Annual Report • Dec 31, 2011
Annual Report
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Annual Report and Accounts 2011
To improve quality and fl exibility of service while signifi cantly reducing costs
Service Desk, Managed Workplace, Managed Network, Managed Datacenter, Managed Applications and Support & Maintenance
Optimise technology, enabling effective change
Flexible Workplace, Borderless Network, Dynamic Datacenter, Unifi ed Communications & Collaboration and Secure Information
Source & Deploy
Address customer technology requirements
Smart Supply, Supply Chain Services, Lifecycle Management, Software Licensing and Compliant Disposals
Scalability High customer loyalty allows us to manage our revenue visibility
Order value varies signifi cantly
Amount the customer spends can be affected by macro economy
Our customers are experiencing increased demand for the latest technology in order for them to remain competitive.
Our customers increasingly want us to deliver our offerings to their locations worldwide, requiring us to expand our global partnerships.
Particularly in diffi cult economic times our customers look to reduce their costs through IT innovations.
There is less appetite to outsource IT to a single provider and more for selective outsourcing, an environment we are well placed to compete in.
| Revenue (£m) |
+6.6% |
|---|---|
| 2011 2010 2009 2008 |
2,852.3 2,676.5 2,503.2 2,560.1 |
| Adjusted* operating profi t (£m) |
+12.6% |
| 2011 2010 2009 2008 42.1 |
72.5 64.4 53.9 |
| Adjusted* diluted earnings per share (p) |
+13.3% |
| 2011 2010 2009 2008 21.0 |
37.4 33.0 27.7 |
| Total dividend per share (p) |
+13.6% |
| 2011 2010 2009 2008 8.2 |
15.0 13.2 11.0 |
Corporate Sustainable Development – page 22 Governance – page 28
2011 was a good year for our Company, more so given the extraordinary economic environment. Our German unit had an outstanding year, growing revenue at 21.8 per cent in the face of stiff competition. In the UK, our revenue declined by 12.9 per cent, but we preserved our overall UK margin percentage and grew our Services order book signifi cantly, with six substantial contracts closed in the last quarter alone. In France, continuous improvement in operations, together with the acquisition of Top Info, led to revenue growth of 33.1 per cent as well as enhanced profi tability. Our Belgian operation had its best year yet.
We continued to invest in our future, implementing our Group-wide ERP system in the UK and Germany and further improving our service delivery capabilities in all countries. We grew our international service support operations in Barcelona and South Africa and we acquired a signifi cantly larger property in the UK for our recycling operation, RDC. In total, we invested over £40 million of capital in strategic projects during 2011. These investments, together with those made in the recent past, have helped our results with adjusted* profi t before tax growing by 12.4 per cent to £74.2 million and our annualised services contract base growing by 6.0 per cent to £563.6 million.
We face 2012 with confi dence, despite the unrelenting challenge of slow, or even no growth in GDP in Western Europe. We are focusing on those aspects we can control – customer support, margin growth and cash generation in the main. We remain dedicated to providing our customers with services that save them money and help them be more competitive, and continue to invest in our ability to support them.
In this report, you will fi nd that we strive for clear and meaningful description of all our activities and decisions, as well as continue our commitment to uphold high standards of governance in line with the UK Corporate Governance Code.
We are far from satisfi ed with anything we do. The competition is fi erce, the economic environment uncertain, but our employees and customers have demonstrated resilience and loyalty, for which I thank them wholeheartedly. We shall work hard to earn that loyalty and in doing so, continue to deliver results that we can be pleased with.
Greg Lock Chairman 12 March 2012
* Adjusted profi t before tax is stated prior to amortisation of acquired intangibles and exceptional items. Adjusted operating profi t is also stated after charging fi nance costs on CSF.
Governance
included in the contracted services base. These wins, combined with other important wins in Germany and France, will provide robust contractual services base and revenue growth in 2012. The contracts also provide further evidence of the continuing trend for large customers to selectively outsource IT Managed Services to 'best in class' providers such as Computacenter.
offshore service delivery capability, to take advantage of the lower costs available such as in South Africa. In addition, we have made signifi cant investments in industry leading tools, for example, a £10 million investment in BMC Software to achieve further effi ciencies in our Managed Services offering. These investments enable us to offer an enhanced service at lower cost in areas such as major incident management and the remote management of datacenter infrastructure. These are ongoing initiatives, which take time to implement and will enable operational and cost benefi ts over the medium and long term. We expect to deliver improved services gross margins over time, as these initiatives mature.
Increase revenue per service head (£'000/head)
+5.9%
Maximising the return on working capital and freeing working capital where not optimally used
Growing our profi t margin through increased services and high-end supply chain sales
Ensuring the successful implementation of the Group-wide ERP system
Adjusted operating cash fl ow of £96 million in 2011 was substantially ahead of adjusted profi t before tax of £74.2 million; a pleasing performance. Most elements of the operating cash infl ow were similar to, or improved on the 2010 performance. However, working capital movements showed an infl ow of £0.3 million, allowing for organic revenue growth of 2.2 per cent, which is encouraging. The working capital infl ow of £21.4 million in 2010 was exceptionally strong, due to the collection of the trade debtors following the sale of our trade distribution business in November 2009.
-12.4%
cash fl ow (£m)
Increase adjusted operating
96 108
79
138
Overall, 2011 Group revenue increased by 6.6 per cent including acquisitions and 2.2 per cent excluding acquisitions, while adjusted PBT grew by 12.4 per cent. Group Services revenue as reported, grew by 6.2 per cent including acquisitions and 4.9 per cent excluding acquisitions. Supply chain revenue excluding acquisitions grew by 1.1 per cent. This combined with robust control of SG&A costs resulted in EBIT, as a percentage of net revenue*, increasing from 6.6 per cent to 6.9 per cent of sales.
The Group-wide ERP system is an extensive IT implementation, as well as a signifi cant business process change. The system covers virtually all of our operating activities with entirely new resource scheduling, call logging and maintenance systems that are at the heart of our business. The German business went live at the end of January 2011 and the UK business went live at the end of August 2011 – on schedule without material disruption to either business. France is now scheduled to go live during 2013. With our two largest countries live on the Group system, we are running a project to align processes across both businesses in order to extract the anticipated effi ciencies and ease the French implementation; also to ensure that the learning from the UK and German implementations is applied for future migrations in other countries.
Pictured left to right: Henri Viard (Managing Director, France) Tony Conophy (Group Finance Director) Neil Muller (Managing Director, UK Sales & Marketing) Mike Norris (Group CEO) Oliver Tuszik (CEO, Germany) Chris Webb (Managing Director, UK Operations) Mark Slaven (Group IS Director)
Financial statements Increase EBIT as a percentage of net revenue* +0.3pts ERP – delivery vs implementation plan 2011 2012 2013 ✓H2 ✓H1 2011 2010 2009 2008 6.9 6.6 6.0 4.9
* EBIT as a percentage of net revenue. Computacenter defi nes net revenue as turnover less the cost of product for re-sale recognised as an expense.
| 25% |
|---|
| 29% |
| 12% |
| 4% |
| 8% |
| 22% |
The Group's adjusted* profi t before tax grew by 12.4 per cent to £74.2 million (2010: £66.1 million). While this outcome in itself represents a strong performance, it is worth noting that this is the sixth consecutive year that Computacenter has delivered double digit profi t growth. The Group's adjusted* diluted earnings per share ('EPS'), increased by 13.3 per cent to 37.4 pence (2010: 33.0 pence), largely as a result of the increased profi tability. This takes the compound annual EPS growth over the last fi ve years to 22.1 per cent.
On a statutory basis, taking into account amortisation of acquired intangibles and exceptional items, Group profi t before tax increased by 10.3 per cent to £72.1 million (2010: £65.4 million) and diluted EPS increased by 20.6 per cent to 39.3 pence (2010: 32.6 pence).
Group revenue, as reported, increased in 2011 by 6.6 per cent to £2.85 billion (2010: £2.68 billion). The impact of currency on the Group's revenue was not signifi cant. Excluding acquisitions, growth on the previous year was 2.2 per cent. Group revenue growth was driven by the very strong volume improvements in France and particularly in Germany, which more than compensated for the 12.9 per cent revenue decline in the UK, due to the adverse economic climate.
Group Services revenue, as reported, increased by 6.2 per cent and by 4.9 per cent, excluding acquisitions. Once again, the drivers for this growth in Services revenue were our businesses in Germany, France and also Belgium. Services revenue in the UK declined by circa 2 per cent, although encouragingly, our Contractual Services revenues increased by 3.3 per cent.
The positive story of the year, for the Group as a whole, is that the annual Services contract base increased by 6.0 per cent in constant currency, compared to last year's fi gures, to £563.6 million. This growth does not yet take account of several contracts secured towards the end of the year, for which revenue generation is only due to commence in 2012. Contractual Services make a fundamental contribution to the long-term success of Computacenter, since it delivers better visibility of revenue. The growth experienced in 2011 bodes well for the future and leaves us confi dent that we are continuing to meet the IT needs of our customers.
Our Group operating expenses ('SG&A') increased by 9.6 per cent. This increase is due to a number of factors, including the impact of the acquisitions, additional depreciation and amortisation charges related to our ERP platform, together with some targeted investments, primarily in Germany, to support and maintain the growth in Services. In addition, there was an estimated increase of circa £7 million due to a reclassifi cation of costs, from cost of sales to SG&A, following the migration in Germany and the UK, to our common ERP platform.
Our balance sheet has remained healthy. At the end of the year, net cash prior to customer specifi c fi nancing ('CSF') was £136.8 million (2010: net cash of £139.4 million). Including CSF, net funds were £113.6 million (2010: £111.0 million). The year-end cash position continues to benefi t, by approximately £45 million (2010: £38 million), from the extended credit facility provided by one of the major suppliers. As stated before, the sustainability of these terms continues to remain uncertain.
Our net cash position is after a spend of £25 million on three acquisitions during the year, as well as the purchase of a large UK property for RDC, our recycling subsidiary, at a cost of £11 million.
The positive story of the year, for the Group as a whole, is that the annual Services contract base increased by 6.0 per cent in constant currency, compared to last year's fi gures, to £563.6 million.
The Board has decided to recommend a fi nal dividend of 10.5 pence, bringing the total dividend paid for 2011 to 15.0 pence, representing a 13.6 per cent increase on the 2010 total dividend paid of 13.2 pence. The increase in dividend is consistent with our stated policy of maintaining dividend cover within our target range of 2 to 2.5 times. Subject to the approval of shareholders at the Annual General Meeting ('AGM') on 18 May 2012, the proposed dividend will be paid on 15 June 2012 to shareholders on the register as at 18 May 2012.
We continue to invest for further growth and the increased acquisition activity in the year is in support of this objective. We added scale to the Supply Chain business through the Top Info acquisition in France, as well as a new customer base for cross selling our services. Our mobility offerings have been enhanced through the HSD acquisition in Germany, while Damax in Switzerland supports specifi c customers based within this region. While acquisitions have added scale and enhanced our services, in line with our goal of helping customers' competitiveness and saving them money, we will continue to invest organically in strengthening our existing offerings and improving our operational effi ciency. For instance, our tools for automating computer-based processes have been improved and advanced
following a £10 million investment over three years into our BMC-based customer toolsuite. Our various service desks were expanded signifi cantly during 2011 to answer increased demand from our Managed Services wins. Capacity at our multi-lingual service desks in Barcelona has doubled to a total potential capacity of 650 operators across two facilities. Additionally, our service desk facilities in Erfurt, Berlin and Cape Town have all been extended to accommodate a further circa 400 operators.
Although we were already well placed in the managed services market, these investments will optimise our ability to respond to the latest trends in IT outsourcing. There is a growing appetite for selective outsourcing, rather than single provider outsourcing deals. We are increasingly being trusted and selected by customers with existing experience of outsourcing relationships and as such, many of our contracts are second generation, or even more mature outsourcing agreements. Our European head-quartered customers are more frequently requiring us to deliver IT services on a global basis, which means we must have a reliable and effi cient global network of delivery partners. Our native language, multi-lingual service desk facility in Barcelona has been a critical resource in support of this trend.
Similarly, our datacenter facilities also enhance our Managed Services offerings and customer relevance. In 2011, we deployed approximately 900 new servers, storage and network devices primarily at our Tier IV secure facility in Romford, UK. We will continue to expand and upgrade these offerings to meet ongoing customer demand.
In 2011, our new ERP system was deployed in both Germany and the UK. We anticipate that France will migrate during 2013, following the completion of both an offi ce and warehouse relocation during 2012. While much has been achieved, we are now in a 'bedding-in' phase. As with all ERP deployments of this scale and given the huge level of business change, there is still a signifi cant volume of work to be undertaken. We are however encouraged that the experience we have gained from these two deployments will help simplify the French migration.
In a particularly challenging market in the UK, total revenue reduced by 12.9 per cent in 2011, to £1.10 billion (2010: £1.27 billion). While both our Supply Chain and Services revenues were lower, the decline, at 17.7 per cent in the Supply Chain business, to £728.0 million (2010: £884.9 million) was the primary driver for the overall revenue reduction in the UK. Our Services revenue decreased only marginally by 1.7 per cent, to £374.1 million (2010: £380.5 million).
Encouragingly, adjusted* operating profi t margin in the UK was broadly maintained, with profi t down by 14.0 per cent to £37.3 million (2010: £43.3 million). This is largely due to certain higher volume one-off Supply Chain deals with low contribution levels in the previous year. Profi tability in the UK was further protected from a greater decline by a 3.1 per cent reduction in SG&A, as a result of lower commissions and bonuses.
The slight drop in UK Services revenue was primarily due to fewer and smaller cabling projects and, following the normal trend, the material decline in Supply Chain sales also led to a reduction in Professional Services requirements.
The most encouraging development this year in the UK was the 3.3 per cent growth in Contractual Services revenue, coupled with further contract wins in the latter part of the year. The level of reported growth in the Services contract base of 1.6 per cent to £244.8 million (2010: £241.0 million), does not refl ect all the contracts concluded during the latter part of the year, as billing on a large portion of these deals will not commence until 2012. This provides an early bolster for 2012 and improved predictability in the years to come. The trend to conclude deals towards the end of the year means it is too early to predict the potential for further base growth in 2012, but the pipeline remains healthy.
The new Contractual Services wins demonstrate customer confi dence in our business model. In this challenging economy, our Contractual Services offerings continue to succeed in attracting customers who are looking for innovative and pragmatic ways to reduce their IT cost and increase operational effi ciency. While our transactional Supply Chain and even Professional Services businesses tend to mirror economic conditions, we achieved more long-term revenue predictability during 2011. We secured a number of signifi cant deals, including a datacenter managed service with a global maufacturer of fuels, lubricants and additives, which will be delivered from our Tier IV facility in Romford. We also won a managed service with a leading pharmacy-led high street health and beauty chain, covering 29,000 desktops and 1,600 servers. This contract includes a Windows 7 transformation and started in September 2011.
At an underlying level, the Supply Chain business was not entirely disappointing, with improved margins preventing gross margin
| 1,391.2 | 1 | 2 | 3 | 4 | 5 | 6 | ||
|---|---|---|---|---|---|---|---|---|
| 1. Workplace | 24% | 4. Third party Services | 4% | |||||
| 2. Datacenter & Networking | 27% | 5. Professional Services | 8% | |||||
| 3. Software | 11% | 6. Managed Services | 26% |
decline and delivering a fl at gross margin percentage performance on 2010.
Although this improvement in contribution was partly due to the absence of the previously mentioned high-volume, low-margin deals seen in 2010, it was also infl uenced by an improvement in Solution Sales and the optimised terms that we have negotiated with our major vendors. Vendor terms are not guaranteed and they must be frequently renegotiated, so such benefi ts cannot be relied upon.
Windows 7 and other new Microsoft offerings, continue to drive IT transformation projects among our customer base and at an increasing rate. We are well placed to meet this demand, which provides us with comfort even in an economy where diffi culties remain. Customer desire to modernise their workplace and Microsoft's operating system support changes, are expected to help the Supply Chain and Professional Services businesses in 2012. John Jester, General Manager of UK Enterprise and Partner Group at Microsoft explains this encouraging opportunity:
"Microsoft Windows 7 is the world's fastest growing operating system in history yet many enterprise customers' desktop PCs still run on Windows XP – an 11-year old operating system that is approaching end-of-life in only two years. To encourage corporate customers to upgrade their systems to a modern platform that will reduce costs, improve productivity and enable future growth, Microsoft is working closely with Computacenter, a key strategic partner that has the expertise and capabilities to deliver great value to our joint customers."
Customers increasingly wish to engage with Computacenter to streamline their supply chain. For example, we were successful in securing a multi-million pound per annum supplier consolidation contract with a large broadcaster in the UK. We will help the broadcaster reduce the time spent managing procurement, which will improve the quality of service and enable cost savings.
The UK business has also experienced an increase in demand from its customers to expand the delivery of IT services to global locations – a trend we are seeing across the Group. This was evidenced by a number of wins during 2011, including a managed service with an American multinational conglomerate for 75,000 end-users in 36 countries. AstraZeneca was another large new international win last year and we will be providing service desk and deskside support to their users in nine countries.
Our subsidiary RDC, which provides customers with secure and environmentally appropriate solutions for their end-of-life IT equipment, once again delivered strong performance, with revenue growth of 18.4 per cent over 2010. While their profi t margins remained resilient in 2011, RDC's relocation in early 2012 to a recently acquired larger and better single location in Braintree, Essex, should improve effi ciency and generate further performance improvements in 2012 and beyond.
"The managed services contract with Computacenter helps make our IT operations more agile, cost-effective and effi cient. As a result, we will be able to ensure that more passengers reach their destination on time as air traffi c volumes grow over the next three years."
Michael Ede, Head of IT Services, Gatwick Airport
Business Advantages • On time/on budget • Lower cost • Better services
"By using IT in a cost-effective manner to streamline public service delivery, we can support front-line resources and help improve the quality of life in South Lanarkshire by ensuring IT systems remain available."
Greater
Janice Woodley, Technology Services Manager, South Lanarkshire Council
In the German segment, including acquisitions, overall adjusted* operating profi t for the year grew by a signifi cant 39.2 per cent to €31.9 million (2010: €22.9 million). Excluding the results of acquisitions, HSD in Germany and Damax AG in Switzerland, adjusted* operating profi t grew by 26.1 per cent to €28.9 million (2010: €22.9 million).
In contrast to the weak start experienced in 2010, 2011 began buoyantly following a strong end to 2010 and we continued to largely sustain this encouraging performance throughout 2011.
Total revenue in the year, for the segment as a whole, increased by 20.3 per cent to €1,415.3 million (2010: €1,176.7 million) and excluding acquisitions, the revenue growth was 17.8 per cent. Much of this growth was delivered by the Supply Chain business, with workplace and networking equipment sales driving a large portion of the volume increase. Supply Chain revenue, for the segment as a whole, increased by a noteworthy 24.3 per cent and excluding acquisitions, on a like-for-like basis, Supply Chain revenue for the year grew by 21.4 per cent.
While encouraging in itself, this growth also stimulated our Services business. Not only did a major supplier of electronic components to the automotive industry award Computacenter Germany a three-year workplace equipment supply contract, but the relationship has evolved to include additional consultancy and related support services.
Services revenue, overall, grew by a healthy 12.3 per cent to €445.5 million (2010: €396.7 million) and excluding acquisitions, growth in Services revenue was 10.6 per cent. Applying the same exclusions, our Services contract base grew by 6.2 per cent to €308.0 million (2010: €290.0 million). However, this contract base growth hides the materiality of the Services wins concluded within the second half of the year, as most of these contracts will only generate revenue from 2012 onwards. The total lifetime contract value of all the Contractual Services wins awarded in 2011 amounted to approximately €250 million. This exceptional and sudden volume increase presented us with some resource and business take-on challenges. Although this caused some erosion to our Services margins, we started 2012 with an unhindered opportunity to optimise this growth.
The material wins achieved in 2011 represent the investments we made to enhance our Managed Services portfolio and deliver more capability. These wins also refl ect growing demand from our existing customers for IT service delivery across a broader range of geographies and our ability to respond to these requirements.
| 1,228.6 | ||||||||
|---|---|---|---|---|---|---|---|---|
| 1,008.9 933.7 |
||||||||
| 835.0 | 1 | 2 | 3 | 4 | 5 | 6 | ||
| 1. Workplace | 19% | 4. Third party Services | 6% | |||||
| 2. Datacenter & Networking | 35% | 5. Professional Services | 8% | |||||
| 3. Software | 9% | 6. Managed Services | 23% | |||||
These market drivers resulted in our largest value, service desk contract win ever awarded by a global manufacturer within the aerospace sector. This fi ve-year contract has an annual contract value of €13 million and will draw on all the Group's core capabilities across all its European operations. Additionally, a large German re-insurance provider awarded Computacenter Germany a four-year service desk contract, which will be supported internationally from our expanded Berlin service desk.
Both these customers have extensive prior experience of outsourcing critical IT functions to external providers and we believe their decision to partner with Computacenter demonstrates growing market confi dence in the quality and maturity of our Services. This is further supported by independent market analysis undertaken by Experton, which rated our offerings for managed workplace services, as the most outstanding amongst our 13 primary competitors.
The need to meet growing customer demand and fulfi l a sudden increase in Services business take-on requirements, while migrating onto the ERP platform, unsurprisingly resulted in a rise of SG&A.
However, more than half of the SG&A increase is due to a combination of the reclassifi cations between cost of sales and SG&A, the impact of acquisitions and expenses relating to amortisation of our new ERP platform. Excluding these impacts and at an underlying level, the SG&A in Germany grew by approximately 7 per cent. We will continue to invest in improving the effi ciency of our take-on process, as well as our general technical resources, to enable our future growth aspirations.
The HSD acquisition in April 2011 has enabled us to establish our mobility and 'bring-your-own' device offerings, resulting in very positive responses from our existing customers, as well as the wider market. This business has now been fully integrated into the German business.
From January 2011, the activities of Computacenter Luxembourg have been reported as part of the German business. Towards the end of July 2011, Computacenter acquired a majority stake in Damax AG in Switzerland and it was similarly considered appropriate to report this business performance as part of Computacenter Germany. Both of these businesses are already showing encouraging contributions to our German reporting sector.
| 2011 | 478.6 |
|---|---|
| 2010 | 359.6 |
| 2009 | 319.4 |
| 2008 | |
| Adjusted* operating profi t | Contract base |
| £6.0m | £48.8m |
Computacenter France, including Top Info's contribution for three quarters of 2011, delivered an adjusted* operating profi t of €6.9 million (2010: €1.2 million). More than half of this profi t improvement was delivered organically, which represents an encouraging performance for both the pre and post-acquisition business.
We achieved another year of good revenue growth with revenue in our existing French business increasing by 6.5 per cent, again outperforming the French market convincingly. Total reported revenue, including the three quarters of Top Info, increased by 31.4 per cent to €551.3 million (2010: €419.4 million).
Including the Top Info acquisition, for three quarters of the year, Supply Chain revenue increased signifi cantly by 35.5 per cent, with an increase of 7.1 per cent to the Supply Chain revenue of the business, excluding Top Info. Services grew by 11.1 per cent and without Top Info, Services revenue increased by 3.9 per cent.
The signifi cant opportunity of deploying Computacenter's Services offerings to Top Info clients is only just beginning, which bodes well for our Services business during 2012 and beyond. Full exploration of this opportunity should improve the 13.9 per cent (2010: 16.5 per cent) Services revenue mix.
The shift in business mix during 2011 is attributable to the strong Supply Chain nature of Top Info. The material revenue growth in the Supply Chain business came largely from improved sales of software and enterprise equipment and to a lesser extent from workplace Supply Chain sales. Supply Chain activity with the primary national procurement agencies for the French public sector has been encouraging and we feel very well placed to gain from future government refresh initiatives.
| 478.6 | |||||
|---|---|---|---|---|---|
| 359.6 | |||||
| 319.4 | |||||
| 308.2 | 1 | 2 | 3 | 4 5 | 6 |
| 1. Workplace | 45% | 4. Third party Services | 4% | ||
| 2. Datacenter & Networking | 17% | 5. Professional Services | 6% | ||
| 3. Software | 20% | 6. Managed Services | 8% | ||
We have increased the cross-selling Services to our traditional Supply Chain customers. For example, at the end of 2010, we announced that we had been awarded a three-year global software licensing contract with a major energy utilities company. In 2011, we went on to win a separate three-year Services contract, extendable to eight years, for the delivery of a full managed service.
This evolution is also occurring within the private sector as evidenced by a three-year contract win with a major corporate and investment bank within the French fi nancial sector. We will be providing desk and deskside support to their users.
Our annual Contractual Services base has grown to €58.4 million (2010: €47.1 million). However, a large proportion of recent Managed Services wins will only commence revenue generation during 2012 which, going forward will help boost the Services business further and have not been included in the 2011 Contractual Services base.
As can be expected with strong revenue growth, commission earnings during the year were higher. This was the primary contributor for the 3.6 per cent increase in the SG&A of the existing business' SG&A, while the SG&A of the post acquisition business increased by 28.8 per cent. We have also continued to invest in strengthening our salesforce during the year, with returns anticipated from 2012 onwards.
The sales functions of Top Info and the original Computacenter France have now been combined into a single operation and the businesses were merged on 30 December 2011. This has completed the integration of Top Info, which went smoothly, retaining all current major customers.
"Computacenter has a client-centric focus and a can-do attitude. It helps us safeguard the stability of our production IT infrastructure and stay on budget for operational expenditure."
Matthew Oakeley, Head of Group IT, Schroders
Business Advantages • On time/on budget
• Better services
"In our efforts to increase our presales capabilities we developed a new managed printing services offering with some immediate successes at customers like Alpha Card (a joint venture between American Express and BNP Paribas Fortis) where we conducted a printing audit and closed a contract delivering the customer a minimum 25% printing cost reduction."
Lower
Alberto Leone, ICT Offi cer, Alpha Card
Business Advantages
Our Belgium operation delivered an outstanding adjusted* operating profi t improvement of 264 per cent, recording an operating profi t of €1.8 million (2010: €0.5 million). After taking into account certain unusual items in 2011, at an underlying level, the operational profi t improvement on last year was approximately €1 million.
This result is particularly pleasing, as we maintained overall revenues of €49.5 million (2010: €49.6 million). Our 2010 revenues were infl uenced to a signifi cant extent, by a one-off Supply Chain sale, at a low margin. Generally, the quality of the revenue earned in the year improved.
Supply Chain revenue reduced by 2.9 per cent to €38.8 million (2010: €40.0 million). However, on the upside, our Services business grew by 10.3 per cent to €10.6 million (2010: €9.7 million), due to growth in both Professional and Managed Services.
Pleasingly, Professional Services revenue did not, as would be the anticipated trend, follow the Supply Chain revenue. The Professional Services revenue growth came from projects delivered to new customers, while our Managed Services contract base grew by more than 30 per cent. We also successfully extended our contract with SWIFT for a further three years, based on our existing 10-year relationship.
We are increasingly delivering a wider suite of services and solutions to our customers. This expanding portfolio is demonstrated by a turnkey project with the city of Wavre, which includes virtualisation, storage, networking and IP telephony services as well as Supply Chain.
As with the rest of the Group, we are experiencing growing demand for our services to be delivered across a wider geographic scale, as evidenced by a contract recently agreed with a multinational biopharmaceutical manufacturer, headquartered in Brussels. As part of the €3 million deal, we will be providing the customer with workplace services across its European locations.
The Board believes that despite the current economic climate, there would need to be further deterioration in this environment for its expectations not to be met this year and the Board is confi dent about gaining further progress during 2012. The Group enters 2012 buoyed by the recent contract wins, an improving position in the UK and continuing growth rates in France and Germany.
The high level of activity across the Group means that the operational challenges facing us this year, should not be underestimated. In the UK, we are incorporating last year's record Managed Services wins. In France, we are centralising all our logistics facilities into a single operation centre, relocating the whole head offi ce and sales functions, as well as preparing to migrate the French operation to the Group ERP platform during 2013. In Germany, the growth we experienced in 2011 and which has continued in the early part of 2012 requires our facilities and technical resources to expand. At a Group-level, customer demand remains to drive the rapid expansion of our Group Service Desk, at both existing and new locations.
We continue to invest to improve the services we offer customers and maximise Computacenter's long-term growth potential. We are delighted with the strong customer demand for our service offerings, which we confi dently believe enable them to reduce their operating costs, in the long term. Our new business pipeline for 2012 looks potentially as exciting, if not more so, than that which we achieved in 2011. The agenda we have set ourselves is ambitious and not without risk, but we believe that the combination of strong customer demand, our operational track record and the strength of our balance sheet, all bode well for Computacenter's aspiration of delivering sustainable EPS growth.
Mike Norris Chief Executive 12 March 2012
Business review
Overview
* Adjusted profi t before tax and EPS is stated prior to amortisation of acquired intangibles and exceptional items. Adjusted operating profi t is also stated after charging fi nance costs on CSF.
The economic recovery that followed the 'credit crunch' and the downturn of 2009 stimulated IT spend during 2010, but this recovery slowed during 2011 with a consequent lessening of business and consumer confi dence, which resulted in corporate IT budgets being reined back as 2011 progressed. Although 2011 began as a year in which enterprises had bullish plans for maintaining and increasing IT spend, the year ended with economic and political uncertainty in the UK and in some key European geographies, causing enterprises to control their IT spend more tightly than they had expected, or even to reduce that spend. Anticipated levels of GDP growth failed to materialise as business and consumer confi dence was hit by the growing sovereign debt crisis and by lowered demand caused by cutbacks in spending in the public and private sectors alike. Filtering down from macro-economic level to overall IT spending, the result of these shifts was a lower than anticipated IT spending growth in 2011 – which stood at 1.8 per cent for Western Europe, and 2.6 per cent for EMEA overall. Such low growth posed problems to many players within the market – especially on the back of several tough years.
