Half-Year interim Results 2022

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Computacenter announces results, based on unaudited financial information, for the six month period ended 30 June 2022.

Computacenter plc - Interim results for the six months ended 30 June 2022

 

Computacenter plc ("Computacenter" or the "Group"), a leading independent technology partner trusted by large corporate and public sector organisations, today announces results, based on unaudited financial information, for the six month period ended 30 June 2022.

 

Financial Highlights

 

H1 2022

H1 2021

Percentage Change
Increase/ (Decrease)

Financial Performance

Technology Sourcing revenue (£ million)

2,074.2

1,719.0

20.7

Services revenue (£ million)

752.5

706.1

6.6

Revenue(£ million)

2,826.7

2,425.1

16.6

Technology Sourcing gross invoiced income (£ million)

3,219.4

2,581.5

24.7

Services revenue (£ million)

752.5

706.1

6.6

Gross invoiced income(£ million)

3,971.9

3,287.6

20.8

Adjusted1profit before tax(£ million)

111.9

118.9

(5.9)

Adjusted1diluted earnings per share(pence)

69.8

73.1

(4.5)

Dividend per share(pence)

22.1

16.9

30.8

Profit before tax (£ million)

107.8

115.2

(6.4)

Diluted earnings per share (pence)

67.3

70.7

(4.8)

Cash Position

 

 

 

Cash and cash equivalents (£ million)

193.5

158.5

 

Adjusted net funds3(£ million)

159.3

121.8

 

Net funds/(debt) (£ million)

12.1

(29.4)

 

Net cash inflow from operating activities(£ million)

8.1

1.5

 

Reconciliation to Adjusted1Measures

 

 

Adjusted1profit before tax(£ million)

111.9

118.9

 

Exceptional and other adjusting items:

 

 

 

Amortisation of acquired intangibles (£ million)

(4.1)

(3.7)

 

Profit before tax (£ million)

107.8

115.2



Operational Highlights:

  • Our strong trading performance over the six months to 30 June 2022 continues to demonstrate the resilience of our business model. Revenue increased 16.0 per cent on a constant currency2 basis, however, as we indicated in our Trading Update on 29 April 2022, adjusted1 profit before tax for the first half of the year is behind the comparative period to 30 June 2021.
     
  • The UK saw a decrease in revenues of 7.1 per cent with the Technology Sourcing business seeing a 10.5 per cent reduction in revenue as the demand for workplace rollouts declined. The UK saw pleasing growth in higher-margin data center business, as the market in this area continues to expand rapidly, although the volumes were not sufficient to replace the workplace business. Significant increases in low-margin software and resold services impacted gross invoiced income4, but are reported net for Technology Sourcing revenues.
     
  • The German business saw revenues increase 10.2 per cent on a constant currency2 basis. Technology Sourcing revenue growth was pleasing during the period, with significant increases in workplace hardware and software. Professional Services once again saw double digit growth, with the business continuing to expand capacity and its offerings. Managed Services generated excellent growth, benefitting from contract wins in 2021.
     
  • The French business saw Technology Sourcing revenues return to growth as significant customers increased spend, with a number of enterprise-level private sector customers and large public-sector framework contracts increasing purchasing activity. Margins improved as these customers invested in significant server rack installations. The integration of Computacenter NS remains on track. As expected, the acquisition had a negative impact on growth in Professional Services revenue in the period, as older contracts ceased. This was more than offset by pleasing growth in Managed Services. This has resulted in a 2.4 per cent decrease in revenues on a constant currency2 basis,
     
  • In North America, the results were driven by continued extraordinary growth in hyperscale data center customers, as well as new customer wins. The growth was achieved in both Technology Sourcing and Services, as deployment project activity increased. North America has seen strong revenue growth of 48.3 per cent on a constant currency2 basis. As this growth was concentrated in a small number of hyperscale technology customers, which have a much lower than average margin, growth in profitability has not matched that seen in revenue.



A reconciliation between key adjusted1 and statutory measures is provided within the Group Finance Director's review contained in this announcement. Further details are provided in note 5 to the summary financial information contained within this announcement.

