2019 Financial results

Computacenter announces audited results for the year ended 31 December 2019.

Financial Highlights	2019	2018	Percentage Change Increase/ (Decrease)
Financial Performance
Services revenue (£ million)	1,230.6	1,175.0	4.7
Technology Sourcing revenue (£ million)	3,822.2	3,177.6	20.3
Revenue (£ million)	5,052.8	4,352.6	16.1
Adjusted1 profit before tax (£ million)	146.3	118.2	23.8
Adjusted1 diluted earnings per share (pence)	92.5	75.7	22.2
Dividend per share (pence)	37.0	30.3	22.1
Statutory profit before tax (£ million)	141.0	108.1	30.4
Statutory diluted earnings per share (pence)	89.0	70.1	27.0
Cash Position
Cash and cash equivalents (£ million)	217.9	200.4	8.7
Adjusted net funds3 (£ million)*	137.1	66.2	107.1
Net funds3 (£ million)	20.3	57.3	(64.6)
Net cash flow from operating activities (£ million)	202.0	115.2	75.3

Reconciliation between Adjusted1 and Statutory Performance
Adjusted1 profit before tax (£ million)	146.3	118.2
Exceptional and other adjusting items:
Costs related to acquisition (£ million)	(0.9)	(5.7)
Amortisation of acquired intangibles (£ million)	(4.4)	(4.4)
Statutory profit before tax (£ million)	141.0	108.1

*The Group recognised £110.9 million of right-of-use assets and £116.8 million of lease liabilities as at 31 December 2019 under the new IFRS 16 accounting standard. The Group includes lease liabilities within its net funds measure. Due to the distortive effect of the capitalised lease liabilities on the overall liquidity position of the Group, these lease liabilities recognised under the new IFRS 16 accounting standard, are excluded from its non-GAAP adjusted net funds³ measure.

Operational Highlights:

• The Group’s total revenues grew 16.1 per cent or £700.2 million during the year, and by 16.9 per cent or £732.2 million during the year in constant currency² including growth of £586.6 million from acquisitions. A 23.8 per cent increase in adjusted¹ profit before tax to £146.3 million has resulted in record adjusted¹ diluted EPS of 92.5 pence (2018: 75.7 pence), an increase of 22.2 per cent.
• France had an excellent year with an organic increase in revenues of 15.7 per cent, led by a buoyant Technology Sourcing marketplace, and an increase in adjusted¹ operating profit of 76.3 per cent, both on a constant currency² basis.
• Germany delivered another strong performance with revenue growth of 5.2 per cent during the year driven by a resilient Technology Sourcing business and a strong Professional Services result leading to a 27.9 per cent increase in adjusted¹ operating profit, both on a constant currency² basis. This was a very good performance given the material spend reduction from a key customer, that declined down to normal volumes rather than those seen in the prior year, which created a challenging comparison.
• The UK saw a reduction in revenues of 1.8 per cent as both Services and Technology Sourcing revenues declined. The prior year comparative result contained two very large margin-dilutive Technology Sourcing deals that, being one-off in nature, contributed to this decline. Adjusted¹ operating profit increased by 10.6 per cent during the year, with improvements in both Services and Technology Sourcing margins.
• The US acquisition made on 30 September 2018 has seen a much better performance in the second half of 2019 as sales orders returned to a more expected baseline level after the slowdown in volumes in the first half of the year.

The result has benefited from £857.6 million of revenues (2018: £270.9 million), and £6.5 million of adjusted¹ profit before tax (2018: £2.2 million), resulting from the acquisitions made since 30 June 2018. All figures reported throughout this announcement include the results of the acquired entities.

