REG - Computacenter - Final Results 2024
18/03/2025 07:00
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RNS Number : 0178B Computacenter PLC 18 March 2025
Computacenter plc
2024 Full Year results
Computacenter plc ('Computacenter' or the 'Group'), a leading independent
technology and services provider, today announces audited results for the year
ended 31 December 2024.
Financial highlights 2024 2023 Change Change in constant currency(1)
Technology Sourcing gross invoiced income (£m) 8,278.1 8,444.9 -2.0% 0.1%
Services revenue (£m) 1,638.4 1,636.5 0.1% 2.1%
Gross invoiced income(1) (£m) 9,916.5 10,081.4 -1.6% 0.5%
Technology Sourcing revenue (£m) 5,326.4 5,286.3 0.8% 3.2%
Services revenue (£m) 1,638.4 1,636.5 0.1 % 2.1%
Revenue (£m) 6,964.8 6,922.8 0.6% 2.9%
Gross profit (£m) 1,035.0 1,044.0 -0.9% 1.2%
Gross margin (%) 14.9% 15.1% -22bps
Adjusted(1) operating profit (£m) 246.7 271.5 -9.1% -6.8%
Adjusted(1) profit before tax (£m) 254.0 278.0 -8.6% -6.3%
Adjusted(1) diluted earnings per share (p) 159.9 174.8 -8.5%
Dividend per share (p) 70.7 70.0 1.0%
Net cash inflow from operating activities (£m) 417.1 410.6 1.6%
Adjusted(1) net funds (£m) 482.2 459.0 5.1%
Statutory measures 2024 2023 Change
Operating profit (£m) 237.9 268.8 -11.5%
Profit before tax (£m) 244.6 272.1 -10.1%
Diluted earnings per share (p) 152.9 173.2 -11.7%
Net funds (£m) 352.7 343.6 2.6%
( )
(1)Alternative performance measures (APMs) and other terms are used throughout
this announcement. These are defined in full in the Appendix to this
announcement.
Mike Norris, Chief Executive Officer, commented:
"Computacenter delivered a solid performance in 2024 as a whole in the context
of a tough first half comparative and a more challenging IT market.
Encouragingly, the second half was the most profitable in our history and was
derived from our highest number of major customers. We executed well in North
America, achieving another record year while Germany performed robustly.
Technology Sourcing momentum improved through the year and we were
particularly pleased with Professional Service's double-digit growth.
"Cash generation was strong, providing us with the capacity to continue to
invest in leading systems and to deliver enhanced shareholder returns through
the completion of a £200m buyback. Since 2013 we have distributed nearly £1
billion pounds to shareholders while making targeted acquisitions that have
enhanced our global footprint, performance and business resilience as well as
our long-term growth potential.
"We are well-placed for progress in 2025, entering the year with a strong
order backlog across all regions, an exciting opportunity set and a continued
focus on helping our customers realise the transformative benefits of IT."
Financial highlights
· Robust gross invoiced income and revenue performance with
Technology Sourcing and Services ahead in constant currency
· Gross profit increased by 1.2% in constant currency with adjusted
operating profit 6.8% lower in constant currency against strong comparatives,
driven by another record year in North America, a robust performance in
Germany, softer UK market conditions and increased Group-wide investment
· Improved momentum across the year with record H2 adjusted
operating profit, up 11.2% in constant currency
· Strong balance sheet position with adjusted net funds of
£482.2m, up £23.2m, after completion of £200m share buyback programme
Strategic and operational highlights
· Continued to deliver our strategic priorities of growing our
target market customers, scaling our activities and empowering our people
· Good progress in growing the number of customers generating over
£1m of gross profit p.a., with growth in North America, Germany and UK,
adding a net 13 across the Group and major customers now totalling 192 (FY
2023: 179)
· Another record year in North America, driven by new hyperscale
and enterprise customer wins; we remain excited about the scale of the
long-term growth opportunity
· Strong Professional Services revenue growth of 11.9% in constant
currency, ahead of market, with growth in Germany, UK and North America
· Product order backlog as at 31 December 2024 up 116% year on year
in constant currency, and up 35% since 30 June 2024, driven by strong
Technology Sourcing order intake in North America
· £36.8m of Group-wide investments (FY 2023: £28.1m) to improve
our capabilities, enhance productivity and secure future growth
Shareholder returns
· Total dividend increased by 1% to 70.7p
· £200m share buyback programme completed in October; almost £1bn
of capital distributed to shareholders since 2013
Outlook
· We exited 2024 in a robust position with a committed product
order backlog which is significantly ahead of our position in December 2023,
as well as at the end of June 2024, with all regions ahead. The size of the
projects we are currently delivering gives us good momentum at the start of
2025.