IDC estimates that the overall UK IT services market growth was 1.1 per cent in 2010 and only 0.3 per cent in 2011 – 0.9 per cent and 1.2 per cent for Western Europe. This uncertainty and lowered levels of confi dence remain in place in early 2012, prompting many organisations to set cautious IT budgets for 2012.
Although 2011 was a tough year for IT suppliers, and although 2012 will be somewhat tougher, IDC does not believe that 2012 will witness a fall in demand of the scale we saw during the 2009 downturn. For example, 2009 saw a 2.8 per cent decline in IT services demand in the UK, whereas IDC expects the equivalent decline to be 1.9 per cent in 2012. It is worth noting that Computacenter has little exposure to customer application development, the IT services market segment expected to see the worst declines in demand during 2012. Moreover, there remain pockets of market growth to be exploited by vendors in 2012.
UK IT services market growth was 1.1 per cent in 2010 and only 0.3 per cent in 2011 – 0.9 per cent and 1.2 per cent for Western Europe
Most enterprises reined in their IT spending during 2011 as the year progressed, so although demand levels that vendors such as Computacenter will experience during 2012 will be somewhat lower than the demand in 2011, it should not come as a shock: 2012 budgets should mostly be confi rmation of the existing lockdown, rather than a bolt from the blue. As such, we should look at 2012 as a continuation of the tough times we have lived through in recent years – only a little more pronounced.
Moreover, diffi cult times bring opportunities as well as threats to the IT and IT services industry. Many organisations will need to invest in 2012 to make their IT infrastructures more agile and fl exible, in order to support business expansion or to allow mergers, acquisitions or indeed divestments. New technologies are also arriving which are stimulating demand for both products and associated services – both in implementing the new technologies and in subsequently managing them and integrating them with the business.
These new technology waves include virtualisation, consumerisation, business analytics, and social media to name but a handful. But the most signifi cant by far is the arrival of 'cloud computing'.
The 'cloud' is now real in the sense that most CIOs fi nally understand what it can do for them in a practical way. It is also here to stay – and won't disappear as a fad created by and to the benefi t of the IT industry. In fact, IDC believes that business will increasingly incorporate cloud computing as a core delivery model for their IT and this will be refl ected in their IT services spending.
Within Europe, most companies now incorporate cloud into their services investment, which represents a tremendous opportunity for services providers. Indeed, more than two-thirds of Western European companies already have a corporate cloud strategy in place today. In addition, cloud is one of the few areas of spending that enterprises don't expect to cut in the event of the economic outlook deteriorating during 2012. Not only that, but the transition to cloud-based IT infrastructures and the subsequent management of these infrastructures requires a signifi cant initial investment in IT services by organisations, followed by continuous levels of service spend to manage and improve the cloud-based infrastructure of the future. IT services companies such as Computacenter should benefi t both from the demand for cloud related professional services, but also from subsequent demand for cloud-related managed services.
Whilst IDC believes that cloud is now a mainstream technology, accepted and indeed welcomed by both IT management and corporate management, it is not the only revolution happening in IT today. One of the main trends we see – and one that has become increasingly important over the past two years – is the 'consumerisation' of corporate IT. We defi ne 'consumerisation' as employees bringing personal devices into the workplace and using 'Web 2.0' social applications (such as Facebook, LinkedIn, etc) in the workplace. This is without doubt happening now, at all levels of the organisation, whether the IT department likes it or not. If left unmanaged, IDC believes consumerisation will overwhelm the CIO's agenda, causing signifi cant operational problems to the corporate IT infrastructure and reducing the effi ciency of the organisation's day-to-day operations. Consumerisation seems attractive, but it can create as many problems as it solves, making this a top priority for IT services buyers in 2012 – and thus a major opportunity for IT services vendors. Not least, security and complexity issues caused by consumerisation will need to be
Related subjects: Our business model - Inside front cover
addressed urgently if CIOs are to retain control of their workloads. Consumerisation will shift the services focus to data privacy, compliance, and data loss prevention as opposed to managing the physical device. Finally, interoperability issues — getting corporate applications to work with multiple devices — will remain as long as new devices are being launched.
As such, consumerisation will create signifi cant opportunities for vendors because enterprises will need help in understanding the potential impact on their organisation (creating professional services opportunities) and managing those consequences (creating opportunities to sell follow-on managed services/outsourcing). Both professional services and managed services/outsourcing are key elements of Computacenter's portfolio.
The consumerisation challenge will drive investment in, for instance, virtual desktop solutions that enable data security by taking it away from the physical device. We view virtualisation – in all parts of the infrastructure – from the datacenter to the desktop, as being a stepping stone towards cloud. This will represent signifi cant growth opportunities for vendors to allow their client base to achieve the cost cutting required whilst providing them with a robust, fl exible infrastructure able to not only support their business, but enable it to grow.
It is a well-known fact that the amount of data held by organisations is expanding dramatically (IDC expects the volume of digital content will grow to 2.7ZB worldwide, up 48 per cent from 2011), creating vast data sets — or 'big data' — which in turn creates need for additional storage, data warehouses, analytics and other technology investments in European organisations.
However, one issue is that the data comes from an increasingly diverse variety of sources — IDC expects that more than 90 per cent of data will be unstructured and based on social media and Web-enabled workloads. The other issue is the velocity, or speed and frequency, with which the data is delivered and bombards organisations that are trying to assess the importance of the data, analyse it and act upon it.
Helping organisations understand what value they can get out of data and how they can bring it into decision processes, help drive effi ciencies and reduce cost, or help create new business propositions and drive top line growth, will be a major service opportunity in 2012.
Translating 'big data' into actionable business information can help organisations address both the cost-cutting agenda and the 'growth' agenda (in which IT investment aims to grow corporate revenues or to drive greater client loyalty/satisfaction). However, the opportunity at this stage will be to help organisations understand how they can use big data, how they integrate it with other BI/BA efforts in the organisation, and for the more advanced provide the skills for the new analytics technologies that are in very short supply.
More tactical opportunities will also appear in 2012 around Unifi ed Communications & Collaboration solutions (UCC) as a way to enable fl exibility within the enterprise whilst cutting down on the time and money spent on travel. This, just as with cloud,
will put extra pressure on the network and related services – which will become vital for all businesses. Without a robust network delivering quality services, businesses lose opportunities.
All of these trends represent major opportunities for service providers – despite the tough market conditions we anticipate. To ride the storm in 2012, IDC believes the key is for vendors to offer a breadth of services for enterprises to choose from – different models from traditional to cloud and even 'blended'. Another key is for vendors to avoid focusing solely on price – important as it might be – and keep focusing on demonstrating the value and quality of their offering. They must become the trusted adviser that client can rely on to help them navigate through the tough times.
As we have seen, this means being able to incorporate cloud within the solutions offered in order to lower the price point, increase fl exibility and reach new markets.
IDC believes this will translate into a different services offering from vendors. On the professional services side, successful vendors will be those who can not only offer but demonstrate a quick return on investment. The days of 'strategic consulting engagements' are not gone; but buyers will want to attach practical business value to their consulting spending.
On the managed services and support side – contracts are likely to be more focused and therefore smaller in length as well as scope. It is worth noting that those vendors focused on managed services – such as Computacenter – were already offering shorter contracts (between three and fi ve years) – more closely mapped to market requirement for some time. The trend towards multi-sourcing will continue – as buyers see the value in best of breed vendors for logical ICT silos that are applications, network & communications and IT (desktop to datacenter).
There is no getting away from the fact that IT is central to not only our corporate life but increasingly our personal life too. The consequence of that increased maturity is that end-users are much more demanding than ever. This will not stop. The impact of cloud and increased competitive pressure will make things much more diffi cult for vendors. Only the best vendors – willing to change and able to offer innovative solutions – will fare well in 2012, which is set to be a diffi cult year, and yet one with some signifi cant areas for opportunity for IT services suppliers.
Lionel Lamy IDC Research Director, European Software & Services
| Table 1 | |||
|---|---|---|---|
| Group Revenues £m | |||
| Half 1 | Half 2 | Total | |
| 2009 | 1,222.2 | 1,281.0 | 2,503.2 |
| 2010 | 1,288.8 | 1,387.7 | 2,676.5 |
| 2011 | 1,365.3 | 1,487.0 | 2,852.3 |
| 2011/10 | 5.9% | 7.2% | 6.6% |
| Revenues by country £m | ||||
|---|---|---|---|---|
| 2011 | 2010 | |||
| Half 1 | Half 2 | Half 1 | Half 2 | |
| UK | 547.3 | 554.9 | 651.9 | 613.5 |
| Germany | 580.4 | 648.2 | 457.2 | 551.7 |
| France | 219.7 | 258.9 | 164.2 | 195.4 |
| Belgium | 17.9 | 25.0 | 15.5 | 27.1 |
| Total | 1,365.3 | 1,487.0 | 1,288.8 | 1,387.7 |
2011 26.6 1.9 47.6 3.2 74.2 2.6
2011/10 25.1% 6.3% 12.4%
Our business model – Inside front cover Risk – page 20 Governance – page 28 Directors' report – page 43
In 2011 , Computacenter Group delivered turnover growth and the sixth successive year of profi t growth.
At a headline level, turnover grew by 6.6 per cent to £2.85 billion, although on a like-for-like basis (excluding acquisitions), turnover growth was 2.2 per cent.
The overall Group performance resulted from a mixed performance across our main geographies. Our German business was the main growth driver with a buoyant market and share gains driving revenue growth in all business lines, however weak infrastructure spending in the UK drove a contraction in the UK supply chain and professional services revenues.
Adjusted profi t before tax improved by 12.4 per cent from £66.1 million to £74.2 million. This increase was achieved despite additional depreciation and amortisation charges of approximately £3.4 million following the go-live of our German and UK businesses onto our new ERP platform and related infrastructure.
After taking account of exceptional items and increased amortisation of acquired intangibles following our acquisitions in the year, statutory profi t before tax increased by 10.3 per cent from £65.4 million to £72.1 million.
Statutory operating profi t increased from £65.9 million to £71.9 million. However, management measure the Group's operating performance using adjusted operating profi t, which is stated prior to amortisation of acquired intangibles, exceptional items, and after charging fi nance costs on customer specifi c fi nancing ('CSF') for which the Group receives regular rental income. Gross profi t is also adjusted to take account of CSF fi nance costs. The reconciliation of statutory to adjusted results is further explained in the segmental reporting note (note 3) to the fi nancial statements. For the purposes of this statement, all subsequent references are to adjusted measures.
In the prior year fi nancial statements, distribution costs were shown below gross profi t, however, management monitor the performance of the business by including such costs within gross profi t. As a result, these costs have been included in cost of sales in 2011 , and 2010 has been restated accordingly.
From 1 January 2011, the management of Computacenter Luxembourg has been transferred from Belgium to Germany. As a consequence, Luxembourg is reported as part of the German segment. The comparative segmental information in 2010 has been restated to refl ect this change.
Due to weak demand for infrastructure spending, particularly from Financial Services and Government customers, UK revenues contracted in 2011 by 12.9 per cent, reducing to £1,102.2 million. Supply chain sales decreased by 17.7 per cent, although the rate of decline slowed progressively in each quarter of the year. A similar contraction in professional services revenues resulted in a reduction in overall services revenues, by 1.7 per cent. The growth in support and managed services revenues of 3.3 per cent does not fully refl ect the progress made in 2011 , with a number of signifi cant contracts won in Q4 that will not contribute to our revenues and contract base until 2012.
Despite the reduction in revenues, gross margins remained robust, with our adjusted gross profi t margin increasing from 14.0 per cent to 15.2 per cent mainly due to a higher mix of services sales and an improved supply chain margin rate due to the absence of some large, low margin deals, particularly in software. Robust management of our adjusted operating expenses ('SG&A') led to a reduction of 3.1 per cent in 2011 . This, together with our focus on margin return, has ensured that overall adjusted operating profi t reduced broadly in line with revenue, by 14.0 per cent from £43.3 million to £37.3 million.
The pace of growth in our German business increased in 2011 . Revenue, as reported, grew in 2011 by 21.8 per cent to £1 ,228.6 million (2010: £1 ,008.9 million). The revenue impact of acquisitions (HSD in Germany and Damax in Switzerland) and currency movements were not signifi cant.
Overall, supply chain revenues increased by 25.9 per cent including acquisitions, with services revenues growing by 13.7 per cent. Whilst the market in Germany was particularly buoyant in 2011 , our share of the market has also increased. The gross margin return of the business reduced, partly due to the increased mix of supply chain revenues, and partly due to margin erosion in services, where the pace of growth impacted our effi ciency of business take-on resources.
(2010: £109.3 million). Approximately £7 million of this increase is due to reclassifi cations between cost of sales and SG&A from alignment arising from our ERP project. Approximately £5 million arises from the impact of acquisitions and expenses relating to amortisation of the new ERP platform. The underlying growth in the German SG&A cost base of £8 million relates to investments in the pre-sales and business take-on teams to support the growth in the services business. Overall, the German segment operating profi t increased by 40.9 per cent from £19.7 million to £27.7 million, with the organic growth in our German business augmented by the profi t generated by our acquisitions (HSD in Germany and Damax in Switzerland).
The revenue in the French segment increased by 33.1 per cent in the year. In April 2011 , the Group acquired Top Info SAS, which contributed revenues of £90.7 million in the year. Encouragingly, like-for-like revenues from our existing French business grew by 7.9 per cent. Supply chain revenue increased by 8.4 per cent prior to acquisitions, mainly due to growth in software and enterprise product sales. Services revenue grew by a more modest 5.2 per cent consolidating the gains made in 2010.
Following a reduction in 2010, the gross profi t return in France recovered in 2011 to 10.6 per cent, due largely to a focus on margin management in services together with the improved mix of enterprise product sales. SG&A grew in France principally due to the Top Info acquisition, with SG&A in our existing French business increasing by 4.9 per cent, mainly due to increased commission payments linked to the improvement in gross margin. The operating profi t of the combined business increased from £1.0 million to £6.0 million, with the contribution from Top Info largely matching the organic growth in profi ts in the existing Computacenter France business.
As a result of the improved profi tability of the business, and an improvement in management's view of the future performance of the combined entity, a deferred tax asset of £2.0 million in respect of losses has been recognised, and disclosed as an exceptional gain.
At the end of 2011 , the Computacenter and Top Info businesses were merged, and no longer generate independent cash fl ows. The goodwill arising from the Top Info purchase has therefore been assessed on the combined cash fl ows of the enlarged Computacenter France business.
During 2011 , the French business committed to move to a new warehouse and offi ce premises and the combined business is expected to move during the fi rst half of 2012.
Reported revenue increased by 0.9 per cent to £43.0 million (2010: £42.6 million). It is pleasing that the mix of revenue in 2011 generated healthy gross margin (2010 included a very large low margin supply chain deal with a single customer).
Gross margin return on sales for Belgium overall improved from 7.6 per cent to 10.7 per cent. SG&A, however, increased by 7.8 per cent mainly due to increased commission costs on the increased gross margin performance.
Overall, therefore, operating profi t improved from £0.4 million in 2010 to £1.6 million in 2011. Although approximately £0.3 million of this profi t growth was due to factors that are not expected to recur, the majority of the growth represents underlying improvement in the business.
In line with the requirements of IFRS3 Revised, acquisition-related costs are expensed in the period in which they are incurred. The Group has recorded £1.0 million acquisition-related costs for both successful and aborted acquisitions within exceptional items.
Due to circumstances arising after the acquisition date, the performance criteria required to trigger deferred consideration of €1.0 million that were previously expected to be achieved, were not met. As a result, the deferred consideration liability recognised has been reversed and the £0.9 million gain in the income statement has been recorded as an exceptional item.
| Half 1 | % | Half 2 | % | |
|---|---|---|---|---|
| UK | 16.7 | 3.0 | 20.6 | 3.7 |
| Germany | 8.4 | 1.4 | 19.3 | 3.0 |
| France | 0.2 | 0.1 | 5.8 | 2.2 |
| Belgium | 0.3 | 2.0 | 1.2 | 4.8 |
| Total | 25.6 | 1.9 | 46.9 | 3.2 |
| 2010 | ||||
|---|---|---|---|---|
| Half 1 | % | Half 2 | % | |
| UK | 18.1 | 2.8 | 25.2 | 4.1 |
| Germany | 3.4 | 0.8 | 16.3 | 3.0 |
| France | (1.2) | (0.7) | 2.2 | 1.1 |
| Belgium | 0.3 | 1.8 | 0.1 | 0.5 |
| Total | 20.6 | 1.6 | 43.8 | 3.2 |
Additionally, the statutory tax charge benefi ts from two items of an exceptional nature. Firstly, the deferred tax asset in respect of losses in Germany was reassessed in line with management's view of the entity's future performance. Where the reassessment exceeds the losses utilised in the year, the change in recoverable amount of the deferred tax asset is shown as an exceptional item. Secondly, the improved profi tability in France, together with an improved outlook for the combined French entity's future performance has resulted in the initial recognition of a deferred tax asset in respect of losses. The combined impact in the income statement is shown as an exceptional item.
Net fi nance income of £0.2 million was earned on a statutory basis in 2011 (2010: net fi nance costs of £0.5 million). This takes account of fi nance costs on CSF of £1.5 million (2010: £2.1 million). On an adjusted basis, prior to the interest on CSF, net fi nance income increased from £1.6 million in 2010 to £1.7 million in 2011 .
The effective adjusted tax rate for 2011 was 21.7 per cent (2010: 23.1 per cent). The Group's tax rate continues to benefi t from losses utilised on earnings in Germany and this year in France and further benefi ts from the reducing corporation tax rate in the UK.
Deferred tax assets that have been recognised in respect of losses carried forward increased to £15.4 million (2010: £11.3 million). In addition, at 31 December 2011, there were unused tax losses across the Group of £125.6 million (2010: £171.2 million) for which no deferred tax asset has been recognised. Of these losses, £68.5 million (2010: £99.4 million) arise in Germany, albeit a signifi cant proportion have been generated in statutory entities that no longer have signifi cant levels of trade. The remaining unrecognised tax losses relate to other loss-making overseas subsidiaries.
The adjusted* diluted earnings per share has increased in line with profi t growth by 13.3 per cent from 33.0 pence in 2010 to 37.4 pence in 2011. The statutory diluted earnings per share growth of 20.6 per cent was greater due to exceptional tax items in 2011.
The Board is recommending a fi nal dividend of 10.5 pence per share, bringing the total dividend for the year to 15.0 pence (2010: 13.2 pence). Subject to the approval of shareholders at the Annual General Meeting ('AGM') on 18 May 2012, the proposed dividend will be paid on 15 June 2012 to shareholders on the register as at 18 May 2012.
During 2011, the Group acquired three subsidiaries. On 1 April 2011, the Group acquired 100 per cent of Top Info SAS in France. The Top Info business was merged with our Computacenter France business on 30 December 2011 , and as a consequence no longer has its own separable cash fl ows. Accordingly the goodwill arising on the acquisition has been tested against the combined Computacenter France cash generating unit ('CGU').
On 11 April 2011, the Group acquired 100 per cent of HSD Consult GmbH, which has been combined in the year within the Computacenter Germany CGU.
On 21 July 2011, the Group acquired 80 per cent of Damax AG in Switzerland, and agreed to purchase the remaining 20 per cent by mid-2015 for a consideration dependent upon the achievement of agreed performance criteria over the next three and a half years. Due to the nature of the transaction, the Group has present access to the benefi ts associated with the remaining 20 per cent of Damax. The Group has recorded this acquisition as a linked transaction, and has accordingly consolidated 100 per cent of the results of Damax since the acquisition date and estimated the fair value deferred consideration payable.
The Group's trading net funds position takes account of factor fi nancing and current asset investments but excludes customer specifi c fi nancing. There is an adjusted cash fl ow statement provided in note 30 that restates the statutory cash fl ow to take account of this defi nition.
Net funds excluding CSF reduced marginally from £139.4 million to £136.8 million by the end of the year. The Group continued to deliver strong cash generation from its operations in 2011, with adjusted operating cash fl ow of £95.5 million (2010: £108.2 million). In the year our outfl ow of cash included over £40 million on specifi c strategic cash investments, such as the remaining expenditure on our ERP implementation, the purchase of a new freehold facility for our RDC recycling business for approximately £11 million, and net cash outfl ow on acquisitions of £25.3 million.
When taking these investments into account together with tax and dividends, our net funds excluding CSF reduced marginally in the year.
Whilst the cash position remains robust, the Group continued to benefi t from the extension of a temporary improvement in credit terms with a signifi cant vendor, equivalent to £45 million at 31 December 2011 , an increase of approximately £7 million from December 2010.
CSF reduced in the year from £28.4 million to £23.1 million partially due to a decision to restrict this form of fi nancing in the light of the credit environment and reduced customer demand. Taking CSF into account, total net cash at the end of the year was £113.6 million, compared to £111.0 million at the start of the year.
In certain circumstances, the Group enters into customer contracts that are fi nanced by leases or loans. The leases are secured only
on the assets that they fi nance. Whilst the outstanding balance of CSF is included within the net funds for statutory reporting purposes, the Group excludes CSF when managing the net funds of the business, as this CSF is matched by contracted future receipts from customers.
Whilst CSF is repaid through future customer receipts, Computacenter retains the credit risk on these customers and ensures that credit risk is only taken on customers with a strong credit rating.
The committed CSF fi nancing facilities are thus outside of the normal working capital requirements of the Group's product resale and service activities.
Details of the Group's capital management policies are included within note 26 to the fi nancial statements.
The Group's fi nancial instruments comprise borrowings, cash and liquid resources, and various items that arise directly from its operations. The Group enters into hedging transactions, principally forward exchange contracts or currency swaps. The purpose of these transactions is to manage currency risks arising from the Group's operations and its sources of fi nance. The Group's policy remains that no trading in fi nancial instruments shall be undertaken.
The main risks arising from the Group's fi nancial instruments are interest rate, liquidity and foreign currency risks. The overall fi nancial instruments strategy is to manage these risks in order to minimise their impact on the fi nancial results of the Group. The policies for managing each of these risks are set out below. Further disclosures in line with the requirements of IFRS 7 are included in note 25 to the fi nancial statements.
The Group fi nances its operations through a mixture of retained profi ts, cash and short-term deposits, bank borrowings and fi nance leases and loans for certain customer contracts. The Group's bank borrowings, other facilities and deposits are at fl oating rates. No interest rate derivative contracts have been entered into.
The Group's policy is to ensure that it has suffi cient funding and facilities in place to meet any foreseeable peak in borrowing requirements. The Group's positive net funds position was maintained throughout 2011, and at the year-end was £136.8 million excluding CSF, and £113.6 million including CSF.
Due to strong cash generation over the past three years, the Group is now in a position where it can fi nance its requirements from its cash balance. As a result, the Group has not renewed a number of overdraft and factoring facilities during 2010 and 2011, but has implemented a cash pooling arrangement for the majority of Group entities.
At 31 December 2011 , the Group had available uncommitted overdraft of £15.9 million (2010 uncommitted overdraft and factoring facilities of £15.5 million). The Group's committed facility expired in May 2011 , and was not renewed.
The Group manages its counterparty risk by placing cash on deposit across a panel of reputable banking institutions, with no more than £50.0 million deposited at any one time except for UK Government backed counterparties where the limit is £70.0 million.
Customer specifi c fi nancing facilities are committed.
The Group operates primarily in the UK, Germany, France and with smaller operations in Belgium, Switzerland, Spain and South Africa. The Group uses a cash pooling facility to ensure that its operations outside of the UK are adequately funded, where principal receipts and payments are denominated in Euros. In each country a small proportion of the sales are made to customers outside those countries. For those countries within the Eurozone, the level of non-Euro denominated sales is very small and, if material, the Group's policy is to eliminate currency exposure through forward currency contracts. For the UK, the majority of sales and purchases are denominated in Sterling and any material trading exposures are eliminated through forward currency contracts.
The value of contracts where service is provided in multiple countries has increased. The Group aims to minimise this exposure by invoicing the customer in the same currency in which the costs are incurred. For certain contracts, the Group's committed contract costs are not denominated in the same currency as its sales. In such circumstances, for example where contract costs are denominated in South African Rand, the Group eliminates currency exposure for a foreseeable future period on these future cash fl ows through forward currency contracts. In 2011 , the Group recognised a charge of £0.5 million through other comprehensive income in relation to the changes in fair value of related forward currency contracts, where the cash fl ow hedges relating to fi rm commitments were assessed to be highly effective.
The Group principally manages credit risk through management of customer credit limits. The credit limits are set for each customer based on the creditworthiness of the customer and the anticipated levels of business activity. These limits are initially determined when the customer account is fi rst set up and are regularly monitored thereafter. In France, credit risk is mitigated through a credit insurance policy which applies to non-Government customers and provides insurance for approximately 50 per cent of the relevant credit risk exposure.
There are no signifi cant concentrations of credit risk within the Group. The Group's major customer, disclosed in note 3 to the fi nancial statements consists of entities under the control of the UK Government. The maximum credit risk exposure relating to fi nancial assets is represented by carrying value as at the balance sheet date.
As disclosed in the Directors' report, the Directors have a reasonable expectation that the Group has adequate resources to continue its operations for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the consolidated fi nancial statements.
Tony Conophy Finance Director 12 March 2012
The ongoing identifi cation and monitoring of risks are undertaken by our Group Risk Committee ('GRC'), the members of which include: the Group Chief Executive, Group Finance Director, Managing Director UK Sales, Managing Director UK Operations, Company Secretary and Group Risk Manager, Chief Executive of Germany, Director General of France and the Group Internal Auditor.
The GRC is responsible for compiling the Strategic Risk Log ('SRL') annually, a 'top down' list of unwanted situations which could prevent the strategic objectives, as established by the Board, from reaching the desired outcome. These risks also include the possibility for failure in maximising upside potential. The SRL is compiled by the Committee with facilitated guidance from an external risk consultancy, every two years, as well as the 'bottom up' Business Risk Assessment ('BRA'), as delivered by all the business leaders across the Group.
Ownership for the top 20 strategic risks is allocated across the GRC and monitored at quarterly scheduled meetings. The agenda of items considered at a GRC meeting also includes: Health and Safety, Insurance and Liabilities, Business Continuity and IT Disaster Recovery, Corporate Sustainable Development and Internal Audit reports. The Group Internal Auditor aims to provide the Group Audit Committee with feedback on the risk
control measures being monitored and assurance that the assessment of risk remains active, at a senior level. The Group Internal Auditor additionally reports on fi ndings, following internal audits of areas impacted by risks captured on the risk logs.
Assessing risk is not only about what is foreseeable. An exercise was undertaken this year by the Committee to consider the unthinkable risks, or 'black swans' and to contemplate their impact on business objectives and how best to mitigate. The disaster recovery plans have undergone review following this study, as further opportunity of minimising post-disaster chaos have, in certain instances, been identifi ed.
The Committee this year benchmarked the SRL against an external Global Risk Management Survey and of the top 10 external fi ndings, the SRL had captured eight, which provides some comfort that our identifi cation process is aligned to that being undertaken in other organisations. Those generic risks more widely identifi ed and also listed on our SRL include: business continuity risks associated with IT operational failures; our obligations under regulatory and compliance legislation; data protection exposures; and the consequences of expanding the delivery of our offerings to our customers, globally. Certain risks on the SRL have been identifi ed as posing potential threat to our strategic objectives and some of these are detailed below.
infrastructures and to this end, vendor independent solutions are imperative.
Financial statements
Computacenter recognises that our people and the societies and environment within which we operate are integral contributors to delivering value and supporting our key strategic aspirations. Whilst we pride ourselves on the provision of technologically advanced information solutions, we recognise that our business occurs within a wider community including employees, shareholders, customers, suppliers, business partners and the natural environment as a whole.
Since 2007, the Group has been committed to the 10 core principles of the United Nations Global Compact ('UNGC'), aimed at demonstrating ethical, environmental and social responsibility towards our own workforce and in our business interaction within each community and country we operate. In 2009, the Group published its fi rst Communication on Progress ('CoP') on the UNGC website, followed by our second and third CoP in April 2010 and 2011. Additionally, the Group retains its membership to the FTSE4Good Index Series. The Group's CSD Policy is annually reviewed by the highest governance structure, the Group Board and the policy is executed and monitored through the facilitation of the Group CSD Committee, constituted out of representatives from across the Group as a whole.
Integral to our commitment, we strive to incorporate the UNGC and its principles into our strategy, culture and day-to-day operations. We do this through the development, communication and implementation of relevant policies to manage and monitor our progress towards these principles. Since our commitment to the core principles, we have adopted and revised a number of policies and procedures across the Group.
We support public accountability and will publish, as part of our annual Business Review, a Report on Progress. We are also communicating our sustainability efforts and achievements with all our shareholders in the Annual Report and Accounts, as well as our Company website. We believe that what is not measured is not effectively managed and in line with this, we are endeavouring to identify at least one standard indicator ('SI'), as recognised by the Global Reporting Initiative ('GRI'), per core principle. In this regard, we have made progress, but there remains more work to be done over the coming years.
Computacenter will seek to collaborate with and encourage our suppliers, contractors and customers to operate in a similar socially responsible manner, as guided by the UNGC 10 principles. We have already secured support from the majority of our suppliers and contractors, but we acknowledge that this will be an ongoing task.
Mike Norris Chief Executive Offi cer
Related subjects: Directors' report - page 43 Governance - page 28
Computacenter's internal sales team needs to be able to respond quickly to customer requests to ensure the success of the business. This requires excellent internal communication and collaboration, with meetings often being arranged at short notice.
With the sales team based at eight UK offi ces and also remote locations, face-to-face meetings were costly, time-consuming and damaging to the environment. Adrian Priest, Internal Sales Director for Computacenter, comments: "We are an extremely busy team without time to spare. Frequent travel not only increases expenses and has a negative effect on the environment but also impacts productivity."
