TIDMCCC
RNS Number : 9549O
Computacenter PLC
25 August 2017
Computacenter plc
Incorporated in England
Registration number: 03110569
LEI: 549300XSXUZ1I19DB105
ISIN: GB00BV9FP302
Interim results for the six months ended 30 June 2017
Computacenter plc ("Computacenter" or the "Group"), whose
ambition is to be Europe's preferred IT provider to enable users
and their business in a digital world, today announces unaudited
results for the six month period ended 30 June 2017.
Financial Highlights H1 2017 H1 2016 Percentage
Change
Increase/
(Decrease)
Financial Performance
Revenue (GBP million) 1,700.3 1,478.2 15.0
Adjusted(1) profit before
tax (GBP million) 41.9 25.3 65.6
Adjusted(1) diluted earnings
per share (pence) 25.6 15.3 67.3
Statutory profit before
tax (GBP million) 47.5 23.6 101.3
Statutory diluted earnings
per share (pence) 28.3 13.2 114.4
Dividend per share (pence) 7.4 7.2 2.8
Cash Position
Net funds(3) (GBP million) 137.3 96.6 42.1
Net cash flow from operating
activities (GBP million) 11.4 (1.1) n/a
Revenue Performance
Services (GBP million) 562.1 498.0 12.9
Supply Chain (GBP million) 1,138.2 980.2 16.1
Reconciliation between Adjusted(1)
and Statutory Performance
Adjusted(1) profit before
tax (GBP million) 41.9 25.3
Exceptional and other adjusting
items:
Exceptional gain on disposal 4.3 -
of an investment property
(GBP million)
Release of provision for 1.4 -
onerous German contracts
(GBP million)
Amortisation of acquired
intangibles (GBP million) (0.1) (0.6)
Increase in estimated costs
of redundancy and other restructuring
in French business (GBP million) - (1.1)
Statutory profit before tax
(GBP million) 47.5 23.6
Operational Highlights:
-- The Group's first half performance was marginally ahead of
our expectations for the period, as revised at the time of our Q1
Trading Update on 24 April 2017;
-- The UK business achieved good revenue growth across the
Supply Chain and Professional Services practices with improved
Services margins dampened by Supply Chain margins, which remain
challenging;
-- Strong revenue growth within the German business, led by key
Supply Chain accounts and supported by continuing demand across our
Services portfolio; and
-- Continuing profit recovery in France with a materially
improved revenue mix from Supply Chain towards Services in the
first half, making the business more sustainable.
Mike Norris, Chief Executive of Computacenter plc,
commented:
'The majority of our profit growth in the first half came from
improved operational performance, with some help from currency
movements. We also benefitted from a comparison with what was a
weaker trading performance in the first half of the prior year,
whereas the comparison for the second half of 2017 is challenging.
We remain on track for a record performance, and marginally ahead
of the upgraded board expectation expressed at our Trading Update
in April 2017. We have never been more optimistic about the
market's potential, as customers invest capital, digitalise their
businesses and require support to reduce their long-term operating
costs. It remains critical that Computacenter invests too, in
skills, tools, automation, infrastructure and customer satisfaction
as we remain more focused on our long-term performance than the
short term. As can be seen from recent results, our investments
over the last few years have paid off but they are not guaranteed.
However, market opportunity and competition makes this continuous
investment both attractive and necessary. It is also worthy of note
that most of our investments are expensed through the Income
Statement, rather than capitalised. Our cash generation over recent
years has enabled us to have a strong dividend policy and to
periodically return additional value to shareholders. We intend to
do this again in the fourth quarter of 2017, with an anticipated
return of value of approximately GBP100 million. This would bring
the total returned to shareholders, via ordinary and special
returns, to GBP648 million since listing on the London Stock
Exchange on 21 May 1998.'
(1) Adjusted operating profit or loss, adjusted profit or loss
before tax, adjusted tax, adjusted profit or loss for the period,
adjusted earnings per share and adjusted diluted earnings per share
are, as appropriate, each stated before: exceptional and other
adjusting items including gain or loss on business disposals, gain
or loss on disposal of investment properties, amortisation of
acquired intangibles, utilisation of deferred tax assets (where
initial recognition was as an exceptional item or a fair value
adjustment on acquisition), and the related tax effect of these
exceptional and other adjusting items, as Management do not
consider these items when reviewing the underlying performance of
the segment or the Group as a whole. Additionally, adjusted gross
profit or loss and adjusted operating profit or loss includes the
interest paid on customer-specific financing (CSF) which Management
considers to be a cost of sale. A reconciliation between key
adjusted and statutory measures is provided within the Group
Finance Director's Review included within this announcement.
Further detail is provided within note 5 to the summary financial
information included within this announcement, Segment
Information.
(2) We evaluate the long-term performance and trends within our
strategic key performance indicators (KPIs) on a constant currency
basis. Further, the performance of the Group and its overseas
segments are shown, where indicated, in constant currency. The
constant currency presentation, which is a non-GAAP measure,
excludes the impact of fluctuations in foreign currency exchange
rates. We believe providing constant currency information gives
valuable supplemental detail regarding our results of operations,
consistent with how we evaluate our performance. We calculate
constant currency percentages by converting our prior-year local
currency financial results using the current year average exchange
rates and comparing these recalculated amounts to our current year
results or by presenting the results in the equivalent local
currency amounts. Wherever the performance of the Group, or its
overseas segments, are presented in constant currency, the
equivalent prior-year measure is also presented in actual currency
using the exchange rates prevailing at the time. Financial
Highlights, and statutory measures, are provided in actual
currency.
(3) Net funds includes cash and cash equivalents, CSF, other
short or other long-term borrowings and current asset
investments.
Enquiries:
Computacenter plc:
Mike Norris, 01707
Chief Executive 631601
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Tony Conophy, 01707
Finance Director 631515
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Tulchan Communications:
James Macey 0207 353
White 4200
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Matt Low
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DISCLAIMER: FORWARD-LOOKING STATEMENTS
This announcement includes statements that are, or may be deemed
to be, 'forward-looking statements'. These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms 'anticipates', 'believes',
'estimates', 'expects', 'intends', 'may', 'plans', 'projects',
'should' or 'will', or, in each case, their negative or other
variations or comparable terminology, or by discussions of
strategy, plans, objectives, goals, future events or intentions.
These forward-looking statements include all matters that are not
historical facts. They appear in a number of places throughout this
announcement and include, but are not limited to, statements
regarding the Groups' intentions, beliefs or current expectations
concerning, amongst other things, results of operations, prospects,
growth, strategies and expectations of its respective
businesses.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances.
Forward-looking statements are not guarantees of future performance
and the actual results of the Group's operations and the
development of the markets and the industry in which they operate
or are likely to operate and their respective operations may differ
materially from those described in, or suggested by, the
forward-looking statements contained in this announcement. In
addition, even if the results of operations and the development of
the markets and the industry in which the Group operates are
consistent with the forward-looking statements contained in this
announcement, those results or developments may not be indicative
of results or developments in subsequent periods. A number of
factors could cause results and developments to differ materially
from those expressed or implied by the forward-looking statements,
including, without limitation, those risks in the risk factor
section of the 2016 Computacenter Annual Report and Accounts, as
well as general economic and business conditions, industry trends,
competition, changes in regulation, currency fluctuations or
advancements in research and development.
Forward-looking statements speak only as of the date of this
announcement and may, and often do, differ materially from actual
results. Any forward-looking statements in this announcement
reflect the Group's current view with respect to future events and
are subject to risks relating to future events and other risks,
uncertainties and assumptions relating to the Group's operations,
results of operations and growth strategy.
Neither Computacenter plc nor any of its subsidiaries undertakes
any obligation to update the forward-looking statements to reflect
actual results or any change in events, conditions or assumptions
or other factors unless otherwise required by applicable law or
regulation.
LETTER FROM THE CHAIRMAN
MOST Interesting times
I am pleased to report a most successful first half of 2017 for
our Company. The strength of our geographically diverse business
model and the investments we have made in customer relationships
throughout our history are evident in revenue growth of 8.7 per
cent in constant currency(2) (15.0 per cent in actual currency(2)
).
Our digital workplace investments are paying off, enhanced by
our Security and Cloud offerings. We have invested in the USA and
Mexico, and now have some 420 employees in the USA and 210 in
Mexico City, supporting a growing number of global enterprises. Add
to this our customer support capabilities, with 650 people in Cape
Town, 400 in Budapest, 140 in Kuala Lumpur and our new customer
service desk in China, and you can see our commitment to our global
customers. Our German business had an outstanding first half,
growing total revenue by 13.6 per cent in constant currency(2)
(25.5 per cent in actual currency(2) ). We are pleased with solid
progress in the UK and delighted with the number of contract
renewals we have won here. We now have a clearly defined French
business, which has won and successfully taken onboard some
outstanding global contracts in the past year or so.
All in all, we are set for a very successful 2017. The new
contract wins and renewals we have booked in the first half of this
year set us up strongly for the second half and beyond, and our
pipeline of opportunities is healthy.
We have a full agenda of improvements on our plate and, as ever,
I stress that we are in business for the long haul. We make no
promises of certain success but we are confident in our ability to
compete vigorously in our chosen markets. We have always believed
in our people and our business model and our continued investments
in our capabilities around the globe are testament to this. In
summary, we are extremely pleased with our position and results but
by no means satisfied.
Greg Lock
Chairman
25 August 2017
Performance review
Our Performance
Financial performance
The Group's revenues increased by 8.7 per cent in constant
currency(2) to GBP1,700.3 million, and by 15.0 per cent in actual
currency(2) (H1 2016: GBP1,478.2 million).
The Group's adjusted(1) profit before tax increased by 58.7 per
cent in constant currency(2) to GBP41.9 million, and by 65.6 per
cent in actual currency(2) (H1 2016: GBP25.3 million).
With the increase in the Group's overall profitability,
adjusted(1) diluted earnings per share increased by 67.3 per cent
to 25.6 pence (H1 2016: 15.3 pence) in the first half of 2017.
The Group made a statutory profit before tax of GBP47.5 million,
an increase of 101.3 per cent in actual currency(2) (H1 2016:
GBP23.6 million). The Group's statutory diluted earnings per share
increased by 114.4 per cent to 28.3 pence for the period (H1 2016:
13.2 pence).
