We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Computacenter Plc | LSE:CCC | London | Ordinary Share | GB00BV9FP302 | ORD 7 5/9P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2,558.00 | 2,556.00 | 2,560.00 | 2,578.00 | 2,552.00 | 2,552.00 | 8,647 | 13:11:13 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Computer Related Svcs, Nec | 6.92B | 197.6M | 1.7312 | 14.83 | 2.93B |
From Apr 2019 to Apr 2024
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.
Hot Features
Premium
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 ------------------- -------- Tony Conophy, 01707 Finance Director 631515 ------------------- --------
Tulchan Communications:
James Macey 0207 353 White 4200 ------------- --------- Matt Low ------------- ---------
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
(END) Dow Jones Newswires
August 25, 2017 02:00 ET (06:00 GMT)
1 Year Computacenter Chart |
1 Month Computacenter Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
