Computacenter plc (“Computacenter” or the “Group”), a leading independent technology partner trusted by large corporate and public sector organisations, today announces unaudited results for the year ended 31 December 2022.
Financial Highlights | 2022 | 2021 |
Percentage |
Financial Performance | |||
Technology Sourcing gross invoiced income (£ million) | 7,481.6 | 5,472.6 | 36.7 |
Services revenue (£ million) | 1,570.6 | 1,450.9 | 8.3 |
Gross invoiced income (£ million) | 9,052.2 | 6,923.5 | 30.7 |
Technology Sourcing revenue (£ million) | 4,899.9 | 3,583.6 | 36.7 |
Services Revenue (£ million) | 1,570.6 | 1,450.9 | 8.3 |
Revenue (£ million) | 6,470.5 | 5,034.5 | 28.5 |
Adjusted1 profit before tax (£ million) | 263.7 | 255.6 | 3.2 |
Adjusted1 diluted earnings per share (pence) | 169.7 | 165.6 | 2.5 |
Dividend per share (pence) | 67.9 | 66.3 | 2.4 |
Profit before tax (£ million) | 249.0 | 248.0 | 0.4 |
Diluted earnings per share (pence) | 159.1 | 160.9 | (1.1) |
Cash Position | |||
Cash and cash equivalents (£ million) | 264.4 | 273.2 |
|
Adjusted net funds3 (£ million) | 244.3 | 241.4 |
|
Net funds (£ million) | 117.2 | 95.3 |
|
Net cash inflow from operating activities (£ million) | 242.1 | 224.3 |
|
Reconciliation to Adjusted1 Measures | |||
Adjusted1 profit before tax (£ million) | 263.7 | 255.6 | |
Exceptional and other adjusting items: | |||
Amortisation of acquired intangibles (£ million) | (10.9) | (7.6) | |
Unwinding of discount relating to acquisition of a subsidiary (£ million) | (2.0) | - | |
Costs relating to acquisition of a subsidiary (£ million) | (1.8) | - | |
Profit before tax (£ million) | 249.0 | 248.0 |
The comparative information is restated on account of a change in accounting policy for Technology Sourcing revenue and cost of sales, see note 3.
Operational Highlights:
- Eighteenth consecutive year of adjusted1 earnings per share growth.
- Customer accounts with gross profit of over £1 million per annum increased by 10.7 per cent, showing our ability to retain and develop long-term customer relationships.
- Services revenue increased by 8.3 per cent, demonstrating our development of customer value.
- Continued significant programme of investments to underpin our long-term resilience, competitiveness and growth.
- North American Segment continued to progress and increased its gross profit by over 18 per cent in constant currency2, in line with our plans and illustrating the long-term opportunity.
- India offshore headcount grew to 1,100, a key source of skills and competitive advantage in the years ahead.
- Achieved carbon neutral status for Scope 1 and 2 emissions in 2022, making us one of the first companies in our industry to reach this milestone.
- Over 20,000 people employed at the end of 2022, highlighting the remarkable scale of our skills and resources globally.
Following a recently approved interpretation of the revenue accounting standard by the International Accounting Standards Board, we, and a number of our peer value-added resellers, have changed the way we recognise revenues for standalone software and resold third-party services contracts and revised our accounting policies to reflect this change. Accordingly, we have restated our prior-year revenues down from £6,725.8 million as reported at 31 December 2021 to £5,034.5 million, as we have now determined that we are an agent for these transactions and will recognise revenue on a net basis, with only the gross profit on these types of deals, being the gross invoiced income less the costs of the resold software or third-party services, showing as revenue, with nothing recorded in cost of goods sold. This change has been applied from 2022 and, retrospectively, we have restated our prior-year 2021 revenues. The equivalent adjustment is not available for years prior to 2021 as it is not practicable to calculate. Further information on this change, including the retrospective restatement of the financial statements, and the revised accounting policy, is available in note 3 to the summary financial information within this announcement.
The result for the year benefited from £187.8 million of revenue (2021: £1.3 million), and £5.4 million of adjusted1 profit before tax (2021: £0.4 million), resulting from all acquisitions made since 1 January 2021. All figures reported throughout this announcement include the results of these acquired entities. The results of these acquisitions are excluded where narrative discussion refers to ‘organic’ growth in this announcement.
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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
Matt Low
www.tulchangroup.com
1 Gross invoiced income, adjusted administrative expense, adjusted operating profit or loss, 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 gains 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 does not consider these items when reviewing the underlying performance of the Segment or the Group as a whole. A reconciliation to adjusted measures is in the Group Finance Director’s review, which details the impact of exceptional and other adjusted items when compared to the non-Generally Accepted Accounting Practice (GAAP) financial measures, in addition to those reported in accordance with IFRS. Further detail is provided within note 4 to the summary financial information within this announcement.
2 We evaluate the long-term performance and trends within our strategic priorities on a constant-currency basis. The performance of the Group and its overseas Segments are also 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, or equivalent local currency amounts, the equivalent prior-year measure is also presented in the reported pound sterling equivalent, using the exchange rates prevailing at the time. 2022 highlights, as shown above, are provided in the reported pound sterling equivalent.
3 Adjusted net funds or adjusted net debt includes cash and cash equivalents, other short- or long-term borrowings and current asset investments. Following the adoption of IFRS 16, this measure excludes all lease liabilities. A table reconciling this measure, including the impact of lease liabilities, is provided within note 9 to the summary financial information within this announcement.
4 Gross invoiced income is based on the value of invoices raised to customers, net of the impact of credit notes and excluding VAT and other sales taxes. This reflects the cash movements to assist Management and the users of this announcement in understanding revenue growth on a ‘principal’ basis and to assist in their assessment of working capital movements in the Consolidated Balance Sheet and Consolidated Cash Flow Statement. This measure allows an alternative view of growth in adjusted gross profit, based on the product mix differences and the accounting treatment thereon. Gross invoiced income includes all items recognised on an ‘agency’ basis within revenue, on a gross income billed to customers basis, as adjusted for deferred and accrued revenue. A reconciliation of revenue to gross invoiced income is provided within note 4 to the summary financial information within this announcement.
The term Group refers to Computacenter plc and its subsidiaries.
At Computacenter, we are pleased to have shown adjusted1 earnings per share growth in 2022 over the previous year considering the challenging headwind from the unravelling of temporary Covid-related cost base reduction benefits. In 2023, we do not have anywhere near the same challenge as we have faced in 2022. By the end of the first half of 2022, almost all of the Covid benefits had disappeared from the business. Demand from most of our largest customers remains solid, particularly for IT infrastructure on which their businesses rely. We have seen top-line revenue extremely buoyant so far this year and expect this trend to continue. Our challenges for the coming year include, to a small extent, Technology Sourcing margins, due to the fact it is the largest customers, which are dilutive to margins, that are spending most, and, more significantly, Services margins due to price pressure in the market and salary inflation. Supply constraints have eased materially and while some will always remain, we are now operating at close to normal market conditions. Aligned with this, our inventory levels started to fall at the start of the fourth quarter of last year and we expect further reduction this year, which will continue to decrease the working capital required in the business. As previously communicated Computacenter is currently going through a significant internal IT investment phase which we expect to last for a further two or three years. While this has put pressure on our profitability in the short term, we believe it is the right thing to do so as we can take advantage of the long-term growth opportunities in the market and enhance our competitive position to take market share. We remain positive about the outlook in the short, medium, and long term. While there are plenty of challenges due to the macroeconomic environment, we continue to expect 2023 to be a year of progress.
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