In the first half of 2017, the Group reported a net gain of
GBP5.6 million from exceptional and other adjusting items. The
disposal of an investment property for GBP14.5 million realised a
gain of GBP4.3 million, after disposal costs, and all remaining
provisions, originally booked in 2013, relating to the two residual
German loss-making contracts were released for a gain of GBP1.4
million.
The Group's first half performance was marginally ahead of our
expectations for the period, as revised at the time of our Q1
Trading Update on 24 April 2017. In that announcement, we noted
that our performance in 2016 was considerably weaker in the first
half than in the second half against historical norms, creating an
easier half-on-half comparison in H1 2017. Higher profit growth
than expected in the first half of 2017 will return Computacenter
to a more historical norm in the balance of our profits between the
first and second halves of the year.
Services performance
The Group's Services revenue increased by 7.2 per cent in
constant currency(2) to GBP562.1 million, and by 12.9 per cent in
actual currency(2) (H1 2016: GBP498.0 million).
Services revenue in the UK showed good improvement during the
first half of 2017. Professional Services activity, both through
Entry Into Service and Transformation work, has rebounded
particularly well with the business cautiously restoring capacity,
as utilisation improves. The Public Sector led this activity, with
significant ongoing project work being added to the forward order
book. Whilst the Managed Services pipeline has been rebuilding, the
UK business has defended its contract base by completing a number
of significant contract renewals. These included a leading
industrial customer, who renewed for a further five years without a
competitive tendering process, and a leading retailer, who also
renewed for five years. Renewing these critical contracts
demonstrates the 'stickiness' created by our approach to putting
the customer first. Whilst we signed a number of new contracts
through the half, several material Public Sector tenders were not
won, with the importance of incumbency again being highlighted.
Services margins have improved in the UK, partly as a result of the
increased mix of Professional Services, a business once again
operating at sustainable levels of utilisation, and partly because
of across-the-board execution in line with expectations within the
Managed Services portfolio.
The German Services business continued to boost the Group's
top-line growth. Demand for our Professional Services business
continues to grow, with its performance starting to be held back by
the availability of suitably qualified personnel in the market,
with utilisation across the practices high. The Managed Services
business saw good growth from the contract wins in 2016 and
continued to attract new customers through the first half of the
year. The significant and complex Entry Into Service projects are
now largely complete, with these contracts successfully entering
the 'run' phase. Several difficult contracts continued to
disappoint, marginally dampening an otherwise successful six months
for the business. Margins remained flat, despite the increasing
contribution from the higher-margin Professional Services, as the
difficulties in delivering certain Managed Services contracts
constrained the overall Service margin. Finally, the last two
onerous contracts that were provided for in 2013 have had the
remaining provisions of GBP1.4 million released, as the ongoing
operational improvements led to these contracts turning profitable.
This completed the turnaround activity and underlined our
commitment to honouring the contracts we enter and to providing
excellent service to our customers.
Our French Services business made significant progress in the
half, with the return to growth of the Professional Services
business supporting a much-improved Managed Services business. The
significant Managed Services wins of 2015 and 2016 are now driving
the business's volume growth. As we have seen elsewhere across the
Group, these Managed Services contracts are also now providing
opportunities for our Professional Services and Supply Chain
businesses. Whilst we were disappointed not to win a significant
contract with a major French utility provider, we are encouraged by
the strength of the French pipeline and the performance of the
contracts we have won to date.
It is worth noting that revenue for work performed by other
Computacenter entities on behalf of several key French contracts
has been reclassified to the French Segment. Historically these
revenues have been recorded in the segment where the associated
underlying subsidiary recognises the revenues in their statutory
accounts. For segmental analysis, all of our offshore internal
service provider entities (e.g. Computacenter USA) are allocated to
the UK Segment apart from Computacenter Switzerland which is within
the German Segment. As the work performed in certain offshore
subsidiaries has grown within the UK Segment, Management decided to
reallocate these revenues inter-segmentally to reflect better where
the portfolio co-ordination and operational responsibility lies and
where the benefits should accrue. We have therefore restated the
French and UK Managed Services revenue for 2016, to assist with
understanding the growth in each business and to ensure
period-on-period comparisons reflect true underlying growth. This
has no impact on Group revenue or on segmental profitability, as
the margins were previously shared on the same basis that the
revenue now reflects. Further information on this segmental revenue
restatement can be found in note 5 to the summary financial
information included within this announcement, Segment Information.
All discussion within this Interim Report on segmental Managed
Services revenues for the UK and France reflect this
reclassification and resultant prior period restatement.
Supply Chain performance
The Group's Supply Chain revenue increased by 9.5 per cent in
constant currency(2) to GBP1,138.2 million, and by 16.1 per cent in
actual currency(2) (H1 2016: GBP980.2 million).
The UK Supply Chain performance continued the recovery displayed
in the fourth quarter of 2016, with pleasing top-line growth
tracking Management's expectations. Margins were depressed,
however, with significant volumes of low-margin software sales
diluting the result and remain below our plan for the year. A small
recovery in this area would materially assist the UK's performance.
Customers continue to consider their technology options in the
Datacenter market, creating procurement delays, although other
areas of the business have started to see the promise of Windows 10
implementations.
The Supply Chain business in Germany saw spectacular growth
during the period and underpinned the Group's performance in the
half. This growth was heavily influenced by the performance of our
Public Sector business, with more modest gains across other
sectors, which could result in a return to more normal patterns of
growth if this sector starts to slow. Supply Chain margins have
improved and now lead the Group, with some high-value deals leading
the way.
French Supply Chain revenues fell only slightly in constant
currency(2) , as the process of rationalising our customer business
neared completion. As we expected, our largest customer had a
quieter start to the year, which has affected performance. Outside
of our biggest customer, we saw pleasing growth, with the overall
top-line performance ahead of expectations. Margins have slipped
from their Group-leading performance of 2016, as the customer and
product mix changed through the first half of the year.
Outlook
The majority of our profit growth in the first half came from
improved operational performance, with some help from currency
movements. We also benefitted from a comparison with what was a
weaker trading performance in the first half of the prior year,
whereas the comparison for the second half of 2017 is challenging.
We remain on track for a record performance, and marginally ahead
of the upgraded board expectation expressed at our Trading Update
in April 2017.
We have never been more optimistic about the market's potential,
as customers invest capital, digitalise their businesses and
require support to reduce their long-term operating costs. It
remains critical that Computacenter invests too, in skills, tools,
automation, infrastructure and customer satisfaction as we remain
more focused on our long-term performance than the short term. As
can be seen from recent results, our investments over the last few
years have paid off but they are not guaranteed. However, market
opportunity and competition makes this continuous investment both
attractive and necessary.
It is also worthy of note that most of our investments are
expensed through the Income Statement, rather than capitalised. Our
cash generation over recent years has enabled us to have a strong
dividend policy and to periodically return additional value to
shareholders. We intend to do this again in the fourth quarter of
2017, with an anticipated return of value of approximately GBP100
million. This would bring the total returned to shareholders, via
ordinary and special returns, to GBP648 million since listing on
the London Stock Exchange on 21 May 1998.
Mike Norris
Chief Executive Officer
25 August 2017
United Kingdom
Financial performance
Total revenue increased by 5.1 per cent to GBP678.3 million (H1
2016: GBP645.1 million). Adjusted(1) operating profit rose by 27.1
per cent to GBP17.8 million (H1 2016: GBP14.0 million) whilst
statutory profit before tax was 55.9 per cent higher at GBP22.6
million (H1 2016: GBP14.5 million).
We are pleased with the UK's performance in the first half and
maintain a positive outlook. Revenue growth across our Services and
Supply Chain businesses appears to be ahead of the market. Profit
growth has exceeded our expectations but there remains further work
to do to restore Supply Chain margins.
Services Performance
Services revenue grew by 5.4 per cent to GBP249.6 million (H1
2016: GBP236.7 million). This included Professional Services growth
of 14.1 per cent to GBP66.4 million (H1 2016: GBP58.2 million) and
Managed Services growth of 2.6 per cent to GBP183.2 million (H1
2016: GBP178.5 million).
Managed Services faced some already anticipated headwinds at the
start of 2017, with the continuation of the heavy renewal activity
we saw in 2016. We had a disproportionately large number of major
contracts due for renewal or coming to an end in 2017, and we are
pleased to report excellent progress, with many key contract
renewals now concluded. During the first half we signed more than
GBP200 million of both renewed and new contracts. This included
significant new wins worth more than GBP45 million on a Total
Contract Value basis. We are pleased by the business's pipeline and
remain on course to reverse our 2016 Managed Services contract base
decline.
We increased Managed Services' profits ahead of volume through
efficiency gains, while maintaining our excellent customer
satisfaction metrics.
The Professional Services business is beginning to see the
impact of Windows 10 and new support models within our Enterprise
customer base. As a result of this momentum, the forward order book
for Professional Services has returned to growth, benefitting from
the pull-through of engagements from Managed Services contracts.
This was particularly the case in the public sector where there was
strong growth during the first half, with some projects due to be
delivered in the second half of the year.
Supply Chain Performance
Supply Chain revenue increased by 5.0 per cent to GBP428.7
million (H1 2016: GBP408.4 million).
Whilst the Datacenter business has been under pressure, as
customers review and refine their Software Defined/Hybrid Cloud
strategies, the Workplace, Networking and Security businesses are
performing well, especially in Security which is experiencing
strong growth. We have seen a significant upturn in Workplace
Supply Chain Services and Projects on the back of Windows 10
momentum. As the digitisation of workplace begins to materialise,
our customers' demand is starting to shift in form factor, with
substantial new mobility device deals into large customers.
Overall Supply Chain margins reduced slightly, partially due to
the increased proportion of lower margin software revenues. This
change in mix has meant that we have not seen the improvement we
anticipated in the first half of 2017 and Supply Chain margins
remain under pressure, albeit broadly in line with 2016. We expect
these challenges to continue into the second half of 2017 and we
are meeting these market pressures with initiatives to improve the
efficiency and effectiveness of our Supply Chain business.
We have continued to invest in our people, to ensure we attract,
develop and retain the best people in the industry. We have made
some minor changes to the UK structure, ensuring that we fully
address the entire UK target market. However, there is still
significant work to do to ensure that the UK business remains
strong, performs ahead of expectations in the year and delivers a
platform for sustained long-term growth. We remain committed to
delivering value to our customers and to continuing our history of
developing intimate relationships with them for the long term.
