--------------------------------------------------- ----- -------- --------
(Increase)/decrease in trade and other receivables (3,660) 52,348
--------------------------------------------------- ----- -------- --------
Increase in trade and other payables 46,435 10,960
--------------------------------------------------- ----- -------- --------
Other adjustments (49) 283
--------------------------------------------------- ----- -------- --------
Cash generated from operations 133,925 190,452
--------------------------------------------------- ----- -------- --------
Income taxes paid (11,281) (17,500)
--------------------------------------------------- ----- -------- --------
Net cash flow from operating activities 122,644 172,952
--------------------------------------------------- ----- -------- --------
Investing activities
--------------------------------------------------- ----- -------- --------
Interest received 2,284 1,717
--------------------------------------------------- ----- -------- --------
Acquisition of subsidiaries, net of cash acquired - (9,742)
--------------------------------------------------- ----- -------- --------
Proceeds from sale of business 4 - 2,982
--------------------------------------------------- ----- -------- --------
Proceeds from sale of property, plant and equipment 372 7
--------------------------------------------------- ----- -------- --------
Purchases of property, plant and equipment (12,856) (9,511)
--------------------------------------------------- ----- -------- --------
Purchases of intangible assets (12,774) (11,790)
--------------------------------------------------- ----- -------- --------
Net cash flow from investing activities (22,974) (26,337)
--------------------------------------------------- ----- -------- --------
Financing activities
--------------------------------------------------- ----- -------- --------
Interest paid (3,200) (4,540)
--------------------------------------------------- ----- -------- --------
Dividends paid to equity shareholders of the
parent 7 (16,984) (12,514)
--------------------------------------------------- ----- -------- --------
Proceeds from share issues 822 44
--------------------------------------------------- ----- -------- --------
Purchase of own shares (2,501) (560)
--------------------------------------------------- ----- -------- --------
Repayment of capital element of finance leases (20,641) (20,956)
--------------------------------------------------- ----- -------- --------
Repayment of loans (12,622) (40,248)
--------------------------------------------------- ----- -------- --------
New borrowings 5,957 16,357
--------------------------------------------------- ----- -------- --------
Increase/(decrease) in factor financing 1,568 (25,600)
--------------------------------------------------- ----- -------- --------
Net cash flow from financing activities (47,601) (88,017)
--------------------------------------------------- ----- -------- --------
Increase in cash and cash equivalents 52,069 58,598
--------------------------------------------------- ----- -------- --------
Effect of exchange rates on cash and cash
equivalents (1,090) (533)
--------------------------------------------------- ----- -------- --------
Cash and cash equivalents at the beginning of
the year 8 104,954 46,889
--------------------------------------------------- ----- -------- --------
Cash and cash equivalents at the year-end 8 155,933 104,954
--------------------------------------------------- ----- -------- --------
Notes to the consolidated financial statements
For the year ended 31 December 2010
1 Authorisation of financial statements and statement of
compliance with IFRS
The consolidated financial statements of Computacenter plc for
the year ended 31 December 2010 were authorised for issue in
accordance with a resolution of the Directors on 9 March 2011. 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
2010 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 as noted below,
adoption of these standards did not have any effect on the
financial performance or position of the Group. They did however
give rise to additional disclosures. The other pronouncements which
came into force during the year were not relevant to the Group:
IFRS 3 (revised) Business Combinations
IFRS 3 (Revised) introduces significant changes in the
accounting for business combinations. It requires that all
acquisition related costs are expensed in the period incurred
rather than included in the cost of the investment, that changes to
the contingent consideration following a business combination are
shown in the statement of comprehensive income instead of adjusting
goodwill and that changes to deferred tax assets relating to
business combinations are only reflected within goodwill if they
occur within the measurement period. The Group has applied IFRS 3
(Revised) with effect from 1 January 2010. During the period the
Group recognised the benefit of tax losses of GBP1.7 million
attributable to an acquisition completed in a previous period. The
impact is included within current income tax expense. Had the
standard not been adopted, an adjustment to goodwill would have
been required.
IAS 27 (amended) Consolidated and Separate Financial
Statements
The amended standard requires that a change in the ownership
interest of a subsidiary (without loss of control) is accounted for
as a transaction with owners in their capacity as owners and these
transactions will no longer give rise to goodwill or gains and
losses. The standard also specifies the accounting when control is
lost and any retained interest is remeasured to fair value with
gains or losses recognised in profit or loss.