To address these challenges, Computacenter has implemented an audio-visual solution that enables staff to conduct virtual meetings regardless of their location. Based on interactive whiteboards and data conferencing software, the solution enables meeting participants to share data remotely and automatically save meeting notes from the whiteboard to eliminate the need for manual note-taking.
By reducing the need for travel by more than 60 per cent, Computacenter has not only been able to decrease its costs but also minimise its environmental impact. Enhanced communication and less time spent travelling also helps the sales team to improve productivity.
These factors all help Computacenter to continue to deliver a responsive and effi cient service to its customers while at the same time safeguarding profi tability. "In addition to helping us to be more cost-effective, the solution helps my team to work effectively as a single unit, despite the geographical spread," adds Adrian. "This is critical for the performance of the team, and the overall success of the business as a whole."
Following the successful internal implementation, Computacenter has helped a number of customers deploy similar solutions to enable them to also reduce travel, cut costs and minimise carbon emissions.
During the whole of 2011, Computacenter was actively involved in designing and implementing a Group-wide ERP SAP system. Much resource and time was dedicated to this project and we are proud, in light of these demands, to have managed to maintain our CSD standards and not deteriorate. Our longer-term aspirations are however, to improve our CSD standards and as this project
moves closer to conclusion over the fi rst half of 2013, our focus will again turn towards improvement targets. We are also encouraged that the ERP system is designed, as the 'go-live' phases embed, to deliver accurate Group-wide data, potentially more aligned to the GRI score card allowing us to take a better view on our most suitable SIs to report against.
| 1. Support and respect the internationally proclaimed human rights – Human Rights | |
|---|---|
| ----------------------------------------------------------------------------------- | -- |
• Maintain human rights awareness through the Company's 'Principles of Employee Behaviour'
✓ New vendors continue to be required to complete the vendor conformance questionnaire and information is shared across the Group
✓ 25 per cent of staff in France completed the Stress Prevention course
• Maintain current status and reassess vendor conformance, through the review of questionnaire responses
✓ Initial conformance verifi cation audits have commenced in France, but GRI scorecard measurement postponed
• Maintain current status and reassess vendor conformance, through the review of questionnaire responses
• Continue to develop young careers and seek assurance from all key vendors that no child labour is deployed, on behalf of the Group, in non-European geographies
Expand on the participation in Germany in the Volkswagen Green Fleet programme
✓ 80 per cent of all Volkswagen vehicles in the fl eet in Germany have 'blue-motion' technology
✓ Computacenter France continued its support to NGO Aide et Action
Continue to track and monitor charity fundraising activities
2011 objectives and achievements – SI = Proportion of customer contract wins where 'Green IT' was part of the contract scope
2011 objectives and achievements – SI not formalised
Stephen Benadé Company Secretary 12 March 2012
Title: Non-Executive Chairman and Chairman of the Nomination Committee
Greg is the Non-Executive Chairman of Kofax plc and also chairs the Nomination Committee of Kofax plc. Greg is a Non-Executive Director of UBM plc. He has extensive experience in the software and computer services industry, including four years as Non-Executive Chairman of SurfControl plc and 30 years at IBM in a variety of senior roles, including as General Manager of IBM's Global Industrial sector from 1998 to 2000, a member of IBM's Worldwide Management Council and a governor of the IBM Academy of Technology. Age 64.
Mike Norris graduated with a degree in Computer Science and Mathematics from East Anglia University in 1983. He joined Computacenter in 1984 as a salesman in the City offi ce. In 1986 he was Computacenter's top account manager. Following appointments as Regional Manager for London Operations in 1988 and General Manager of the Systems Division in 1992 with full sales and marketing responsibilities, he became Chief Executive in December 1994 with responsibility for all day-to-day activities and reporting channels across Computacenter. Mike also led the Company through fl otation on the London Stock Exchange in 1998. Mike is also Non-Executive Chairman of Triage Holdings Limited. Mike was awarded an Honorary Doctorate of Science from Hertfordshire University in 2010. Age 50.
Tony has been a member of the Institute of Chartered Management Accountants since 1982. He qualifi ed with Semperit (Ireland) Ltd. and then worked for fi ve years at Cape Industries plc. He joined Computacenter in 1987 as Financial Controller, rising in 1991 to General Manager of Finance. In 1996 he was appointed Finance and Commercial Director of Computacenter (UK) Limited with responsibility for all fi nancial, purchasing and vendor relations activities. In March 1998 he was appointed Finance Director to the Group. Age 54.
Sir Peter founded Computacenter with Philip Hulme in 1981 and was Chairman of the Company until 1998, when he became a Non-Executive Director. He is Chairman of Dealogic (Holdings) plc, a Director of Biomni Limited and prior to founding Computacenter, he was a Managing Director of Morgan Stanley and Co. Sir Peter is Founder, Chairman and Trustee of the Ogden Trust, a member of the Development Councils of both Durham University and Westminster School, a member of the Royal Society 350th Anniversary Campaign Board and a Patron of Support and Help in Education. Age 64.
| Title: | Non-Executive Director and |
|---|---|
| Chairman of the Audit | |
| Committee | |
| Committee membership: | A, N, R |
John is the Senior Independent Director and Audit Committee Chairman of Misys plc, a Non-Executive Director and Chairman of the Audit Committees of both Gemalto NV and ITV Plc and Non-Executive Chairman of Tribal Group plc. John has extensive experience of being a Non-Executive Director for several companies and public bodies. John is a chartered accountant. He has held senior positions with Arthur Andersen and with Deloitte. Age 63.
Title: Non-Executive Director
Philip founded Computacenter with Peter Ogden in 1981 and worked for the Company on a full-time basis until stepping down as Executive Chairman in 2001. He is a Non-Executive Director of Dealogic (Holdings) plc and was previously a Vice President and Director of the Boston Consulting Group. Philip is a Director of Biomni Limited and is the Founder and a Trustee of the Hadley Trust. Age 63.
| Title: | Non-Executive Director |
|---|---|
| Committee membership: | A, N, R |
Ian is Director of the University Computing Service at the University of Cambridge. During his career he has held a number of senior positions, including First Vice President and Global Chief Technology Offi cer of Merrill Lynch's Investment Banking and Sales division and Global CTO at Dresdner Kleinwort Wasserstein Investment Banking. Age 51.
| Title: | Non-Executive Director, |
|---|---|
| Senior Independent Director and | |
| Chairman of the Remuneration | |
| Committee | |
| Committee membership: | A, N, R |
Brian is the former Managing Director of Amazon.co.uk. He began his career at Xerox and has worked at IBM, in the UK, Europe and the USA. Brian has also worked at Crosfi eld Electronics, Madge Networks, Lucent and Dell Computers and was managing director of T-Mobile (UK). Brian has had broad non-executive experience, having served as Chairman of the Remuneration Committee and Senior Independent Director of SThree plc, a Non-Executive Director of Celtic Football Club plc and the British Retail Consortium and Chairman of Virgin Mobile. He is currently a member of the Advisory Boards of Numis Securities and Huawei UK and a Non-Executive Director of Monitise plc, MX Data Limited and the BBC Executive Board. Brian is a Venture Partner (part-time) with Scottish Equity Partners and is a Trustee of In Kind Direct, a charity which redirects surplus products to the needy. Age 56.
| 1. Greg Lock | 17/17 |
|---|---|
| 2. Mike Norris | 17/17 |
| 3. Tony Conophy | 17/17 |
| 4. Peter Ogden | 13/17 |
| 5. John Ormerod | 15/17 |
| 6. Philip Hulme | 14/17 |
| 7. Ian Lewis | 15/17 |
| 8. Brian McBride | 15/17 |
Key:
Business review
Overview
The Board remains committed to the principles of good corporate governance and supports the best practice guidelines contained within the UK Corporate Governance Code ('the Code') published in June 2010, which can be found on the FRC's website (www.frc.org.uk/corporate/ukcgcode. cfm). This statement explains the Company's governance policies and practices and sets out how the principles of the Code have been applied during the year ended 31 December 2011 ('the year'). The Board confi rms that, save as where detailed below, the Company has complied with the Code throughout the year.
The membership of the Board as at 31 December 2011 is as set out on pages 26 and 27. The Board comprises two Executive Directors, fi ve Non-Executive Directors and the Chairman. The Chairman, Greg Lock, was considered by the Board to be independent on appointment and Ian Lewis, John Ormerod and Brian McBride are all considered to be independent. Brian McBride is the Senior Independent Director, following his appointment to the Board on 10 January 2011. Prior to this date, John Ormerod acted as the Senior Independent Director, pending the new appointment to the Board.
The Board acknowledges that the Company is not in compliance with paragraph B.1.2 of the Code, which requires at least half the Board, excluding the Chairman, to be independent Non-Executive Directors. Both Philip Hulme and Peter Ogden, who are Non-Executive Directors and the founders of the Company, are not considered independent, due to their long tenure, substantial shareholding in the Company and their previously held executive positions in the Company. Notwithstanding this, the contribution that these two Directors make to the Board is highly valued, as the two Directors bring a wealth of experience to the Board, not only from having founded the Company, but from their other ongoing businesses activities.
The Board is responsible for the overall management and performance of the Group. To this effect, the Board sets the Company's strategic aims and ensures that suffi cient resources are in place to meet these objectives and reviews the performance of senior management in order to ensure that they are meeting the agreed objectives. The Directors set those values and standards which ensure that obligations to shareholders and other stakeholders are understood, their expectations are met and that satisfactory dialogue with shareholders is maintained. A framework of controls exists to ensure that risks are properly identifi ed, effectively assessed and prudently managed.
The roles of Chairman and Chief Executive are separate and their responsibilities are clearly defi ned in writing, reviewed annually and approved by the Board. In summary, the Chairman's role is to lead and manage the Board. The Chairman stimulates contribution from all Directors and is responsible for ensuring that constructive interaction remains between the individual members of the Board. The Chief Executive, in turn, is responsible for the day-to-day management of the Group's operational activities and for the proper execution of the strategy, as approved by the Board. There is no dominant individual or group of individuals on the Board infl uencing the decision making processes and the Board is comfortable that the contribution of all the Directors is valued. The Board believes that it oversees the Group effectively and maintains a proactive approach.
There is a documented schedule of matters which are reserved for the Board and these matters include, amongst other matters, the agreement of the primary strategy and budgets, as well as the approval of acquisitions and major capital expenditure. This schedule is reviewed annually or more frequently where required and during the year, the schedule was updated on two occasions.
The Board supports equal opportunities and recognises the benefi ts that diverse skills, experience and points of view can bring to an organisation and the decision making ability required from the Board. In this regard, the Board has considered the recommendations made in the Davies Report, 'Women on Boards', published in February 2011, as well as the continuing debate on the matter and whilst the Board recognises the principles involved, appointments will primarily remain based on merit.
It was further agreed that the Nomination Committee will actively seek candidates from the widest talent pool possible and will in addition to taking into account the skills and experience desired for the appointment, also have regard for the benefi ts of wider diversity, including gender. However, a search for additional members to the Board will only be launched when the Nominations Committee recommends this, following a review of the Board's composition, and therefore it was not considered appropriate to set any targets on diversity at this time.
Upon joining the Board, all Directors receive a comprehensive induction programme, tailored to their specifi c requirements. New Directors receive an induction pack which contains information on the Group's business, its structure and operations, the Board procedures, various corporate governance related matters and details regarding Directors' duties and responsibilities. All new Directors are introduced to the Group's senior management team and major shareholders are invited to meet them as well.
All Directors receive appropriate documentation in advance of each Board and Committee meeting, including detailed briefi ngs on all matters, in order to enable the Directors to discharge their duties effectively in reaching a decision. In addition, the Directors receive regular reports on the performance of the Group and matters of importance. Senior management regularly present to the Board, the results and strategies of their respective business units, and all Directors are encouraged to meet with the senior management team, thereby enabling the Board to remain familiar with key elements of the business and the management of the Group.
The Board, its Directors and its Committees are subject to annual performance reviews, which are led by the Chairman, or the relevant chairman in the case of each Committee. Each chairman sets the scope and format for the review. This year, the Board evaluation was initiated with the completion and return by each Director of an assessment questionnaire. An analysis by the Chairman of the returned questionnaires crystallised those areas upon which to focus during individual meetings between each of the Directors and the Chairman. The information obtained through both the analysis of the returned questionnaires and the individual discussions were summarised and, together with recommendations for improvement, included in a report for discussion and consideration by the Board as a whole. Whilst the Board was broadly assured that it fulfi lled its role effectively, recommendations of improvement related primarily to the development of the strategy, monitoring progress in the implementation and in ensuring proper oversight and constructive challenge by the Board. In this regard, plans to incorporate these suggested improvements are underway.
The Board recognises that the UK Corporate Governance Code requires that an externally facilitated evaluation on its effectiveness be undertaken at least once every third year and in this regard the Board is currently compliant to this Code. The Board has considered in detail whether to satisfy this requirement during the year, but could not conclusively determine the added value incrementally to the traditional evaluation process and how this would deliver signifi cant benefi t. The Board continues to believe that its internal evaluation process is both robust and thorough and, therefore, decided not to have an externally facilitated evaluation for this year. The Board will keep the matter under review and will continue to explore the market and consider providers for possible externally facilitated evaluations in the future.
The performance of the Chairman is assessed by the Non-Executive Directors, led by the Senior Independent Director. All the Directors provided positive feedback to the Senior Independent Director on the performance of the Chairman.
The Company Secretary is responsible for advising the Board on all corporate governance matters and for ensuring that all Board procedures are followed, applicable rules and regulations are complied with and the Board is updated on regulatory and governance matters. All Directors have access to the advice and services of the Company Secretary.
A procedure is in place to enable individual Directors to obtain independent professional advice, at the Company's expense, where they believe it is important to the furtherance of their duties.
Details of the Directors' attendance at Board and Committee meetings are provided on pages 27, 32, 34 and 35.
The Company arranges insurance cover in respect of legal action against the Directors and to the extent allowed by legislation, the Company has issued an indemnity to each Director against claims brought by third parties.
Whilst the Company's Articles of Association require a Director to be subject to election at the fi rst AGM following his or her appointment and thereafter every third year, the Board has decided that, in accordance with the UK Corporate Governance Code, all Directors should be subject to re-election at the next AGM on 18 May 2012.
The Board has delegated certain governance responsibilities to three principal Board Committees: Audit Committee; Remuneration Committee; and Nomination Committee. The Terms of Reference for each Committee can be obtained from the Company's website www.computacenter.com/investors or from the Company Secretary, by request. The composition of the Committees appear on pages 27, 32, 34 and 35 and directly following this report, are reports from the chairman of each Committee setting out the main responsibilities of the respective Committees and their main activities during the year. These reports may be found from pages 32 to 42.
The Board values the importance of meeting the Company's shareholders to obtain their views and has established a programme to communicate with the shareholders, based on the fi nancial reporting calendar.
The Board is informed of any substantial changes in the ownership of the Company's shares and the Company's corporate brokers provide monthly reports on the ownership of the Company's shares. In addition, meetings are held with major shareholders following both the full-year and half-year results. Normally, these meetings are with the Chief Executive and Finance Director. The whole Board is briefed on the outcome of these meetings and any issues raised are discussed.
In addition, once a year, the Company's top 15 shareholders are invited to meet the Chairman and the Company Secretary to provide feedback on the Company's management and raise other comments. Specifi cally, at these meetings, the Company Secretary discusses the Company's corporate governance arrangements and invites feedback on any areas of particular interest from the shareholders. The information received is then used as part of the evaluation of the Board's effectiveness.
The Chairman and the Senior Independent Director are contactable at the Company's registered offi ce to answer any queries that both institutional and individual shareholders may have. All of the Directors aim to attend the AGM and value the opportunity of welcoming individual shareholders and other investors to communicate directly and address their questions. In addition to mandatory information, a full and balanced explanation of the business of all general meetings is sent in advance to shareholders. Resolutions at the Company's general meetings have been passed on a show of hands and proxies for and against each resolution (together with any abstentions) are announced at such meetings, noted in the minutes, available on the Company's website and notifi ed to the market.
The Board has overall responsibility for maintaining and reviewing the Group's systems of internal control, ensuring that the controls are robust and effective enabling risks to be appropriately assessed and managed. The Group's systems and controls are designed to manage risks, safeguard the Group's assets and to ensure reliability of information used both within the business and for publication. Systems are designed to govern, rather than eliminate, the risk of failure to achieve business objectives and can provide reasonable, but not absolute, assurance against material misstatement or loss.
The Board conducts an annual review of the effectiveness of the systems of internal control including fi nancial, operational and compliance controls and risk management systems. Where weaknesses have been identifi ed, safeguards are implemented and monitored.
All systems of internal control are designed to identify, evaluate and manage signifi cant risks faced by the Group continuously. The key elements of the Group's controls are as follows:
The Board has overall responsibility for making strategic decisions and there is a written schedule of matters reserved for the Board. The Group Executive Committee meets on a quarterly basis to discuss day-to-day operational matters, in addition to the separate Executive Committees which have been established for each of the Group's operations in the UK, France and Germany and which also meet quarterly. The Executive Directors therefore discuss operational matters with the senior management teams, at least at four separate meetings per quarter. A fl at reporting structure is maintained across the Group, with clearly defi ned responsibilities for operational and fi nancial management.
The Group operates defi ned authorisation and approval processes throughout all of its operations. Access controls exist where processes have been automated to ensure the security of data. Management information systems have been developed to identify risks and to enable assessment of the effectiveness of the systems of internal control. Accountability is reinforced and further scrutiny of costs and revenues encouraged, by the linking of staff incentives to customer satisfaction and profi tability.
A three-year strategic plan is prepared or updated annually and reviewed by the Board. A comprehensive budgetary process is completed annually and is subject to the approval of the Board. Performance is monitored through a rigorous and detailed fi nancial and management reporting system, by which monthly results are compared to budgets, the previous year and the agreed targets. The results and explanations for variances are regularly and routinely reported to the Board. Appropriate action is taken where variances arise.
Management and specialists within the Finance Department are responsible for ensuring the appropriate maintenance of fi nancial records and processes that ensure fi nancial information is relevant, reliable, in accordance with the applicable laws and regulations, and distributed both internally and externally in a timely manner. A review of the consolidation and fi nancial statements is completed by management to ensure that the fi nancial position and results of the Group are appropriately refl ected. All fi nancial information published by the Group is subject to review by the Audit Committee.
The Group Risk and Insurance Department monitors developments and oversees compliance with legislative and regulatory requirements. A comprehensive risk management programme is developed and monitored by the Group Risk Committee, the members of which include senior operational managers across the Group, the Finance Director, the Group Risk Manager and the Group Internal Auditor. The Group Risk Committee is chaired by the Group's Chief Executive. Further information on the Company's risks can be found within the Risk report on pages 20 and 21. Through a programme of assessment, appropriate measures and systems of control are maintained. Detailed business interruption contingency plans are in place for all key sites and these are regularly tested, in accordance with an agreed schedule.
Procedures exist and authority levels are documented to ensure that capital expenditure is properly appraised and authorised. Cases for all investment projects are reviewed and approved at divisional level. Major investment projects are subject to approval by the Board and Board input and approval is sought for all merger and acquisition proposals.
The Board has established and reviews regularly key treasury policies over matters such as counterparty exposure; borrowing arrangements; and foreign exchange exposure management. All cash payments and receipts are managed by centralised fi nance functions within each of the operating companies. Weekly reporting of cash balances to the Group Finance Department ensures that the position of the Group, as a whole, is properly controlled. The management of liquidity and borrowing facilities for customer specifi c requirements, ongoing capital expenditure and working capital of the business is undertaken by the Group Finance Director, with regular reporting to the Board.
Rigorous recruitment procedures are in place to ensure that new employees are of a suitable calibre. Management continuously monitors training requirements and ongoing appraisal procedures are in place to ensure that required standards are maintained. Resource requirements are identifi ed by managers and reviewed by the relevant national Executive Committee.
The Company has a comprehensive Business Ethics Policy in place and should an employee be found in breach of the policy, appropriate disciplinary actions are applied. Part of this policy is the Company's whistleblowing procedure where concerns of wrongdoing can be reported to the Group Internal Auditor or the Chairman of the Audit Committee. Following the effective date of the new UK Bribery Act, on 1 July 2011, the Company also reviewed its policy and procedures to actively prevent bribery within the Company's business, in addition to establishing a separate and specifi c Anti-Bribery Code of Ethics, across the Group.
The Group has an internal audit function led by the Group Internal Auditor who reports to the Chairman of the Audit Committee.
The Board, acting through the Audit Committee, has directed the work of the Internal Audit Department towards those areas of the business that are considered to be of the highest risk. The Audit Committee approves a rolling audit programme, ensuring that all signifi cant areas of the business are independently reviewed over approximately a three-year period. The programme and the fi ndings of the reviews are continually assessed to ensure they take account of the latest information and in particular, the results of the annual review of internal control and any shifts in the focus areas of the various businesses. The effectiveness of the Internal Audit Department and the Group's risk management programme are reviewed annually by the Audit Committee.
The information that is required by DTR 7.2.6, information relating to the share capital of the Company, can be found within the Directors' report from page 44.
By order of the Board
Stephen Benadé Company Secretary 12 March 2012
John Ormerod Audit Committee
| Members | Role | Attendance record |
|---|---|---|
| 1. John Ormerod (Chairman) | Non-Executive Director | 7/7 |
| 2. Ian Lewis | Non-Executive Director | 6/7 |
| 3. Brian McBride (since 10 Jan 2011) Senior Independent Director | 6/7 |
The key responsibilities of the Audit Committee are to oversee and monitor:
The full terms of reference for the Audit Committee are available on our website, www.computacenter.com/investors
All members of the Audit Committee are independent Non-Executive Directors and are considered by the Board to be appropriately experienced for the Committee to perform effectively. The Board considers the Chairman of the Audit Committee to have recent and relevant fi nancial experience.
Details of the members of the Audit Committee and their attendance at the Committee meetings during the year are provided above and on page 27.
Other Board members, as well as the Group Internal Audit Manager, Group Financial Controller and the external auditor routinely attend, at the Committee's request, meetings of the Committee.
The Committee also meets privately, at least annually, with the external auditor and the Group Internal Audit Manager and these private meetings were convened twice with the external auditor and once with the Group Internal Audit Manager.
In addition to the formal meetings, the Chairman of the Committee has regular informal discussions with the Finance Director, Head of Internal Audit and the external auditors. He also receives directly, the reports of internal audit as they are issued. In addition, he receives feedback on the preparation and audit of the accounts, as work progresses and as any signifi cant judgements arise.
The Company Secretary is the secretary to the Committee.
The Audit Committee met seven times during 2011 and its work included:
concluded that the policies and procedures on all such matters remained adequate and effective, but initiated an independent assessment to be carried out during the fi rst half of 2012 in order to review the implementation of enhanced procedures designed to minimise the risk of bribery and comply with the UK Bribery Act.
The external auditors are appointed primarily to report on the annual and interim fi nancial statements. The Committee places a high priority on ensuring that this independent role of reporting to shareholders is not compromised. The Committee recognises however, that there are occasions when the auditors are best placed to undertake other accounting, advisory and consultancy work in view of their knowledge of the Company's business, confi dentiality and cost considerations. The Committee has therefore established procedures to ensure that any non-audit work is only undertaken by the auditors where there is no risk of compromise to their independence.
To this end the Committee has formally defi ned areas of work for which the auditors will be prohibited from engagement and areas where, subject to following the stipulated processes of authorisation and, where appropriate, competitive tendering, the auditors may be engaged. The former areas of work include the preparation of accounting records and fi nancial statements which will ultimately be subject to audit. The latter areas of potential engagement may include acquisition due diligence and tax compliance and advice. In all cases signifi cant non-audit engagements are subject to prior approval by the audit committee or if approval is required between meetings, by the Chairman of the Audit Committee. Other than in exceptional circumstances the Committee does not expect the value of non-audit services to exceed the aggregate value of audit and audit related services in any fi nancial year.
John Ormerod Chairman of the Audit Committee
12 March 2012
Greg Lock Nomination Committee Chairman
| Members | Role | Attendance record |
|---|---|---|
| 1. Greg Lock (Chairman) | Chairman | 2/3 |
| 2. Ian Lewis | Non-Executive Director | 1/3 |
| 3. John Ormerod | Non-Executive Director | 3/3 |
| 4. Brian McBride (since 10 Jan 2011) Senior Independent Director | 3/3 |
The key responsibilities of the Nomination Committee are to assist the Board with:
The full terms of reference for the Nomination Committee are available on our website, www.computacenter.com/ investors
The members of the Nomination Committee are all the independent Non-Executive Directors and the Chairman is the Chairman of the Board. However, input from all the Directors is sought by the Committee and the Committee involves the Board as a whole when performing its key responsibilities. Details of the membership and attendance at Committee meetings during the year are provided above and on pages 26 and 27.
The Company Secretary is the secretary to the Committee.
The Nomination Committee met on three occasions during 2011 and its work included:
Greg Lock Chairman of the Nomination Committee
12 March 2012
Brian McBride Remuneration Committee Chairman
| Members | Role | Attendance record |
|---|---|---|
| 1. Brian McBride (since 10 Jan 2011) Senior Independent Director | 5/5 | |
| 2. Ian Lewis | Non-Executive Director | 5/5 |
| 3. John Ormerod | Non-Executive Director | 5/5 |
| 4. Greg Lock | Non-Executive Director | 4/5 |
The key responsibilities of the Remuneration Committee are to determine on behalf of the Board:
The fees of the Non-Executive Directors are determined by the Chairman and the Executive Directors. There is the overriding principle that no person shall be involved in the process in determining his or her own remuneration.
The full terms of reference for the Remuneration Committee are available on our website, www.computacenter.com/investors.
All members of the Remuneration Committee are Independent Non-Executive Directors. Details of the membership and attendance at Committee meetings during the year are provided above and on pages 26 and 27.
The Company Secretary is the secretary to the Committee.
The principal adviser to the Committee is Mercer Limited who assisted the Committee during the year on benchmarking the Executive Directors' and Senior Executives' remuneration. Mercer provides no other services to the Company. In addition, both Stephen Benadé (Company Secretary) and Barry Hoffman (HR Director) provided advice to the Committee during the year.
The Committee considers comparative practice in the European technology sector, FTSE techMARK 100 companies and FTSE 250 companies.
The Remuneration Committee met fi ve times during 2011 and its work included:
The Company's remuneration policy is designed to reward Executive Directors with remuneration arrangements that are competitive, but not excessive and which closely align the interests of the Directors and shareholders. The policy is designed to ensure that a signifi cant proportion of the total remuneration is dependent upon the Group's fi nancial performance over the fi scal year, as well as over extended periods and that the remuneration policy is aligned to the Group's risk profi le. These objectives are achieved through a combination of base salary and benefi ts, performance-related annual bonuses, a defi ned contribution pension scheme and long-term incentive plans.
The Committee considers, when reviewing the remuneration of the Executive Directors and Senior Executives, the wider remuneration levels of all employees of the Group. The Committee reviews the average base salary increases applied across the Group when base salary increases of the Executive Directors and Senior Executives are considered. The audited tables and related notes are identifi ed within the report, with the A key. A resolution to approve this report will be proposed at the Company's forthcoming Annual General Meeting on 18 May 2012.
The main elements of Executive Directors' remuneration for 2011 and for 2012 are shown below, together with what was paid in 2010 for comparative purposes.
| 2012 | 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| A | 2011 | 2010 | Maximum | Maximum | 2011 | 2010 | |||
| 2012 | Base salary | Base salary | bonus | bonus | 2011 | 2010 | Total | Total | |
| Executive | Base salary | and fees | and fees | potential | potential | Actual bonus | Actual bonus | remuneration | remuneration |
| Mike Norris | £500,000 | £500,000 | £475,000 | £600,000 | £550,000 | £350,350 | £467,875 | £850,350 | £942,875 |
| Tony Conophy | £325,000 | £332,465 | £314,800 | £300,000 | £290,000 | £192,560 | £221,630 | £525,025 | £536,430 |
Each Executive Director's base salary is reviewed annually to ensure that it remains appropriate and fair. In setting base salary levels, the Committee considers a variety of factors including information provided by the remuneration consultants, Mercer, on remuneration levels and trends in peer companies.
The Executive Directors receive benefi ts in line with those offered to employees throughout the Group, including the provision of a car allowance, life insurance, personal accident insurance and the opportunity to participate in the Group's Save as You Earn scheme ('SAYE'), as well as participation in the fl exible benefi ts scheme ('MyBenefi ts').
The Remuneration Committee believes that it is important that the Executive Directors are incentivised in a way that aligns with the Company's strategy and the interests of the Company's shareholders. The Remuneration Committee has devised a performance-related bonus scheme for the Executive Directors which is well structured and aims to achieve this objective.
Each December, the Remuneration Committee meets to set not only the base salary for the Executive Directors, but to determine the performance targets for their bonuses for the forthcoming year. The Executive Directors are then notifi ed of these targets in January. However, once set, the Committee continually reviews these targets throughout the year to ensure that they remain appropriate. For example, in 2011, the Remuneration Committee revised upwards the profi ts targets for the Executive Directors following the successful acquisitions of both Top Info SAS and Damax AG.