SG&A
Levels of SG&A within the UK business have increased by 8.6
per cent in actual currency(2) to GBP83.7 million (H1 2016: GBP77.1
million) due to increased variable remuneration and continued
investment into tactical investment plans.
Kevin James
Managing Director, UK
25 August 2017
GERMANY
Financial performance
Total revenue increased by 13.6 per cent in constant currency(2)
to EUR886.2 million (H1 2016: EUR779.8 million) and by 25.5 per
cent in actual currency(2) . Adjusted(1) operating profit rose by
105.7 per cent in constant currency(2) to EUR25.1 million (H1 2016:
EUR12. 2 million), and by 129.5 per cent in actual currency(2) .
Statutory profit before tax increased by 136.0 per cent in constant
currency(2) to EUR26.9 million (H1 2016: EUR11.4 million), and by
160.7 per cent in actual currency(2) .
The Supply Chain area led Computacenter's growth in Germany,
driven by a strong economy encouraging customers to invest heavily
in extending and refreshing their infrastructure. Services growth
was also pleasing, as we benefitted from several significant 2016
Managed Services wins and continuing strong demand for our
consultancy practices.
Services Performance
Services revenue grew by 5.8 per cent in constant currency(2) to
EUR288.3 million (H1 2016: EUR272.5 million) and by 16.7 per cent
in actual currency(2) . This included Professional Services growth
of 7.2 per cent in constant currency(2) to EUR86.6 million (H1
2016: EUR80.8 million) and by 18.3 per cent in actual currency(2) ,
and Managed Services growth of 5.2 per cent in constant currency(2)
to EUR201.7 million (H1 2016: EUR191.7 million) and by 16.1 per
cent in actual currency(2) .
Whilst Services revenue growth is pleasing, margins continue to
be affected by a handful of underperforming contracts. These
underperforming contracts continued to achieve margins below our
expectations for the first half, however we expect these margins to
improve in the second half of the year. We have completed the
turnaround in the financial performance of the onerous contracts in
Germany, releasing EUR1.7 million of provisions as an exceptional
item. This demonstrates our commitment to honouring our contracts
with customers and our ability to improve their financial
performance over time. In addition, the business is scaling up for
the Entry Into Service phase for three major contracts and the
associated transformations these customers have requested. The pace
of Managed Services activities will continue to be a challenge for
the business throughout the rest of the year.
We have grown our existing customer base and successfully
renewed one of our most important networking operations contracts,
with an automotive customer for the next five years, maintaining
our record of successfully retaining nearly all of the important
renewals over the last 12 months. This provides clear evidence of
our customers' satisfaction with our ability to meet service level
agreements and deliver quality of service. Most of the renewals and
new business are based on transformational change programmes, to
prepare our customers for the new world of digitisation, cloud and
user enablement.
Our Professional Services business performed well during the
period, driven by ongoing demand for Security, Cloud enablement and
Networking infrastructure services, as well as initial migrations
to the new Windows 10 and Office 365 environment. We have seen some
big investments in the Public Sector, to build up new
infrastructure for private cloud solutions and digitisation. New
wins and existing framework contracts allowed us to participate in
our customers' investment programmes. Our infrastructure
consultancy practice remains in high demand due to its skillset and
this looks set to continue. However, high demand for resources
across Germany makes it challenging for us to retain and grow our
people base.
Supply Chain Performance
Supply Chain revenue for the first six months of 2017 grew by
17.9 per cent in constant currency(2) to EUR597.9 million (H1 2016:
EUR507.3 million) and by 30.2 per cent in actual currency(2) . We
saw significant demand from both public sector and certain private
sector customers, where we participate in framework sales
agreements. All business lines performed well, with Datacenter
benefitting from customer investments in private cloud
infrastructure, particularly within Central Government. In
Networking and Security, there continues to be significant demand
for refreshing and extending existing core infrastructure. The
Workplace business has seen the first implementations of new
infrastructure, based on the upcoming Windows 10 migrations. In all
business areas, we have benefitted from driving solutions such as
Cloud, Security, SAP Hana, Industrie 4.0 and Digital Workplace.
SG&A
SG&A costs in the first half increased by 3.0 per cent in
constant currency(2) to EUR86.8 million (H1 2016: EUR84.3 million)
and by 13.5 per cent in actual currency(2) . This was primarily due
to increased business volumes leading directly to higher variable
remuneration and increased pre-sales costs for the growing Services
business. We have kept our sales headcount flat but seen a slight
increase in headcount in Services management and some overlay
functions.
Reiner Louis
Managing Director, Germany
25 August 2017
FRANCE
Financial Performance
Total revenue increased by 3.1 per cent in constant currency(2)
to EUR265.5 million (H1 2016: EUR257.6 million) and by 13.8 per
cent in actual currency(2) . Adjusted(1) operating profit improved
by EUR0.5 million to EUR1.7 million in constant currency(2) (H1
2016: EUR1.2 million) and by GBP0.6 million in actual currency(2) .
The statutory profit before tax was EUR1.7 million in constant
currency(2) (H1 2016: loss of EUR0.5 million) and GBP1.4 million in
actual currency(2) (H1 2016: loss of GBP0.3 million).
With the French business having exceeded our expectations in H1
2016, we were pleased that the H1 2017 results confirmed its
further improved performance. Moreover, it improved its revenue mix
from Supply Chain towards Services in the first half, making the
business more sustainable.
Services Performance
We are pleased with the material improvement in our Services
performance in France.
Overall Services revenue increased by 20.3 per cent in constant
currency(2) to EUR62.1 million (H1 2016: EUR51.6 million) and by
32.8 per cent in actual currency(2) .
Our Managed Services business saw revenues rise by 22.0 per cent
in constant currency(2) to EUR50.4 million (H1 2016: EUR41.3
million) and by 34.9 per cent in actual currency(2) . The Managed
Services teams have successfully taken on two major contracts that
we signed at the end of 2016. Despite the disappointment of failing
to extend a Services contract with a large French utilities
provider, we remain well positioned to increase our annual contract
base, as we are currently in the final phase of several significant
Managed Services bids.
Although overall revenues remain relatively small, the
performance of our Professional Services business materially
improved, with revenues increasing by 13.6 per cent in constant
currency(2) to EUR11.7 million (H1 2016: EUR10.3 million) and by
24.7 per cent in actual currency(2) .
We believe this improvement was the result of rising demand for
Windows 10 competencies within our traditional Supply Chain
customer base and additional service opportunities generated by
pull-through from our expanding Managed Services customer base. We
are confident that this positive trend will continue in the second
half of the year and, provided we successfully recruit consultants
with skills in digital workplace, mobility, datacenter and
security, we will be able to accelerate our Professional Services
growth.
Supply chain performance
Supply Chain revenue decreased by 1.3 per cent in constant
currency(2) to EUR203.4 million (H1 2016: EUR206.0 million, and
increased by 9.1 per cent in actual currency(2) .
While we saw lower activity from one of our largest Supply Chain
customers, we compensated for this with new customer wins in our
target market of large private and public sector organisations.
Taking on new contracts reduced our Supply Chain margin in the
first half but we are confident that we will increase our margin in
the second half to the same level as 2016, as a whole.
We continued to improve our product business mix, by shifting
from workplace business towards higher-margin Datacenter and
Networking solutions, but much remains to be done.
As usual at this time of year, there is still much work to do to
secure Supply Chain business in the second half and traditionally
there is considerable focus on the last quarter of the year. With a
positive economic climate in France, a strong short-term pipeline
and the recent wins of some high-volume framework tenders in the
public sector, we are optimistic about our chances of exceeding the
overall Supply Chain revenue achieved in 2016.
SG&A
We continue to realise cost savings through our core strategy of
working with a reducing targeted customer set. These efficiencies,
alongside our continued focus on cost control within the French
business, have resulted in a reduction in SG&A expenditure of
5.1 per cent in constant currency(2) to EUR22.3 million (H1 2016:
EUR23.5 million) and an increase of 4.3 per cent in actual
currency(2) .
Lieven Bergmans
Managing Director, France
25 August 2017
BELGIUM
Financial performance
Total revenue increased by 12.4 per cent in constant currency(2)
to EUR35.4 million (H1 2016: EUR31.5 million) and by 24.5 per cent
in actual currency(2) . Adjusted(1) operating profit decreased by
50.0 per cent in both constant and actual currency(2) , to EUR0.4
million (H1 2016: EUR0.8 million), primarily because of one-time
restructuring costs. Statutory profit before tax fell by 57.1 per
cent in constant currency(2) to EUR0.3 million (H1 2016: EUR0.5
million) and by 40.0 per cent in actual currency(2) .
Overall, the operational performance of the Belgian business was
within our expectations for the first half of 2017.
Services Performance
Services revenue increased by 17.1 per cent in constant
currency(2) to EUR13.0 million (H1 2016: EUR11.1 million) and by
28.7 per cent in actual currency(2) . This included Professional
Services growth of 9.1 per cent in constant currency(2) to EUR1.2
million (H1 2016: EUR1.1 million) and by 22.2 per cent in actual
currency(2) , and Managed Services growth of 18.0 per cent in
constant currency(2) to EUR11.8 million (H1 2016: EUR10.0 million)
and by 29.5 per cent in actual currency(2) .
We continue to benefit from implementing the Group Operating
Model, which improves our competitive position in Belgium,
especially for international customers headquartered there. This is
recognised by independent IT outsourcing researchers Whitelane, who
ranked Computacenter Belgium as the market leader in End User
Computing for the fifth year in a row. Following a significant
Managed Services contract win in 2016 in the automotive industry,
we are competitively positioned for both a significant renewal and
a new Managed Services contract, both to be awarded in 2017. We are
also delivering Digital Workplace solutions, in particular to our
Managed Services customers, which will continue to drive
demand.
Supply Chain Performance
Supply Chain revenue increased by 9.8 per cent in constant
currency(2) to EUR22.4 million (H1 2016: EUR20.4 million), and by
22.2 per cent in actual currency(2) .
The business saw a strong Supply Chain performance in the first
half of 2017, predominantly in Workplace where we have leveraged
our group relationships with key hardware vendors and improved our
margins. We expect further growth opportunities in the second half
of the year, especially in the Network and Datacenter Supply Chain
business lines. This will also drive volumes for our Professional
Services business.