3 Segmental analysis
For management purposes, the Group is organised into
geographical segments, with each segment determined by the location
of the Group's assets and operations. The Group's business in each
geography is managed separately and held in separate statutory
entities.
No operating segments have been aggregated to form the below
reportable operating segments.
Management monitor the operating results of its geographical
segments separately for the purposes of making decisions about
resource allocation and performance assessment. Segment performance
is evaluated based on adjusted operating profit or loss which is
measured differently from operating profit or loss in the
consolidated financial statements. At a Group level however
management measure performance on adjusted profit before tax.
Adjusted operating profit or loss takes account of the interest
paid on customer-specific financing ('CSF') which management
consider to be a cost of sale for management reporting purposes.
Excluded from adjusted operating profit is the amortisation of
acquired intangibles, exceptional items and the transfer of
internal ERP implementation costs as management do not consider
these items when reviewing the underlying performance of a
segment.
Segmental performance for the years ended 31 December 2010 and
2009 was as follows:
UK Germany France Benelux Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- --------- -------- -------- ---------
For the year ended 31
December 2010
------------------------- --------- --------- -------- -------- ---------
Results
------------------------- --------- --------- -------- -------- ---------
Revenue 1,265,431 1,005,812 359,611 45,641 2,676,495
------------------------- --------- --------- -------- -------- ---------
Adjusted gross profit 189,614 131,511 37,815 4,753 363,693
------------------------- --------- --------- -------- -------- ---------
Adjusted net operating
expenses (146,277) (111,014) (36,825) (5,150) (299,266)
------------------------- --------- --------- -------- -------- ---------
Adjusted segment
operating profit/(loss) 43,337 20,497 990 (397) 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
------------------------- --------- --------- -------- -------- ---------
Intangible fixed assets 11,935 701 138 - 12,774
------------------------- --------- --------- -------- -------- ---------
Depreciation 21,142 9,971 491 118 31,722
------------------------- --------- --------- -------- -------- ---------
Amortisation 4,073 2,339 138 - 6,550
------------------------- --------- --------- -------- -------- ---------
Share-based payments 1,918 489 213 - 2,620
------------------------- --------- --------- -------- -------- ---------
UK Germany France Benelux Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- --------- -------- -------- ---------
For the year ended 31
December 2009
------------------------- --------- --------- -------- -------- ---------
Results
------------------------- --------- --------- -------- -------- ---------
Revenue 1,226,917 930,673 319,384 26,224 2,503,198
------------------------- --------- --------- -------- -------- ---------
Adjusted gross profit 181,149 124,395 37,448 2,838 345,830
------------------------- --------- --------- -------- -------- ---------
Adjusted net operating
expenses (143,310) (104,831) (40,169) (3,597) (291,907)
------------------------- --------- --------- -------- -------- ---------
Adjusted segment
operating profit/(loss) 37,839 19,564 (2,721) (759) 53,923
------------------------- --------- --------- -------- -------- ---------
Adjusted net interest 302
------------------------- --------- --------- -------- -------- ---------
Adjusted profit before
tax 54,225
------------------------- --------- --------- -------- -------- ---------
Other segment information
------------------------- --------- --------- -------- -------- ---------
Capital expenditure:
------------------------- --------- --------- -------- -------- ---------
Property, plant and
equipment 11,042 8,107 783 118 20,050
------------------------- --------- --------- -------- -------- ---------
Intangible fixed assets 11,891 15,301 71 - 27,263
------------------------- --------- --------- -------- -------- ---------
Depreciation 24,015 10,064 1,118 129 35,326
------------------------- --------- --------- -------- -------- ---------
Amortisation 3,302 1,209 120 - 4,631
------------------------- --------- --------- -------- -------- ---------
Share-based payments 1,893 357 305 - 2,555
------------------------- --------- --------- -------- -------- ---------
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:
2010 2009
GBP'000 GBP'000
------------------------------------- -------- --------
Adjusted profit before tax 66,053 54,225
------------------------------------- -------- --------
Amortisation of acquired intangibles (655) (517)
------------------------------------- -------- --------
Exceptional items - (5,299)
------------------------------------- -------- --------
Profit before tax 65,398 48,409
------------------------------------- -------- --------