Following a recently approved interpretation of the revenue accounting standard by the , we, and a number of our peer value added resellers, have changed the way we recognise revenues for standalone software and resold third-party services contracts and revised our accounting policies to reflect this change. Accordingly, we have restated our prior-period revenues down from  as reported at  to  as we have now determined that we are an agent for these transactions and will recognise revenue on a net basis, with only the gross margin on these types of deals, being the gross invoiced income less the costs of the resold software or third party services, showing as revenue, with nothing recorded in cost of goods sold. Further information on this change, including the retrospective restatement of the financial statements, and the revised accounting policy, is available in note 3 to the summary financial information contained within this announcement.


1 Gross invoiced income, adjusted administrative expense, adjusted operating profit or loss, adjusted profit or loss before tax, adjusted tax, adjusted profit or loss, adjusted earnings per share and adjusted diluted earnings per share are, as appropriate, each stated before: exceptional and other adjusting items, including gains or losses on business acquisitions and disposals, amortisation of acquired intangibles, utilisation of deferred tax assets (where initial recognition was as an exceptional item or a fair value adjustment on acquisition), and the related tax effect of these exceptional and other adjusting items, as Management does not consider these items when reviewing the underlying performance of the Segment or the Group as a whole. A reconciliation to adjusted measures is provided within the Group Finance Director's review contained in this announcement which details the impact of exceptional and other adjusted items when compared to the non-Generally Accepted Accounting Practice (GAAP) financial measures, in addition to those reported in accordance with IFRS. Further detail is provided within note 4 to the summary financial information contained in this announcement.

2 We evaluate the long-term performance and trends within our strategic priorities on a constant-currency basis. The performance of the Group and its overseas Segments are also shown, where indicated, in constant currency. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information gives valuable supplemental detail regarding our results of operations, consistent with how we evaluate our performance. We calculate constant currency percentages by converting our prior-period local currency financial results using the current period average exchange rates and comparing these recalculated amounts to our current period results or by presenting the results in the equivalent local currency amounts. Wherever the performance of the Group, or its overseas Segments, are presented in constant currency, or equivalent local currency amounts, the equivalent prior-period measure is also presented in the reported pound sterling equivalent, using the exchange rates prevailing at the time. 2022 interim highlights, as shown above, are provided in the reported pound sterling equivalent.

3 Adjusted net funds or adjusted net debt includes cash and cash equivalents, other short or long-term borrowings and current asset investments. Following the adoption of IFRS 16 this measure excludes all lease liabilities. A table reconciling this measure, including the impact of lease liabilities, is provided within note 12 to the summary financial information contained in this announcement.

4 Gross invoiced income is based on the value of invoices raised to customers, net of the impact of credit notes and excluding VAT and other sales taxes. This reflects the cash movements from revenue, to assist Management and the users of this announcement in understanding revenue growth on a 'Principal' basis and to assist in their assessment of working capital movements in the Consolidated Statement of Financial Position and Consolidated Cash Flow Statement. This measure allows an alternative view of growth in adjusted gross profit, based on the product mix differences and the accounting treatment thereon. Gross invoiced income includes all items recognised on an 'agency' basis within revenue, on a gross income billed to customers basis, as adjusted for deferred and accrued revenue. A reconciliation of revenue to gross invoiced income is provided within note 5 to the summary financial information contained in this announcement.

The term Group refers to Computacenter plc and its subsidiaries.



Read the full report

 


 

Enquiries:

Computacenter plc

Mike Norris, Chief Executive

01707 631601

Tony Conophy, Finance Director

01707 631515

 

Tulchan Communications

James Macey White

Matt Low

020 7353 4200

 

As we have predicted and announced on multiple occasions, profitability for Computacenter was down in the first half of 2022 compared to the same period last year, however, we remain on track to deliver our stated expectations of profit growth for the year as a whole.

With the exception of networking products where difficulties still remain, supply chain challenges have eased materially in the last 3 months. However, our customers have become extremely sensitive about supply chain shortages, and as such require us to hold more inventory, impacting our balance sheet. In almost all cases there is a guaranteed sale on the inventory items. The continuing strength of our balance sheet gives us a significant competitive advantage in being able to support our customers' requirements in this manner. How this will unravel as customers get used to the freeing up of supply remains to be seen.

While the pandemic has accelerated new ways of working the major effects of Covid-19 are firmly behind us and we believe current market conditions are the new normal. Our customers commitment to investment in technology feels extremely robust despite well publicised and difficult economic conditions around the world. This gives us confidence for 2023 and beyond.

Mike Norris , Chief Executive of Computacenter plc

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