The Group has adopted IFRS 16 from 1 January 2019 which has resulted in changes in accounting policies and adjustments to the amounts recognised in the Financial Statements. Importantly, and in accordance with the modified retrospective approach, the comparative results for the year ended 31 December 2018 have not been restated under the accounting policies adopted as a result of transition to IFRS 16. The current year results include an overall decrease in profitability before tax of £1.7 million on both statutory and adjusted¹ basis due to the impact of IFRS 16 which has seen increased interest costs exceed the net of increased depreciation and reduced rental costs due to the timing difference effect of the new accounting standard. An analysis of the impact of transition is presented in note 2 to the summary financial information contained within this announcement. Further information on the implementation of, and transition to, IFRS 16 is included within the Group Finance Director’s review contained in this announcement.

A reconciliation between key adjusted¹ and statutory measures is provided within the Group Finance Director’s review contained in this announcement. Further details are provided in note 2 to the summary financial information contained within this announcement.

Mike Norris, Chief Executive of Computacenter plc, commented:

‘As we stated back in January, the results for 2019 set a high bar for the business in 2020. It is too early to predict the outcome for the year as a whole and there is still much work to be done, particularly as we have not yet completed our first quarter. Our Services pipeline is the strongest we have seen for some time in both Professional and Managed Services. While we still believe customers will continue to invest in product, particularly in the areas of Security, Networking and Cloud, it may well be difficult to achieve the same growth rates we have seen in recent years.

The current COVID-19 outbreak makes forecasting the future even more challenging. In the short term, we are urgently supporting our customers focused on their business continuity plans which involves the need for a greater degree of remote working. We have seen a surge in demand for laptop computers for this purpose. To-date, supply constraints from our Technology Providers have been minimal, although there are some concerns going forward. We do however have some concerns that in the medium-term, customers may postpone significant IT infrastructure projects while the current uncertainty remains. In the longer term, we feel more certain, either because when this crisis is behind us, life will return to normal and the fundamental business drivers for IT growth remain or, if there is a long-term reduction in business travel and commuting with  a consequent  upsurge in remote working, it can only drive the need for technology even further.

Our current focus is on maintaining continuity for our customers for the services and products we supply as well as doing whatever we can to protect the health of our employees, customers and the wider community.’

 

Read the full report

---

For further information, please contact: 
Computacenter plc.
Mike Norris, Chief Executive                01707 631 601
Tony Conophy, Finance Director        01707 631 515
www.computacenter.com

Tulchan Communications                020 7353 4200
James Macey White
www.tulchangroup.com

---

¹ Adjusted operating profit or loss, adjusted net finance income or expense, adjusted profit or loss before tax, adjusted tax, adjusted profit or loss, adjusted earnings per share and adjusted diluted earnings per share are, as appropriate, each stated before: exceptional and other adjusting items including gain or losses on business acquisitions and disposals, 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. Prior to the adoption of IFRS 16, adjusted gross profit or loss and adjusted operating profit or loss included the interest paid on customer-specific financing (CSF) which Management considered to be a cost of sale. A reconciliation between key adjusted and statutory measures is provided within the Group Finance Director’s review contained in this announcement which details the impact of exceptional and other adjusted items when compared to the non-Generally Accepted Accounting Practice financial measures in addition to those reported in accordance with IFRS. Further detail is provided within note 6 to the summary financial information contained in this announcement.

² We evaluate the long-term performance and trends within our strategic objectives 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-period local currency financial results using the current period average exchange rates and comparing these recalculated amounts to our current period 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, or equivalent local currency amounts, the equivalent prior-period measure is also presented in the reported pound sterling equivalent using the exchange rates prevailing at the time. 2019 Highlights, as shown at the beginning of this announcement, and statutory measures, are provided in the reported pound sterling equivalent.

³ Adjusted net funds or adjusted net debt includes cash and cash equivalents, other short or other long-term borrowings and current asset investments. Following the adoption of IFRS 16 this measure excludes all lease liabilities. CSF balances which were previously included within this measure are now also excluded as they form part of lease liabilities. A table reconciling this measure, including the impact of finance lease liabilities, is provided within note 9 to the summary financial information contained in this announcement.