· Looking to 2025 as a whole, we remain mindful of the uncertain
macroeconomic and political environment. In North America, following a strong
performance in 2024, we continue to be excited by the growth opportunities we
see ahead. We have started the year positively and overall, we expect to make
progress in FY 2025, with earnings per share benefiting further from the
impact of the share buyback.
Enquiries:
Computacenter plc
Mike Norris, CEO +44 (0) 1707 631 601
Christian Cowley, Investor Relations +44 (0) 1707 631 132
Teneo
James Macey White / Matt Low +44 (0) 207 353 4200
About Computacenter
Computacenter is a leading independent technology and services provider,
trusted by large corporate and public sector organisations. We are a
responsible business that believes in winning together for our people and our
planet. We help our customers to Source, Transform and Manage their technology
infrastructure to deliver digital transformation, enabling people and their
business. Computacenter plc is a public company quoted on the London Stock
Exchange (CCC.L) and a member of FTSE 250. Computacenter employs over 20,000
people worldwide.
DISCLAIMER - FORWARD LOOKING STATEMENTS
This announcement includes statements that are, or may be deemed to be,
'forward-looking statements'. These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
'anticipates', 'believes', 'estimates', 'expects', 'intends', 'may', 'plans',
'projects', 'should' or 'will', or, in each case, their negative or other
variations or comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These forward-looking
statements include all matters that are not historical facts. They appear in a
number of places throughout this announcement and include, but are not limited
to, statements regarding the Group's intentions, beliefs or current
expectations concerning, amongst other things, results of operations,
prospects, growth, strategies and expectations of its respective businesses.
By their nature, forward-looking statements involve risk and uncertainty
because they relate to future events and circumstances. Forward-looking
statements are not guarantees of future performance and the actual results of
the Group's operations and the development of the markets and the industry in
which they operate or are likely to operate and their respective operations
may differ materially from those described in, or suggested by, the
forward-looking statements contained in this announcement. In addition, even
if the results of operations and the development of the markets and the
industry in which the Group operates are consistent with the forward-looking
statements contained in this announcement, those results or developments may
not be indicative of results or developments in subsequent periods. A number
of factors could cause results and developments to differ materially from
those expressed or implied by the forward-looking statements, including,
without limitation, those risks in the risk factor section of the
Computacenter plc 2023 Annual Report and Accounts, as well as general economic
and business conditions, industry trends, competition, changes in regulation,
currency fluctuations or advancements in research and development.
Forward-looking statements speak only as of the date of this announcement and
may, and often do, differ materially from actual results. Any forward-looking
statements in this announcement reflect the Group's current view with respect
to future events and are subject to risks relating to future events and other
risks, uncertainties and assumptions relating to the Group's operations,
results of operations and growth strategy. Neither Computacenter plc nor any
of its subsidiaries undertakes any obligation to update the forward-looking
statements to reflect actual results or any change in events, conditions or
assumptions or other factors unless otherwise required by applicable law or
regulation.
Chief Executive Officer's review
Summary of 2024 performance
Computacenter delivered a solid performance in 2024 reflecting a combination
of tough comparatives in the prior year, a more challenging backdrop for
corporate IT demand across the year and our continuing commitment to invest in
world-class, Group-wide systems. While it is disappointing not to deliver
another year of growth after 19 consecutive years of increased earnings per
share, 2024's performance was derived from a broader base of major customers
generating over £1m of gross profit per annum, and we delivered our
strongest-ever performance in the second half of the year, following a weaker
first half. We ended 2024 with 192 major customers, an increase of 13 on 2023.
Growing the number of major customers in our target market of large corporate
and public sector customers ensures greater resilience and underpins
Computacenter's long-term growth. We see significant opportunities for growth
across all of our geographies.
Cash generation was strong. Even after completing a £200m share buyback
programme, we ended the year with £482.2m of adjusted net funds, £23.2m
ahead of 2023. Since 2013, Computacenter has distributed nearly £1bn in
capital to shareholders via dividends and special returns, while continuing to
invest organically for the long term and creating value through targeted
acquisitions, which have increased our geographic diversity and long-term
growth opportunity. Since our first acquisition in late 2018, North America
has grown to become a material profit contributor, now accounting for nearly a
quarter of Group operating profit (before central costs).