The bonus arrangements for the Executive Directors for 2011 and 2012 are:
| Performance target element | 2012 | 2011 | |
|---|---|---|---|
| Mike Norris | Profi t – Group profi t before tax | Up to 45% | Up to 45% |
| Services contribution growth | Up to 15% | Up to 15% | |
| Cost savings | Up to 10% | Up to 10% | |
| Cash balance | Up to 10% | Up to 10% | |
| Personal objectives | Up to 20% | Up to 20% | |
| Total: | 100% of max. bonus potential | 100% of max. bonus potential | |
| Maximum bonus potential | £600,000 | £550,000 | |
| Base salary | £500,000 | £500,000 | |
| Maximum potential bonus % | |||
| of base salary | 120% | 110% | |
| Actual bonus paid | – | £350,350 | |
| % of base salary | – | 70.1% | |
| Tony Conophy Profi t – Group profi t before tax | Up to 45% | Up to 45% | |
| Services contribution growth | Up to 10% | Up to 10% | |
| Cost savings | Up to 15% | Up to 10% | |
| Cash balance | Up to 10% | Up to 15% | |
| Personal objectives | Up to 20% | Up to 20% | |
| Total: | 100% of max. bonus potential | 100% of max. bonus potential | |
| Maximum bonus potential | £300,000 | £290,000 | |
| Base salary | £325,000 | £315,000 | |
| Potential bonus % of base | |||
| salary | 92.3% | 92.1% | |
| Actual bonus paid | – | £192,560 | |
| % of base salary | – | 61.1% |
Within each performance target element, the Remuneration Committee has set stepped thresholds that have to be achieved for a proportion, or for the whole, of that bonus element to be paid.
The personal objective targets are non-fi nancial targets and will only be paid provided that the profi t performance target has been achieved and that the Remuneration Committee is fully satisfi ed that the personal objectives have been met.
Notwithstanding that the performance targets might be achieved, in order to provide for unexpected circumstances, the payment of any bonus to an Executive Director is at the absolute discretion of the Remuneration Committee.
The Committee normally determines in February of each year whether the performance targets for the previous year have been met, including the personal objectives, and the amount of bonus to be paid to the Executive Director in relation to that year.
The Executive Directors participate in the Computacenter Pension Scheme, a defi ned contribution salary sacrifi ce scheme, under which a maximum annual Company contribution of £5,975 per employee is payable, based on base salary. For 2011, the CEO and Finance Director received the maximum annual Company contribution of £5,975. The scheme is open to all UK employees and allows employees to make additional salary sacrifi ces, which the Company may contribute to the scheme, on their behalf.
Long-term incentive plans are considered to be an important part of the executive remuneration policy, designed to support management retention and motivation, whilst aligning senior management's interests with those of shareholders.
The details of the historical grants and associated performance conditions are set out in the table of Directors' Interests in Share Plans on page 40.
The Performance Share Plan 2005 ('PSP') is the Company's primary long-term incentive plan for Executive Directors and Senior Executives and has been operating since 2006. The Remuneration Committee approves grants under this scheme, once a year, although further grants may be made in appropriate circumstances.
Under the PSP, awards may be made to Executive Directors and Senior Executives in the form of either a conditional right to acquire shares in the Company or the grant of a nil-cost option to acquire shares. The vesting of awards is subject to the satisfaction over a three-year period of performance conditions determined by the Remuneration Committee at the time the awards are made.
At the end of 2010, the Remuneration Committee commissioned an external adviser, Mercer, to undertake a review of the PSP in the context of the overall remuneration packages of Executives, which culminated in the shareholders passing a resolution at last year's AGM, whereby the rules of the PSP (the 'PSP Rules') were amended. The principal amendments to the PSP Rules were that:
The amendments to the PSP Rules were to allow for potentially greater rewards in return for achieving more signifi cant growth targets, to encourage the retention of interests in shares following vesting at the end of the three-year performance period and to give the Executives fl exibility to choose when to exercise their awards.
The PSP awards granted to the Executive Directors on 17 March 2011 were made on the assumption that the PSP Rules would be amended at the 2011 AGM and hence the multiple of two times base salary was used for each Executive Director in determining the awards. The awards made were subject to the PSP Rules being amended at the 2011 AGM and the performance criteria for the awards are set out in note 9 in the table of Directors' Interests in Share Plans on page 40. In summary, the vesting schedule for the award was as follows:
One-quarter of the shares will vest if the compound annual EPS growth over the performance period from 1 January 2011 to 31 December 2013 (the 'Performance Period') equals 7.5 per cent per annum. One-half of the shares will vest if the compound annual EPS growth over the Performance Period equals 10 per cent per annum. If the compound annual EPS growth rate over the Performance Period is between 7.5 per cent and 10 per cent over the Performance Period, shares awarded will vest on a straight line basis up to one-half. Awarded shares will vest in full if the compound annual EPS growth equals or exceeds 20 per cent or more over the Performance Period.
Earnings per share ('EPS') have been chosen as a performance measure as it is widely used and is considered a transparent yardstick. EPS is calculated on a pre-exceptional, diluted basis. After careful review it was agreed that EPS was the most appropriate performance measure for the long-term incentive plan. It has the benefi t of being a published number and is widely understood by management and shareholders alike.
The Company also operates the Computacenter Employee Share Option Scheme 2007 (the 'Option Scheme'). As the PSP is the primary long-term incentive scheme, the Remuneration Committee intends that the scheme be used only in exceptional circumstances. No grants were made to employees or Directors, under this scheme, during 2011. The Executive Directors have historically been awarded share options under the Company's previous share option plans and details of these grants can be found in the table of Directors' Interests in Share Plans on page 40.
The maximum number of options that can be awarded under the Option Scheme is three times base salary, although this can be exceeded in exceptional circumstances. If a grant is to be made to an Executive Director, it is current policy to grant a maximum of 1.25 times base salary.
Should grants be made under the scheme in 2012, any applicable performance conditions will be subject to review by the Remuneration Committee, taking account of prevailing market conditions, Group plans and objectives. There is currently no intention to make grants under the Option Scheme.
The Company uses a mixture of both new issue and market purchase shares to satisfy awards under the Option, PSP and Share Save Plans. In line with best practice, the use of new issue or treasury shares to satisfy awards made under all share schemes, is restricted to 10 per cent in any ten-year rolling period, with a further restriction for discretionary schemes of 5 per cent in the same period. As at the year-end, the potential dilution from awards under all share plans was approximately 5.26 per cent and the potential dilution from awards under the discretionary schemes was approximately 1.61 per cent.
In February 2011, the Remuneration Committee approved the Minimum Shareholding Policy which requires the Executive Directors and Senior Executives to build up and retain a shareholding in the Company over a fi ve-year period. The minimum holding for each year is set with reference to the share price at 31 December in the preceding year using the below mentioned multiples for the Executive concerned:
| Group 1 | CEO | 2 x base salary |
|---|---|---|
| Group 2 | Finance Director | 1 x base salary |
| Executives within the remit of the Remuneration Committee | ||
| Executives within the Group Executive Committee | ||
| Group 3 | Senior Country, Functional or Other Executives | 0.5 x base salary |
As at 31 December 2011, both the CEO and the Finance Director were compliant with this policy.
| A | Exercise/ | Exercise period/ | At 1 January |
Granted during |
Exercised during |
At 31 December |
|||
|---|---|---|---|---|---|---|---|---|---|
| Mike Norris | Scheme Options |
Note 3 |
share price 322.0p |
Vesting period 10/04/05–09/04/12 |
2011 122,670 |
the year – |
the year – |
Lapsed – |
2011 122,670 |
| Sharesave | 2 | 320.0p | 01/12/14–31/05/15 | 4,859 | – | – | – | 4,859 | |
| PSP | 5 | N/A | 17/03/11–17/09/11 | 223,930 | – | 223,930 | – | – | |
| PSP | 6 | N/A | 13/03/12–12/09/12 | 208,102 | – | – | – | 208,102 | |
| PSP | 7 | N/A | 20/03/12–19/09/12 | 390,000 | – | – | – | 390,000 | |
| PSP | 8 | N/A | 15/03/13–15/09/13 | 150,316 | – | – | – | 150,316 | |
| PSP – | |||||||||
| Enhanced | 9 | N/A | 17/03/14–16/03/21 | – | 224,586 | – | – | 224,586 | |
| Tony Conophy | Options | 1, 4 | 322.0p | 10/04/05–09/04/12 | 9,316 | – | – | – | 9,316 |
| Options | 3 | 322.0p | 10/04/05–09/04/12 | 66,770 | – | – | – | 66,770 | |
| Sharesave | 2 | 178.0p | 01/12/12–31/05/13 | 9,438 | – | – | – | 9,438 | |
| PSP | 5 | N/A | 17/03/11–17/09/11 | 136,364 | – | 136,364 | – | – | |
| PSP | 6 | N/A | 13/03/12–12/09/12 | 131,433 | – | – | – | 131,433 | |
| PSP | 7 | N/A | 20/03/12–19/09/12 | 240,000 | – | – | – | 240,000 | |
| PSP | 8 | N/A | 15/03/13–15/09/13 | 94,937 | – | – | – | 94,937 | |
| PSP – | |||||||||
| Enhanced | 9 | N/A | 17/03/14–16/03/21 | – | 124,113 | – | – | 124,113 | |
1 Issued under the terms of the Computacenter Employee Share Option Scheme 1998.
2 Issued under the terms of the Computacenter Sharesave Plus Scheme, which is available to employees and full-time Executive Directors of the Computacenter Group.
3 Issued under the terms of the Computacenter Performance Related Share Option Scheme 1998. The options become exercisable if the average annual compound growth in the Group's earnings per share (on a post-investment in the Biomni joint venture, diluted basis) compared to the base year of 2001, is at least equal to RPI plus 5 per cent in any of the three-, four- or fi ve-year periods up to and including 2004, 2005 or 2006 respectively.
4 Exercisable on the condition that the average annual compound growth in the Group's earnings per share (on a post-investment in the Biomni joint venture, diluted basis) compared to the base year of 2001, is at least equal to RPI plus 5 per cent in any of the three-, four- or fi ve-year periods up to and including 2004, 2005 or 2006 respectively.
5 Issued under the terms of the Computacenter Performance Share Plan 2005. One-quarter of the shares will vest if the average annual compound growth in the Group's earnings per share is at least equal to RPI plus 3 per cent over the three consecutive fi nancial years starting on 1 January 2008 and ended on 31 December 2010, compared to the base year of 2007. Awards will vest in full if the Group's cumulative annual growth is at or above RPI plus 7.5 per cent. If the Group's earnings per share growth over the period is between 3 per cent and 7.5 per cent above RPI, awards will vest on a straight line basis.
6 Issued under the terms of the Computacenter Performance Share Plan 2005. One quarter of the shares will vest if the average annual compound growth in the Group's earnings per share is at least equal to RPI plus 3 per cent over the three consecutive fi nancial years starting on 1 January 2009 and ended on 31 December 2011, compared to the base year of 2008. Awards will vest in full if the Group's cumulative annual growth is at or above RPI plus 7.5 per cent. If the Group's earnings per share growth over the period is between 3 per cent and 7.5 per cent above RPI, awards will vest on a straight line basis.
7 If in 2011, profi t before tax reaches £90 million, 25 per cent of the awards will vest, if the profi t before tax is £100 million or more, 100 per cent of the awards will vest, awards will vest on a straight line basis between those limits.
8 Issued under the terms of the Computacenter Performance Share Plan 2005. One quarter of the shares will vest if cumulative annual EPS growth equals RPI plus 3 per cent per annum over the three consecutive fi nancial years, compared to the base year. Awarded shares will vest in full if cumulative annual EPS growth equals or exceeds RPI plus 7.5 per cent per annum. If cumulative annual growth in EPS is between 3 per cent and 7.5 per cent per annum above RPI, shares awarded will vest on a straight line basis.
9 Issued under the terms of the Computacenter Performance Share Plan 2005 as amended at the AGM held on 13 May 2011. One-quarter of the shares will vest if the compound annual EPS growth over the performance period from 1 January 2011 to 31 December 2013 (the 'Performance Period') equals 7.5 cent per annum. One-half of the shares will vest if the compound annual EPS growth over the Performance Period equals 10 cent per annum. If the compound annual EPS growth rate over the Performance Period is between 7.5 per cent and 10 per cent over the Performance Period, shares awarded will vest on a straight line basis up to one-half. Awarded shares will vest in full if the compound annual EPS growth equals or exceeds 20 per cent or more over the Performance Period.
Gains made from Executive Share Plans exercised during the year by the Directors were:
| A | ||||||
|---|---|---|---|---|---|---|
| Director | Date of vesting | Scheme | Number of shares | Exercise price | Market value at vesting |
Gain on vesting |
| Mike Norris | 17/03/2011 | PSP | 223,930 | N/A | 418 pence | £936,027 |
| Tony Conophy | 17/03/2011 | PSP | 136,364 | N/A | 418 pence | £570,001 |
The closing market price of the ordinary shares at 30 December 2011 (being the last trading day of 2011) was 334.6 pence. The highest price during the year was 490.0 pence and the lowest was 324.7 pence.
Computacenter's shares are quoted on the London Stock Exchange and the Remuneration Committee has deemed the FTSE Software & Computer Services share index as the appropriate comparator, against which to assess Total Shareholder Return performance.
The performance of the Group over the last fi ve fi nancial years, in relation to other relevant UK-quoted shares, is shown in the graph below:
Computacenter versus FTSE Software and Computer Services sector
A summary of the Directors' contracts of employment of letters of appointment is given in the table below:
| Letter of appointment/ Unexpired term Notice period Director Start date of employment Expiry date (months)* (months) Executive Mike Norris 23/04/1998 n/a none specifi ed 12 Tony Conophy 23/04/1998 n/a none specifi ed 12 Non-Executive Greg Lock 01/07/2011 2014 AGM 26 3 Philip Hulme 15/05/2009 2012 AGM 2 3 Ian Lewis 15/05/2009 2012 AGM 2 3 Peter Ogden 15/05/2009 2012 AGM 2 3 John Ormerod 15/05/2009 2012 AGM 2 3 |
|||
|---|---|---|---|
| Brian McBride 10/01/2011 2013 AGM 14 3 |
* Calculated as at 12 March 2012, assuming that future Annual General Meetings will be held in May each year and where Directors stand for re-election at Annual General Meetings, either in accordance with the Company's Articles of Association or the UK Corporate Governance Code, they are re-elected.
All Executive Directors have a rolling 12-month service contract with the Company, which is subject to 12 months' notice by either the Company or the Director.
No contractual arrangements are in place which guarantee additional payments upon termination of employment by the Company. All service contracts provide for summary termination in the event of gross misconduct.
Executive Directors are permitted to hold outside Directorships, subject to approval by the Chairman, and such Executive Director is permitted to retain any fees paid for such services. During the year, Mike Norris served as a Non-Executive Director of Triage Holdings Limited and received a fee of £24,000.
The Non-Executive Directors have not entered into service contracts with the Company. They each operate under a letter of appointment which sets out their terms, duties and responsibilities. Non-Executive Directors are appointed for an initial term, which runs to the conclusion of the third Annual General Meeting following their appointment, which may be renewed at that point for a further three-year term. The letters of appointment provide that should a Non-Executive Director not be re-elected at an Annual General Meeting before he is due to retire, then his appointment will terminate. The Board agreed that all the Directors will be subject to re-election at the AGM on 18 May 2012.
The components of the Non-Executive Directors' remuneration for 2010, 2011 and 2012 are shown below. The Executive Directors and Chairman of the Board, together review the base fee payable to the Non-Executive Directors and for their additional contributions to the committees, every two years. The Senior Independent Director reviews the fee of the Chairman of the Board, at the same intervals. These fees were revised, following benchmark guidance from Mercer and altered with effect from 1 January 2012.
| A | |||||||
|---|---|---|---|---|---|---|---|
| Non-Executive Director |
2012 Base fee | 2012 Additional fee |
2012 Total remuneration |
2011 and 2010 Base fee |
2011 and 2010 Additional fee |
2011 and 2010 Total remuneration |
Additional fee as |
| Greg Lock | £42,000 | £118,000 | £160,000 | £39,000 | £111,000 | £150,000 | Chairman of the Board |
| Philip Hulme | £42,000 | – | £42,000 | £39,000 | – | £39,000 | – |
| Ian Lewis | £42,000 | £5,500 | £47,500 | £39,000 | £5,500 | £44,500 | Member of the Sub-Committee for the ERP Systems Project |
| Brian McBride | £42,000 | £6,000 + £8,000 |
£56,000 | £39,000 (2011 only) |
£5,000 + £7,000 (2011 only) |
£51,000 (2011 only) + £6,500* |
Senior Independent Director and Chairman of the Remuneration Committee |
| Peter Ogden | £42,000 | – | £42,000 | £39,000 | – | £39,000 | – |
| John Ormerod | £42,000 | £14,000 | £56,000 | £39,000 | £14,000 | £53,000 | Chairman of the Audit Committee |
* Brian McBride was appointed as a Non-Executive Director on 10 January 2011. In addition to his total remuneration of £51,000 received in 2011, he received a one-off fee in March 2011of £6,500 for advice and guidance provided to the Board in the fourth quarter of 2010, prior to his appointment.
The Non-Executive Directors are not invited or permitted to participate in any of the Company's Employee Share Plans.
Brian McBride Chairman of the Remuneration Committee 12 March 2012
The Directors present their report and the audited fi nancial statements of Computacenter plc and its subsidiary companies ('the Group') for the year ended 31 December 2011.
The Company is a holding company. The principal activities of the Group, of which it is the parent, are the supply, implementation, support and management of information technology systems.
The Companies Act 2006 requires the Group to prepare a business review, which commences at the start of the Report and Accounts up to page 25, excluding the market overview on pages 14 and 15, as this overview has been externally compiled. The review includes information about the Group's operations and the business model, fi nancial performance throughout the year and likely developments, key performance indicators, principal risks and information regarding the Group's sustainable development plan.
Under Disclosure and Transparency Rule 7.2, the Company is required to include a Corporate Governance Statement within the Directors' Report. Information on the corporate governance practices can be found in the Corporate Governance Statement on pages 28 to 31 and the reports of the Audit, Remuneration and Nomination Committees on pages 32 to 42, which are incorporated into the Directors' Report by reference.
This Directors' report together with the other reports forms the Management Report for the purposes of Disclosure and Transparency Rule 4.1.8.
The Group's activities resulted in a profi t before tax of £72.1 million (2010: £65.4 million). The Group profi t for the year, attributable to shareholders, amounted to £61.0 million (2010: £50.3 million).
The Directors recommend a fi nal dividend of 10.5 pence per share totalling £16.2 million (2010: £14.9 million). Dividends are recognised in the accounts in the year in which they are paid, or in the case of a fi nal dividend, when approved by the shareholders. As such, the amount recognised in the 2011 accounts, as described in note 11, is made up of last year's fi nal dividend (9.7 pence per share) and the interim dividend (4.5 pence per share).
The fi nal ordinary dividend for 2011, if approved at the forthcoming AGM, will be paid on 15 June 2012 to those shareholders on the register as at 18 May 2012. The Company paid an interim dividend of £6.9 million on 14 October 2011.
The Company's Articles of Association sets out the procedures for governing the Company. A copy of the Articles of Association is available on the Company's website (www. computacenter.com/investors). The Articles of Association were last amended at the 2010 AGM. A special resolution (i.e. 75% majority of the shareholders who vote) is required to be passed in general meeting to amend the Articles of Association.
The Directors who served throughout the year ended 31 December 2011 were Tony Conophy, Philip Hulme, Ian Lewis, Greg Lock, Mike Norris, John Ormerod and Peter Ogden. Brian McBride was appointed to the Board as Non-Executive Director, Chairman of the Remuneration Committee and Senior Independent Director on 10 January 2011. The Directors' biographical details at the date of this report are given on pages 26 and 27.
The Company's Articles of Association require at each AGM for those Directors who were appointed since the last AGM to retire as well as one third of the Directors who have been the longest serving. The Board has decided, in accordance with the UK Corporate Governance Code, that all Directors will retire at the forthcoming AGM and offer themselves for re-election. The Nomination Committee has considered the re-election of each Director and recommends their re-election. Further details on the Committee's recommendations for the re-election of the Directors are set out in the Notice of Annual General Meeting, as are the brief Curriculum Vitae of each Director, which show their experience and skills that they bring to the Board.
The Company's Articles of Association provide for a Board of Directors consisting of not fewer than three, but not more than 20 Directors, who manage the business and affairs of the Company. The Directors may appoint additional or replacement directors, who shall serve until the next AGM of the Company at which point they will be required to stand for election by the members. A Director may be removed from offi ce at a general meeting by the passing of an Ordinary Resolution (provided special notice has been given).
Members have previously approved a Resolution to give the Directors authority to allot shares and a renewal of this authority is proposed at the 2012 AGM. This authority allows the Directors to allot shares up to the maximum amount stated in the Notice of Annual General Meeting (approximately one-third of the issued share capital) and this authority would generally expire at the following AGM. In addition, the Company may not allot shares for cash (unless pursuant to an employee share scheme) without fi rst making an offer to existing shareholders in proportion to their existing holdings. This is known as rights of pre-emption. A Resolution to allow a limited waiver of these rights was passed by the members at last year's AGM. It is proposed at the forthcoming AGM that a similar waiver should be granted, which will represent approximately fi ve per cent of the issued share capital. Full details of the proposed waiver are given in the Notice of the AGM. The current waiver expires at the conclusion of the following AGM.
During the year, the Company executed deeds of indemnity with each of the Directors. These deeds contain qualifying third party indemnity provisions and indemnify the Directors to the extent permitted by law and remain in force at the date of this report. The indemnities are uncapped and cover all costs, charges, losses and liabilities the Directors may incur to third parties, in the course of acting as Directors of the Company or its subsidiaries.
The Board has put in place a process for the Directors to notify the Company Secretary of any situations (appointments, holdings or otherwise), or any changes to such, which may give rise to an actual or potential confl ict of interest with the Company. These notifi cations are then reviewed by the Board and recorded in a register maintained by the Company Secretary and, if appropriate, are considered further by the Directors who are not confl icted in the matter, to authorise the situation. The register of notifi cations and authorisations is reviewed by the Board twice a year. Where the Board has approved an actual or potential confl ict, it has imposed the condition that the confl icted Director abstains from participating in any discussion or decision affected by the confl icted matter.
The interests of the Directors in the share capital of the Company at the beginning and end of the year are set out below:
| At 31 December 2011 | At 1 January 2011 or as at date of appointment |
|||
|---|---|---|---|---|
| Number of ordinary shares Benefi cial |
Number of ordinary shares Non-Benefi cial |
Number of ordinary shares Benefi cial |
Number of ordinary shares Non-Benefi cial |
|
| Executive Directors | ||||
| Mike Norris | 1,385,658 | – | 1,385,658 | – |
| Tony Conophy | 2,175,905 | – | 2,175,905 | – |
| Non-Executive Directors | ||||
| Greg Lock | 410,983 | – | 350,000 | – |
| Philip Hulme | 18,051,770 | 8,073,921 | 18,291,770 | 10,143,921 |
| Ian Lewis | 45,000 | – | 45,000 | – |
| Brian McBride | – | – | – | – |
|---|---|---|---|---|
| Peter Ogden | 35,335,636 | 979,166 | 35,335,636 | 979,166 |
| John Ormerod | 25,000 | – | 25,000 | – |
Between 31 December 2011 and 12 March 2012 there have been no changes to the interests detailed above.
In addition to the Directors' interests set out above, as at 29 February 2012, the Company had been notifi ed, in accordance with the Financial Services Authority's Disclosure and Transparency Rules, of the following substantial interests in the Company's issued ordinary share capital:
| Number | % of | |
|---|---|---|
| of ordinary | issued | |
| shares held | share capital | |
| Standard Life Investments Ltd | 14,327,285 | 9.31 |
| Investec Asset Management Ltd | 8,910,137 | 5.79 |
| LSV Asset Management | 4,405,385 | 2.86 |
As at 12 March 2012, there were 153,887,822 fully paid ordinary shares in issue, all of which have full voting rights and there are no restrictions on the transfer of shares.
Pursuant to the Company's share schemes, there are two employee trusts which, as at the year-end, held a total of 4,781,906 ordinary shares of 6 pence each, representing 3.1 per cent of the issued share capital. During the year the Trusts purchased a total of 1,047,409 shares. The voting rights attached to these shares are not exercisable directly by the employees, but are exercisable by the Trustees. However, in line with good practice, the Trustees do not exercise these voting rights.
In the event of another company taking control of the Company, the employee share schemes operated by the Company have set change of control provisions. Participants may, in certain circumstances, be allowed to exchange their options for options of an equivalent value over shares in the acquiring company. Alternatively, the options may vest early, in which case, early vesting under the executive schemes will be pro-rated accordingly and under the Sharesave scheme, employees will only be able to exercise the option, to the extent of their accumulated saving.
The Company was granted authority at the 2011 AGM, to make market purchases of up to 15,388,782 ordinary shares of 6 pence each. This authority will expire at the 2012 AGM, where approval from shareholders will be sought to renew the authority. During the period no shares were purchased for cancellation.
Details regarding the status of the various borrowing facilities used by the Group are provided in the Finance Director's Review on pages 16 to 19. These agreements include a change of control provision, which may result in the facility being withdrawn or amended upon a change of control of the Group. It is also not extraordinary within our business sector for our longer term Services contracts to contain change of control clauses. In addition to fi nancing arrangements and our larger contracts with our customers, the Board considers that there are a number of major product suppliers who are material to the business, including HP, IBM, Cisco, Microsoft, Oracle and Lenovo.
The Company does not hold any trade creditor balances. However, it is the policy of the Group that each of the businesses should agree appropriate terms and conditions with suppliers (ranging from standard written terms to individually negotiated contracts) and that payment should be in accordance with those terms and conditions, provided that the supplier has also complied with them. Group creditor days amounted to 50 (2010: 50).
The Group's fi nancial risk management objectives and policies are discussed in the Finance Director's Review on pages 16 to 19.
The Company operates executive share option schemes and a performance-related option scheme for the benefi t of employees. During the year no options were granted under the executive share option schemes.
At the year-end, the options remaining outstanding under these schemes were in respect of a total of 1,964,756 ordinary shares of 6 pence each (2010: 2,162,756 shares). During the year options over 189,000 shares were exercised and options over 9,000 shares lapsed.
The Company also operates a Performance Share Plan ('PSP') to incentivise employees. During the year, 1,086,024 ordinary shares of 6 pence each were conditionally awarded (2010: 1,195,677 shares). At the year-end, awards over 4,599,072 shares remained outstanding under this scheme (2010: 5,249,112 shares). During the year, awards over 1,273,722 shares were transferred to participants and awards over 462,342 shares lapsed.
In addition, the Company operates a Sharesave scheme for the benefi t of employees. At the year-end 2,905,644 options granted under the Sharesave scheme remained outstanding (2010: 2,758,808).
The Board recognises that acting in a socially responsible way benefi ts the community, our customers, shareholders, the environment and employees alike. Further information can be found in the Corporate Sustainable Development report on pages 22 to 25 and covers matters regarding Health and Safety, the environment, equal opportunities, employee involvement, employment of disabled people, employee development and charitable donations. During the year, the Group did not make any political donations to any political party or organisation and it did not incur any political expenditure within the meaning of Sections 362 to 379 of the Companies Act 2006.
The Group acknowledges the importance of equality and diversity and is committed to equal opportunities throughout the workplace. The Group's policies for recruitment, training, career development and promotion of employees are based purely on the suitability of the employee and give those who may be disabled, equal treatment to their able bodied colleagues. Where an employee becomes disabled, subsequent to joining the Group, all efforts are made to enable that employee to continue in their current job. However, if due to the specifi c circumstances, it is not possible for an employee to continue in their current job, they will be given suitable training for alternative employment within the Group or elsewhere.
The Group monitors and regularly reviews its policies and practices to ensure that it meets current legislative requirements, as well as its own internal standards. The Group is committed to making full use of the talents and resources of all its employees and to provide a healthy environment that encourages productive and mutually respectful working relationships within the organisation. Policies dealing with equal opportunities are in place in all parts of the Group, which take account of the Group's overall commitment and also address local regulatory requirements.
The Group is committed to involving all employees in signifi cant business issues, especially matters which affect their work and working environment. A variety of methods are used to engage with employees, including team briefi ngs, intranet, electronic mail and in-house publications. The Group will use one or more of these channels to brief the employees on the Group's performance and the fi nancial and economic factors affecting the Group's performance. In particular, the Group operates a Save As You Earn share scheme, which is open to eligible employees, where employees are encouraged to save a fi xed monthly sum for a period of either three or fi ve years, upon maturity of the saving period they can purchase shares in the Company at a price set at the commencement of the saving period.
The primary method used to engage and consult with employees is through team briefi ngs, where managers are tasked with ensuring that information sharing, discussion and feedback happen on a regular basis.
Employee consultative forums exist in each country to consult staff on major issues affecting employment and matters of policy and to enable management to seek the views and opinions of employees on a wide range of business matters. Should there be transnational issues to discuss a facility exists to engage a European forum made up of representatives from country forums.
The Group regularly reviews the performance of its employees through a formal review process, in order to identify areas for development. Managers are responsible for setting and reviewing personal objectives, aligned to corporate and functional goals. The Board closely oversees and monitors management skills and the development of talent to meet the current and future needs of the Group. The Board directly monitors and reviews closely, succession and plans for developing the identifi ed key senior managers. In 2011, Computacenter was assessed by Investors in People and commended for demonstrating commitment to its people, at a level over and above the Investors in People standards, resulting in successful recertifi cation.
Performance and operational KPIs can be found within the strategy spread on pages 2 and 3 at the front of the Report and Accounts. The Board considers employee-driven attrition rates as a KPI in relation to employee issues. For the year ended 31 December 2011, this fi gure was 9.56 per cent (2010: 7.78 per cent). Further KPIs on employee and environmental matters can be found within the Corporate Sustainable Development report on pages 22 to 25.
An ethics policy is operated by the Group, which commits Computacenter employees to the highest standards of ethical behaviour in respect of customers, suppliers, colleagues and other stakeholders in the business. The policy includes a requirement for all employees to report abuses or non-conformance with the policy ('whistleblowing') and sets out the procedures to be followed. The Group has additionally adopted a Code of Ethics specifi cally aimed at the prevention of bribery.