SG&A
SG&A increased by 12.5 per cent in constant currency(2) to
EUR4.5 million (H1 2016: EUR4.0 million), and by 22.6 per cent in
actual currency(2) .
Jurgen Strijkers
Managing Director, Belgium
25 August 2017
Group finance director's review
RETURNING VALUE TO shareholderS
Revenue
Revenue for the Group increased by GBP222.1 million or 15.0 per
cent over the period, to GBP1,700.3 million as measured in actual
currency(2) . The revenue result was assisted by the decline in
Sterling over the period, with revenue increasing by 8.7 per cent
when measured in constant currency(2) .
Operating profit
Adjusted(1) operating profit for the Group increased by 65.6 per
cent to GBP41.4 million (H1 2016: GBP25.0 million), with gains seen
across all geographic segments but primarily led by the German
Segment. The Group's statutory operating profit of GBP42.9 million
for the period was 83.3 per cent higher than in the comparative
period (H1 2016: GBP23.4 million).
The weakening of Sterling has resulted in a foreign exchange
translation benefit to the Group. The impact of restating the first
half of 2016 at 2017 exchange rates would be an increase of
approximately GBP1.2 million in H1 2016 adjusted(1) profit before
tax.
Exceptional and other adjusting items
A net gain of GBP5.6 million was recorded, resulting from
exceptional and other adjusting items (H1 2016: net loss of GBP1.7
million).
The remaining provisions for the last two onerous contracts in
Germany were released, for an exceptional gain of GBP1.4 million.
These provisions were originally booked in 2013 and the contracts
have now returned to profitability, so the provisions are no longer
required. As these provisions were booked as exceptional items,
this release has also been classified as such.
The disposal of an investment property in Braintree, Essex, was
completed on 26 May 2017 for GBP14.5 million. This property was
associated with a former subsidiary of the Group, R.D. Trading
Limited, which was itself sold in February 2015. Due to the size
and non-operational nature of the transaction, the GBP4.3 million
gain on disposal, net of disposal costs, has been classified as
exceptional.
Profit before tax
Adjusted(1) profit before tax increased by 65.6 per cent to
GBP41.9 million in actual currency(2) (H1 2016: GBP25.3 million),
and by 58.7 per cent in constant currency(2) . Statutory profit
before tax increased by GBP23.9 million to GBP47.5 million (H1
2016: GBP23.6 million), due to the strong underlying performance
assisted by the exceptional gains.
Taxation
The adjusted(1) tax charge on ordinary activities was GBP10.7
million (H1 2016: GBP6.7 million), on an adjusted(1) profit before
tax of GBP41.9 million (H1 2016: GBP25.3 million). The adjusted(1)
effective tax rate ('ETR') was 25.5 per cent (H1 2016: 26.6 per
cent). The H1 2017 ETR was lower than in the prior period due to a
change in the geographic split of profit before tax, with
increasing profits in France, a flat German cash tax rate and an
increase in profits in the United Kingdom, where the tax rate is
substantially lower than in the other European countries.
The statutory tax charge was GBP13.1 million (H1 2016: GBP7.5
million), on profit before tax of GBP47.5 million (H1 2016: GBP23.6
million). This represents a statutory ETR of 27.5 per cent (H1
2016: 31.9 per cent). The GBP4.3 million gain on the disposal of
the investment property was not taxable and is the most significant
reason for the movement in the ETR.
We continue to utilise the German tax losses, which reduces the
statutory ETR. However, the deferred tax asset, which we previously
recognised as an exceptional tax item, is no longer replenishing
and readily available losses will be largely exhausted by the end
of 2017, leading to an increase in the expected adjusted(1) ETR for
2018.
The table below reconciles the statutory tax charge to the
adjusted(1) tax charge for the period ended 30 June 2017.
H1 2017 H1 2016 Year
GBP'000 GBP'000 2016
GBP'000
============================================ ======== ======== ========
Statutory tax charge 13,052 7,509 23,300
============================================ ======== ======== ========
Adjustments to exclude:
============================================ ======== ======== ========
Utilisation of German deferred tax assets (2,048) (892) (2,580)
============================================ ======== ======== ========
Tax on amortisation of acquired intangibles 16 114 72
============================================ ======== ======== ========
Tax on exceptional items (351) - (192)
============================================ ======== ======== ========
Adjusted(1) tax charge 10,669 6,731 20,600
============================================ ======== ======== ========
Statutory ETR 27.5% 31.9% 26.8%
============================================ ======== ======== ========
Adjusted(1) ETR 25.5% 26.6% 23.8%
============================================ ======== ======== ========
Profit for the period
The adjusted(1) profit for the period increased by 67.7 per cent
to GBP31.2 million (H1 2016: GBP18.6 million). The statutory profit
after tax increased by GBP18.4 million to GBP34.5 million (H1 2016:
GBP16.1 million).
Earnings per share
Adjusted(1) diluted earnings per share increased by 67.3 per
cent to 25.6 pence per share (H1 2016: 15.3 pence per share).
Statutory diluted earnings per shares increased by 114.4 per cent
to 28.3 pence per share (H1 2016: 13.2 pence per share).
H1 2017 H1 2016 Year
2016
========================================== ======= ======= =======
Basic weighted average number of shares
(excluding own shares held) (no. '000) 120,842 120,617 120,540
========================================== ======= ======= =======
Effect of dilution:
========================================== ======= ======= =======
Share options 888 879 1,344
========================================== ======= ======= =======
Diluted weighted average number of shares 121,730 121,496 121,884
========================================== ======= ======= =======
Statutory profit for the period/year
attributable to equity holders of the
parent (GBP'000) 34,475 16,059 63,773
========================================== ======= ======= =======
Basic earnings per share (pence) 28.5 13.3 52.9
========================================== ======= ======= =======
Diluted earnings per share (pence) 28.3 13.2 52.3
========================================== ======= ======= =======
Adjusted(1) profit for the period/year
attributable to equity holders of the
parent (GBP'000) 31,189 18,554 65,829
========================================== ======= ======= =======
Adjusted(1) basic earnings per share
(pence) 25.8 15.4 54.6
========================================== ======= ======= =======
Adjusted(1) diluted earnings per share
(pence) 25.6 15.3 54
========================================== ======= ======= =======
DIVID
We are pleased to announce an interim dividend of 7.4 pence per
share. This is in line with our policy that the interim dividend
will be approximately one-third of the previous year's full
dividend. The interim dividend will be paid on Friday 13 October
2017. The dividend record date is Friday 15 September 2017, and the
shares will be marked ex-dividend on Thursday 14 September
2017.
Net funds
Net funds(3) at 30 June 2017 were GBP137.3 million, compared to
GBP96.6 million at 30 June 2016. The cash position remains strong,
after what is historically the weaker half of the year in terms of
our working capital cycle. The net funds(3) position at 30 June
2017 benefitted from the GBP14.3 million of proceeds on disposal,
after GBP0.2 million of disposal costs, of an investment property
that occurred on 26 May 2017. This largely offset the final 2016
dividend of GBP18.1 million, which was paid in May 2017, and the
Group's relatively improved operating cash flow performance, with
an inflow of GBP11.4 million for the period to 30 June 2017 (H1
2016: GBP1.1 million outflow). Net funds(3) decreased by GBP7.2
million from GBP144.5 million as at 31 December 2016.
The Group net funds(3) position includes current asset
investments which have decreased by GBP30.0 million to nil since 31
December 2016 (H1 2016: GBP35.0 million). The Group continues to
have no material borrowings outside of customer-specific finance
leases and loans.
We remain conscious of our responsibility to shareholders to
maximise the return on the Group's cash assets and improve the
efficiency of our balance sheet. We investigate opportunities to
make best use of the funds available and now believe that it would
be appropriate to return excess cash to shareholders. We intend to
do this in the fourth quarter of 2017, with an anticipated return
of value of approximately GBP100 million.
Currency
The Group reports its results in Pounds Sterling. The weakening
of Sterling, particularly against the Euro, is expected to continue
to result in a foreign exchange translation benefit to the Group.
If the 30 June 2017 spot rates were to continue through the
remainder of 2017, the impact of restating 2016 at 2017 exchange
rates would be an increase of approximately GBP120 million in 2016
revenue and an increase of approximately
GBP3 million in 2016 adjusted(1) profit before tax.
UNITED KINGDOM'S WITHDRAWAL FROM THE EUROPEAN UNION
Management and the Board continue to consider the financial and
commercial implications of the pending withdrawal by the United
Kingdom from the European Union on both the short and medium
prospects of the Group. Outside of two principal areas where the
withdrawal could affect the Group, including weakness within the UK
economy driving down short term demand for the Group's products and
services, the potential impact of which remains too early to
foresee at this stage, and the impact of the change in foreign
currency exchange rates, which has been modelled on the 2016
results and disclosed above, the Group does not see any major
impact on its day to day business activities.
The Group is unable to comment on the likely impact when the
United Kingdom withdraws from the European Union, as the terms and
conditions remain under negotiation. Due to the positive net
funds(3) of the Group, our ongoing strong cash generation and our
continued policy to return excess cash to shareholders, we are not
adversely impacted by short term fluctuations in interest rates.
Further, our lack of material defined benefit pension schemes makes
our exposure to extremely low gilt yields negligible. Specifically
the Group sees no change to its Going Concern assumptions, Group
Operating Model or Principal Risks and Uncertainties as a result of
the pending withdrawal. In short, we believe the Group is well
positioned, through its geographic spread, balance sheet strength,
and diversity of offering, to meet the foreseeable challenges that
withdrawal from the European Union may present. The Group continues
to reflect on the coming change by assessing the likely
opportunities this will bring for Computacenter and remains
positively focused on the period ahead.
PRINCIPAL RISKS AND UNCERTAINTIES
The Group's activities expose it to a variety of economic,
financial, operational and regulatory risks.
Our principal risks continue to be concentrated in the
availability and resilience of systems, our people, our cost base,
technology change, and in the design, take on and running of large
Services contracts.
The principal risks and uncertainties facing the Group are set
out on pages 22 to 25 of the 2016 Annual Report and Accounts, a
copy of which is available on the Group's website.
The Group's risk management approach and the principal risks,
potential impacts and primary mitigating activities are unchanged
from those set out in the 2016 Annual Report and Accounts.