Management also reviews 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 Benelux Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- -------- --------
For the year ended 31
December 2010
---------------------------- -------- -------- -------- -------- --------
Adjusted segment operating
profit/(loss) 43,337 20,497 990 (397) 64,427
---------------------------- -------- -------- -------- -------- --------
Add back interest on CSF 1,442 678 - - 2,120
---------------------------- -------- -------- -------- -------- --------
Amortisation of acquired
intangibles (519) (136) - - (655)
---------------------------- -------- -------- -------- -------- --------
ERP implementation costs (4,250) 4,250 - - -
---------------------------- -------- -------- -------- -------- --------
Segment operating
profit/(loss) 40,010 25,289 990 (397) 65,892
---------------------------- -------- -------- -------- -------- --------
For the year ended 31
December 2009
---------------------------- -------- -------- -------- -------- --------
Adjusted segment operating
profit/(loss) 37,839 19,564 (2,721) (759) 53,923
---------------------------- -------- -------- -------- -------- --------
Add back interest on CSF 2,921 1,051 - - 3,972
---------------------------- -------- -------- -------- -------- --------
Amortisation of acquired
intangibles (481) (36) - - (517)
---------------------------- -------- -------- -------- -------- --------
Exceptional items (3,155) (291) (1,613) (240) (5,299)
---------------------------- -------- -------- -------- -------- --------
ERP implementation costs (2,728) 2,728 - - -
---------------------------- -------- -------- -------- -------- --------
Segment operating
profit/(loss) 34,396 23,016 (4,334) (999) 52,079
---------------------------- -------- -------- -------- -------- --------
Sources of revenue
Each geographical segment principally consists of a single
entity with shared assets, liabilities and capital expenditure. The
Group has three sources of revenue, which are aggregated and shown
in the table below. The sale of goods is recorded within product
revenues and the rendering of services is split into Professional
and Support and Managed Services.
Revenue performance is reported to the Chief Operating Decision
Maker excluding the UK Trade Distribution business, which was
disposed of on 27 November 2009. The table below reflects revenue
performance before and after the impact of the sold business.
2010 2009
GBP'000 GBP'000
----------------------------- --------- ---------
Sources of revenue
----------------------------- --------- ---------
Product revenue
----------------------------- --------- ---------
Ongoing operations 1,888,362 1,678,613
----------------------------- --------- ---------
Trade distribution - 84,589
----------------------------- --------- ---------
Total product revenue 1,888,362 1,763,202
----------------------------- --------- ---------
Services revenue
----------------------------- --------- ---------
Professional services 192,448 175,364
----------------------------- --------- ---------
Support and managed services 595,685 564,632
----------------------------- --------- ---------
Total services revenue 788,133 739,996
----------------------------- --------- ---------
Total revenue 2,676,495 2,503,198
----------------------------- --------- ---------
Information about major customers
Included in revenues arising from the UK segment are revenues of
approximately GBP311 million (2009: GBP397 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
2010 2009
GBP'000 GBP'000
------------------------------------------------------ -------- --------
Operating profit
------------------------------------------------------ -------- --------
Profit on disposal of business, net of goodwill - 1,879
------------------------------------------------------ -------- --------
Restructuring costs - (7,178)
------------------------------------------------------ -------- --------
- (5,299)
------------------------------------------------------ -------- --------
Income tax
------------------------------------------------------ -------- --------
Tax on exceptional items included in operating profit - 1,415
------------------------------------------------------ -------- --------
The profit on disposal of business of GBP1,879,000 arose from
the Group disposing of its Trade Distribution division to Ingram
Micro in November 2009. The disposal did not match the criteria of
IFRS 5 'Non-current assets held-for-sale and discontinued
operations' as the disposal did not represent a separate major line
of business or geographical area of operations and hence was not
treated as a discontinued operation. The Group received
consideration of GBP2,982,000 in cash and cash equivalents, net of
costs incurred in relation to the sale. This was offset by the
disposal of goodwill associated with the business of GBP1,002,000.
The directly attributable goodwill associated with the Trade
Distribution business originally arose from the acquisition of
Metrologie UK in 1999. Separately, related inventories of
GBP8,574,000 were sold to Ingram Micro at cost.