Computacenter's business activities, the business model and strategic goals are set out in the overview section and the performance is set out within the Operating Review on pages 2 to 13. The fi nancial position of the Company, its cash fl ows, liquidity position and borrowing facilities are set-out within the Finance Director's Review on pages 16 to 19. In addition, notes 25 and 26 to the fi nancial statements include Computacenter's objectives, policies and processes for managing its capital; its fi nancial risk management objectives; details of its fi nancial instruments and its exposures to credit and liquidity risk.
Computacenter's balance sheet strength, long-term contracts with customers and suppliers, as well as the different geographies within which the Company operates, provide the Directors with the confi dence that Computacenter is well placed to manage its business risks even during a prolonged period of economic uncertainty.
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the annual fi nancial statements.
Ernst & Young LLP has expressed its willingness to continue in offi ce as auditor and a resolution approving the reappointment of Ernst & Young LLP as the Company's auditor will be proposed at the forthcoming AGM.
The Directors are responsible for preparing the Annual Report and the fi nancial statements in accordance with applicable company law and those International Financial Reporting Standards as adopted by the European Union. The Directors are required to prepare fi nancial statements for each fi nancial year which present fairly the fi nancial position of the Company and of the Group and the results and cash fl ows of the Group for that period. In preparing the fi nancial statements, the Directors are required to:
The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the fi nancial position of the Group and enable them to ensure that the accounts comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and hence, taking reasonable steps for the prevention and detection of fraud and other irregularities.
Each of the persons who is a Director at the date of approval of this report confi rms that:
On behalf of the Board
Mike Norris Tony Conophy Chief Executive Finance Director 12 March 2012
We have audited the group fi nancial statements of Computacenter plc for the year ended 31 December 2011 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement and the related notes 1 to 33. The fi nancial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
As explained more fully in the Directors' Responsibilities Statement set out on page 47, the Directors are responsible for the preparation of the Group fi nancial statements and for being satisfi ed that they give a true and fair view. Our responsibility is to audit and express an opinion on the Group fi nancial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
An audit involves obtaining evidence about the amounts and disclosures in the fi nancial statements suffi cient to give reasonable assurance that the fi nancial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of signifi cant accounting estimates made by the Directors; and the overall presentation of the fi nancial statements. In addition, we read all the fi nancial and non-fi nancial information in the Annual Report to identify material inconsistencies with the audited fi nancial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
In our opinion the Group fi nancial statements:
In our opinion the information given in the Directors' Report for the fi nancial year for which the Group fi nancial statements are prepared is consistent with the Group fi nancial statements.
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
Under the Listing Rules we are required to review:
We have reported separately on the Parent Company fi nancial statements of Computacenter plc for the year ended 31 December 2011 and on the information in the Directors' Remuneration Report that is described as having been audited.
Nick Powell (Senior statutory auditor) for and on behalf of Ernst & Young LLP, Statutory Auditor London
12 March 2012
For the year ended 31 December 2011
| Restated | |||
|---|---|---|---|
| Notes | 2011 £'000 |
2010 £'000 |
|
| Revenue | 3 | 2,852,303 | 2,676,495 |
| Cost of sales | (2,470,932) | (2,329,660) | |
| Gross profi t | 381,371 | 346,835 | |
| Administrative expenses | (307,377) | (280,288) | |
| Operating profi t: | 4 | ||
| Before amortisation of acquired intangibles and exceptional items | 73,994 | 66,547 | |
| Amortisation of acquired intangibles | (1,986) | (655) | |
| Exceptional items | 5 | (131) | – |
| Operating profi t | 71,877 | 65,892 | |
| Finance income | 7 | 2,361 | 2,329 |
| Finance costs | 8 | (2,136) | (2,823) |
| Profi t before tax: Before amortisation of acquired intangibles and exceptional items |
74,219 | 66,053 | |
| Amortisation of acquired intangibles | (1,986) | (655) | |
| Exceptional items | (131) | – | |
| Profi t before tax | 72,102 | 65,398 | |
| Income tax expense: | |||
| Before amortisation of acquired intangibles and exceptional items | (16,125) | (15,265) | |
| Tax on amortisation of acquired intangibles | 433 | 187 | |
| Tax on exceptional items | 5 | 174 | – |
| Exceptional tax items | 5 | 4,427 | – |
| Income tax expense | 9 | (11,091) | (15,078) |
| Profi t for the year | 61,011 | 50,320 | |
| Attributable to: | |||
| Equity holders of the parent | 10 | 61,013 | 50,321 |
| Non-controlling interests | (2) | (1) | |
| 61,011 | 50,320 | ||
| Earnings per share | 10 | ||
| – basic | 41.0p | 34.1p | |
| – diluted | 39.3p | 32.6p | |
For the year ended 31 December 2011
| 2011 | 2010 | ||
|---|---|---|---|
| Notes | £'000 | £'000 | |
| Profi t for the year | 61,011 | 50,320 | |
| Loss arising on cash fl ow hedge | 22 | (464) | – |
| Income tax effect | 116 | – | |
| Exchange differences on translation of foreign operations | (4,495) | (4,076) | |
| Total comprehensive income for the year | 56,168 | 46,244 | |
| Equity holders of the parent | 56,166 | 46,250 |
|---|---|---|
| Non-controlling interests | 2 | (6) |
| 56,168 | 46,244 |
As at 31 December 2011
| 2011 | 2010 | ||
|---|---|---|---|
| Non-current assets | Notes | £'000 | £'000 |
| Property, plant and equipment | 98,261 | 88,882 | |
| Intangible assets | 12 | 104,242 | 78,531 |
| Investment in associates | 13 | 497 | 47 |
| Deferred income tax asset | 15 | 15,928 | 15,577 |
| 9 | 218,928 | 183,037 | |
| Current assets | |||
| Inventories | 17 | 97,440 | 81,569 |
| Trade and other receivables | 18 | 548,968 | 471,133 |
| Prepayments | 43,042 | 44,219 | |
| Accrued income | 47,019 | 39,971 | |
| Forward currency contracts | 22 | 296 | 562 |
| Current asset investment | 10,000 | – | |
| Cash and short-term deposits | 19 | 128,437 | 159,269 |
| 875,202 | 796,723 | ||
| Total assets | 1,094,130 | 979,760 | |
| Current liabilities | |||
| Trade and other payables | 20 | 530,953 | 440,790 |
| Deferred income | 115,350 | 100,840 | |
| Financial liabilities | 21 | 12,247 | 37,936 |
| Forward currency contracts | 464 | – | |
| Income tax payable | 22 | 4,700 | 5,941 |
| Provisions | 2,689 | 2,644 | |
| 24 | 666,403 | 588,151 | |
| Non-current liabilities | |||
| Financial liabilities | 12,554 | 10,320 | |
| Provisions | 21 | 9,059 | 10,749 |
| Other non-current liabilities | 24 | 831 | – |
| Deferred income tax liabilities | 9 | 1,536 | 978 |
| 23,980 | 22,047 | ||
| Total liabilities | 690,383 | 610,198 | |
| Net assets | 403,747 | 369,562 | |
| Capital and reserves | |||
| Issued capital | 27 | 9,233 | 9,233 |
| Share premium | 27 | 3,717 | 3,697 |
| Capital redemption reserve | 27 | 74,957 | 74,957 |
| Own shares held | 27 | (10,962) | (10,146) |
| Foreign currency translation reserve | 27 | 7,638 | 12,137 |
| Retained earnings | 319,152 | 279,674 | |
| Shareholders' equity | 403,735 | 369,552 | |
| Non-controlling interests | 12 | 10 | |
| Total equity | 403,747 | 369,562 |
Approved by the Board on 12 March 2012
MJ Norris FA Conophy
Chief Executive Finance Director
For the year ended 31 December 2011
| Attributable to equity holders of the parent | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Issued capital £'000 |
Share premium £'000 |
Capital redemption reserve £'000 |
Own shares held £'000 |
Foreign currency translation reserve £'000 |
Retained earnings £'000 |
Total £'000 |
Non controlling interests £'000 |
Total £'000 |
|
| At 1 January 2011 | 9,233 | 3,697 | 74,957 | (10,146) | 12,137 279,674 369,552 | 10 369,562 | |||
| Profi t for the year | – | – | – | – | – | 61,013 | 61,013 | (2) | 61,011 |
| Other comprehensive income | – | – | – | – | (4,499) | (348) | (4,847) | 4 | (4,843) |
| Total comprehensive income | – | – | – | – | (4,499) | 60,665 | 56,166 | 2 | 56,168 |
| Cost of share-based | |||||||||
| payments | – | – | – | – | – | 2,476 | 2,476 | – | 2,476 |
| Tax on share-based payment | |||||||||
| transactions | – | – | – | – | – | 296 | 296 | – | 296 |
| Exercise of options | – | 20 | – | 2,790 | – | (2,790) | 20 | – | 20 |
| Purchase of own shares | – | – | – | (3,606) | – | – | (3,606) | – | (3,606) |
| Equity dividends | – | – | – | – | – | (21,169) | (21,169) | – | (21,169) |
| At 31 December 2011 | 9,233 | 3,717 | 74,957 | (10,962) | 7,638 319,152 403,735 | 12 403,747 |
| At 1 January 2010 | 9,186 | 2,929 | 74,950 | (9,657) | 16,208 244,940 338,556 | 16 338,572 | |||
|---|---|---|---|---|---|---|---|---|---|
| Profi t for the year | – | – | – | – | – | 50,321 | 50,321 | (1) | 50,320 |
| Other comprehensive income | – | – | – | – | (4,071) | – | (4,071) | (5) | (4,076) |
| Total comprehensive income | – | – | – | – | (4,071) | 50,321 | 46,250 | (6) | 46,244 |
| Cost of share-based | |||||||||
| payments | – | – | – | – | – | 2,620 | 2,620 | – | 2,620 |
| Deferred tax on share-based | |||||||||
| payment transactions | – | – | – | – | – | 789 | 789 | – | 789 |
| Exercise of options | 46 | 264 | – | 1,563 | – | (1,563) | 310 | – | 310 |
| Issue of share capital | 8 | 504 | – | – | – | – | 512 | – | 512 |
| Purchase of own shares | – | – | – | (2,501) | – | – | (2,501) | – | (2,501) |
| Cancellation of own shares | (7) | – | 7 | 449 | – | (449) | – | – | – |
| Equity dividends | – | – | – | – | – | (16,984) | (16,984) | – | (16,984) |
| At 31 December 2010 | 9,233 | 3,697 | 74,957 | (10,146) | 12,137 279,674 369,552 | 10 369,562 |
For the year ended 31 December 2011
| 2011 | 2010 | ||
|---|---|---|---|
| Operating activities | Notes | £'000 | £'000 |
| Profi t before taxation | 72,102 | 65,398 | |
| Net fi nance (income)/costs | (225) | 494 | |
| Depreciation | 12 | 27,417 | 31,722 |
| Amortisation | 13 | 7,844 | 6,550 |
| Impairment reversal | 12 | (398) | – |
| Share-based payments | 2,476 | 2,620 | |
| Loss on disposal of property, plant and equipment | 545 | 815 | |
| Loss on disposal of intangibles | 33 | – | |
| Increase in inventories | (13,698) | (16,400) | |
| Increase in trade and other receivables | (67,372) | (3,660) | |
| Increase in trade and other payables | 87,687 | 46,435 | |
| Other adjustments | (3) | (49) | |
| Cash generated from operations | 116,408 | 133,925 | |
| Income taxes paid | (14,384) | (11,281) | |
| Net cash fl ow from operating activities | 102,024 | 122,644 | |
| Investing activities | |||
| Interest received | 2,316 | 2,284 | |
| Increase in current asset investment | (10,000) | – | |
| Acquisition of subsidiaries, net of cash acquired | 16 | (24,840) | – |
| Acquisition of associate | (500) | – | |
| Proceeds from sale of property, plant and equipment | 1,449 | 372 | |
| Purchases of property, plant and equipment | (24,181) | (12,856) | |
| Purchases of intangible assets | (10,487) | (12,774) | |
| Net cash fl ow from investing activities | (66,243) | (22,974) | |
| Financing activities | |||
| Interest paid | (2,513) | (3,200) | |
| Dividends paid to equity shareholders of the parent | 11 | (21,169) | (16,984) |
| Proceeds from share issues | 20 | 822 | |
| Purchase of own shares | (3,606) | (2,501) | |
| Repayment of capital element of fi nance leases | (17,415) | (20,641) | |
| Repayment of loans | (1,971) | (12,622) | |
| New borrowings | – | 5,957 | |
| (Decrease)/increase in factor fi nancing | (16,500) | 1,568 | |
| Net cash fl ow from fi nancing activities | (63,154) | (47,601) | |
| (Decrease)/increase in cash and cash equivalents | (27,373) | 52,069 | |
| Effect of exchange rates on cash and cash equivalents | (1,776) | (1,090) | |
| Cash and cash equivalents at the beginning of the year | 19 | 155,933 | 104,954 |
| Cash and cash equivalents at the year-end | 19 | 126,784 | 155,933 |
For the year ended 31 December 2011
The consolidated fi nancial statements of Computacenter plc for the year ended 31 December 2011 were authorised for issue in accordance with a resolution of the Directors on 12 March 2012. The balance sheet was signed on behalf of the Board by MJ Norris and FA Conophy. Computacenter plc is a limited company incorporated and domiciled in England whose shares are publicly traded.
The Group's fi nancial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS'), as adopted by the European Union as they apply to the fi nancial statements of the Group for the year ended 31 December 2011 and applied in accordance with the Companies Act 2006.
The consolidated fi nancial statements are presented in Sterling and all values are rounded to the nearest thousand (£'000) except when otherwise indicated.
The consolidated fi nancial statements comprise the fi nancial statements of Computacenter plc and its subsidiaries as at 31 December each year. The fi nancial statements of subsidiaries are prepared for the same reporting year as the Parent Company, using existing GAAP in each country of operation. Adjustments are made on consolidation translating any differences that may exist between the respective local GAAPs and IFRS.
All intra-Group balances, transactions, income and expenses and profi t and losses resulting from intra-Group transactions have been eliminated in full.
Subsidiaries are consolidated from the date on which the Group obtains control and cease to be consolidated from the date on which the Group no longer retains control.
Non-controlling interests represent the portion of profi t or loss and net assets in subsidiaries that is not held by the Group and is presented separately within equity in the consolidated balance sheet, separately from parent shareholders' equity.
The accounting policies adopted are consistent with those of the previous fi nancial year except as follows:
The Group has adopted the following new and amended IFRS and IFRIC interpretations during the year. Except where noted below, adoption of these standards did not have any effect on the fi nancial performance or position of the Group.
The IASB has issued an amendment to IAS 24 that clarifi es the defi nitions of a related party. The new defi nitions emphasise a symmetrical view of related party relationships as well as clarifying in which circumstances persons and key management personnel affect related party relationships of an entity. Secondly, the amendment introduces an exemption from the general related party disclosure requirements for transactions with a government and entities that are controlled, jointly controlled or signifi cantly infl uenced by the same government as the reporting entity. The adoption of the amendment did not have any impact on the fi nancial position or performance of the Group.
The IASB issued an amendment that alters the defi nition of a fi nancial liability in IAS 32 to enable entities to classify rights issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are given pro rata to all of the existing owners of the same class of an entity's non-derivative equity instruments, to acquire a fi xed number of the entity's own equity instruments for a fi xed amount in any currency. The amendment has had no effect on the fi nancial position or performance of the Group because the Group does not have these type of instruments.
The amendment removes an unintended consequence when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover such requirements. The amendment permits a prepayment of future service cost by the entity to be recognised as a pension asset. The Group is not subject to minimum funding requirements in Euroland, therefore the amendment of the interpretation has no effect on the fi nancial position nor performance of the Group.
In May 2010, the IASB issued its third omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The adoption of the following amendments resulted in changes to accounting policies, but no impact on the fi nancial position or performance of the Group.
• IAS 1 Presentation of Financial Statements: The amendment clarifi es that an entity may present an analysis of each component of other comprehensive income may be either in the statement of changes in equity or in the notes to the fi nancial statements.
Other amendments resulting from improvements to IFRSs to the following standards did not have any impact on the accounting policies, fi nancial position or performance of the Group:
The following interpretation and amendments to interpretations did not have any impact on the accounting policies, fi nancial position or performance of the Group:
The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
Standards issued but not yet effective up to the date of issuance of the Group's fi nancial statements that the Group reasonably expects to have an impact on disclosures, fi nancial position or performance when applied at a future date are listed below. The Group intends to adopt these standards when they become effective.
The preparation of the Group's fi nancial statements requires management to make judgements on how to apply the Group's accounting policies and make estimates about the future. Due to the inherent uncertainty in making these critical judgements and estimates, actual outcomes could be different.
The more signifi cant judgements and estimates, where a risk exists that a material adjustment to the carrying value of assets and liabilities in the next fi nancial year could occur, relate to:
Further information is provided within this note summarising signifi cant accounting policies, and notes 9 and 14 to the fi nancial statements.
For the year ended 31 December 2011
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation, down to residual value, is calculated on a straight line basis over the estimated useful life of the asset as follows:
| Freehold and long leasehold buildings | 25–50 years |
|---|---|
| Short leasehold improvements | shorter of 7 years and period to expiry of lease |
| Fixtures and fi ttings | |
| – Head offi ce | 5–15 years |
| – Other | shorter of 7 years and period to expiry of lease |
| Offi ce machinery, computer hardware | 3–15 years |
| Motor vehicles | 3 years |
Freehold land is not depreciated. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefi ts are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the year the item is derecognised.
Assets held under fi nance leases, which transfer to the Group substantially all the risks and benefi ts incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the fi nance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term.
Leases where the lessor retains substantially all the risks and benefi ts of ownership of the asset are classifi ed as operating leases. Operating lease payments are recognised as an expense in the income statement on a straight line basis over the lease term.
Software and software licences include computer software that is not integral to a related item of hardware. These assets are stated at cost less accumulated amortisation and any impairment in value. Amortisation is calculated on straight line basis over the estimated useful life. Currently software is amortised over four years except for licence and development costs related to the ERP system which is amortised over seven years.
The carrying values of software and software licences are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount.
Costs that are incurred and that can be specifi cally attributed to the development phase of management information systems for internal use are capitalised and amortised over their useful life, once the asset becomes available for use.
Intangible assets acquired as part of a business are carried initially at fair value. Following initial recognition intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses. Intangible assets with a fi nite life have no residual value and are amortised on a straight line basis over their expected useful lives with charges included in administrative expenses as follows:
| Existing customer contracts | 5 years |
|---|---|
| Existing customer relationships | 5–10 years |
| Tools and technology | 7 years |
The carrying value of intangible assets is reviewed for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable.
Business combinations on or after 1 January 2004 are accounted for under IFRS 3 (Revised) using the purchase method. Any excess of the cost of the business combination over the Group's interest in the net fair value of the identifi able assets, liabilities and contingent liabilities is recognised in the balance sheet as goodwill and is not amortised. Goodwill recognised on acquisitions prior to 1 January 2004, the date of transition to IFRS, is recorded at its amortised cost at transition to IFRS and is no longer amortised. Any goodwill asset arising on the acquisition of equity accounted entities is included within the cost of those entities.
After initial recognition, goodwill is stated at cost less any accumulated impairment losses, with the carrying value being reviewed for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may be impaired.
For the purpose of impairment testing, goodwill is allocated to the related cash-generating units monitored by management, usually at business segment level or statutory company level as the case may be. Where the recoverable amount of the cashgenerating unit is less than its carrying amount, including goodwill, an impairment loss is recognised in the income statement.
Goodwill arising on acquisitions prior to 31 December 1997 remains set off directly against reserves even if the related investment becomes impaired or the business is disposed of.
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. Where an asset does not have independent cash fl ows, the recoverable amount is assessed for the cash-generating unit to which it belongs. The recoverable amount is the higher of the fair value less costs to sell and the value in use of the asset or cash-generating unit. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset. Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset.
For assets excluding goodwill, an assessment is made at each reporting date whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the assets or cash-generating unit's recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. As the Group has no assets carried at revalued amounts, such reversal is recognised in the income statement.
The Group's interests in its associates, being those entities over which it has signifi cant infl uence and which are neither subsidiaries nor joint ventures, are accounted for using the equity method.
Under the equity method, the investment in an associate is carried in the balance sheet at cost plus post-acquisition changes in the Group's share of net assets of the associate, less distributions received and less any impairment in value of individual investments. The Group income statement refl ects the share of the associate's results after tax. Where there has been a change recognised in other comprehensive income of the associate, the Group recognises its share of any such change in the Group statement of other comprehsive income.
Financial assets are recognised at their fair value which initially equates to the consideration given plus directly attributable transaction costs associated with the investment.
The subsequent measurement of fi nancial assets depends on their classifi cation as described in each category below.
Inventories are carried at the lower of weighted average cost and net realisable value after making allowance for any obsolete or slow-moving items. Costs include those incurred in bringing each product to its present location and condition, on a fi rst-in, fi rst-out basis.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale.
For the year ended 31 December 2011
Trade receivables, which generally have 30–90-day terms, are recognised and carried at their original invoice amount less an allowance for any uncollectable amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Balances are written off when the probability of recovery is assessed as being remote.
Some of the Group's trade receivables are subject to factoring arrangements. These transactions do not meet IAS 39's requirements for derecognition, since the risks and rewards have not been substantially transferred. All receivables sold through factoring transactions which do not meet the IAS 39 derecognition criteria continue to be recognised in full in the Group fi nancial statements even though they are legally subject to the factoring arrangement; a corresponding liability is recorded in the consolidated balance sheet as 'Factor Financing'. Gains and losses relating to the sale of such assets are not recognised until the assets are derecognised.
Current asset investments comprise deposits held for a term of greater than three months from the date of deposit and which is not available to the Group on demand. Subsequent to initial measurement, current asset investments are measured at fair value.
Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.
For the purpose of the consolidated cash fl ow statement, cash and cash equivalents consist of cash and short-term deposits as defi ned above, net of outstanding bank overdrafts.
All borrowings are initially recognised at fair value less directly attributable transaction costs. Borrowing costs are recognised as an expense when incurred.
After initial recognition, interest-bearing borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement.
A fi nancial asset (or, where applicable, a part of a fi nancial asset or part of a group of similar fi nancial assets) is derecognised where:
A fi nancial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Cash fl ow hedges that meet the strict criteria for hedge accounting are accounted for as follows:
The effective portion of the gain or loss on the hedging instrument is recognised directly in other comprehensive income in the cashfl ow hedge reserve, while any ineffective portion is recognised immediately in the income statement in other operating expenses.
The Group uses forward currency contracts as hedges of its exposure to foreign currency risk in forecasted transactions and fi rm commitments. The ineffective portion is recognised in other operating income.
Amounts recognised as other comprehensive income are transferred to the income statement when the hedged transaction affects profi t or loss, such as when the hedged fi nancial expense is recognised.
The Group uses foreign currency forward contracts to hedge its risks associated with foreign currency fl uctuations. Forward contracts are initially recognised at fair value on the date that the contract is entered into and are subsequently remeasured at fair value at each reporting date. The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profi les. Forward contracts are recorded as assets when the fair value is positive and as liabilities when the fair value is negative.
For the purposes of hedge accounting, hedges are classifi ed as cash fl ow hedges when hedging the exposure to variability in cash fl ows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised fi rm commitment.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identifi cation of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the effectiveness of changes in the hedging instrument's fair value in offsetting the exposure to changes in the hedged item's fair value or cash fl ows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash fl ows and are addressed on an ongoing basis to determine that they actually have been highly effective throughout the fi nancial reporting periods for which they are designated.
If the forecast transaction or fi rm commitment is no longer expected to occur, the cumulative gain or loss previously recognised in equity is transferred to the income statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, any cumulative gain or loss previously recognised in other comprehensive income remains in other comprehensive income until after the forecast transaction or fi rm commitment affects profi t or loss.
Any other gains or losses arising from changes in fair value on forward contracts are taken directly to the income statement.
The Group's presentation currency is Pounds Sterling (£). Each entity in the Group determines its own functional currency and items included in the fi nancial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the consolidated income statement.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of initial transaction.
The functional currencies of the overseas subsidiaries are Euro (€), US dollar (US\$), South African rand (ZAR) and Swiss franc (CHF). As at the reporting date, the assets and liabilities of these overseas subsidiaries are translated into the presentation currency of the Group at the rate of exchange ruling at the balance sheet date and their income statements are translated at the average exchange rates for the year. Exchange differences arising on the retranslation are recognised in the consolidated statement of comprehensive income. On disposal of a foreign entity, the deferred cumulative amount recognised in the consolidated statement of comprehensive income relating to that particular foreign operation is recognised in the income statement.
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash fl ows at a pre-tax rate that refl ects current market assessments of the time value of money and, where appropriate, the risks specifi c to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.
For the year ended 31 December 2011
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the fi nancial statements, with the following exceptions:
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
Income tax is charged or credited directly to the statement of comprehensive income if it relates to items that are credited or charged to the statement of comprehensive income. Otherwise income tax is recognised in the income statement.
Revenues, expenses and assets are recognised net of the amount of sales tax except:
• where the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • trade receivables and payables are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
Revenue is recognised to the extent that it is probable that the economic benefi ts will fl ow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts and rebates given to customers, VAT and other sales tax or duty. The following specifi c recognition criteria must also be met before revenue is recognised:
Revenue is recognised when the signifi cant risks and rewards of ownership of the goods have passed to the buyer, usually on dispatch of goods.
Revenue is recognised when receivable under a contract following delivery of a service or in line with the stage of work completed. The stage of completion is determined by reference to the costs incurred as a proportion of the total estimated costs of the contract and unbilled revenue is recognised within accrued income. If the total estimated costs and revenues of a contract cannot be reliably estimated, revenue is recognised only to the extent that costs have been incurred. A provision is made as soon as a loss is foreseen.
Contracted service revenue is recognised on a percentage of completion basis. Usually revenue is recognised on a straight-line basis, when this is representative of the stage of completion of an individual contract. Unrecognised contracted revenue is included as deferred income in the balance sheet. Amounts invoiced relating to more than one period are deferred and recognised over their relevant life.
On a limited number of Support and Managed Service contracts recognising revenue on a straight-line basis is not representative of the stage of completion. On these contracts, the stage of completion is determined by reference to the costs incurred as a proportion of the total estimated costs of the contract and unbilled revenue is recognised within accrued income. If a contract cannot be reliably estimated revenue is recognised only to the extent that costs have been incurred. A provision is made as soon as a loss is foreseen.
Where a contract contains several elements, the individual elements are accounted for separately where appropriate and revenue thereon is measured at the fair value of the consideration received.
Income is recognised as interest accrues.
Dividend income is recognised when the Group's right to receive payment is established.
Rental income arising from operating leases is accounted for on a straight line basis over the lease term.
The Group operates a defi ned contribution scheme available to all UK employees. Contributions are recognised as an expense in the income statement as they become payable in accordance with the rules of the scheme. There are no signifi cant pension schemes within the Group's overseas operations.
The Group presents as exceptional items on the face of the income statement, those material items of income and expense which, because of the nature and expected infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better elements of fi nancial performance in the year, so as to facilitate comparison with prior periods and to assess better trends in fi nancial performance.
Employees (including Executive Directors) of the Group can receive remuneration in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares ('equity-settled transactions').
The cost of equity-settled transactions with employees is measured by reference to the fair value of the award at the date at which they are granted. The fair value is determined by utilising an appropriate valuation model, further details of which are given in note 28. In valuing equity-settled transactions, no account is taken of any performance conditions as none of the conditions set are market-related ones.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfi lled, ending on the date on which the relevant employees become fully entitled to the award ('vesting date'). The cumulative expense recognised for equity-settled transactions at each reporting date, until the vesting date, refl ects the extent to which the vesting period has expired and the Directors' best estimate of the number of equity instruments that will ultimately vest. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. As the schemes do not include any market-related performance conditions, no expense is recognised for awards that do not ultimately vest.
Where the terms of an equity-settled award are modifi ed, as a minimum, an expense is recognised as if the terms had not been modifi ed. In addition, an expense is recognised for any modifi cation, which increases the total fair value of the share-based payment arrangement, or is otherwise benefi cial to the employee as measured at the date of modifi cation.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modifi cation of the original award, as described in the previous paragraph.
The dilutive effect of outstanding options is refl ected as additional share dilution in the computation of earnings per share (see note 10).
The Group has an employee share trust for the granting of non-transferable options to executives and senior employees. Shares in the Group held by the employee share trust are treated as investment in own shares and are recorded at cost as a deduction from equity (see note 27).
Computacenter plc shares held by the Group are classifi ed in shareholders' equity as 'own shares held' and are recognised at cost. Consideration received for the sale of such shares is also recognised in equity, with any difference between the proceeds from sale and the original cost being taken to revenue reserves. No gain or loss is recognised in the performance statements on the purchase, sale, issue or cancellation of equity shares.
For the year ended 31 December 2011
For management purposes, the Group is organised into geographical segments and the management thereof. The Group's business in each geography is managed separately and can constitute several separate statutory entities.
No operating segments have been aggregated to form the below reportable operating segments.
Management monitor the operating results of its geographical segments separately for the purposes of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on adjusted operating profi t or loss which is measured differently from operating profi t or loss in the consolidated fi nancial statements. At a Group level however, management measure performance on adjusted profi t before tax. Adjusted operating profi t or loss takes account of the interest paid on customer specifi c fi nancing ('CSF') which management consider to be a cost of sale for management reporting purposes. Excluded from adjusted operating profi t is the amortisation of acquired intangibles and exceptional items as management do not consider these items when reviewing the underlying performance of a segment.