Tony Conophy
Group Finance Director
25 August 2017
Directors' responsibility statement
Responsibility statement of the Directors in respect of the
half-yearly financial report.
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
Mike Norris Tony Conophy
Chief Executive Officer Group Finance Director
25 August 2017
Consolidated income statement
For the six months ended 30 June 2017
Audited
Unaudited Unaudited Year
H1 2017 H1 2016 2016
Note GBP'000 GBP'000 GBP'000
========================================= ==== =========== =========== ===========
Revenue 5 1,700,329 1,478,219 3,245,397
========================================= ==== =========== =========== ===========
Cost of sales (1,477,393) (1,288,844) (2,817,350)
========================================= ==== =========== =========== ===========
Gross profit 222,936 189,375 428,047
========================================= ==== =========== =========== ===========
Administrative expenses (181,395) (164,228) (341,668)
========================================= ==== =========== =========== ===========
Amortisation of acquired intangibles (111) (601) (710)
========================================= ==== =========== =========== ===========
Exceptional items 8 1,460 (1,114) 1,876
========================================= ==== =========== =========== ===========
Operating profit 42,890 23,432 87,545
========================================= ==== =========== =========== ===========
Exceptional gain on disposal of
an investment property 8 4,320 - -
========================================= ==== =========== =========== ===========
Exceptional loss on disposal of
a subsidiary 8 - - (522)
========================================= ==== =========== =========== ===========
Finance revenue 676 689 1,629
========================================= ==== =========== =========== ===========
Finance costs (359) (551) (1,579)
========================================= ==== =========== =========== ===========
Profit before tax 47,527 23,570 87,073
========================================= ==== =========== =========== ===========
Income tax expense:
========================================= ==== =========== =========== ===========
Before exceptional items (12,701) (7,509) (23,108)
========================================= ==== =========== =========== ===========
Exceptional items 8 (351) - (192)
========================================= ==== =========== =========== ===========
Income tax expense (13,052) (7,509) (23,300)
========================================= ==== =========== =========== ===========
Profit for the period/year 34,475 16,061 63,773
========================================= ==== =========== =========== ===========
Attributable to:
========================================= ==== =========== =========== ===========
Equity holders of the parent 34,475 16,061 63,773
========================================= ==== =========== =========== ===========
Earnings per share (pence)
========================================= ==== =========== =========== ===========
- basic for profit for the period/year 11 28.5 13.3 52.9
========================================= ==== =========== =========== ===========
- diluted for profit for the period/year 11 28.3 13.2 52.3
========================================= ==== =========== =========== ===========
Consolidated statement of comprehensive income
Audited
Unaudited Unaudited Year
H1 2017 H1 2016 2016
GBP'000 GBP'000 GBP'000
================================================ ========= ========= ========
Profit for the period/year 34,475 16,061 63,773
================================================ ========= ========= ========
Items that may be reclassified to consolidated
income statement:
================================================ ========= ========= ========
(Loss)/gain arising on cash flow hedge,
net of amount transferred to consolidated
income statement (287) 728 5,353
================================================ ========= ========= ========
Income tax effect (71) (143) (879)
================================================ ========= ========= ========
(358) 585 4,474
================================================ ========= ========= ========
Exchange differences on translation
of foreign operations 3,532 21,942 29,374
================================================ ========= ========= ========
3,174 22,527 33,848
================================================ ========= ========= ========
Items not to be reclassified to consolidated
income statement:
================================================ ========= ========= ========
Remeasurement of defined benefit plan - - (710)
================================================ ========= ========= ========
Other comprehensive income for the period/year,
net of tax 3,174 22,527 33,138
================================================ ========= ========= ========
Total comprehensive income for the period/year 37,649 38,588 96,911
================================================ ========= ========= ========
Attributable to:
================================================ ========= ========= ========
Equity holders of the parent 37,649 38,581 96,909
================================================ ========= ========= ========
Non-controlling interests - 7 2
================================================ ========= ========= ========
37,649 38,588 96,911
================================================ ========= ========= ========
Consolidated balance sheet
Audited
Unaudited Unaudited Year
H1 2017 H1 2016 2016
GBP'000 GBP'000 GBP'000
================================= ========= --------- ---------
Non-current assets
================================= ========= ========= =========
Property, plant and equipment 62,066 62,983 63,020
================================== ========= ========= =========
Investment property - 10,147 10,033
================================== ========= ========= =========
Intangible assets 80,005 75,816 76,285
================================== ========= ========= =========
Investment in associate 56 53 55
================================== ========= ========= =========
Deferred income tax asset 8,447 11,973 10,537
================================== ========= ========= =========
150,574 160,972 159,930
================================= ========= ========= =========
Current assets
================================= ========= ========= =========
Inventories 50,116 40,546 44,015
================================== ========= ========= =========
Trade and other receivables 666,512 525,493 740,371
================================== ========= ========= =========
Prepayments 68,670 63,516 58,959
================================== ========= ========= =========
Accrued income 119,336 98,179 80,554
================================== ========= ========= =========
Derivative financial instruments 6,237 4,694 8,127
================================== ========= ========= =========
Current asset investments - 35,000 30,000
================================== ========= ========= =========
Cash and short-term deposits 140,136 65,884 118,676
================================== ========= ========= =========
1,051,007 833,312 1,080,702
================================= ========= ========= =========
Total assets 1,201,581 994,284 1,240,632
================================== ========= ========= =========
Current liabilities
================================= ========= ========= =========
Trade and other payables 606,590 484,212 679,538
================================== ========= ========= =========
Deferred income 114,077 105,072 102,112
================================== ========= ========= =========
Financial liabilities 1,393 2,904 2,352
================================== ========= ========= =========
Derivative financial instruments 1,488 1,170 273
================================== ========= ========= =========
Income tax payable 19,816 12,275 17,410
================================== ========= ========= =========
Provisions 1,664 4,038 3,075
================================== ========= ========= =========
745,028 609,671 804,760
================================= ========= ========= =========
Non-current liabilities
================================= ========= ========= =========
Financial liabilities 1,442 1,339 1,832
================================== ========= ========= =========
Provisions 6,266 4,999 5,732
================================== ========= ========= =========
Deferred income tax liabilities 436 446 341
================================== ========= ========= =========
8,144 6,784 7,905
================================= ========= ========= =========
Total liabilities 753,172 616,455 812,665
================================== ========= ========= =========
Net assets 448,409 377,829 427,967
================================== ========= ========= =========
Capital and reserves
================================= ========= ========= =========
Issued capital 9,299 9,299 9,299
================================== ========= ========= =========
Share premium 3,913 3,913 3,913
================================== ========= ========= =========
Capital redemption reserve 74,957 74,957 74,957
================================== ========= ========= =========
Own shares held (9,700) (11,025) (12,115)
================================== ========= ========= =========
Translation and hedging reserves 25,859 11,359 22,685
================================== ========= ========= =========
Retained earnings 344,067 289,307 329,214
================================== ========= ========= =========
Shareholders' equity 448,395 377,810 427,953
================================== ========= ========= =========
Non-controlling interests 14 19 14
================================== ========= ========= =========
Total equity 448,409 377,829 427,967
================================== ========= ========= =========
Consolidated statement of changes in equity
Attributable to equity holders
of the parent
================ ================================================================== ======== ============ ========
Capital Own Translation Non-
Issued Share redemption shares and hedging Retained controlling Total
capital premium reserve held reserves earnings Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
At 1 January
2016 9,297 3,830 74,957 (10,571) (11,161) 295,086 361,438 12 361,450
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Profit for the
period - - - - - 16,061 16,061 - 16,061
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Other
comprehensive
income - - - - 22,520 - 22,520 7 22,527
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Total
comprehensive
income - - - - 22,520 16,061 38,581 7 38,588
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Cost of
share-based
payments - - - - - 1,697 1,697 - 1,697
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Tax on
share-based
payments - - - - - (854) (854) - (854)
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Exercise of
options - - - 4,613 - (4,577) 36 - 36
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Issue of shares 2 83 - - - - 85 - 85
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Purchase of
own shares - - - (5,067) - - (5,067) - (5,067)
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Equity dividends - - - - - (18,106) (18,106) - (18,106)
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
At 30 June 2016 9,299 3,913 74,957 (11,025) 11,359 289,307 377,810 19 377,829
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Profit for the
period - - - - - 47,712 47,712 - 47,712
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Other
comprehensive
income - - - - 11,326 (710) 10,616 (5) 10,611
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Total
comprehensive
income - - - - 11,326 47,002 58,328 (5) 58,323
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Cost of
share-based
payments - - - - - 1,648 1,648 - 1,648
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Tax on
share-based
payments - - - - - 1,090 1,090 - 1,090
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Exercise of
options - - - 2,836 - (1,137) 1,699 - 1,699
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Purchase of
own shares - - - (3,926) - - (3,926) - (3,926)
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Equity dividends - - - - - (8,696) (8,696) - (8,696)