Restructuring costs arose in 2009 from the change programme to
reduce costs. They included expenses from headcount reductions of
GBP5,309,000 and vacant premises costs of GBP1,869,000.
5 Income tax
a) Tax on profit on ordinary activities
2010 2009
GBP'000 GBP'000
------------------------------------------------------ -------- --------
Tax charged in the income statement
------------------------------------------------------ -------- --------
Current income tax
------------------------------------------------------ -------- --------
UK corporation tax 12,917 11,181
------------------------------------------------------ -------- --------
Foreign tax 3,306 1,394
------------------------------------------------------ -------- --------
Adjustments in respect of prior periods (1,682) (853)
------------------------------------------------------ -------- --------
Total current income tax 14,541 11,722
------------------------------------------------------ -------- --------
Deferred tax
------------------------------------------------------ -------- --------
Origination and reversal of temporary differences (1,239) (2,284)
------------------------------------------------------ -------- --------
Losses utilised 5,535 4,803
------------------------------------------------------ -------- --------
Changes in recoverable amounts of deferred tax assets (6,608) (3,691)
------------------------------------------------------ -------- --------
Adjustments in respect of prior periods 2,849 148
------------------------------------------------------ -------- --------
Total deferred tax 537 (1,024)
------------------------------------------------------ -------- --------
Tax charge in the income statement 15,078 10,698
------------------------------------------------------ -------- --------
b) Reconciliation of the total tax charge
2010 2009
GBP'000 GBP'000
--------------------------------------------------------- -------- --------
Accounting profit before income tax 65,398 48,409
--------------------------------------------------------- -------- --------
At the UK standard rate of corporation tax of 28.0 per
cent (2009: 28.0 per cent) 18,311 13,555
--------------------------------------------------------- -------- --------
Expenses not deductible for tax purposes 1,446 803
--------------------------------------------------------- -------- --------
Non-deductible element of share-based payment charge 490 715
--------------------------------------------------------- -------- --------
Relief on share option gains (607) (364)
--------------------------------------------------------- -------- --------
Adjustments in respect of current income tax of previous
periods 1,167 (705)
--------------------------------------------------------- -------- --------
Higher tax on overseas earnings 110 69
--------------------------------------------------------- -------- --------
Other differences 781 (457)
--------------------------------------------------------- -------- --------
Effect of changes in tax rate 197 -
--------------------------------------------------------- -------- --------
Current year profits offset against brought forward
losses (438) -
--------------------------------------------------------- -------- --------
Capital gain relieved by unrecognised losses brought
forward - (835)
--------------------------------------------------------- -------- --------
Changes in recoverable amounts of deferred tax assets (6,608) (3,691)
--------------------------------------------------------- -------- --------
Losses of overseas undertakings not available for relief 229 1,609
--------------------------------------------------------- -------- --------
At effective income tax rate of 23.1 per cent (2009:
22.1 per cent) 15,078 10,698
--------------------------------------------------------- -------- --------
c) Tax losses
Deferred tax assets of GBP11.3 million (2009: GBP11.4 million)
have been recognised in respect of losses carried forward. In
addition, at 31 December 2010, there were unused tax losses across
the Group of GBP171.2 million (2009: GBP188.1 million) for which no
deferred tax asset has been recognised. Of these losses, GBP99.4
million (2009: GBP111.1 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) Impact of rate change
The Finance (No 2) Act 2010 reduced the main rate of UK
Corporation Tax from 28 per cent to 27 per cent with effect from 1
April 2011. The impact of the new rate is to reduce the UK deferred
tax asset by GBP0.2 million. Additional changes to the main rate of
UK Corporation Tax to reduce the rate by 1 per cent per annum to 24
per cent by 1 April 2014 have been proposed. These changes have not
been substantively enacted at the balance sheet date and
consequently are not included in these financial statements. The
effect of these proposals would be to reduce the UK net deferred
tax asset by GBP0.2 million.
6 Earnings per ordinary share
Earnings per share ('EPS') amounts are calculated by dividing
profit attributable to ordinary equity holders by the weighted
average number of ordinary shares outstanding during the year
(excluding own shares held).
Diluted earnings per share amounts are calculated by dividing
profit attributable to ordinary equity holders by the weighted
average number of ordinary shares outstanding during the year
(excluding own shares held) adjusted for the effect of dilutive
options.