In the prior year consolidated fi nancial statements, distribution costs were shown below gross profi t, however, management monitor the performance of the business by including such costs within gross profi t, and reports accordingly to the Chief Operating Decision Maker. As a result, these costs have been included in cost of sales in 2011, and 2010 has been restated accordingly.
From 1 January 2011, the management of Computacenter Luxembourg has been transferred from Belgium to Germany. As a consequence, CC Luxembourg is reported as part of the German segment. The comparative segmental information has been restated to refl ect this change. An adjusted operating loss of £820,343 has been reclassifi ed from the Belgium segment to the Germany segment in the 2010 comparative information.
Following our ERP implementation in the UK and Germany, the Group has been able to further align its structure and therefore how it classifi es departmental costs between cost of sales and administrative expenses. The Group estimates that the net impact of these changes, principally related to pre-sales costs in Germany, has resulted in approximately £7 million costs being reported in administrative expenses in 2011 that were previously reported in cost of sales in 2010. This represents the Group's best estimate of the impact of the changes made in the 2011 reported results. 2010 has not been restated to refl ect this change.
Segmental performance for the years ended 31 December 2011 and 2010 was as follows:
| UK £'000 |
Germany £'000 |
France £'000 |
Belgium £'000 |
Total £'000 |
|
|---|---|---|---|---|---|
| For the year ended 31 December 2011 | |||||
| Revenue | 1,102,184 | 1,228,574 | 478,583 | 42,962 | 2,852,303 |
| Results | |||||
| Adjusted gross profi t | 167,305 | 157,355 | 50,636 | 4,610 | 379,906 |
| Adjusted net operating expenses | (130,040) | (129,633) | (44,651) | (3,053) | (307,377) |
| Adjusted segment operating profi t | 37,265 | 27,722 | 5,985 | 1,557 | 72,529 |
| Adjusted net interest | 1,690 | ||||
| Adjusted profi t before tax | 74,219 | ||||
| Other segment information | |||||
| Capital expenditure: | |||||
| Property, plant and equipment | 18,403 | 19,034 | 1,136 | 136 | 38,709 |
| Goodwill and acquired intangible assets | – | 10,074 | 14,629 | – | 24,703 |
| Software | 8,951 | 1,428 | 108 | – | 10,487 |
| Depreciation | 15,783 | 11,153 | 410 | 71 | 27,417 |
| Amortisation of software | 2,886 | 2,879 | 93 | – | 5,858 |
| Amortisation of acquired intangible assets | 481 | 765 | 740 | – | 1,986 |
| Impairment reversal | – | – | (398) | – | (398) |
| Share-based payments | 1,842 | 471 | 163 | – | 2,476 |
| Restated UK |
Restated Germany |
Restated France |
Restated Belgium |
Restated Total |
|
|---|---|---|---|---|---|
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| For the year ended 31 December 2010 | |||||
| Revenue | 1,265,431 | 1,008,889 | 359,611 | 42,564 | 2,676,495 |
| Results | |||||
| Adjusted gross profi t | 177,545 | 128,949 | 35,238 | 3,256 | 344,988 |
| Adjusted net operating expenses | (134,208) | (109,272) | (34,248) | (2,833) | (280,561) |
| Adjusted segment operating profi t | 43,337 | 19,677 | 990 | 423 | 64,427 |
| Adjusted net interest | 1,626 | ||||
| Adjusted profi t before tax | 66,053 | ||||
| Other segment information | |||||
| Capital expenditure: | |||||
| Property, plant and equipment | 10,552 | 5,967 | 491 | 108 | 17,118 |
| Software | 11,935 | 701 | 138 | – | 12,774 |
| Depreciation | 21,142 | 9,971 | 491 | 118 | 31,722 |
| Amortisation of software | 3,591 | 2,072 | 138 | – | 5,801 |
| Amortisation of acquired intangible assets | 482 | 267 | – | – | 749 |
| Share-based payments | 1,918 | 489 | 213 | – | 2,620 |
Management review adjusted measures of performance as shown in the tables above. Adjusted profi t before tax excludes exceptional items and the amortisation of acquired intangibles as shown below:
| 2011 £'000 |
2010 £'000 |
|
|---|---|---|
| Adjusted profi t before tax | 74,219 | 66,053 |
| Amortisation of acquired intangibles | (1,986) | (655) |
| Exceptional items | (131) | – |
| Profi t before tax | 72,102 | 65,398 |
Management also review adjusted measures for gross profi t, operating expenses, operating profi t and net interest, which in addition takes account of interest costs of CSF within cost of sales (as these are considered to form part of the gross profi t performance of a contract). The reconciliation for adjusted operating profi t to operating profi t, as disclosed in the Consolidated Income Statement, is as follows:
| UK £'000 |
Germany £'000 |
France £'000 |
Belgium £'000 |
Total £'000 |
|
|---|---|---|---|---|---|
| For the year ended 31 December 2011 | |||||
| Adjusted segment operating profi t | 37,265 | 27,722 | 5,985 | 1,557 | 72,529 |
| Add back interest on CSF | 585 | 880 | – | – | 1,465 |
| Amortisation of acquired intangibles | (481) | (764) | (741) | – | (1,986) |
| Exceptional items | (656) | (82) | 607 | – | (131) |
| Segment operating profi t | 36,713 | 27,756 | 5,851 | 1,557 | 71,877 |
| For the year ended 31 December 2010 |
| Adjusted segment operating profi t | 43,337 | 19,677 | 990 | 423 | 64,427 |
|---|---|---|---|---|---|
| Add back interest on CSF | 1,442 | 678 | – | – | 2,120 |
| Amortisation of acquired intangibles | (519) | (136) | – | – | (655) |
| Segment operating profi t | 44,260 | 20,219 | 990 | 423 | 65,892 |
For the year ended 31 December 2011
Within each geographical segment the Group has three sources of revenue, which are aggregated and shown in the table below. The sale of goods is recorded within Supply Chain revenues and the rendering of services is split into Professional and Support and Managed Services.
| 2011 | 2010 |
|---|---|
| £'000 | £'000 |
| Sources of revenue | |
| Total Supply Chain revenue 2,015,582 |
1,888,362 |
| Services revenue | |
| Professional Services 216,906 |
192,448 |
| Support and Managed Services 619,815 |
595,685 |
| Total services revenue 836,721 |
788,133 |
| Total revenue 2,852,303 |
2,676,495 |
Included in revenues arising from the UK segment are revenues of approximately £254 million (2010: £311 million) which arose from sales to the Group's largest customer. For the purposes of this disclosure a single customer is considered to be a group of entities known to be under common control. This customer consists of entities under control of the UK Government, and includes the Group's revenues with central government, local government and certain government controlled banking institutions.
This is stated after charging/(crediting):
| 2011 £'000 |
2010 £'000 |
|---|---|
| Auditors' remuneration: | |
| Audit of the fi nancial statements 509 |
400 |
| Other fees to auditors – local statutory audits for subsidiaries 32 |
31 |
| – other services in pursuant of legislation 12 |
12 |
| – taxation services 114 |
68 |
| – other services 69 |
46 |
| 736 | 557 |
| Depreciation of property, plant and equipment 27,417 |
31,722 |
| Loss on disposal of property, plant and equipment 545 |
815 |
| Loss on disposal of intangible assets 33 |
– |
| Impairment reversal (398) |
– |
| Amortisation of software 5,858 |
5,801 |
| Amortisation of other intangible assets 1,986 |
749 |
| Net foreign currency differences 539 |
(35) |
| Costs of inventories recognised as an expense 1,806,390 |
1,709,585 |
| Operating lease payments – minimum lease payments 42,739 |
37,343 |
| 2011 | 2010 | |
|---|---|---|
| £'000 | £'000 | |
| Operating profi t | ||
| Acquisition-related costs | (999) | – |
| Deferred consideration reversed | 868 | – |
| (131) | – | |
| Income tax | ||
| Exceptional tax items | 4,427 | – |
| Tax on exceptional items included in operating profi t | 174 | – |
| 4,601 | – | |
| Exceptional items after taxation | 4,470 | – |
Included within the current year are:
The exceptional income tax credit for the year comprises two items which, due to their size are disclosed separately as follows:
The income statement impact of both items has been shown as an exceptional tax item.
| 2011 | 2010 | |
|---|---|---|
| £'000 | £'000 | |
| Wages and salaries | 458,743 | 440,352 |
| Social security costs | 74,956 | 67,136 |
| Share-based payments | 2,476 | 2,620 |
| Pension costs | 14,956 | 15,938 |
| 551,131 | 526,046 |
Share-based payments arise from transactions accounted for as equity-settled share-based payment transactions.
The average monthly number of employees during the year was made up as follows:
| 2011 No. |
2010 No. |
|
|---|---|---|
| UK | 4,958 | 4,947 |
| Germany | 4,454 | 4,169 |
| France | 1,440 | 1,203 |
| Belgium | 161 | 195 |
| 11,013 | 10,514 |
| 2011 £'000 |
2010 £'000 |
|
|---|---|---|
| Bank interest receivable | 2,218 | 1,878 |
| Income from investments | 143 | 451 |
| 2,361 | 2,329 |
For the year ended 31 December 2011
| 2011 £'000 |
2010 £'000 |
|
|---|---|---|
| Bank loans and overdrafts | 526 | 352 |
| Finance charges payable on customer specifi c fi nancing | 1,465 | 2,120 |
| Finance costs on factoring | 80 | 206 |
| Other interest | 65 | 145 |
| 2,136 | 2,823 |
| 2011 £'000 |
2010 £'000 |
|
|---|---|---|
| Tax charged in the income statement | ||
| Current income tax | ||
| UK corporation tax | 10,484 | 12,917 |
| Foreign tax | 5,122 | 3,306 |
| Adjustments in respect of prior periods | (1,425) | (1,682) |
| Total current income tax | 14,181 | 14,541 |
| Deferred tax | ||
| Origination and reversal of temporary differences | 294 | (2,312) |
| Exceptional changes in recoverable amounts of deferred tax assets | (4,427) | – |
| Adjustments in respect of prior periods | 1,043 | 2,849 |
| Total deferred tax | (3,090) | 537 |
| Tax charged in the income statement | 11,091 | 15,078 |
| b) Reconciliation of the total tax charge | ||
| 2011 £'000 |
2010 £'000 |
|
| Accounting profi t before income tax | 72,102 | 65,398 |
| At the UK standard rate of corporation tax of 26.5 per cent (2010: 28.0 per cent) | 19,107 | 18,311 |
| Expenses not deductible for tax purposes | 869 | 537 |
| Non-deductible element of share-based payment charge | 168 | 490 |
| Relief on share option gains | (20) | (607) |
| Adjustments in respect of current income tax of previous periods | (382) | 1,167 |
| Higher tax on overseas earnings | 284 | 110 |
| Other differences | 697 | 1,010 |
| Effect of changes in tax rate | 270 | 197 |
| Utilisation of previously unrecognised deferred tax assets | (6,834) | (7,046) |
| Exceptional changes in recoverable amounts of deferred tax assets | (4,427) | – |
| Overseas tax not based on earnings | 1,359 | 909 |
| At effective income tax rate of 15.4 per cent (2010: 23.1 per cent) | 11,091 | 15,078 |
There are no income tax consequences attaching to the payment of dividends by the Group to its shareholders.
Deferred tax assets of £15.4 million (2010: £11.3 million) have been recognised in respect of losses carried forward.
In addition, at 31 December 2011, there were unused tax losses across the Group of £125.6 million (2010: £171.2 million) for which no deferred tax asset has been recognised. Of these losses, £68.5 million (2010: £99.4 million) arise in Germany, albeit a signifi cant proportion have been generated in statutory entities that no longer have signifi cant levels of trade. The remaining unrecognised tax losses relate to other loss-making overseas subsidiaries.
Deferred income tax at 31 December relates to the following:
| Consolidated balance sheet | Consolidated income statement | |||
|---|---|---|---|---|
| 2011 £'000 |
2010 £'000 |
2011 £'000 |
2010 £'000 |
|
| Deferred income tax liabilities | ||||
| Accelerated capital allowances | 653 | 922 | (269) | (752) |
| Revaluations of foreign exchange contracts to fair value | 74 | 56 | 18 | 56 |
| Effect of changes in tax rate on opening liability | – | – | (234) | (45) |
| Arising on acquisition | 2,581 | – | (244) | – |
| Gross deferred income tax liabilities | 3,308 | 978 | ||
| Deferred income tax assets | ||||
| Relief on share option gains | 1,465 | 2,266 | 207 | (568) |
| Other temporary differences | 699 | 2,049 | 1,504 | 1,478 |
| Effect of changes in tax rate on opening asset | – | – | 153 | 234 |
| Revaluations of foreign exchange contracts to fair value | 116 | – | – | (27) |
| Losses available for offset against future taxable income | 15,420 | 11,262 | (4,225) | 161 |
| Gross deferred income tax assets | 17,700 | 15,577 | ||
| Deferred income tax charge | (3,090) | 537 | ||
| Net deferred income tax asset | 14,392 | 14,599 | ||
| Disclosed on the balance sheet | ||||
| Deferred income tax asset | 15,928 | 15,577 | ||
| Deferred income tax liability | (1,536) | (978) | ||
| Net deferred income tax asset | 14,392 | 14,599 |
At 31 December 2011, there was no recognised or unrecognised deferred income tax liability (2010: £nil) for taxes that would be payable on the unremitted earnings of the Group's subsidiaries as the Group expects that future remittances of earnings from its overseas subsidiaries will be covered by the UK dividend exemption.
The main rate of UK Corporation tax was reduced to 26 per cent from 1 April 2011. The Finance Act 2011 further reduced the main rate of UK Corporation tax to 25 per cent from 1 April 2012. Deferred tax has been restated accordingly in these fi nancial statements.
Additional changes to the main rate of UK Corporation Tax are proposed, to reduce the rate by 1 per cent per annum to 23 per cent by 1 April 2014. These changes had not been substantively enacted at the balance sheet date and consequently are not included in these fi nancial statements. The effect of these proposed reductions would be to reduce the UK net deferred tax asset by £0.1 million.
For the year ended 31 December 2011
Earnings per share ('EPS') amounts are calculated by dividing profi t attributable to ordinary equity holders by the weighted average number of Ordinary Shares outstanding during the year (excluding own shares held).
Diluted earnings per share amounts are calculated by dividing profi t attributable to ordinary equity holders by the weighted average number of Ordinary Shares outstanding during the year (excluding own shares held) adjusted for the effect of dilutive options.
Adjusted basic and adjusted diluted EPS are presented to provide more comparable and representative information. Accordingly, the adjusted basic and adjusted diluted EPS fi gures exclude amortisation of acquired intangibles and exceptional items.
| 2011 £'000 |
2010 £'000 |
|
|---|---|---|
| Profi t attributable to equity holders of the parent | 61,013 | 50,321 |
| Amortisation of acquired intangibles | 1,986 | 655 |
| Tax on amortisation of acquired intangibles | (433) | (187) |
| Exceptional items within operating profi t | 131 | – |
| Tax on exceptional items included in operating profi t | (174) | – |
| Exceptional tax items | (4,427) | – |
| Profi t before amortisation of acquired intangibles and exceptional items | 58,096 | 50,789 |
| 2011 000's |
2010 000's |
|
|---|---|---|
| Basic weighted average number of shares (excluding own shares held) | 148,793 | 147,752 |
| Effect of dilution: | ||
| Share options | 6,639 | 6,370 |
| Diluted weighted average number of shares | 155,432 | 154,122 |
| 2011 | 2010 |
|---|---|
| pence | pence |
| Basic earnings per share 41.0 |
34.1 |
| Diluted earnings per share 39.3 |
32.6 |
| Adjusted basic earnings per share 39.0 |
34.4 |
| Adjusted diluted earnings per share 37.4 |
33.0 |
| 2011 | 2010 | |
|---|---|---|
| Declared and paid during the year: | £'000 | £'000 |
| Equity dividends on Ordinary Shares: | ||
| Final dividend for 2010: 9.7 pence (2009: nil pence) | 14,460 | – |
| Interim dividend for 2011: 4.5 pence (2010: 3.5 pence) | 6,709 | 5,173 |
| Additional interim dividend for 2010: nil pence (2009: 8.0 pence) | – | 11,811 |
| 21,169 | 16,984 | |
| Proposed (not recognised as a liability as at 31 December) | ||
| Equity dividends on Ordinary Shares: | ||
| Final dividend for 2011: 10.5 pence (2010: 9.7 pence) | 16,157 | 14,926 |
| Freehold land and buildings £'000 |
Short leasehold improvements £'000 |
Fixtures, fi ttings, equipment and vehicles £'000 |
Total £'000 |
|
|---|---|---|---|---|
| Cost | ||||
| At 1 January 2010 | 67,431 | 18,966 | 161,066 | 247,463 |
| Additions | – | 2,816 | 14,302 | 17,118 |
| Disposals | – | (1,506) | (8,377) | (9,883) |
| Foreign currency adjustment | (40) | (642) | (1,555) | (2,237) |
| At 31 December 2010 | 67,391 | 19,634 | 165,436 | 252,461 |
| Additions | 10,670 | 3,969 | 24,070 | 38,709 |
| Acquisition via subsidiary | – | – | 320 | 320 |
| Disposals | – | (1,861) | (34,339) | (36,200) |
| Foreign currency adjustment | (27) | (463) | (1,424) | (1,914) |
| At 31 December 2011 | 78,034 | 21,279 | 154,063 | 253,376 |
| Accumulated depreciation and impairment | ||||
| At 1 January 2010 | 26,117 | 9,492 | 106,564 | 142,173 |
| Provided during the year | 2,535 | 2,685 | 26,502 | 31,722 |
| Disposals | – | (1,345) | (7,351) | (8,696) |
| Foreign currency adjustment | (3) | (470) | (1,147) | (1,620) |
| At 31 December 2010 | 28,649 | 10,362 | 124,568 | 163,579 |
| Provided during the year | 2,315 | 2,478 | 22,624 | 27,417 |
| Impairment reversal | – | – | (398) | (398) |
| Disposals | – | (1,725) | (32,481) | (34,206) |
| Foreign currency adjustment | 2 | (420) | (859) | (1,277) |
| At 31 December 2011 | 30,966 | 10,695 | 113,454 | 155,115 |
| Net book value | ||||
| At 31 December 2011 | 47,068 | 10,584 | 40,609 | 98,261 |
| At 31 December 2010 | 38,742 | 9,272 | 40,868 | 88,882 |
| At 1 January 2010 | 41,314 | 9,474 | 54,502 | 105,290 |
The impairment reversal is in relation to certain assets in France, which are in continuing use in the business, that were previously impaired. The reversal is a result of the improvements in the forecasted results for Computacenter France. The reversal has been limited to the net book value of the assets had they not been previously impaired.
Included in the fi gures above are the following amounts relating to leased assets which are used to satisfy specifi c customer contracts:
| Fixtures, fi ttings, equipment and vehicles |
||
|---|---|---|
| 2011 £'000 |
2010 £'000 |
|
| Cost | ||
| At 1 January | 84,069 | 85,651 |
| Additions | 14,528 | 4,262 |
| Disposals | (20,326) | (5,844) |
| At 31 December | 78,271 | 84,069 |
| At 1 January | 61,461 | 47,579 |
|---|---|---|
| Charge for year | 14,651 | 18,766 |
| Disposals | (18,756) | (4,884) |
| At 31 December | 57,356 | 61,461 |
| Net book value | 20,915 | 22,608 |
For the year ended 31 December 2011
| Other | ||||
|---|---|---|---|---|
| Goodwill | Software | intangible assets |
Total | |
| £'000 | £'000 | £'000 | £'000 | |
| Cost | ||||
| At 1 January 2010 | 43,404 | 45,426 | 8,645 | 97,475 |
| Additions | – | 12,774 | – | 12,774 |
| Foreign currency adjustment | (437) | (312) | (80) | (829) |
| At 31 December 2010 | 42,967 | 57,888 | 8,565 | 109,420 |
| Additions | 14,344 | 10,487 | 10,359 | 35,190 |
| Acquired via subsidiary | – | – | 82 | 82 |
| Disposals | – | (3,912) | – | (3,912) |
| Foreign currency adjustment | (1,084) | (245) | (753) | (2,082) |
| At 31 December 2011 | 56,227 | 64,218 | 18,253 | 138,698 |
| Amortisation and impairment | ||||
| At 1 January 2010 | – | 20,853 | 3,657 | 24,510 |
| Charged during the year | – | 5,801 | 749 | 6,550 |
| Foreign currency adjustment | – | (158) | (13) | (171) |
| At 31 December 2010 | – | 26,496 | 4,393 | 30,889 |
| Charged during the year | – | 5,858 | 1,986 | 7,844 |
| Disposals | – | (3,878) | – | (3,878) |
| Foreign currency adjustment | – | (352) | (47) | (399) |
| At 31 December 2011 | – | 28,124 | 6,332 | 34,456 |
| Net book value | ||||
| At 31 December 2011 | 56,227 | 36,094 | 11,921 | 104,242 |
| At 31 December 2010 | 42,967 | 31,392 | 4,172 | 78,531 |
| At 1 January 2010 | 43,404 | 24,573 | 4,988 | 72,965 |
Goodwill acquired through business combinations have been allocated to the following cash-generating units:
These represent the lowest level within the Group at which goodwill is monitored for internal management purposes.
| Computacenter | |||||
|---|---|---|---|---|---|
| (UK) | Computacenter | Computacenter | |||
| Total | |||||
| £'000 | |||||
| 30,429 | 835 | 12,140 | – | – | 43,404 |
| – | – | (437) | – | – | (437) |
| 30,429 | 835 | 11,703 | – | – | 42,967 |
| – | – | 3,738 | 9,610 | 996 | 14,344 |
| – | – | (495) | (514) | (75) | (1,084) |
| 30,429 | 835 | 14,946 | 9,096 | 921 | 56,227 |
| Limited £'000 |
RD Trading £'000 |
Germany £'000 |
France £'000 |
Damax AG £'000 |
Additions to goodwill in 2011 arose from the following acquisitions:
The acquired assets and liabilities of HSD were integrated within Computacenter Germany during the year. The goodwill arising on the acquisition is tested for impairment against the Computacenter Germany cash-generating unit.
The acquired assets and liabilities of Top Info were integrated within Computacenter France at 31 December 2011. The goodwill arising on the acquisition is tested for impairment against the Computacenter France cash-generating unit.
Whilst Damax is managed and therefore reported as part of the Germany segment, it retains its own identifi able cash fl ows. As a consequence, the goodwill arising on the acquisition of Damax is tested against its own future cash fl ows.
The recoverable amounts of all fi ve cash-generating units have been determined based on a value-in-use calculation. To calculate this, cash fl ow projections are based on fi nancial budgets approved by senior management covering a three-year period and on long-term market growth rates of between 1.5 and 2.5 per cent (2010: 2.5 per cent) thereafter.
Key assumptions used in the value-in-use calculation for all cash-generating units for 31 December 2011 and 31 December 2010 are:
Each cash-generating unit generates value substantially in excess of the carrying value of goodwill attributed to each of them. Management therefore believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of the unit to materially exceed its recoverable amount.
No impairment provision on goodwill has been required at either 31 December 2011 or at 31 December 2010.
Other intangible assets consist of customer contracts, customer relationships and tools and technology. The expected useful lives are shown in note 2.
For the year ended 31 December 2011
The following table illustrates summarised information of the investment in associates:
| 2011 £'000 |
2010 £'000 |
|
|---|---|---|
| Cost | ||
| At 1 January | 57 | 57 |
| Acquisitions | 500 | – |
| Share of associates losses | (48) | – |
| Exchange rate movement | (2) | – |
| At 31 December | 507 | 57 |
| Impairment | ||
| At 1 January | (10) | – |
| Charge for year | – | (10) |
| At 31 December | (10) | (10) |
| Carrying value | 497 | 47 |
The Group has a 20 per cent (2010: 20 per cent) interest in Gonicus GmbH, whose principal activity is the provision of Open Source Software. Gonicus is a private entity, incorporated in Germany, that is not listed on any public exchange and therefore there is no published quotation price for the fair value of this investment. The reporting date of Gonicus is 31 December.
On 1 April 2011 the Group acquired a 25 per cent interest in ICS Solutions Limited for a cash consideration of £500,000. The acquisition will allow the Group to pursue wider opportunities in the deployment of its Microsoft Collaboration service and solution offerings. The reporting date of ICS is 30 June.
The Group's principal subsidiary undertakings are as follows:
| Proportion of voting rights and shares held |
||||
|---|---|---|---|---|
| Country | ||||
| Name | of incorporation | Nature of business | 2011 | 2010 |
| Computacenter (UK) Limited | England | IT Infrastructure services | 100% | 100% |
| Computacenter France SA | France | IT Infrastructure services | 100% | 100% |
| Computacenter Holding GmbH | Germany | IT Infrastructure services | 100% | 100% |
| Computacenter GmbH | Germany | IT Infrastructure services | 100% | 100% |
| CC Managed Services GmbH | Germany | IT Infrastructure services | 100% | 100% |
| Computacenter NV/SA | Belgium | IT Infrastructure services | 100% | 100% |
| RD Trading Limited | England | IT Asset Management | 100%* | 100%* |
| Computacenter PSF SA | Luxembourg | IT Infrastructure services | 100% | 100% |
| Computacenter USA | USA | IT Infrastructure services | 100%* | 100%* |
| Computacenter Services (Iberia) SLU | Spain | International Call Centre Services | 100%* | 100%* |
| Digica Group Holdings Limited | England | IT Infrastructure and application services | 100%* | 100%* |
| Computacenter Services and Solutions | ||||
| (Pty) Ltd | South Africa | IT Infrastructure services | 100%* | 100%* |
| becom Informationssysteme GmbH | Germany | IT Infrastructure services | 100%** | 100%** |
| Top Info SAS | France | IT Infrastructure services | 100%*** | – |
| Damax AG | Switzerland | IT Infrastructure services | 80% | – |
| HSD Consult GmbH | Germany | IT Infrastructure services | 100%** | – |
* Includes indirect holdings of 100 per cent via Computacenter (UK) Limited.
** Includes indirect holdings of 100 per cent via Computacenter Holding GmbH.
*** Includes indirect holdings of 100 per cent via Computacenter France SA.
Computacenter plc is the ultimate parent entity of the Group.
On 1 April 2011 the Group acquired 100 per cent of the voting shares of Top Info SAS for an initial consideration of €37.7 million and a maximum deferred consideration of €1.0 million dependant on performance in 2011, on a debt-free basis. The net book value of the assets acquired included €18.7 million of net cash and short-term deposits. The costs of acquisition amounted to €301,000 and are included in the income statement as an exceptional item. Top Info SAS is based in France and is an information technology reseller of hardware, software and services. The acquisition has been accounted for using the purchase method of accounting. The 2011 consolidated fi nancial statements include the results of Top Info for the period from the acquisition date.
The book and provisional fair values of the net assets acquired were as follows:
| 2011 | ||
|---|---|---|
| 2011 | Provisional fair value |
|
| Book value | to Group | |
| £'000 | £'000 | |
| Intangible assets | ||
| Comprising: | ||
| Existing customer relationships | – | 5,019 |
| Total intangible assets | – | 5,019 |
| Property, plant and equipment | 125 | 125 |
| Inventories | 1,203 | 3,125 |
| Trade and other receivables | 22,146 | 19,564 |
| Prepayments | 324 | 324 |
| Cash and short-term deposits | 16,511 | 16,511 |
| Trade and other payables | (18,031) | (18,044) |
| Deferred income | (328) | (328) |
| Deferred tax liability | – | (1,706) |
| Net assets | 21,950 | 24,590 |
| Goodwill arising on acquisition | 9,610 | |
| 34,200 | ||
| Discharged by: | ||
| Cash paid | 33,317 | |
| Deferred consideration | 883 | |
| 34,200 | ||
| Cash and cash equivalents acquired | ||
| Cash and short-term deposits | (16,511) | |
| Cash outfl ow on acquisition | 17,689 |
From the date of acquisition to 31 December 2011, Top Info contributed £90,659,300 to the Group's revenue and £1,975,294 to the Group's profi t after tax.
The provisional fair values include adjustments to the book values to recognise differences in accounting policies between Top Info and the Group principally relating to revenue recognition, the principal effect of which is a reclassifi cation from trade receivables to inventory.
Included in the £9,610,000 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.
Due to circumstances arising after the acquisition date, the performance criteria required to trigger deferred consideration of €1 million that were previously expected to be achieved, were not met. As a result, the deferred consideration liability recognised has been reversed, with the gain in the income statement disclosed as an exceptional item.
For the year ended 31 December 2011
On 11 April 2011 the Group acquired 100 per cent of the voting shares of HSD Consult GmbH for an initial consideration of €4.9 million and a deferred consideration of €0.5 million dependant on certain performance conditions in 2011. The costs of acquisition amounted to €94,000 and are included in the income statement as an exceptional item. HSD is based in Germany and is an Apple Integrator. The acquisition has been accounted for using the purchase method of accounting. The 2011 consolidated fi nancial statements include the results of HSD for the period from the acquisition date.
The book and provisional fair values of the net assets acquired were as follows:
| 2011 | ||
|---|---|---|
| 2011 | Provisional fair value |
|
| Book value | to Group | |
| £'000 | £'000 | |
| Intangible assets | ||
| Comprising: | ||
| Existing customer relationships | 36 | 402 |
| Other intangibles | 46 | 46 |
| Total intangible assets | 82 | 448 |
| Property, plant and equipment | 146 | 146 |
| Inventories | 940 | 940 |
| Trade and other receivables | 2,140 | 2,140 |
| Cash and short-term deposits | 190 | 190 |
| Trade and other payables | (2,726) | (2,726) |
| Deferred tax liabilities | – | (110) |
| Net assets | 772 | 1,028 |
| Goodwill arising on acquisition | 3,738 | |
| 4,766 | ||
| Discharged by: | ||
| Cash paid | 4,325 | |
| Deferred consideration | 441 | |
| 4,766 | ||
| Cash and cash equivalents acquired | ||
| Cash and short-term deposits | (190) | |
| Cash outfl ow on acquisition | 4,576 |
From the date of acquisition to 31 December 2011, HSD contributed £21,649,488 to the Group's revenue and £251,826 to the Group's profi t after tax.