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
At 31 December
2016 9,299 3,913 74,957 (12,115) 22,685 329,214 427,953 14 427,967
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Profit for the
period - - - - - 34,475 34,475 - 34,475
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Other
comprehensive
income - - - - 3,174 - 3,174 - 3,174
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Total
comprehensive
income - - - - 3,174 34,475 37,649 - 37,649
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Cost of
share-based
payments - - - - - 1,865 1,865 - 1,865
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Tax on
share-based
payments - - - - - 112 112 - 112
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Exercise of
options - - - 4,302 - (3,448) 854 - 854
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Purchase of
own shares - - - (1,887) - - (1,887) - (1,887)
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Equity dividends - - - - - (18,151) (18,151) - (18,151)
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
At 30 June 2017 9,299 3,913 74,957 (9,700) 25,859 344,067 448,395 14 448,409
================ ======== ======== =========== ======== ============ ========= ======== ============ ========
Consolidated cash flow statement
Audited
Unaudited Unaudited Year
H1 2017 H1 2016 2016
GBP'000 GBP'000 GBP'000
======================================== ========= ========= ========
Operating activities
======================================== ========= ========= ========
Profit before tax 47,527 23,570 87,073
========================================= ========= ========= ========
Net finance income (317) (138) (50)
========================================= ========= ========= ========
Depreciation of property, plant
and equipment 8,505 7,009 15,631
========================================= ========= ========= ========
Depreciation of investment property 91 113 227
========================================= ========= ========= ========
Amortisation of intangible assets 6,316 6,820 13,197
========================================= ========= ========= ========
Share-based payments 1,865 1,697 3,345
========================================= ========= ========= ========
Exceptional gain on disposal of
an investment property (4,320) - -
========================================= ========= ========= ========
(Gain)/Loss on disposal of property,
plant and equipment (528) 24 168
========================================= ========= ========= ========
(Gain)/Loss on disposal of intangibles (688) 114 25
========================================= ========= ========= ========
Exceptional loss from disposal
of a subsidiary - - 522
========================================= ========= ========= ========
Net cash flow from provisions (1,011) (957) (2,149)
========================================= ========= ========= ========
Net cash flow from inventories (5,142) 9,161 7,185
========================================= ========= ========= ========
Net cash flow from trade and other
receivables 44,437 95,803 (73,980)
========================================= ========= ========= ========
Net cash flow from trade and other
payables (77,020) (137,922) 31,377
========================================= ========= ========= ========
Other adjustments (506) 178 374
========================================= ========= ========= ========
Cash generated from operations 19,209 5,472 82,945
========================================= ========= ========= ========
Income taxes paid (7,785) (6,582) (14,711)
========================================= ========= ========= ========
Net cash flow from operating activities 11,424 (1,110) 68,234
========================================= ========= ========= ========
Investing activities
======================================== ========= ========= ========
Interest received 676 689 1,629
========================================= ========= ========= ========
Decrease/(increase) in current
asset investments 30,000 (20,000) (15,000)
========================================= ========= ========= ========
Acquisition of subsidiaries, net
of cash acquired (7,662) - -
========================================= ========= ========= ========
Proceeds from disposal of a subsidiary,
net of cash disposed of - - (319)
========================================= ========= ========= ========
Proceeds from disposal of property,
plant and equipment 797 97 112
========================================= ========= ========= ========
Proceeds from disposal of an investment
property 14,450 - -
========================================= ========= ========= ========
Proceeds from disposal of intangible
assets 1,381 - -
========================================= ========= ========= ========
Purchases of property, plant and
equipment (6,916) (6,531) (17,641)
========================================= ========= ========= ========
Purchases of intangible assets (2,931) (2,071) (4,943)
========================================= ========= ========= ========
Net cash flow from investing activities 29,795 (27,816) (36,162)
========================================= ========= ========= ========
Financing activities
======================================== ========= ========= ========
Interest paid (359) (551) (1,579)
========================================= ========= ========= ========
Dividends paid to equity shareholders
of the parent (18,151) (18,106) (26,802)
========================================= ========= ========= ========
Proceeds from share issues 854 121 1,820
========================================= ========= ========= ========
Purchase of own shares (1,887) (5,067) (8,993)
========================================= ========= ========= ========
Repayment of capital element of
finance leases (1,024) (1,247) (2,679)
========================================= ========= ========= ========
Repayment of loans (337) (942) (1,101)
========================================= ========= ========= ========
New borrowings - - 1,512
========================================= ========= ========= ========
Net cash flow from financing activities (20,904) (25,792) (37,822)
========================================= ========= ========= ========
Increase/(decrease) in cash and
cash equivalents 20,315 (54,718) (5,750)
========================================= ========= ========= ========
Effect of exchange rates on cash
and cash equivalents 1,145 8,861 12,746
========================================= ========= ========= ========
Cash and cash equivalents at the
beginning of the period/year 118,676 111,680 111,680
========================================= ========= ========= ========
Cash and cash equivalents at the
end of the period/year 140,136 65,823 118,676
========================================= ========= ========= ========
1 Corporate information
The interim condensed consolidated financial statements
(Financial Statements) of the Group for the six months ended 30
June 2017 were authorised for issue in accordance with a resolution
of the Directors on 25 August 2017.
Computacenter plc is a limited company incorporated and
domiciled in England whose shares are publicly traded.
2 Basis of preparation
The Financial Statements for the six months ended 30 June 2017
have been prepared in accordance with International Accounting
Standard 34 'Interim Financial Reporting', as adopted by the
European Union. They do not include all of the information and
disclosures required in the annual financial statements, and should
be read in conjunction with the Group's 2016 Annual Report and
Accounts which have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European
Union.
The Group has maintained its positive cash position in the
period. In order to ensure that the Group can maintain its strong
liquidity position it has a GBP40 million committed facility, which
remained unutilised at the reporting date. The Group's forecast and
projections, which allow for reasonably possible variations, show
that the Group will continue to maintain its strong liquidity
position, and therefore supports the Directors' view that the Group
has sufficient funds available to meet its foreseeable
requirements. The Directors have concluded therefore that the going
concern basis remains appropriate.
3 Significant Accounting Policies
The accounting policies applied by the Group in these Financial
Statements are the same as those applied by the Group in 2016
Annual Report and Accounts, except for the adoption of new
standards and interpretations as of 1 January 2017, which did not
have any impact on the accounting policies, financial position or
performance of the Group.
IFRS 15, Revenue from Contracts with Customers, becomes
effective for the Group on 1 January 2018. The guidance permits two
methods of
adoption: retrospectively to each prior reporting period
presented (full retrospective method), or retrospectively with the
cumulative effect of
initially applying the guidance recognised at the date of
initial application (the cumulative catch-up transition
method).
In our 2016 Annual Report and Accounts, we highlighted an
expected adjustment to our Supply Chain revenue where certain
services will be presented as 'agency' revenue on a net basis
compared to the current presentation as gross 'principal'
revenue.
Further analysis performed since the 2016 Annual Report and
Accounts was published has identified that adjustments are also
expected in relation to:
-- Certain costs, such as win fees (a form of commission) will
need to be capitalised and spread over the life of the contract, as
opposed to being expensed as incurred;
-- Certain elements of our Managed Services contracts, for
example those relating to Entry Into Service, will no longer be
treated as separate performance obligations for which revenue and
costs are recognised as incurred, but rather will be treated as
part of the ongoing performance obligations in the contract. This
will result in the revenue and costs for Entry Into Service being
deferred and spread over the life of the contracts; and
-- Our analysis of which contracts are considered to be
loss-making will change, resulting in fewer onerous contract
provisions being recognised.
The impact of these items, individually or in aggregate, may be
material to the revenue and profits in any given financial year,
however there will be no impact on cash in any given financial year
nor is there expected to be any ultimate long-term impact on the
cumulative profits of the Group.
The Group's IFRS 15 impact assessment and implementation work
remains ongoing, alongside a quantification exercise which is
expected to be finalised coincidental with the 2017 Annual Report
and Accounts.
4 Adjusted measures
The Group uses a number of non-Generally Accepted Accounting
Practice (non-GAAP) financial measures in addition to those
reported in accordance with IFRS. The Directors believe that these
non-GAAP measures, detailed below, are important when assessing the
underlying financial and operating performance of the Group.
Adjusted operating profit or loss, adjusted profit or loss
before tax, adjusted profit or loss for the period, adjusted
earnings per share and adjusted diluted earnings per share are, as
appropriate, each stated before: exceptional and other adjusting
items including gain or loss on business disposals, gain or loss on
disposal of investment properties, amortisation of acquired
intangibles, utilisation of deferred tax assets (where initial
recognition was as an exceptional item or a fair value adjustment
on acquisition), and the related tax effect of these exceptional
and other adjusting items, as Management do not consider these
items when reviewing the underlying performance of the segment or
the Group as a whole.
Additionally, adjusted gross profit or loss and adjusted
operating profit or loss includes the interest paid on
customer-specific financing (CSF) which Management considers to be
a cost of sale.
A reconciliation between key adjusted and statutory measures is
in the Group Finance Director's review included within this
announcement. Further detail is also provided within note 5,
Segment Information.
5 Segment information
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.
No operating segments have been aggregated to form the
reportable operating segments shown below.