Adjusted basic and adjusted diluted EPS are presented to provide
more comparable and representative information. Accordingly the
adjusted basic and adjusted diluted EPS figures exclude
amortisation of acquired intangibles and exceptional items.
2010 2009
GBP'000 GBP'000
------------------------------------------------------- -------- --------
Profit attributable to equity holders of the parent 50,321 37,703
------------------------------------------------------- -------- --------
Amortisation of acquired intangibles 655 517
------------------------------------------------------- -------- --------
Tax on amortisation of acquired intangibles (187) (145)
------------------------------------------------------- -------- --------
Exceptional items within operating profit - 5,299
------------------------------------------------------- -------- --------
Tax on exceptional items included in profit before tax - (1,415)
------------------------------------------------------- -------- --------
Profit before amortisation of acquired intangibles and
exceptional items 50,789 41,959
------------------------------------------------------- -------- --------
2010 2009
000's 000's
------------------------------------------------------- ------- -------
Basic weighted average number of shares (excluding own
shares held) 147,752 146,918
------------------------------------------------------- ------- -------
Effect of dilution:
------------------------------------------------------- ------- -------
Share options 6,370 4,671
------------------------------------------------------- ------- -------
Diluted weighted average number of shares 154,122 151,589
------------------------------------------------------- ------- -------
2010 2009
pence pence
------------------------------------ ------ ------
Basic earnings per share 34.1 25.7
------------------------------------ ------ ------
Diluted earnings per share 32.6 24.9
------------------------------------ ------ ------
Adjusted basic earnings per share 34.4 28.6
------------------------------------ ------ ------
Adjusted diluted earnings per share 33.0 27.7
------------------------------------ ------ ------
7 Dividends paid and proposed
2010 2009
GBP'000 GBP'000
---------------------------------------------------------- -------- --------
Declared and paid during the year:
---------------------------------------------------------- -------- --------
Equity dividends on ordinary shares:
---------------------------------------------------------- -------- --------
Final dividend for 2009: nil (2008: 5.5 pence) - 8,097
---------------------------------------------------------- -------- --------
Interim dividend for 2010: 3.5 pence (2009: 3.0 pence) 5,173 4,417
---------------------------------------------------------- -------- --------
Additional interim dividend for 2009: 8.0 pence (2008:
nil) 11,811 -
---------------------------------------------------------- -------- --------
16,984 12,514
---------------------------------------------------------- -------- --------
Proposed (not recognised as a liability as at 31 December)
---------------------------------------------------------- -------- --------
Equity dividends on ordinary shares:
---------------------------------------------------------- -------- --------
Final dividend for 2010: 9.7 pence (2009: nil) 14,926 -
---------------------------------------------------------- -------- --------
Additional interim dividend for 2009: 8.0 pence (2008:
nil) - 11,863
---------------------------------------------------------- -------- --------
8. Analysis of changes in net funds
At At 31
1 January Cash flows Non-cash Exchange 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
------------------ ---------- ---------- -------- ----------- -----------
At 1 At 31
January Cash flows Non-cash Exchange December
2009 in year flow differences 2009
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ----------- ---------- -------- ----------- ----------
Cash and
short-term
deposits 53,372 55,698 - (1,052) 108,017
------------------ ----------- ---------- -------- ----------- ----------
Bank overdraft (6,483) 2,901 - 519 (3,063)
------------------ ----------- ---------- -------- ----------- ----------
Cash and cash
equivalents 46,889 58,598 - (533) 104,954
------------------ ----------- ---------- -------- ----------- ----------
Other loans and
leases non-CSF - (3,705) - - (3,705)
------------------ ----------- ---------- -------- ----------- ----------
Factor financing (42,280) 25,600 - 1,834 (14,846)
------------------ ----------- ---------- -------- ----------- ----------
Net funds
excluding
customer-specific
financing 4,609 80,493 - 1,301 86,403
------------------ ----------- ---------- -------- ----------- ----------
Customer-specific
finance leases (55,191) 21,056 (10,163) 1,731 (42,567)
------------------ ----------- ---------- -------- ----------- ----------
Customer-specific
other loans (34,009) 27,496 - 25 (6,488)
------------------ ----------- ---------- -------- ----------- ----------
Total
customer-specific
financing (89,200) 48,552 (10,163) 1,756 (49,055)
------------------ ----------- ---------- -------- ----------- ----------
Net (debt)/funds (84,591) 129,045 (10,163) 3,057 37,348
------------------ ----------- ---------- -------- ----------- ----------
9 Adjusted management cash flow statement
The adjusted management cash flow has been provided to explain
how management view the cash performance of the business. There are
two primary differences to this presentation compared to the
statutory cash flow statement, as follows:
1) Factor financing is not included within the statutory
definition of cash and cash equivalents, but 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.