As outlined at our Capital Markets Day in June 2024 - 'Building Long-Term
Value' - we continue to execute on our strategy of growing our target market
customers, scaling our activities and empowering our people. Our 20,000
colleagues worldwide drive our success through their commitment to our
customers and I thank them all for their contribution.
Delivering digital transformation
In 2024, customers continued to pursue their digital transformation agenda,
albeit with a degree of caution, given the uncertain macroeconomic and
geopolitical backdrop. In Europe, our public sector business grew while
corporate sector demand was more selective. Technology areas such as security
were prioritised over, for example, workplace refreshes despite the ageing
profile of PCs. Corporate and public sector organisations continue to assess
the opportunities and returns that AI can deliver, with many now trialling and
experimenting with new products. While some of this innovation is most
immediately accessible through software, customers are also evaluating their
own infrastructure requirements.
Hyperscalers meanwhile continue to allocate significant capital into
AI-centric infrastructure. In North America, we have established a track
record of delivering a high-quality service for hyperscale customers given our
expertise in the areas of high-performance computing, networking, low-latency
storage, data center infrastructure and software components. We won major new
hyperscale business in the US during the year, helping to diversify our
portfolio of hyperscale customers. Additionally, we won AI-related
infrastructure projects in Europe and anticipate more in 2025.
Computacenter has always helped customers to evaluate new technologies, to
navigate rising complexity of their IT estates and to achieve the return on
investment they need. Our customers are looking to work with fewer suppliers,
and for their partners to have a deep understanding of their requirements, as
well as the scale, financial strength, flexibility and cost competitiveness to
meet their specific needs. Our three core activities - Technology Sourcing,
Professional Services and Managed Services - are all critical in helping
customers to achieve their IT goals and in Computacenter they have a partner
that can deliver for them across each.
A record second-half performance
In 2024, as anticipated, Technology Sourcing volumes, with some of our large
customers normalised following an exceptional 2023, which especially impacted
our first-half performance. It was therefore pleasing to win a number of new
customers and large projects which meant, at a Group level, we delivered a
much stronger result in the second half of the year. This was particularly
evident in North America where we won two new hyperscale customers and
continued to grow our enterprise business, resulting in another record year of
operating profit from the region. We ended 2024 with a significantly stronger
committed order backlog than both at the end of 2023 and June 2024. While
North America was the single largest contributor to the growth in the backlog
at a Group level, Germany, the UK and France were also ahead of the prior
year.
In Services, Professional Services delivered a strong performance that was
partly offset by a softer performance in Managed Services. We made a
commitment from the start of 2024 to grow and enhance Professional Services by
having a broader and scalable portfolio across all countries, based on a
common operating framework and a stronger sales approach. We are starting to
see the benefits of this approach, achieving double-digit revenue growth in
2024, with solid growth in our largest market in Germany, a strong return to
growth in the UK and an excellent year in the US, leveraging our expertise in
hyperscale data center deployment. Professional Services has been a strong
driver of growth for Services over the last five years and we see it as an
important future driver of revenue and profit growth for the Group.
Managed Services revenues declined during the year, albeit at a slower rate in
the second half. This weaker revenue performance reflected the timing of
certain contract losses, while the onboarding of some large contracts has
taken longer than anticipated. Our margin was also impacted by two large
underperforming contracts, one in Germany and one in the UK which, following
remedial action, we do not expect to repeat at the same level in 2025. While
it is disappointing when contracts do not meet our financial expectations, we
have gained critical operational insights that will serve us well for future
contracts, and the rest of our portfolio is performing as anticipated.
To offer increased value to our customers we continue to invest in new and
improved systems, greater automation and offshoring. We now have approximately
1,500 colleagues serving our customers from India. The market opportunity for
Managed Services is substantial in our core areas of workplace, networking,
infrastructure and cloud. These services are important to the longevity of our
customer relationships, with more than three-quarters of our major
European-headquartered customers contracting with us, supported by our Service
Centers globally. Our Managed Services pipeline is significantly larger than a
year ago and we are focused on contract conversion in the year ahead.
Diversified geographic exposure
While IT spending is expected to grow across all of our markets over the long
term, our diversified geographic exposure provides us with greater protection
from any short-term weakness in particular geographies. In 2024, another
record year in North America and robust performance in Germany cushioned the
impact of a weaker performance in the UK.
North America's performance was particularly impressive given an exceptionally
strong comparative and starting the year knowing that we would need to win
material new business to grow. We won significant new hyperscale and
enterprise business and grew our order book substantially. We remain excited
by the clear long-term growth opportunity in this highly fragmented market, as
we continue to leverage Computacenter's broader capability and resources.