Segmental performance for the periods to H1 2017, H1 2016 and
Full Year 2016 were as follows:
Six months ended 30 June 2017 (unaudited)
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================================== ======== ======== ======== ======== =========
Revenue
===================================== ======== ======== ======== ======== =========
Supply Chain revenue 428,780 515,000 175,163 19,293 1,138,236
===================================== ======== ======== ======== ======== =========
Services revenue
===================================== ======== ======== ======== ======== =========
Professional Services 66,314 74,460 10,108 1,069 151,951
===================================== ======== ======== ======== ======== =========
Managed Services 183,175 173,473 43,363 10,131 410,142
===================================== ======== ======== ======== ======== =========
Total Services revenue 249,489 247,933 53,471 11,200 562,093
===================================== ======== ======== ======== ======== =========
Total revenue 678,269 762,933 228,634 30,493 1,700,329
===================================== ======== ======== ======== ======== =========
Results
===================================== ======== ======== ======== ======== =========
Adjusted(1) gross profit 101,587 96,346 20,672 4,194 222,799
===================================== ======== ======== ======== ======== =========
Administrative expenses (83,739) (74,626) (19,180) (3,850) (181,395)
===================================== ======== ======== ======== ======== =========
Adjusted(1) operating profit 17,848 21,720 1,492 344 41,404
===================================== ======== ======== ======== ======== =========
Adjusted(1) net interest 400 135 (77) (4) 454
===================================== ======== ======== ======== ======== =========
Adjusted(1) profit before
tax 18,248 21,855 1,415 340 41,858
===================================== ======== ======== ======== ======== =========
Exceptional items:
===================================== ======== ======== ======== ======== =========
- exceptional gains - 1,460 - - 1,460
===================================== ======== ======== ======== ======== =========
Total exceptional items - 1,460 - - 1,460
===================================== ======== ======== ======== ======== =========
Exceptional gain on disposal
of an investment property 4,320 - - - 4,320
===================================== ======== ======== ======== ======== =========
Amortisation of acquired intangibles - (65) - (46) (111)
===================================== ======== ======== ======== ======== =========
Statutory profit before tax 22,568 23,250 1,415 294 47,527
===================================== ======== ======== ======== ======== =========
The reconciliation for adjusted(1) operating profit to statutory
operating profit, as disclosed in the Consolidated Income
Statement, is as follows:
Six months ended 30 June 2017 (unaudited)
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================================== ======== ======== ======== ======== ========
Adjusted(1) segment operating
profit 17,848 21,720 1,492 344 41,404
===================================== ======== ======== ======== ======== ========
Add back interest on CSF 1 136 - - 137
===================================== ======== ======== ======== ======== ========
Amortisation of acquired intangibles - (65) - (46) (111)
===================================== ======== ======== ======== ======== ========
Exceptional items - 1,460 - - 1,460
===================================== ======== ======== ======== ======== ========
Segment operating profit 17,849 23,251 1,492 298 42,890
===================================== ======== ======== ======== ======== ========
Other segment information
===================================== ======== ======== ======== ======== ========
Share-based payments 1,599 345 (79) - 1,865
===================================== ======== ======== ======== ======== ========
Six months ended 30 June 2016 (unaudited)
Restated Restated
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================================== ======== ======== ======== ======== ==========
Revenue
===================================== ======== ======== ======== ======== ==========
Supply Chain revenue 408,448 395,395 160,569 15,837 980,249
===================================== ======== ======== ======== ======== ==========
Services revenue
===================================== ======== ======== ======== ======== ==========
Professional Services 58,194 62,943 8,063 851 130,051
===================================== ======== ======== ======== ======== ==========
Managed Services 178,477 149,453 32,158 7,831 367,919
===================================== ======== ======== ======== ======== ==========
Total Services revenue 236,671 212,396 40,221 8,682 497,970
===================================== ======== ======== ======== ======== ==========
Total revenue 645,119 607,791 200,790 24,519 1,478,219
===================================== ======== ======== ======== ======== ==========
Results
===================================== ======== ======== ======== ======== ==========
Adjusted(1) gross profit 91,080 75,219 19,259 3,706 189,264
===================================== ======== ======== ======== ======== ==========
Administrative expenses (77,050) (65,703) (18,354) (3,121) (164,228)
===================================== ======== ======== ======== ======== ==========
Adjusted(1) operating profit 14,030 9,516 905 585 25,036
===================================== ======== ======== ======== ======== ==========
Adjusted(1) net interest 457 (36) (158) (14) 249
===================================== ======== ======== ======== ======== ==========
Adjusted(1) profit before
tax 14,487 9,480 747 571 25,285
===================================== ======== ======== ======== ======== ==========
Exceptional items:
===================================== ======== ======== ======== ======== ==========
- exceptional losses - - (1,114) - (1,114)
===================================== ======== ======== ======== ======== ==========
Total exceptional items - - (1,114) - (1,114)
===================================== ======== ======== ======== ======== ==========
Amortisation of acquired intangibles - (561) - (40) (601)
===================================== ======== ======== ======== ======== ==========
Statutory profit/(loss) before
tax 14,487 8,919 (367) 531 23,570
===================================== ======== ======== ======== ======== ==========
The reconciliation for adjusted(1) operating profit to operating
profit, as disclosed in the Consolidated Income Statement, is as
follows:
Six months ended 30 June 2016 (unaudited)
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================================== ======== ======== ======== ======== ========
Adjusted(1) segment operating
profit 14,030 9,516 905 585 25,036
===================================== ======== ======== ======== ======== ========
Add back interest on CSF 5 106 - - 111
===================================== ======== ======== ======== ======== ========
Amortisation of acquired intangibles - (561) - (40) (601)
===================================== ======== ======== ======== ======== ========
Exceptional items - - (1,114) - (1,114)
===================================== ======== ======== ======== ======== ========
Segment operating profit/(loss) 14,035 9,061 (209) 545 23,432
===================================== ======== ======== ======== ======== ========
Other segment information
===================================== ======== ======== ======== ======== ========
Share-based payments 1,375 306 16 - 1,697
===================================== ======== ======== ======== ======== ========
Year ended 31 December 2016
Restated Restated
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================================== ========= ========= ======== ======== =========
Revenue
===================================== ========= ========= ======== ======== =========
Supply Chain revenue 899,822 934,214 335,612 37,907 2,207,555
===================================== ========= ========= ======== ======== =========
Services revenue
===================================== ========= ========= ======== ======== =========
Professional Services revenue 118,636 138,218 15,470 1,868 274,192
===================================== ========= ========= ======== ======== =========
Managed Services revenue 357,473 319,744 69,446 16,987 763,650
===================================== ========= ========= ======== ======== =========
Total Services revenue 476,109 457,962 84,916 18,855 1,037,842
===================================== ========= ========= ======== ======== =========
Total revenue 1,375,931 1,392,176 420,528 56,762 3,245,397
===================================== ========= ========= ======== ======== =========
Results
===================================== ========= ========= ======== ======== =========
Adjusted(1) gross profit 202,556 175,273 42,520 7,479 427,828
===================================== ========= ========= ======== ======== =========
Adjusted(1) administrative
expenses (155,812) (139,683) (39,649) (6,524) (341,668)
===================================== ========= ========= ======== ======== =========
Adjusted(1) operating profit 46,744 35,590 2,871 955 86,160
===================================== ========= ========= ======== ======== =========
Adjusted(1) net interest 717 (212) (208) (28) 269
===================================== ========= ========= ======== ======== =========
Adjusted(1) profit before
tax 47,461 35,378 2,663 927 86,429
===================================== ========= ========= ======== ======== =========
Exceptional items:
===================================== ========= ========= ======== ======== =========
- exceptional losses on redundancy
and other restructuring costs - - (1,169) - (1,169)
===================================== ========= ========= ======== ======== =========
- gain on reversal of fair
value adjustments - 3,045 - - 3,045
===================================== ========= ========= ======== ======== =========
Total exceptional items - 3,045 (1,169) - 1,876
===================================== ========= ========= ======== ======== =========
Exceptional loss on disposal
of a subsidiary (522) - - - (522)
===================================== ========= ========= ======== ======== =========
Amortisation of acquired intangibles - (627) - (83) (710)
===================================== ========= ========= ======== ======== =========
Statutory profit before tax 46,939 37,796 1,494 844 87,073
===================================== ========= ========= ======== ======== =========
The reconciliation for adjusted(1) operating profit to statutory
operating profit, as disclosed in the Consolidated Income
Statement, is as follows:
Year ended 31 December 2016
UK Germany France Belgium Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
===================================== ======== ======== ======== ======== ========
Adjusted(1) operating profit 46,744 35,590 2,871 955 86,160
===================================== ======== ======== ======== ======== ========
Add back interest on CSF 9 210 - - 219
===================================== ======== ======== ======== ======== ========
Amortisation of acquired intangibles - (627) - (83) (710)
===================================== ======== ======== ======== ======== ========
Exceptional items - 3,045 (1,169) - 1,876
===================================== ======== ======== ======== ======== ========
Statutory operating profit 46,753 38,218 1,702 872 87,545
===================================== ======== ======== ======== ======== ========
Restatement
The revenue for work performed by other Computacenter entities
on behalf of several key French contracts has been reclassified to
the French Segment, consistent with the way information is reported
and monitored internally. Historically these revenues have been
recorded in the segment where the associated underlying subsidiary
recognises the revenues in their statutory accounts. For segmental
analysis, all of our offshore internal service provider entities
(e.g. Computacenter USA) are allocated to the UK Segment apart from
Computacenter Switzerland which is within the German Segment. As
the work performed in certain offshore subsidiaries has grown
within the UK Segment, Management decided to reallocate these
revenues inter-segmentally to reflect better where the portfolio
co-ordination and operational responsibility lies and where the
benefits should accrue. We have therefore restated the French and
UK Managed Services revenue for 2016, to assist with understanding
the growth in each business and to ensure period-on-period
comparisons reflect true underlying growth. This has no impact on
Group revenue or on segmental profitability, as the margins were
previously shared on the same basis that the revenue now reflects.
All discussion within this Interim Report on segmental Managed
Services revenues for the UK and France reflect this
reclassification and resultant prior period restatement.
6 Seasonality of operations
Historically, revenues have been higher in the second half of
the year than in the first six months. This is principally driven
by customer buying behaviour in the markets in which we operate.
Typically this leads to a more pronounced effect on operating
profit. In addition, the effect is compounded further by the
tendency for the holiday entitlements of our employees to accrue
during the first half of the year and to be utilised in the second
half.
7 Dividends paid and proposed
A second interim dividend for 2016 of 15.0 pence per ordinary
share was paid on 9 June 2017. An interim dividend in respect of
2017 of 7.4 pence per ordinary share, amounting to a total dividend
of GBP9.1 million, was declared by the Directors at their meeting
on 22 August 2017. The expected payment date of the dividend
declared is Friday 13 October 2017. This interim report does not
reflect this dividend payable.
8 Exceptional items
Audited
Unaudited Unaudited Year
H1 2017 H1 2016 2016
GBP'000 GBP'000 GBP'000
=========================================== ========= ========= ========
Operating profit
=========================================== ========= ========= ========
Redundancy and other restructuring costs - (1,114) (1,169)
=========================================== ========= ========= ========
Onerous contracts 1,460 - -
=========================================== ========= ========= ========
Gain on reversal of fair value adjustments - - 3,045
=========================================== ========= ========= ========
1,460 (1,114) 1,876
=========================================== ========= ========= ========
Gain on disposal of an investment property 4,320 - -
=========================================== ========= ========= ========
Loss on disposal of a subsidiary - - (522)
=========================================== ========= ========= ========
Exceptional items before taxation 5,780 (1,114) 1,354
=========================================== ========= ========= ========
Income tax
=========================================== ========= ========= ========
Tax on onerous contracts included in
operating profit (351) - -
=========================================== ========= ========= ========
Tax on gain on reversal of fair value
adjustments - - (192)
=========================================== ========= ========= ========
Exceptional items after taxation 5,429 (1,114) 1,162
=========================================== ========= ========= ========
2017:
Included within the current period are the following exceptional
items:
-- The remaining provisions for the last two onerous contracts
in Germany were released, for an exceptional gain of GBP1,461,000.
These provisions were originally booked in 2013 and the contracts
have now returned to profitability, so the provisions are no longer
required. As these provisions were booked as exceptional items,
this release has also been classified as such.
-- The disposal of an investment property in Braintree, Essex,
was completed on 26 May 2017 for GBP14.5 million. This property was
associated with a former subsidiary of the Group, R.D. Trading
Limited, which was itself sold in February 2015. Due to the size
and non-operational nature of the transaction, the GBP4.3 million
gain on disposal, net of GBP0.2 million disposal costs, has been
classified as exceptional.