2010 2009
GBP'000 GBP'000
---------------------------------------------------- -------- --------
Adjusted profit before taxation 66,053 54,225
---------------------------------------------------- -------- --------
Net finance income (1,626) (302)
---------------------------------------------------- -------- --------
Depreciation and amortisation 19,506 17,695
---------------------------------------------------- -------- --------
Share-based payment 2,620 2,555
---------------------------------------------------- -------- --------
Working capital movements 21,358 65,337
---------------------------------------------------- -------- --------
Other adjustments 293 (1,567)
---------------------------------------------------- -------- --------
Adjusted operating cash inflow 108,204 137,943
---------------------------------------------------- -------- --------
Net interest received 1,204 1,149
---------------------------------------------------- -------- --------
Income taxes paid (11,281) (17,500)
---------------------------------------------------- -------- --------
Capital expenditure and disposals (25,258) (21,294)
---------------------------------------------------- -------- --------
Acquisitions and disposals - (6,775)
---------------------------------------------------- -------- --------
Equity dividends paid (16,984) (12,514)
---------------------------------------------------- -------- --------
Cash inflow before financing 55,885 81,009
---------------------------------------------------- -------- --------
Financing
---------------------------------------------------- -------- --------
Proceeds from issue of shares 822 44
---------------------------------------------------- -------- --------
Purchase of own shares (2,501) (560)
---------------------------------------------------- -------- --------
Increase in net funds excluding CSF in the period 54,206 80,493
---------------------------------------------------- -------- --------
Increase in net funds excluding CSF 54,206 80,493
---------------------------------------------------- -------- --------
Effect of exchange rates on net funds excluding CSF (1,170) 1,301
---------------------------------------------------- -------- --------
Net funds excluding CSF at beginning of period 86,403 4,609
---------------------------------------------------- -------- --------
Net funds excluding CSF at end of period 139,439 86,403
---------------------------------------------------- -------- --------
10 Related party transactions
During the year the Group entered into transactions, in the
ordinary course of business, with related parties. Transactions
entered into are as described below:
Biomni provides the Computacenter e-procurement system used by
many of Computacenter's major customers. An annual fee has been
agreed on a commercial basis for use of the software for each
installation. Both PJ Ogden and PW Hulme are Directors of and have
a material interest in Biomni Limited.
The table below provides the total amount of transactions that
have been entered into with related parties for the relevant
financial year:
Amounts Amounts
Sales to Purchases owed by owed to
related from related related related
parties parties parties parties
GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- ------------- -------- --------
Biomni Limited 12 31 2 -
--------------- -------- ------------- -------- --------
Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made on terms
equivalent to those that prevail in arm's length transactions.
Outstanding balances at the year-end are unsecured and settlement
occurs in cash. There have been no guarantees provided or received
for any related party receivables. The Group has not recognised any
provision for doubtful debts relating to amounts owed by related
parties. This assessment is undertaken each financial year through
examining the financial position of the related party and the
market in which the related party operates.
11. Events after the reporting period
On 15 February 2011, the Group announced its agreement to
acquire TOP Info SAS and its subsidiaries ('Top Info'), an
information technology reseller of hardware, software and services
based in Paris, France. The acquisition is still subject to
competition clearance in France, with the closing date not expected
before the end of March 2011. The expected consideration totals
EUR21 million payable on the closing date with an additional EUR1
million dependant upon the performance of Top Info in the period to
31 December 2011. The management and exercise of control over Top
Info will not pass to Computacenter until the closing date.
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 2010 but is derived from those accounts and
the accompanying Directors' report. Statutory accounts for the year
ended 31 December 2010 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 2010 were authorised for issue
by the Board of Directors on 9 March 2011 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 2009. 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
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