Germany's robust performance was also delivered against a strong comparative.
This resilience is a function of deep capabilities across all major technology
areas and our ability to support customers at every stage of the IT lifecycle.
It also means we remain well-positioned in the context of a more uncertain
political and macro environment in 2025.
Our UK performance was disappointing, with the market for hardware proving
weaker than anticipated at the start of the year. While this outweighed the
improvements we have made in how we approach the market, we delivered a more
stable performance in the second half and ended the year with six more major
customers. We are also encouraged by the excellent growth achieved in
Professional Services revenue, positioning us well as market conditions
improve. Our integrated offer remains compelling to our target market, as
evidenced by some significant renewals including a six-year contract worth
approximately £1bn with an existing customer, covering all three Service
Lines.
Investing to secure future growth
We continue at pace with the rollout of our strategic initiatives which will
improve our capabilities and productivity, enable us to further leverage AI
solutions, underpin our systems for the future, and create competitive
advantage. This investment of £36.8m (2023: £28.1m) increased operating
costs by £8.7m year-on-year.
While moving all our Service Desks onto a common platform, we are migrating
from our legacy service management tool to a new platform and building new
functionality within it for our modern workplace solutions, such as Device
Lifecycle Management. We are also upgrading all our Integration Centers across
the world to a new standard. This includes the latest warehouse management
software, a Group standard for configuration, new scanning functionality and a
more sophisticated capability for courier integration. We have finished the
rollout of our CRM system and will complete the implementation of a new
configuration and pricing tool, and ultimately will upgrade our current ERP
system to a new cloud-based version. At the same time, we continue to invest
significantly to mitigate evolving cyber risks.
Continued cash generation and capital discipline
Given the Group's continued strong cash generation and robust balance sheet,
we announced in late July 2024 that we would return up to £200m to
shareholders via a share buyback programme. The programme was completed by the
end of October, reducing the number of total voting rights by 6.9%. This is in
line with our disciplined capital allocation policy to invest organically,
make targeted acquisitions and distribute surplus capital while retaining a
strong balance sheet. It brings the total value of capital distributed to
shareholders since 2013 to nearly £1bn.
Outlook
We exited 2024 in a robust position, with a committed product order backlog
which is significantly ahead of our position in December 2023, as well as at
the end of June 2024, with all regions ahead. The size of the projects we are
currently delivering gives us good momentum at the start of 2025.
Looking to 2025 as a whole, we remain mindful of the uncertain macroeconomic
and political environment. In North America, following a strong performance in
2024, we continue to be excited by the growth opportunities we see ahead. We
have started the year positively and overall, we expect to make progress in
2025, with earnings per share benefiting further from the impact of the share
buyback.
Looking further ahead, we remain excited by the pace of innovation and growth
in demand for technology. Our strength in Technology Sourcing, Professional
Services and Managed Services, combined with our global reach and our
continued focus on retaining and maximising customer relationships over the
long term, means we are well-placed to deliver profitable growth and sustained
cash generation.
Technical guidance for 2025:
· Central costs (including group-wide investments) expected to be
£50-55m
· Adjusted effective tax rate expected to be 29.5%-31.5%
· Capex expected to be c.£35m
· Dividend cover of 2-2.5x adjusted diluted EPS
Our strategic focus
Focus on Target Market Customers: We focus only on a target market of the
largest corporate and public sector organisations in each of our sales
countries. These target market customers require us to offer significant
flexibility to meet their specific needs, while also being competitive in each
part of our portfolio. We invest in sales and customer engagement teams to
build long-term relationships which earn customer loyalty. We work hard to get
to know our customers, understand their needs and put them at the heart of
everything we do.
Build Service Line scale and competitive advantage: We want to be the logical
choice for our target market customers in the activities on which we focus.
Our Service Lines of Technology Sourcing, Professional Services and Managed
Services are focused on building and leveraging capabilities to meet customer
needs efficiently and consistently, and to build economic advantage.
Empower our People: We work hard to understand the needs of our customers and
empower our customer-facing people to make responsible decisions that help us
meet the needs of our customers faster. This is an essential part of our
culture and helps to differentiate us from our competition, ensuring that we
are focused on the needs of our target market customers and that our
investments deliver an effective return. We empower our customer-facing
people, while ensuring that all decisions are taken within a clear governance
framework, supported by strong customer profitability reporting and clear
remuneration plans.