There were no differences between the provisional fair values and the book values at acquisition other than the recognition of intangible assets at acquisition and the related deferred tax liabilities.
Included in the £3,738,000 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.
The criteria required to trigger the further payment for the HSD business have been met. Accordingly, the full deferred consideration was recognised as at 31 December 2011 in the provisional fair value to the Group.
On 21 July 2011, the Group acquired 80 per cent of Damax AG in Switzerland for an initial consideration of CHF 7.2 million, and agreed to purchase the remaining 20 per cent by mid-2015 for a maximum consideration of CHF 3.2 million dependent upon the achievement of agreed performance criteria over the next three and a half years. Due to the nature of the transaction, that the Group has present access to the benefi ts associated with the remaining 20 per cent of Damax, the Group has recorded this acquisition as a linked transaction, and has accordingly consolidated 100 per cent of the results of Damax since the acquisition date and estimated the fair value of the deferred consideration payable. The costs of acquisition amounted to £221,000 and are included in the income statement as an exceptional item. Damax is based in Switzerland and is a Swiss IT service provider. The acquisition has been accounted for using the purchase method of accounting.
The book and provisional fair values of the net assets acquired were as follows:
| 2011 | ||
|---|---|---|
| Provisional | ||
| 2011 | fair value | |
| Book value | to Group | |
| £'000 | £'000 | |
| Intangible assets | ||
| Comprising: | ||
| Existing customer relationships | – | 4,974 |
| Total intangible assets | – | 4,974 |
| Property, plant and equipment | 49 | 49 |
| Inventories | 26 | 26 |
| Trade and other receivables | 4,303 | 4,303 |
| Cash at bank | 1,491 | 1,491 |
| Trade and other payables | (3,824) | (3,824) |
| Deferred tax liabilities | – | (1,045) |
| Net assets | 2,045 | 5,974 |
| Goodwill arising on acquisition | 996 | |
| 6,970 | ||
| Discharged by: | ||
| Cash | 5,390 | |
| Deferred consideration | 1,580 | |
| 6,970 | ||
| Cash and cash equivalents acquired | |
|---|---|
| Cash and short-term deposits | (1,491) |
| Cash outfl ow on acquisition | 5,479 |
From the date of acquisition to 31 December 2011, Damax contributed £3,825,496 to the Group's revenue and £1,729,624 to the Group's profi t after tax.
There were no differences between the provisional fair values and the book values at acquisition other than the recognition of intangible assets at acquisition and the related deferred tax liabilities.
Included in the £996,000 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.
Based on the performance of the business in 2011 and the forecasted performance for the next three years, management's assessment is that it is highly probable that the maximum deferred consideration will become payable and accordingly it has been included in the provisional fair value to the Group.
If the acquisition of Top Info, HSD and Damax had taken place at the beginning of 2011, Group revenues for the period ended 31 December 2011 would have been £2,895,960,399 and profi t after tax would have been £62,976,417.
For the year ended 31 December 2011
| 2011 £'000 |
2010 £'000 |
|
|---|---|---|
| Inventories | 97,440 | 81,569 |
| 2011 £'000 |
2010 £'000 |
|
|---|---|---|
| Trade receivables | 544,335 | 467,808 |
| Other receivables | 4,633 | 3,325 |
| 548,968 | 471,133 |
For terms and conditions relating to related party receivables, refer to note 33.
Trade receivables are non-interest bearing and are generally on 30–90-day terms.
Note 25 sets out the Group's strategy towards credit risk.
The movements in the provision for impairment of receivables were as follows:
| 2011 | 2010 | |
|---|---|---|
| £'000 | £'000 | |
| At 1 January | 13,100 | 10,977 |
| Charge for the year | 6,429 | 10,120 |
| Utilised | (2,763) | (3,548) |
| Unused amounts reversed | (3,391) | (3,748) |
| Foreign currency adjustment | (171) | (701) |
| At 31 December | 13,204 | 13,100 |
As at 31 December, the ageing analysis of trade receivables is as follows:
| Neither past | Past due but not impaired | ||||||
|---|---|---|---|---|---|---|---|
| Total £'000 |
due nor impaired £'000 |
<30 days £'000 |
30–60 days £'000 |
60–90 days £'000 |
90–120 days £'000 |
>120 days £'000 |
|
| 2011 | 544,335 | 417,354 | 86,669 | 22,870 | 6,127 | 7,258 | 4,057 |
| 2010 | 467,808 | 384,107 | 60,184 | 14,015 | 3,971 | 2,701 | 2,830 |
At 31 December 2011, Trade receivables include receivables sold and fi nanced through factoring transactions of £nil (2010: £191.0 million ) which do not meet IAS 39 criteria for derecognition. These receivables continue to be recognised in full in the Group fi nancial statements even though they are legally subject to the factoring arrangement; a corresponding liability is recorded in the consolidated balance sheet as Factor Financing (see note 21).
| 2011 | 2010 | |
|---|---|---|
| £'000 | £'000 | |
| Cash at bank and in hand | 88,466 | 104,269 |
| Short-term deposits | 39,971 | 55,000 |
| 128,437 | 159,269 |
Cash at bank and in hand earns interest at fl oating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. The fair value of cash and cash equivalents is £128,437,000 (2010: £159,269,000).
Due to strong cash generation over the past few years, the Group is now in a position where it can fi nance its working capital requirements from its cash balance. The Group has not renewed its factoring facilities during 2011, however, the Group retains overdraft facilities where required. The uncommitted overdraft facility available to the Group is £15.9 million at 31 December 2011 (2010: £15.5 million).
For the purposes of the consolidated cash fl ow statement, cash and cash equivalents comprise the following at 31 December:
| 2011 | 2010 | |
|---|---|---|
| £'000 | £'000 | |
| Cash at bank and in hand | 88,466 | 104,269 |
| Short-term deposits | 39,971 | 55,000 |
| Bank overdrafts (note 21) | (1,653) | (3,336) |
| 126,784 | 155,933 |
The Group operates a notional cash pooling facility whereby Group companies have instant access to a facility into which excess funds can be deposited or withdrawn to meet funding requirements. Due to the nature of this facility, all balances related to this arrangement are disclosed within cash at bank and in hand.
| 2011 | 2010 | |
|---|---|---|
| £'000 | £'000 | |
| Trade payables | 308,983 | 258,861 |
| Other payables | 221,970 | 181,929 |
| 530,953 | 440,790 |
Terms and conditions of the above fi nancial liabilities:
For terms and conditions relating to related parties, refer to note 33.
Trade payables are non-interest bearing and are normally settled on net monthly terms.
Other payables, which principally relate to other taxes, social security costs and accruals, are non-interest bearing and have an average term of three months.
For the year ended 31 December 2011
| 2011 | 2010 |
|---|---|
| £'000 | £'000 |
| Current | |
| Bank overdrafts 1,653 |
3,336 |
| Other loans – 'CSF' 1,515 |
2,024 |
| Factor fi nancing – |
16,494 |
| Current obligations under fi nance leases – 'CSF' (note 23a) 9,079 |
16,082 |
| 12,247 | 37,936 |
| Non-current | |
| Other loans – 'CSF' 9 |
1,508 |
| Non-current obligations under fi nance leases – 'CSF' (note 23a) 12,545 |
8,812 |
| 12,554 | 10,320 |
The bank overdrafts are unsecured and are subject to annual review.
The fi nance leases are only secured on the assets that they fi nance. These assets are in the main used to satisfy specifi c customer contracts. There are a small number of assets that are utilised internally.
The other loans are unsecured borrowings to fi nance equipment sold to customers on specifi c contracts or for equipment for own use.
Other loans comprise the following:
| Maturity date | Interest rate | £'000 | |
|---|---|---|---|
| 31 December 2011 | |||
| 2012 | 0%–7.84% | 1,515 | |
| 2013 | 3.95%–4.60% | 3 | |
| 2014 | 3.09%–4.25% | 3 | |
| 2015 | 2.47%–3.34% | 2 | |
| 2016 | 2.33%–2.54% | 1 | |
| 1,524 | |||
| Less: current instalments due on other loans | 1,515 | ||
| 9 | |||
| Maturity date | Interest rate | £'000 | |
| 31 December 2010 | |||
| 2011 | 0%–7.84% | 1,988 | |
| 2012 | 0% | 1,504 | |
| 2013 | 3.95%–4.60% | 34 | |
| 2014 | 3.09%–4.25% | 4 | |
| 2015 | 2.47%–3.34% | 2 | |
| 3,532 | |||
| Less: current instalments due on other loans | 2,024 | ||
| 1,508 |
The table below summarises the maturity profi le of these loans:
| 2011 £'000 |
2010 £'000 |
|
|---|---|---|
| Not later than one year | 1,515 | 2,024 |
| After one year but not more than fi ve years | 9 | 1,508 |
| 1,524 | 3,532 |
The fi nance lease and loan facilities are committed.
Factor fi nancing arrangement in the UK and France were not renewed and the Group had no factor fi nancing facilities at 31 December 2011.
At 31 December 2011, the Group had available £15.9 million of uncommitted overdraft facilities (2010: £15.5 million of uncommitted overdraft and factoring facilities). The Group's committed facility expired in May 2011 and was not renewed.
| 2011 £'000 |
2010 £'000 |
|
|---|---|---|
| Financial instruments at fair value through profi t or loss | ||
| Foreign exchange forward contracts | 296 | 562 |
| Financial instruments at fair value through other comprehensive income | ||
| Cash fl ow hedges | ||
| Foreign exchange forward contracts | (464) | – |
| 168 | 562 |
Financial assets and liabilities at fair value through other comprehensive income refl ect the change in fair value of foreign exchange forward contracts, designated as cash fl ow hedges to hedge the expected contract costs in South African Rand where sales on those contracts are in Sterling, based on highly probable forecast transactions. Financial assets and liabilities through profi t or loss are those foreign exchange contracts that are not designated in hedge relationships as they are intended to reduce the level of foreign currency risk for expected sales and purchases.
Foreign exchange forward contracts measured at fair value through other comprehensive income are designated as hedging instruments in cash fl ow hedges of forecast sales in the United Kingdom and forecast costs in South Africa. These forecast transactions are highly probable.
The Group also enters into other foreign exchange forward contracts with the intention to reduce the foreign exchange risk of expected sales and purchases. When these other contracts are not designated in hedge relationships they are measured at fair value through profi t and loss.
The foreign exchange forward contract balances vary with the level of expected foreign currency costs and changes in the foreign exchange forward rates.
The terms of the foreign currency forward contracts have been negotiated for the expected highly probable forecast transactions to which hedge accounting has been applied. No signifi cant element of hedge ineffectiveness required recognition in the income statement.
The cash fl ow hedges of the forecasted costs were assessed to be highly effective and a net unrealised loss of £464,000 with a deferred tax asset of £116,000 relating to the hedging instruments is included in the other comprehensive income. The amounts retained in the other comprehensive income is expected to mature and affect the income statement in 2012.
For the year ended 31 December 2011
The Group has fi nance leases for various items of plant and machinery; these leases have no terms of renewal or purchase options and escalation clauses. Future minimum lease payments under fi nance leases together with the present value of the net minimum lease payments are as follows:
| 2011 | 2010 | |||
|---|---|---|---|---|
| Minimum Present value |
Minimum | Present value of | ||
| payments £'000 |
of payments £'000 |
payments £'000 |
payments £'000 |
|
| Within one year | 10,017 | 9,079 | 16,843 | 16,082 |
| After one year but not more than fi ve years | 13,078 | 12,116 | 9,343 | 8,812 |
| More than fi ve years | 436 | 429 | – | – |
| 23,531 | 21,624 | 26,186 | 24,894 | |
| Future fi nance charges | (1,907) | (1,292) | ||
| Present value of fi nance lease obligation | 21,624 | 24,894 |
The Group has entered into commercial leases on certain properties, motor vehicles, items of small machinery and IT equipment. There are no restrictions placed upon the Group by entering into these leases.
Future commitments payable under non-cancellable operating leases as at 31 December are as follows:
| 2011 | 2010 | |
|---|---|---|
| £'000 | £'000 | |
| Not later than one year | 44,551 | 36,377 |
| After one year but not more than fi ve years | 74,513 | 63,231 |
| More than fi ve years | 16,210 | 16,294 |
| 135,274 | 115,902 |
During the year the Group entered into commercial leases with customers on certain items of IT equipment. These leases have remaining terms of between one and fi ve years.
Future amounts receivable by the Group under the non-cancellable operating leases as at 31 December are as follows:
| 2011 | 2010 | |
|---|---|---|
| £'000 | £'000 | |
| Not later than one year | 13,336 | 17,138 |
| After one year but not more than fi ve years | 5,893 | 7,887 |
| 19,229 | 25,025 |
The amounts receivable are directly related to the fi nance lease obligations detailed in note 21.
| Property | |
|---|---|
| provisions | |
| £'000 | |
| At 1 January 2011 | 13,393 |
| Arising during the year | 573 |
| Utilised | (1,131) |
| Movement in discount rate | (951) |
| Exchange adjustment | (136) |
| At 31 December 2011 | 11,748 |
| 13,393 | |
|---|---|
| Non-current 2010 | 10,749 |
| Current 2010 | 2,644 |
| 11,748 | |
| Non-current 2011 | 9,059 |
| Current 2011 | 2,689 |
Assumptions used to calculate the property provisions are based on the market value of the rental charges plus any contractual dilapidation expenses on empty properties and the Directors' best estimates of the likely time before the relevant leases can be reassigned or sublet, which ranges between one and seven years. The provisions in relation to the UK properties are discounted at a rate based upon the Bank of England base rate. Those in respect of the European operations are discounted at a rate based on Euribor.
An explanation of the Group's fi nancial instrument risk management objectives, policies and strategies are set out in the Finance Director's Review on pages 16 to 19.
The Group principally manages credit risk through management of customer credit limits. The credit limits are set for each customer based on the creditworthiness of the customer and the anticipated levels of business activity. These limits are initially determined when the customer account is fi rst set up and are regularly monitored thereafter. The balance of trade receivables relates to customers for whom there is no recent history of default. In determining the recoverability of the trade receivables, the Group considers any change in the credit quality of the trade receivables from the date the credit was initially granted up to the reporting date. The maximum exposure on trade receivables, as at the reporting date, is their carrying value. In France, credit risk is mitigated through a credit insurance policy which applies to non-Government customers and provides insurance for approximately 50 per cent of the relevant credit risk exposure.
With respect to credit risk arising from the other fi nancial assets of the Group and forward currency contracts, the Group's exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to their carrying amount.
There are no signifi cant concentrations of credit risk within the Group.
For the year ended 31 December 2011
The Group fi nances its operations through a mixture of retained profi ts, cash and short-term deposits, bank borrowings and fi nance leases and loans for certain customer contracts. The Group's bank borrowings, other facilities and deposits are at fl oating rates. No interest rate derivative contracts have been entered into. When long-term borrowings are utilised, the Group's policy is to maintain these borrowings at fi xed rates to limit the Group's exposure to interest rate fl uctuations.
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 fi nancial instruments carried within the Group's fi nancial statements is not materially different from their carrying amount.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Group's profi t before tax (through the impact on fl oating rate borrowings). There is no impact on the Group's equity.
| Change in basis points £'000 |
Effect on profi t before tax £'000 |
|
|---|---|---|
| 2011 | ||
| Sterling | +25 | 132 |
| Euro | +25 | 104 |
| 2010 | ||
| Sterling | +25 | 236 |
| Euro | +25 | 38 |
The impact of a reasonably possible decrease to the same range shown in the table would result in an opposite impact on the profi t before tax of the same magnitude.
At 31 December 2011 the Group held foreign exchange contracts as hedges of an inter-company loan and future expected payments to suppliers. The exchange contracts are being used to reduce the exposure to foreign exchange risk. The terms of these contracts are detailed below:
| Buy currency |
Sell currency |
Currency value of contracts |
Maturity dates |
Contract rates |
|
|---|---|---|---|---|---|
| UK | Sterling | Euros | £500,000 | Jan 12 | 0.8557 |
| US Dollars | Sterling | \$13,656,870 | Jan–Apr 12 | 1.5400–1.6098 | |
| US Dollars | Euros | \$1,695,465 | Mar 12 | 1.3988 | |
| SA Rand | Sterling | ZAR88,992,000 | Jan–Dec 12 | 11.4325–12.5270 | |
| Germany | US Dollars | Euros | \$61,300,000 | Jan–Jun 12 | 1.294–1.444 |
| Buy currency |
Sell currency |
Currency value of contracts |
Maturity dates |
Contract rates |
|
|---|---|---|---|---|---|
| UK | Euros | Sterling | €1,100,000 | Feb 11 | 1.1628 |
| US Dollars | Sterling | \$12,623,564 | Jan–Mar 11 | 1.5572–1.6189 | |
| Germany | US Dollars | Euros | \$75,468,000 | Jan–Aug 11 | 1.228–1.417 |
| Euros | US Dollars | €5,724,727 | Jan–Apr 11 | 1.279–1.319 |
The gains or losses arising from changes in the fair value of the above contracts are detailed in note 22.
The majority of the transactions in each of the Group's geographical segments are denominated in the functional currency of that segment. There are, however, a limited number of transactions where foreign currency exchange risk exists. In these instances the Group enters into forward currency contracts, as shown in the above table, in order to mitigate such risk. At the end of the year the fair value of the outstanding contracts was a liability of £168,000 (2010: asset of £562,000).
Other than differences arising from the translation of results of operations outside of the Group's functional currency, reasonably foreseeable movements in the exchange rates of +10 per cent or -10 per cent would not have a material impact on the Group's profi t before tax or equity.
The table below summarises the maturity profi le of the Group's fi nancial liabilities as at 31 December based on contractual undiscounted payments:
| On demand £'000 |
<3 months £'000 |
3–12 months £'000 |
1–5 years £'000 |
>5 years £'000 |
Total £'000 |
|
|---|---|---|---|---|---|---|
| Year ended 31 December 2011 | ||||||
| Financial liabilities | 2,141 | 3,005 | 8,084 | 13,091 | 436 | 26,757 |
| Property provisions | – | 384 | 2,347 | 8,741 | 746 | 12,218 |
| Trade and other payables | – | 530,953 | – | – | – | 530,953 |
| 2,141 | 534,342 | 10,431 | 21,832 | 1,182 | 569,928 | |
| On demand £'000 |
<3 months £'000 |
3–12 months £'000 |
1–5 years £'000 |
>5 years £'000 |
Total £'000 |
|
| Year ended 31 December 2010 | ||||||
| Financial liabilities | 20,498 | 5,157 | 13,033 | 10,884 | – | 49,572 |
| Property provisions | – | – | 2,688 | 9,348 | 1,972 | 14,008 |
| Trade and other payables | – | 440,790 | – | – | – | 440,790 |
| 20,498 | 445,947 | 15,721 | 20,232 | 1,972 | 504,370 | |
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 defi ned as follows:
At 31 December 2011 the Group had a current asset investment, which was measured at Level 2 fair value subsequent to initial recognition, to the value of £10.0 million (31 December 2010: £nil).
At 31 December 2011 the Group had forward currency contracts, which were measured at Level 2 fair value subsequent to initial recognition, to the value of a liability of of £168,000 (31 December 2010: asset of £562,000).
The realised losses from forward currency contracts in the period to 31 December 2011 of £730,000 (2010: loss of £164,000), are offset by broadly equivalent realised gains on the related underlying transactions.
For the year ended 31 December 2011
Computacenter's approach to capital management is to ensure that the Group has a strong capital base to support the development of the business and to maintain a strong credit rating, whilst aiming to maximise shareholder value.
Consistent with the Group's aim to maximise return to shareholders, the dividend policy is to maintain a dividend cover of between 2–2.5 times. In 2011 the cover was 2.5 times, on a pre-exceptional basis (2010: 2.5 times).
The Group's capital base is primarily utilised to fi nance its fi xed assets and working capital requirements. The Group intends to optimise the use of working capital and improve its cash fl ow. As a consequence, the UK has sourced an increasing proportion of its product business via distributors in order to reduce the working capital requirements of the business.
Capital is allocated across the Group in order to minimise the Group's exposure to exchange rates. Each country fi nances its own working capital requirements, typically resulting in borrowings in France with cash on deposit in the UK and Germany. During 2011, a notional cash pooling arrangement was introduced, which Group companies can access and allows the Group to pool its funds.
In certain circumstances, the Group enters into customer contracts that are fi nanced by leases, which are secured only on the assets that they fi nance, or loans. Whilst the outstanding amounts of this 'customer specifi c fi nancing' ('CSF') are included within net funds for statutory reporting purposes, the Group excludes this 'customer specifi c fi nancing' when managing the net funds of the business as this outstanding fi nancing is matched by committed future revenues. These fi nancing facilities, which are committed, are thus outside of the normal working capital requirements of the Group's product resale and services activities.
In certain circumstances, the Group deposits its funds in short-term investments that do not fulfi ll the criteria to be classifi ed as cash and cash equivalents. The Group considers these deposits when managing the net funds of the business, and accordingly includes these deposits within net funds excluding CSF.
The measures of net funds that the Group monitors are:
| 2011 | 2010 | |
|---|---|---|
| £'000 | £'000 | |
| Net funds excluding CSF | 136,784 | 139,439 |
| Customer specifi c fi nancing | (23,148) | (28,426) |
| Net funds | 113,636 | 111,013 |
The net funds (excluding CSF) reduced marginally from £139.4 million to £136.8 million by the end of the year. In the year, the outfl ow of cash included circa £40 million on specifi c strategic cash investments, such as the remaining expenditure on our ERP implementations in Germany and the UK, the purchase of a new freehold facility for our RDC recycling business for approximately £11 million, and net cash outfl ow on acquisitions of £25.3 million. The Group was able to fi nance both these projects and its working capital requirements from its existing cash base. However, the Group continued to benefi t from the extension of a temporary improvement in credit terms with a signifi cant vendor, equivalent to £45 million at 31 December 2011 (2010: £38 million).
Each operating country manages working capital in line with Group policies. The key components of working capital, i.e. trade receivables, inventory and trade payables, are managed in accordance with an agreed number of days targeted in the budget process, in order to ensure effi cient capital usage.
An important element of the process of managing capital effi ciently is to ensure that each operating country rewards behaviour at an Account Manager and Account Director level to minimise working capital, at a transactional level. This is achieved by increasing commission payments for early payment by customers and reduced commission payments for late payment by customers, which encourages appropriate behaviour.
The Group regularly reviews the adequacy of its facilities against any foreseeable peak borrowing requirement, and as a result of the strong cash position, has allowed certain bank and factoring facilities to expire during 2010 and 2011. At 31 December 2011, the Group had available £15.9 million of uncommitted overdraft facilities (2010: £15.5 million).
In accordance with the Companies Act 2006, the Company no longer has an authorised share capital. The Company's Articles of Association has been amended to refl ect this change.
| Issued and fully paid | No. '000 | £'000 |
|---|---|---|
| At 1 January 2010 | 153,099 | 9,186 |
| Purchase of own ordinary shares for cancellation | (115) | (7) |
| Ordinary shares issued during the year for cash | 109 | 8 |
| Ordinary shares issued during the year for cash on exercise of share options | 787 | 46 |
| At 31 December 2010 | 153,880 | 9,233 |
| Ordinary shares issued during the year for cash on exercise of share options | 8 | – |
| At 31 December 2011 | 153,888 | 9,233 |
The holders of A ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the general meetings of the Company. On a winding up of the Company, holders of A ordinary shares may be entitled to the residual assets of the Company.
The Company has a number of share option schemes under which options to subscribe for the Company's shares have been granted to certain executives and senior employees (note 28).
The share premium account is used to record the aggregate amount or value of premiums paid when the Company's shares are issued/redeemed at a premium.
The capital redemption reserve is used to maintain the Company's capital following the purchase and cancellation of its own shares. During the year the Company repurchased nil of its own shares for cancellation (2010: 115,371).
Own shares held comprise the following:
Shares in the parent undertaking comprise 4,676,785 (2010: 5,277,811) 6 pence ordinary shares of Computacenter plc purchased by the Computacenter Employee Share Ownership Plan ('the Plan'). The number of shares held represents 3.0 per cent (2010: 3.4 per cent) of the Company's issued share capital.
None of these shares were awarded to executives of the Company under the Computacenter (UK) Limited Cash Bonus and Share Plan. Options previously awarded are to be held on behalf of employees and former employees of Computacenter (UK) Limited and their dependants, excluding Jersey residents. The distribution of these shares is dependant upon the trustee holding them on the employees' behalf for a restrictive period of three years.
Since 31 December 2002 the defi nition of benefi ciaries under the ESOP Trust has been expanded to include employees who have been awarded options to acquire ordinary shares of 6 pence each in Computacenter plc under the other employee share plans of the Computacenter Group, namely the Computacenter Services Group plc Approved Executive Share Option Plan, the Computacenter Employee Share Option Scheme 1998, the Computacenter Services Group plc Unapproved Executive Share Option Scheme, the Computacenter Performance Related Share Option Scheme 1998, the Computacenter Sharesave Plus Scheme and any future similar share ownership schemes.
All costs incurred by the Plan are settled directly by Computacenter (UK) Limited and charged in the accounts as incurred.
The Plan Trustees have waived the dividends receivable in respect of 4,676,785 (2010: 5,277,811) shares that it owns which are all unallocated shares.
For the year ended 31 December 2011
The total shares held are 105,121 (2010: 115,530), which represents 0.1 per cent (2010: 0.1 per cent) of the Company's issued share capital. All of these shares will continue to be held by the Quest until such time as the Sharesave options granted against them are exercised. The market value of these shares at 31 December 2011 was £351,735 (2010: £448,256). The Quest Trustees have waived dividends in respect of all of these shares. During the year the Quest subscribed for 193,213 (2010: 407,023) 6 pence Ordinary Shares.
The foreign currency translation reserve is used to record exchange differences arising from the translation of the fi nancial statements of foreign subsidiaries.
During the year, options were exercised with respect to 189,000 (2010: 267,000) 6 pence ordinary shares at a nominal value of £11,340 (2010: £16,020) at an aggregate premium of £523,530 (2010: £674,980).
Under the Computacenter Employee Share Option Scheme 1998 and the Computacenter Services Group Executive Share Scheme, options in respect of 9,000 (2010: 285,000) shares lapsed.
The numbers of shares under options outstanding at the year-end comprise:
| Date of grant | Exercisable between | Exercise price | 2011 Number outstanding |
2010 Number outstanding |
|---|---|---|---|---|
| 10/04/2002 | 10/04/2005–09/04/2012 | 322.00p | 112,316 | 168,816 |
| 10/04/2002 | 10/04/2005–09/04/2012 | 331.00p | 10,000 | 35,000 |
| 21/03/2003 | 21/03/2006–20/03/2013 | 266.50p | 35,000 | 42,500 |
| 02/04/2004 | 02/04/2007–01/04/2014 | 424.00p | 30,000 | 39,000 |
| 24/10/2006 | 24/10/2009–23/10/2016 | 250.00p | 1,362,800 | 1,462,800 |
| 17/04/2007 | 17/04/2010–16/04/2017 | 285.00p | 225,200 | 225,200 |
| 1,775,316 | 1,973,316 |
Please refer to the information given in the Directors' interest in share incentive schemes table in the Directors' Remuneration Report on page 40 for details of the vesting conditions attached to the Executive share options.
The following table illustrates the number ('No.') and weighted average exercise prices ('WAEP') of share options for the Executive Share Option Scheme:
| 2011 No. |
2011 WAEP |
2010 No. |
2010 WAEP |
|
|---|---|---|---|---|
| Executive share option scheme | ||||
| Outstanding at the beginning of the year1 | 1,973,316 | £2.65 | 2,525,316 | £2.72 |
| Forfeited during the year | (9,000) | £4.24 | (285,000) | £3.34 |
| Exercised during the year2 | (189,000) | £2.83 | (267,000) | £2.59 |
| Outstanding at the end of the year1 | 1,775,316 | £2.95 | 1,973,316 | £2.65 |
| Exercisable at the end of the year | 1,775,316 | £2.95 | 1,973,316 | £2.65 |
The weighted average remaining contractual life for the share options outstanding as at 31 December 2011 is 4.27 years (2010: 5.27 years).
Notes
2 The weighted average share price at the date of exercise for the options exercised is £4.56 (2010: £3.32).
1 Included within this balance are options over 122,316 (2010: 203,816) shares that have not been accounted for under IFRS 2 as the options were granted on or before 7 November 2002. These options have not been subsequently modifi ed and therefore do not need to be accounted for in accordance with IFRS 2.
Under the Computacenter Performance Related Share Option scheme, options granted will be subject to certain performance conditions as described in the Directors' Remuneration Report.
During the year nil options were awarded (2010: nil) and no options lapsed (2010: nil).
At 31 December 2011 the number of shares under outstanding options was as follows:
| 2011 | 2010 | |||
|---|---|---|---|---|
| Number | Number | |||
| Date of grant | Exercisable between | Exercise price | outstanding | outstanding |
| 10/04/2002 | 10/04/2005–09/04/2012 | 322.00p | 189,440 | 189,440 |
The following table illustrates the number ('No.') and weighted average exercise prices ('WAEP') of share options for the Performance Related Share Option Scheme.
| 2011 No. |
2011 WAEP |
2010 No. |
2010 WAEP |
|
|---|---|---|---|---|
| Computacenter performance related share option scheme | ||||
| Outstanding at the beginning and end of the year1 | 189,440 | £3.22 | 189,440 | £3.22 |
| Exercisable at the end of the year | 189,440 | £3.22 | 189,440 | £3.22 |
Notes
1 Included within this balance are options over 189,440 (2010: 189,440) shares that have not been accounted for under IFRS 2 as the options were granted on or before 7 November 2002. These options have not been subsequently modifi ed and therefore do not need to be accounted for in accordance with IFRS 2.