2016:
Included within the current period are the following exceptional
items:
-- During the period a Line of Business restructure was agreed
with the business in France. This initiative reduced the
underutilised resources within our Professional Services arm and
completed in H2 2016. The full cost of GBP1.0 million was
recognised as at 30 June 2016. This restructure has seen
Computacenter France exit the direct provision of Group Field
Maintenance Services. This Line of Business had materially
decreased over time, leading to a significant resourcing
overcapacity. Any future residual customer requirement will be
sub-contracted to an existing third party provider.
-- Computacenter France continued to complete its
responsibilities under the Social Plan that related to the
substantial restructuring
exercise that occurred in 2014. An additional cost of GBP0.1
million was recognised as part of the wind-down of the Social Plan.
As the redundancy and restructuring costs were previously treated
as an exceptional item on recognition, this further provision was
also treated as an exceptional item.
9 Business Contribution
cITius AG ('Citius')
On 1 January 2017, the Group acquired 100 per cent of the voting
shares of cITius for an initial consideration of CHF 2.8 million
and agreed to a maximum undiscounted contingent consideration of
CHF 1.5 million, dependent upon the achievement of agreed
performance criteria over the next three and a half years. The
acquisition-related costs amounted to CHF 41,500 and are included
in the interim Consolidated Income Statement. Due to the size of
the balance, the acquisition cost is not treated as an exceptional
item. cITius is based in Switzerland and is an IT service provider.
The acquisition has been accounted for using the purchase method of
accounting.
The book and fair values of the net assets at date of
acquisition and at 30 June 2017 were as follows:
Provisional
fair
Book value
value to Group
GBP'000 GBP'000
=================================== ======== ===========
Intangible assets
=================================== ======== ===========
Comprising:
=================================== ======== ===========
Software 123 123
=================================== ======== ===========
Total intangible assets 123 123
=================================== ======== ===========
Property, plant and equipment 302 302
=================================== ======== ===========
Inventories 17 17
=================================== ======== ===========
Trade and other receivables 297 297
=================================== ======== ===========
Cash and short-term deposits 422 422
=================================== ======== ===========
Trade and other payables (183) (183)
=================================== ======== ===========
Net assets acquired 978 978
=================================== ======== ===========
Goodwill arising on acquisition 2,107
=================================== ======== ===========
3,085
=================================== ======== ===========
Discharged by:
=================================== ======== ===========
Cash paid on acquisition 2,212
=================================== ======== ===========
Contingent consideration 873
=================================== ======== ===========
3,085
=================================== ======== ===========
Cash and cash equivalents acquired
=================================== ======== ===========
Cash and short-term deposits (422)
=================================== ======== ===========
Cash outflow on acquisition 2,663
=================================== ======== ===========
There were no differences between the provisional fair values
and the book values at acquisition. The initial accounting for the
acquisition of cITius has only been provisionally determined at the
end of the interim reporting period. At the date of finalisation of
these consolidated interim financial statements, the necessary
market valuations and other calculations had not been finalised and
they have therefore only been provisionally determined based on the
Management's best estimates.
Included in the GBP2.1 million of goodwill that arose on
acquisition are certain intangible assets that cannot be
individually separated and reliably measured from the acquiree due
to their nature. These items include the expected value of
synergies and an assembled workforce.
From the date of acquisition to 30 June 2017, cITius contributed
GBP1.4 million to the Group's revenue and GBP0.2 million to the
Group's profit after tax.
The previous shareholders of cITius included the current
Managing Director of Computacenter Switzerland, who owned 30 per
cent at the time of the acquisition, as a result GBP0.1 million was
paid in cash and a further GBP0.9 million will be payable in three
and a half years contingent on the achievement of profit based
targets. The acquisition of cITius was made on terms equivalent to
those that would have prevailed in an arm's-length transaction.
Contingent consideration
Based on the performance of the business in 2017 and the
forecasted performance for the next three and a half years,
Management's assessment is that it is highly probable that the
maximum contingent consideration will become payable and
accordingly the discounted maximum contingent consideration has
been included in the provisional fair value to the Group.
TeamUltra Limited ('TeamUltra')
On 1 April 2017, the Group acquired 100 per cent of the voting
shares of TeamUltra for an initial consideration of GBP2.6 million
and agreed to a maximum undiscounted contingent consideration of
GBP3.5 million, dependent upon the achievement of agreed
performance criteria over the next three and a half years. The
acquisition-related costs amounted to GBP30,000 and are included in
the interim Consolidated Income Statement.
Due to the size of the balance, the acquisition cost is not
treated as an exceptional item. TeamUltra is based in the United
Kingdom and is an IT service provider. The acquisition has been
accounted for using the purchase method of accounting.
The book and fair values of the net assets at date of
acquisition and at 30 June 2017 were as follows:
Provisional
fair
Book value
value to Group
GBP'000 GBP'000
=================================== ======== ===========
Property, plant and equipment 23 23
=================================== ======== ===========
Trade and other receivables 2,767 2,767
=================================== ======== ===========
Cash and short-term deposits 370 370
=================================== ======== ===========
Trade and other payables (2,982) (2,982)
=================================== ======== ===========
Net assets acquired 178 178
=================================== ======== ===========
Goodwill arising on acquisition 4,905
=================================== ======== ===========
5,083
=================================== ======== ===========
Discharged by:
=================================== ======== ===========
Cash paid on acquisition 2,575
=================================== ======== ===========
Contingent consideration 2,508
=================================== ======== ===========
5,083
=================================== ======== ===========
Cash and cash equivalents acquired
=================================== ======== ===========
Cash and short-term deposits (370)
=================================== ======== ===========
Cash outflow on acquisition 4,713
=================================== ======== ===========
There were no differences between the provisional fair values
and the book values at acquisition. The initial accounting for the
acquisition of TeamUltra has only been provisionally determined at
the end of the interim reporting period. At the date of
finalisation of these consolidated interim financial statements,
the necessary market valuations and other calculations had not been
finalised and they have therefore only been provisionally
determined based on the Management's best estimates.
Included in the GBP4.9 million of goodwill that arose on
acquisition are certain intangible assets that cannot be
individually separated and reliably measured from the acquiree due
to their nature. These items include the expected value of
synergies and an assembled workforce.
From the date of acquisition to 30 June 2017, TeamUltra
contributed GBP1.6 million to the Group's revenue and GBP0.1
million to the Group's profit after tax.
Contingent consideration
Based on the performance of the business in 2017 and the
forecasted performance for the next three and a half years,
Management's assessment is that it is highly probable that the
maximum contingent consideration will become payable and
accordingly the discounted maximum contingent consideration has
been included in the provisional fair value to the Group.
If the acquisition of TeamUltra had been completed on the first
day of the financial year, Group's revenue for the period would
have been GBP1,701,846,000 and Group's profit would have been
GBP34,494,000.
10 Income tax
Tax for the six months period in charged at 27.5 per cent (six
months ended 30 June 2016: 31.9 per cent; year ended 31 December
2016: 26.8 per cent), representing the best estimate of the average
annual effective tax rate expected for the full year, applied to
the pre-tax income of the six month period.
11 Earnings per share
Earnings per share ('EPS') amounts are calculated by dividing
profit attributable to ordinary equity holders by the weighted
average number of ordinary shares outstanding during the period
(excluding own shares held).
To calculate diluted earnings per share, the weighted average
number of ordinary shares in issue is adjusted to assume conversion
of all dilutive potential shares. Share options granted to
employees where the exercise price is less than the average market
price of the Company's ordinary shares during the period are
considered to be dilutive potential shares.
Audited
Unaudited Unaudited Year
H1 2017 H1 2016 2016
GBP'000 GBP'000 GBP'000
====================================== ========= ========= ========
Profit attributable to equity holders
of the parent 34,475 16,061 63,773
====================================== ========= ========= ========
Audited
Unaudited Unaudited Year
H1 2017 H1 2016 2016
'000 '000 '000
========================================== ========= ========= =======
Basic weighted average number of shares
(excluding own shares held) 120,842 120,617 120,540
========================================== ========= ========= =======
Effect of dilution:
========================================== ========= ========= =======
Share options 888 879 1,344
========================================== ========= ========= =======
Diluted weighted average number of shares 121,730 121,496 121,884
========================================== ========= ========= =======
Audited
Unaudited Unaudited Year
H1 2017 H1 2016 2016
pence pence pence
=========================== ========= ========= =======
Basic earnings per share 28.5 13.3 52.9
=========================== ========= ========= =======
Diluted earnings per share 28.3 13.2 52.3
=========================== ========= ========= =======
12 Fair value measurements recognised in the consolidated
balance sheet
Financial instruments which are recognised at fair value
subsequent to initial recognition are grouped into Levels 1 to 3
based on the degree to which the fair value is observable. The
three levels are defined as follows:
1. Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
2. Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
3. Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
At 30 June 2017 the Group had forward currency contracts, which
were measured at Level 2 fair value subsequent to initial
recognition, to the value of a net asset of GBP4,749,000 (30 June
2016: GBP3,524,000, 31 December 2016: GBP7,854,000).
The net realised gains from forward currency contracts in the
period to 30 June 2017 of GBP6,006,000 (30 June 2016: GBP1,335,000,
31 December 2016: GBP940,000), are offset by broadly equivalent
realised losses/gains on the related underlying transactions. There
were no transfers between Level 1 and Level 2 during the period
(2016: nil).
The foreign currency forward contracts are measured based on
observable spot exchange rates, the yield curves of the respective
currencies as well as the currency basis spreads between the
respective currencies. All contracts are fully cash collateralised,
thereby eliminating both counterparty and the Group's own credit
risk.
The carrying value of the Group's short-term receivables and
payables is a reasonable approximation of their fair values. The
fair value of all other financial instruments carried within the
Group's financial statements is not materially different from their
carrying amount.
13 Publication of non-statutory accounts
The financial information contained in the interim statement
does not constitute statutory accounts as defined in section 435 of
the Companies Act 2006.
The comparative figures for the financial year ended 31 December
2016 are not the company's statutory accounts for that financial
year. Those accounts have been reported on by the company's auditor
and delivered to the registrar of companies. The report of the
auditor was (i) unqualified, (ii) did not include a reference to
any matters to which the auditor drew attention by way of emphasis
without qualifying their report, and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAPPLASNXEFF
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August 25, 2017 02:00 ET (06:00 GMT)
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