The weighted average remaining contractual life of the share options outstanding as at 31 December 2011 is 0.3 years (2010: 1.3 years).
Under the Computacenter LTIP Performance Share Plan, shares granted will be subject to certain performance conditions as described in the Directors' Remuneration Report.
During the year 1,086,024 (2010: 1,195,677) shares were awarded, 1,273,722 (2010: 850,791) were exercised and 462,342 (2010: 149,747) lapsed.
At 31 December 2011 the number of shares outstanding was as follows:
| Date of grant | Maturity date | Share price at date of grant |
2011 Number outstanding |
2010 Number outstanding |
|---|---|---|---|---|
| 17/03/2008 | 01/04/2011 | 180.00p | – | 1,161,872 |
| 13/03/2009 | 13/03/2012 | 126.50p | 1,173,054 | 1,282,117 |
| 13/03/2009 | 13/03/2011 | 126.50p | – | 129,952 |
| 20/03/2009 | 20/03/2012 | 123.00p | 1,260,000 | 1,500,000 |
| 15/03/2010 | 15/03/2013 | 315.80p | 1,093,374 | 1,175,171 |
| 17/03/2011 | 17/03/2014 | 423.00p | 1,022,148 | – |
| 17/03/2011 | 17/03/2016 | 423.00p | 50,496 | – |
| 4,599,072 | 5,249,112 |
The weighted average share price at the date of exercise for the options exercised is £4.18 (2010: £3.12).
The weighted average remaining contractual life of the options outstanding as at 31 December 2011 is 1.2 years (2010: 1.9 years).
For the year ended 31 December 2011
The Company operates a Sharesave Scheme which is available to all employees and full time Executive Directors of the Company and its subsidiaries who have worked for a qualifying period. All options granted under this scheme are satisfi ed at exercise by way of a transfer of shares from the Computacenter Qualifying Employee Share Trust. During the year 583,927 (2010: 1,487,532) options were granted with a fair value of £732,838 (2010: £2,286,768).
Under the scheme the following options have been granted and are outstanding at the year-end:
| 2011 | 2010 | |||
|---|---|---|---|---|
| Number | Number | |||
| Date of grant | Exercisable between | Share price | outstanding | outstanding |
| October-2005 | 01/12/2010–31/05/2011 | 222.00p | – | 10,731 |
| October-2006 | 01/12/2011–31/05/2012 | 254.00p | 18,156 | 61,565 |
| October-2007 | 01/12/2010–31/05/2011 | 178.00p | – | 155,840 |
| October-2007 | 01/12/2012–31/05/2013 | 178.00p | 494,127 | 529,609 |
| October-2009 | 01/12/2012–31/05/2013 | 320.00p | 322,375 | 368,291 |
| October-2009 | 01/12/2014–31/05/2015 | 320.00p | 133,026 | 146,629 |
| October-2010 | 01/12/2013–31/05/2014 | 286.00p | 532,892 | 592,900 |
| October-2010 | 01/12/2015–31/05/2016 | 258.00p | 822,044 | 893,243 |
| October-2011 | 01/12/2014–31/05/2015 | 369.00p | 256,405 | – |
| October-2011 | 01/12/2016–31/05/2017 | 332.00p | 326,619 | – |
| 2,905,644 | 2,758,808 |
The following table illustrates the No. and WAEP of share options for the Sharesave scheme:
| 2011 | 2011 | 2010 | 2010 | |
|---|---|---|---|---|
| No. | WAEP | No. | WAEP | |
| Sharesave scheme | ||||
| Outstanding at the beginning of the year | 2,758,808 | £2.55 | 2,595,964 | £2.21 |
| Granted during the year | 583,927 | £3.48 | 1,487,532 | £2.69 |
| Forfeited during the year | (225,893) | £2.66 | (305,699) | £2.63 |
| Exercised during the year1 | (211,198) | £2.00 | (1,018,989) | £1.85 |
| Outstanding at the end of the year | 2,905,644 | £2.77 | 2,758,808 | £2.55 |
| Exercisable at the end of the year | 18,156 | £2.54 | 166,571 | £1.81 |
Notes
1 The weighted average share price at the date of exercise for the options exercised is £4.15 (2010: £3.63).
The weighted average remaining contractual life of the options outstanding as at 31 December 2011 is 3.2 years (2010: 3.5 years).
The fair value of the Executive Share Option Scheme, the Performance Related Share Option Scheme, the LTIP Performance Share Plan and Sharesave Scheme plans are estimated as at the date of grant using the Black-Scholes valuation model. The following tables give the assumptions made during the year ended 31 December 2011 and 31 December 2010:
2011
| LTIP performance |
LTIP performance |
LTIP performance |
SAYE | SAYE | |
|---|---|---|---|---|---|
| Nature of the arrangement | share plan | share plan | share plan | scheme | scheme |
| Date of grant | 17/03/2011 | 17/03/2011 | 17/03/2011 | 28/10/2011 | 28/10/2011 |
| Number of instruments granted | 984,511 | 50,496 | 51,017 | 256,405 | 327,522 |
| Exercise price | £nil | £nil | £nil | £3.69 | £3.32 |
| Share price at date of grant | £4.23 | £4.23 | £4.23 | £3.85 | £3.85 |
| Contractual life (years) | 3 | 5 | 2 | 3 | 5 |
| See notes 8 and 9 on page 40 in the Directors' Remuneration |
See note 9 on page 40 in the Directors' Remuneration |
See note 8 on page 40 in the Directors' Remuneration |
Three-year service period and savings |
Five-year service period and savings |
|
| Vesting conditions | report | report | report | requirement | requirement |
| Expected volatility | n/a | n/a | n/a | 49.7% | 49.0% |
| Expected option life at grant date (years) | 3 | 5 | 2 | 3 | 5 |
| Risk-free interest rate | n/a | n/a | n/a | 1.43% | 1.43% |
| Dividend yield | 3.12% | 3.12% | 3.12% | 3.69% | 3.69% |
| Fair value per granted instrument determined at | |||||
| grant date | £3.85 | £3.97 | £3.63 | £1.12 | £1.36 |
| 2010 | |||||
| Nature of the arrangement | performance share plan |
LTIP LTIP performance share plan |
SAYE scheme |
SAYE scheme |
|
| Date of grant | 15/03/10 | 15/03/10 | 29/10/10 | 29/10/10 | |
| Number of instruments granted | 1,075,637 | 120,040 | 593,109 | 894,423 | |
| Exercise price | £nil £nil |
£2.86 | £2.58 | ||
| Share price at date of grant | £3.16 | £3.16 | £3.66 | £3.66 | |
| Contractual life (years) | 3 2 |
3 | 5 | ||
| See note 8 on page 40 in the Directors' Remuneration |
See note 8 on page 40 in the Directors' Remuneration |
Three-year service period and savings |
Five-year service period and savings |
||
| Vesting conditions | report | report | requirement | requirement | |
| Expected volatility | n/a n/a |
56.0% | 49.10% | ||
| Expected option life at grant date (years) | 3 2 |
3 | 5 | ||
| Risk-free interest rate | n/a n/a |
1.88% | 1.88% | ||
| Dividend yield | 3.48% | 3.48% | 3.01% | 3.01% | |
| Fair value per granted instrument determined at grant date | £2.83 | £2.83 | £1.47 | £1.58 |
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur.
The expected volatility refl ects the assumption that the recent historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.
No other features of the options granted were incorporated into the measurement of fair value.
For the year ended 31 December 2011
| Total customer specifi c fi nancing Net funds |
(28,426) 111,013 |
19,386 18,513 |
(14,528) (14,528) |
420 (1,362) |
(23,148) 113,636 |
|---|---|---|---|---|---|
| Customer specifi c other loans | (3,532) | 1,971 | – | 37 | (1,524) |
| Customer specifi c fi nance leases | (24,894) | 17,415 | (14,528) | 383 | (21,624) |
| Net funds excluding customer specifi c fi nancing | 139,439 | (873) | – | (1,782) | 136,784 |
| Factor fi nancing | (16,494) | 16,500 | – | (6) | – |
| Current asset investment | – | 10,000 | – | – | 10,000 |
| Cash and cash equivalents | 155,933 | (27,373) | – | (1,776) | 126,784 |
| Bank overdraft | (3,336) | 1,641 | – | 42 | (1,653) |
| Cash and short-term deposits | 159,269 | (29,014) | – | (1,818) | 128,437 |
| At 1 January 2011 £'000 |
Cash fl ows in year £'000 |
Non-cash fl ow £'000 |
Exchange differences £'000 |
At 31 December 2011 £'000 |
| At 1 January 2010 £'000 |
Cash fl ows in year £'000 |
Non-cash fl ow £'000 |
Exchange differences £'000 |
At 31 December 2010 £'000 |
|
|---|---|---|---|---|---|
| Cash and short-term deposits | 108,017 | 52,452 | – | (1,200) | 159,269 |
| Bank overdraft | (3,063) | (383) | – | 110 | (3,336) |
| Cash and cash equivalents | 104,954 | 52,069 | – | (1,090) | 155,933 |
| Other loans and leases non-CSF | (3,705) | 3,705 | – | – | – |
| Factor fi nancing | (14,846) | (1,568) | – | (80) | (16,494) |
| Net funds excluding customer specifi c fi nancing | 86,403 | 54,206 | – | (1,170) | 139,439 |
| Customer specifi c fi nance leases | (42,567) | 20,641 | (3,468) | 500 | (24,894) |
| Customer specifi c other loans | (6,488) | 2,960 | – | (4) | (3,532) |
| Total customer specifi c fi nancing | (49,055) | 23,601 | (3,468) | 496 | (28,426) |
| Net funds | 37,348 | 77,807 | (3,468) | (674) | 111,013 |
The adjusted management cash fl ow has been provided to explain how management view the cash performance of the business. The primary differences to this presentation compared to the statutory cash fl ow statement are as follows:
| 2011 | 2010 | |
|---|---|---|
| £'000 | £'000 | |
| Adjusted profi t before taxation | 74,219 | 66,053 |
| Net fi nance income | (1,690) | (1,626) |
| Depreciation and amortisation | 20,596 | 19,506 |
| Share-based payment | 2,476 | 2,620 |
| Working capital movements | 281 | 21,358 |
| Other adjustments | (358) | 293 |
| Adjusted operating cash infl ow | 95,524 | 108,204 |
| Net interest received | 1,268 | 1,204 |
| Income taxes paid | (14,384) | (11,281) |
| Capital expenditure and disposals | (33,186) | (25,258) |
| Acquisitions and disposals | (25,340) | – |
| Equity dividends paid | (21,169) | (16,984) |
| Cash infl ow before fi nancing | 2,713 | 55,885 |
| Financing | ||
| Proceeds from issue of shares | 20 | 822 |
| Purchase of own shares | (3,606) | (2,501) |
| (Decrease)/increase in net funds excluding CSF in the period | (873) | 54,206 |
| (Decrease)/increase in net funds excluding CSF | (873) | 54,206 |
| Effect of exchange rates on net funds excluding CSF | (1,782) | (1,170) |
| Net funds excluding CSF at beginning of period | 139,439 | 86,403 |
| Net funds excluding CSF at end of period | 136,784 | 139,439 |
For the year ended 31 December 2011
At 31 December 2011 and 31 December 2010 the Group held no signifi cant commitments for capital expenditure.
The Group has a defi ned contribution pension plan, covering substantially all of its employees in the UK. The amount recognised as an expense for this plan is detailed in note 6.
During the year the Group entered into transactions, in the ordinary course of business, with related parties. Transactions entered into are as described below:
Biomni provides the Computacenter e-procurement system used by many of Computacenter's major customers. An annual fee has been agreed on a commercial basis for use of the software for each installation. Both PJ Ogden and PW Hulme are Directors of, and have a material interest in, Biomni Limited.
The table below provides the total amount of transactions that have been entered into with related parties for the relevant fi nancial year:
| Sales to | Purchases | Amounts | Amounts | |
|---|---|---|---|---|
| related | from related | owed by | owed to | |
| parties | parties | related parties | related parties | |
| £'000 | £'000 | £'000 | £'000 | |
| Biomni Limited | 24 | 519 | – | 5 |
Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made on terms equivalent to those that prevail in arm's length transactions. Outstanding balances at the year-end are unsecured and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables. The Group has not recognised any provision for doubtful debts relating to amounts owed by related parties. This assessment is undertaken each fi nancial year through examining the fi nancial position of the related party and the market in which the related party operates.
The Board of Directors is identifi ed as the Group's key management personnel. Please refer to the information given in the Directors' remuneration tables in the Directors' Remuneration Report on pages 36 and 42 for details of compensation given to the Group's key management personnel. A summary of the compensation of key management personnel is provided below:
| 2011 £'000 |
2010 £'000 |
|---|---|
| Short-term employee benefi ts 1,758 |
1,822 |
| Social security costs 387 |
353 |
| Share based payment transactions 1,079 |
974 |
| Pension costs 12 |
12 |
| Total compensation paid to key management personnel 3,236 |
3,161 |
The interest of the key management personnel in the Group's share incentive schemes are disclosed in the Directors' Remuneration Report on page 40.
The Directors are responsible for preparing the Annual Report and the fi nancial statements in accordance with applicable law and United Kingdom Generally Accepted Accounting Practice.
Company law requires the Directors to prepare fi nancial statements for each fi nancial year which give a true and fair view of the state of affairs of the Company and of the profi t or loss of the Company for that period. In preparing those fi nancial statements, the Directors are required to:
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the fi nancial position of the Company and to enable them to ensure that the fi nancial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and fi nancial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of fi nancial statements may differ from legislation in other jurisdictions.
We have audited the parent company fi nancial statements of Computacenter plc for the year ended 31 December 2011 which comprise the Company Balance Sheet and the related notes 1 to 12. The fi nancial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
As explained more fully in the Directors' Responsibilities Statement set out on page 93, the Directors are responsible for the preparation of the Parent Company fi nancial statements and for being satisfi ed that they give a true and fair view. Our responsibility is to audit and express an opinion on the Parent Company fi nancial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
An audit involves obtaining evidence about the amounts and disclosures in the fi nancial statements suffi cient to give reasonable assurance that the fi nancial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Parent Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of signifi cant accounting estimates made by the Directors; and the overall presentation of the fi nancial statements.
In addition, we read all the fi nancial and non-fi nancial information in the Annual Report to identify material inconsistencies with the audited fi nancial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
In our opinion the Parent Company fi nancial statements:
In our opinion:
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
We have reported separately on the Group fi nancial statements of Computacenter plc for the year ended 31 December 2011.
for and on behalf of Ernst & Young LLP, Statutory Auditor London 12 March 2012
As at 31 December 2011
| Note | 2011 £'000 |
2010 £'000 |
|
|---|---|---|---|
| Fixed assets | |||
| Intangible assets | 2 | 101,721 | 110,221 |
| Tangible assets | 3 | 23,715 | 25,331 |
| Investments | 4 | 188,235 | 161,943 |
| 313,671 | 297,495 | ||
| Current assets | |||
| Debtors | 5 | 90,126 | 90,126 |
| Cash at bank and in hand | 265 | 791 | |
| 90,391 | 90,917 | ||
| Creditors: Amounts falling due within one year | 6 | 159,638 | 113,569 |
| Net current liabilities | (69,247) | (22,652) | |
| Total assets less current liabilities | 244,424 | 274,843 | |
| Creditors: amounts falling due after more than one year | 7 | 18,535 | 26,704 |
| Provisions for liabilities and charges | 8 | 109 | 246 |
| Total assets less liabilities | 225,780 | 247,893 | |
| Capital and reserves | |||
| Called up share capital | 9 | 9,233 | 9,233 |
| Share premium account | 9 | 3,717 | 3,697 |
| Capital redemption reserve | 9 | 74,957 | 74,957 |
| Merger reserve | 9 | 55,990 | 55,990 |
| Own shares held | 9 | (9,001) | (8,185) |
| Profi t and loss account | 9 | 90,884 | 112,201 |
| Equity shareholders' funds | 225,780 | 247,893 |
Approved by the Board on 12 March 2012
MJ Norris FA Conophy
Chief Executive Finance Director
For the year ended 31 December 2011
The fi nancial statements of Computacenter plc were approved for issue in accordance with a resolution of the Directors on 12 March 2012. The balance sheet was signed on behalf of the Board by MJ Norris and FA Conophy.
The fi nancial statements are prepared under the historical cost convention and in accordance with the applicable UK Accounting Standards.
No profi t and loss account is presented for the Company as permitted by section 408 of the Companies Act 2006. The profi t after tax for the Company was £165,674 (2010: £51,306,000). There are no other recognised gains or losses other than the profi t for the year.
The Company has taken advantage of the exemption in paragraph 2D(b) of 'FRS 29 Financial Instruments: Disclosure' and has not disclosed information required by that standard, as the Group's consolidated fi nancial statements, in which the Company is included, provide equivalent disclosures for the Group under 'IFRS 7 Financial Instruments: Disclosures'.
Licences purchased in respect of intellectual property are capitalised, classifi ed as an intangible asset on the balance sheet and amortised on a straight-line basis over the period of the license, normally 20 years.
Freehold land is not depreciated. Depreciation is provided on all other tangible fi xed assets at rates calculated to write off the cost, less estimated residual value, of each asset evenly over its expected useful life, as follows:
| Freehold buildings | 25 years |
|---|---|
Fixed asset investments are shown at cost less provision for impairment. In addition, subsequent to the adoption of UITF Abstract 41, investments in subsidiaries also include the FRS 20 cost of share-based payments.
The carrying values of assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. All differences are taken to the profi t and loss account.
The expense for share-based payments is recognised in the subsidiary companies employing the relevant employees. The Company records a corresponding increase in its investments in subsidiaries with a credit to equity which is equivalent to the FRS 20 cost in the subsidiary undertakings.
Corporation tax payable is provided on taxable profi ts at the current tax rate. Where Group relief is surrendered from other subsidiaries in the Group, the Company is required to pay to the surrendering company an amount equal to the loss surrendered multiplied by the current tax rate.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more, or a right to pay less, tax in the future have occurred at the balance sheet date.
Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
| Intellectual | |
|---|---|
| property | |
| £'000 | |
| Cost | |
| At 1 January 2011 and 31 December 2011 | 169,737 |
| Amortisation | |
| At 1 January 2011 | 59,516 |
| Charged in the year | 8,500 |
| At 31 December 2011 | 68,016 |
| Net book value |
| At 31 December 2011 | 101,721 |
|---|---|
| At 31 December 2010 | 110,221 |
| Freehold land | |
|---|---|
| and buildings | |
| Cost | £'000 |
| At 1 January 2011 and 31 December 2011 | 42,350 |
| Depreciation | |
| At 1 January 2011 | 17,019 |
| Charged in the year | 1,616 |
| At 31 December 2011 | 18,635 |
| Net book value | |
| At 31 December 2011 | 23,715 |
| At 31 December 2010 | 25,331 |
| Investments | Loans to | |||
|---|---|---|---|---|
| in subsidiary | subsidiary | |||
| undertakings | undertakings | Investment | Total | |
| £'000 | £'000 | £'000 | £'000 | |
| Cost | ||||
| At 1 January 2011 | 231,107 | 2,754 | 25 | 233,886 |
| Additions | 24,000 | – | 500 | 24,500 |
| Share-based payments | 2,476 | – | – | 2,476 |
| At 31 December 2011 | 257,583 | 2,754 | 525 | 260,862 |
| Amounts provided | ||||
| At 1 January 2011 | 69,164 | 2,754 | 25 | 71,943 |
| Provided during the year | 684 | – | – | 684 |
| At 31 December 2011 | 69,848 | 2,754 | 25 | 72,627 |
| Net book value | ||||
| At 31 December 2011 | 187,735 | – | 500 | 188,235 |
| At 31 December 2010 | 161,943 | – | – | 161,943 |
Details of the principal investments at 31 December in which the Company holds more than 20 per cent of the nominal value of ordinary share capital are given in the Group accounts in note 15.
For the year ended 31 December 2011
| 2011 £'000 |
2010 £'000 |
|
|---|---|---|
| Amount owed by subsidiary undertaking | 90,000 | 90,000 |
| Other debtors | 126 | 126 |
| 90,126 | 90,126 |
| 2011 £'000 |
2010 £'000 |
|
|---|---|---|
| Amount owed to subsidiary undertaking | 158,825 | 112,446 |
| Accruals | 702 | 568 |
| Corporation tax | 111 | 555 |
| 159,638 | 113,569 |
| 2011 £'000 |
2010 £'000 |
|
|---|---|---|
| Deferred income | 18,535 | 26,704 |
| Deferred taxation £'000 |
|
|---|---|
| At 1 January 2011 | 246 |
| Capital allowances in advance of depreciation | (137) |
| At 31 December 2011 | 109 |
The deferred tax balance all relates to capital allowances in advance of depreciation.
| 9 Reconciliation of shareholders' funds and movements on reserves | |||
|---|---|---|---|
| Capital | Own | Profi t | Total | ||||
|---|---|---|---|---|---|---|---|
| Share | Share | redemption | shares | Merger | and loss | shareholders' | |
| capital | premium | reserve | held | reserve | account | funds | |
| At 1 January 2010 | £'000 9,186 |
£'000 2,929 |
£'000 74,950 |
£'000 (7,696) |
£'000 55,990 |
£'000 77,271 |
£'000 212,630 |
| Shares issued | 8 | 504 | – | – | – | – | 512 |
| Exercise of options | 46 | 264 | – | 1,563 | – | (1,563) | 310 |
| Total recognised gains | |||||||
| and losses in the year | – | – | – | – | – | 51,306 | 51,306 |
| Purchase of own shares | – | – | – | (2,501) | – | – | (2,501) |
| Cancellation of own shares | (7) | – | 7 | 449 | – | (449) | – |
| Share options granted to | |||||||
| employees of subsidiary | |||||||
| companies | – | – | – | – | – | 2,620 | 2,620 |
| Equity dividends | – | – | – | – | – | (16,984) | (16,984) |
| At 31 December 2010 | 9,233 | 3,697 | 74,957 | (8,185) | 55,990 | 112,201 | 247,893 |
| Exercise of options | – | 20 | – | 2,790 | – | (2,790) | 20 |
| Total recognised gains | |||||||
| and losses in the year | – | – | – | – | – | 166 | 166 |
| Purchase of own shares | – | – | – | (3,606) | – | – | (3,606) |
| Share options granted to | |||||||
| employees of subsidiary | |||||||
| companies | – | – | – | – | – | 2,476 | 2,476 |
| Equity dividends | – | – | – | – | – | (21,169) | (21,169) |
| At 31 December 2011 | 9,233 | 3,717 | 74,957 | (9,001) | 55,990 | 90,884 | 225,780 |
The Company has given a guarantee in the normal course of business to a supplier of a subsidiary undertaking for an amount not exceeding £16.6 million (2010: £8.0 million), and to a customer of a subsidiary undertaking for an amount not exceeding £nil (2010: £6.0 million).
The Company has provided cross guarantees in respect of certain bank loans and overdrafts of its subsidiary undertakings. The amount outstanding at 31 December is £1.6 million (2010: £3.3 million).
The Company has taken the exemption in FRS 8 not to disclose transactions with other wholly owned Group Companies. The Company has not traded with any of the related parties disclosed in note 33 of the Group accounts.
All auditors' remuneration is borne by Computacenter (UK) Ltd, a fully-owned UK subsidiary of the Company.
Year ended 31 December
| 2007 £m |
2008 £m |
2009 £m |
2010 £m |
2011 £m |
|
|---|---|---|---|---|---|
| Revenue | 2,379.1 | 2,560.1 | 2,503.2 | 2,676.5 | 2,852.3 |
| Adjusted* operating profi t | 41.7 | 42.1 | 53.9 | 64.4 | 72.5 |
| Adjusted* profi t before tax | 42.7 | 43.1 | 54.2 | 66.1 | 74.2 |
| Profi t for the year | 28.9 | 37.3 | 37.7 | 50.3 | 61.0 |
| Adjusted* diluted earnings per share | 18.5p | 21.0p | 27.7p | 33.0p | 37.4p |
| Net cash/(debt) excluding CSF | (16.2) | 4.6 | 86.4 | 139.4 | 136.8 |
| Year-end headcount | 9,877 | 10,220 | 10,296 | 10,566 | 11,626 |
* Before amortisation of acquired intangibles and exceptional items. Adjusted operating profi t is stated after charging fi nance costs on customer-specifi c fi nancing. The adjusted diluted EPS also excludes the effects of exceptional items within the tax charge for the year when applicable.
Year ended 31 December
| 2007 £m |
2008 £m |
2009 £m |
2010 £m |
2011 £m |
|
|---|---|---|---|---|---|
| Tangible assets | 116.4 | 123.3 | 105.3 | 88.9 | 98.3 |
| Intangible assets | 45.2 | 51.6 | 73.0 | 78.5 | 104.2 |
| Investment in associates | – | – | – | – | 0.5 |
| Deferred tax asset | 8.2 | 16.7 | 16.4 | 15.5 | 15.9 |
| Inventories | 110.5 | 105.8 | 67.1 | 81.6 | 97.4 |
| Trade and other receivables | 454.2 | 529.5 | 475.6 | 471.1 | 549.0 |
| Prepayments and accrued income | 61.4 | 97.7 | 85.3 | 84.2 | 90.1 |
| Forward currency contracts | (0.4) | (0.6) | 0.7 | 0.6 | (0.2) |
| Current asset investment | – | – | – | – | 10.0 |
| Cash | 29.2 | 53.4 | 108.0 | 159.3 | 128.4 |
| Current liabilities | (496.1) | (602.6) | (557.5) | (588.2) | (665.9) |
| Non-current liabilities | (50.4) | (53.6) | (35.5) | (22.0) | (24.0) |
| Net assets | 278.1 | 321.1 | 338.6 | 369.6 | 403.7 |
| Title | Date |
|---|---|
| Dividend record date | 18 May 2012 |
| AGM | 18 May 2012 |
| Dividend payment date | 15 June 2012 |
| Interim results announcement | 31 August 2012 |
| Dividend record date | 21 September 2012 |
| Dividend payment date | 19 October 2012 |
Greg Lock (Non-Executive Chairman) Mike Norris (Chief Executive) Tony Conophy (Finance Director) Brian McBride (Senior Independent Director) Philip Hulme (Non-Executive Director) Ian Lewis (Non-Executive Director) Peter Ogden (Non-Executive Director) John Ormerod (Non-Executive Director)
PO Box 544 54 Lombard Street London EC3V 9EX United Kingdom Tel: +44 (0) 845 755 5555
Ernst & Young LLP One More London Place London SE1 2AF United Kingdom Tel: +44 (0) 20 7951 2000
Computacenter Hatfi eld Avenue Hatfi eld Hertfordshire AL10 9TW United Kingdom Tel: +44 (0) 1707 631000 Fax: +44 (0) 1707 639966
Computacenter NV/SA Ikaroslaan 31 B-1930 Zaventem Belgium Tel: +32 (0) 2 704 9411 Fax: +32 (0) 2 704 9595
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Stephen Benadé
Hatfi eld Avenue Hatfi eld Hertfordshire AL10 9TW United Kingdom Telephone: +44 (0) 1707 631000
One Cabot Square London E14 4QJ United Kingdom Tel: +44 (0) 20 7888 8888
2 Gresham Street London EC2V 8QP United Kingdom Tel: +44 (0) 20 7597 5120
Computacenter France SA 229 rue de la Belle Etoile ZI Paris Nord 2 BP 52387 95943 Roissy CDG Cedex France Tel: +33 (0) 1 48 17 41 00 Fax: +33 (0) 1 70 73 42 22
Computacenter AG & Co. oHG Europaring 34-40 50170 Kerpen Germany Tel: +49 (0) 22 73 / 5 97 0 Fax: +49 (0) 22 73 / 5 97 1300
Computacenter PSF SA 13-15 Parc d'activités 8308 Capellen Luxembourg Tel: +352 (0) 26 29 11 Fax: +352 (0) 26 29 1 815
Aspect House Spencer Road Lancing BN99 6FE United Kingdom Tel: +44 (0) 871 384 2074
(Calls to this number are charged at 8p (+VAT) per minute from a BT landline. Other telephony providers' cost may vary).
Linklaters One Silk Street London EC2Y 8HQ United Kingdom Tel: +44 (0) 20 7456 2000
Company Registration Number 3110569
Computacenter Group www.computacenter.com
Computacenter N.V. Beech Avenue 54-80 1119 PW, Schiphol-Rijk The Netherlands Tel: +31 (0) 20 658 6800 Fax: +31 (0) 20 658 6111
Computacenter Services and Solutions (PTY) Ltd Building 3 Parc du Cap Mispel Road Bellville, 7535 South Africa Tel: +27 (0) 21 957 4900 Fax: +27 (0) 21 948 3135
Computacenter Services (Iberia) S.L.U. C/Balmes 236 08006 Barcelona Spain Tel: +34 (0) 936 207 000 Fax: +34 (0) 936 207 025
Damax AG Riedstrasse 6 1953 Dietikon Switzerland Tel: +41 (0) 43 322 40 80 Computacenter Plc Hatfi eld Avenue Hatfi eld Hertfordshire AL10 9TW United Kingdom
Tel: +44 (0) 1707 631000 Fax: +44 (0) 1707 639966
E&OE. All trademarks acknowledged. © 2012 Computacenter. All rights reserved.
www.computacenter.com
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