We measure our strategic progress as follows:
Customer relationships: retain and maximise the relationships with our large
corporate and public sector customers over the long term
In 2024, we finished with 192 customers generating over £1m of gross profit,
a net increase of 13 from the previous year. We were pleased to resume growth
in this important KPI during 2024. Furthermore, the growth was spread across
Germany, North America and the UK, with a mix of existing and new customers
and all resulting from organic growth. This broader base of major customers
generated gross profit growth of 1.2% in 2024 in constant currency.
Services growth: lead with and grow Services
In 2024, we grew Services revenue by 2.1% in constant currency, in a market
where several services competitors have seen revenue declines. Group
Professional Services revenue grew by an excellent 11.9% in constant currency,
with growth in Germany, UK, and North America. We have organised our
Professional Services resources into a single Group Service Line, to provide
the necessary focus and to leverage our success in Germany across the Group,
and we are now starting to see the benefits of a more consistent approach. We
believe there is a large market opportunity across our Professional Services
portfolio and that we can grow Professional Services across the Group
significantly. Group Managed Services revenue declined by 5.3% in constant
currency. We renewed a number of large contracts during the year and ended the
year with a significantly increased pipeline.
Productivity: increase the adjusted operating profit we retain as a proportion
of our gross profit
Productivity is an important driver of value for the Group. We use gross
profit conversion as the best overall productivity measure for our business
across all our activities. It measures how much of our gross profit we convert
into adjusted operating profit and helps measure how effectively we use our
scale to improve operational leverage.
Gross profit conversion decreased to 23.8% in 2024 from 25.9% in 2023, driven
by a 1.2% increase in gross profit and a 6.8% decrease in adjusted operating
profit, all in constant currency. The decline in gross profit conversion was
primarily driven by our UK performance and the increase in strategic
investments, with Germany broadly similar to the prior year and North America
continuing to improve. We believe this investment is essential to underpin our
long-term competitiveness and we expect it to continue at a similar level in
2025. We believe our ambition of achieving gross profit conversion of over 30%
in the medium term can be delivered through a combination of revenue growth
and realising scale benefits from our Group Operating Model.
Summary of 2024 Group financial performance
Total gross invoiced income decreased by 1.6% on a reported basis and
increased by 0.5% in constant currency. Total revenue was 0.6% higher and rose
by 2.9% in constant currency. This performance reflected an exceptionally
strong comparative in Technology Sourcing and, as expected, more normalised
activity levels with some of our larger customers in 2024. This was largely
offset by significant new customer wins during the year, resulting in a record
performance in the second half. Gross profit decreased by 0.9% on a reported
basis and increased by 1.2% in constant currency. Group gross margin,
expressed as gross profit as a percentage of revenue, decreased by 22 basis
points to 14.9%, reflecting a 31 basis points decrease in Technology Sourcing
and an 11 basis points increase in Services.
Adjusted operating profit decreased by 9.1% on a reported basis and by 6.8% in
constant currency, after a 4.0% increase in adjusted administrative expenses
in constant currency. By geography, Germany was resilient, with adjusted
operating profit broadly unchanged against a strong comparative, the UK
declined, reflecting weaker market conditions than expected at the start of
the year, and North America delivered another record performance. Group
adjusted operating profit in the second half of 2024 was £165.6m, an increase
of 11.2% or £16.7m in constant currency over the prior period (8.2% or
£12.6m on a reported basis).
Adjusted profit before tax decreased by 8.6% on a reported basis, including a
£7m adverse currency translation impact from stronger sterling, and by 6.3%
in constant currency, helped by the stronger second half performance noted
above. Adjusted diluted EPS decreased by 8.5%, with an increase in the
adjusted effective tax rate to 29.3% (2023: 27.6%). Profit before tax
decreased by 10.1%. The difference between profit before tax and adjusted
profit before tax relates to the Group's net costs of £9.4m from exceptional
and other adjusting items, related to the acquisitions in North America.
Diluted EPS decreased by 11.7%.
We maintain a strong balance sheet, with adjusted net funds of £482.2m, an
increase of £23.2m versus 2023, after completing a £200m share buyback
during the year. The year-end adjusted net funds position benefited from
strong collections and approximately £100m more of early customer payments
than in the prior year.
Results 2024 2023 Change Change in constant currency
£m £m
Technology Sourcing gross invoiced income 8,278.1 8,444.9 -2.0% 0.1%
Services revenue 1,638.4 1,636.5 0.1% 2.1%
Total gross invoiced income 9,916.5 10,081.4 -1.6% 0.5%
Technology Sourcing revenue 5,326.4 5,286.3 0.8% 3.2%
Services revenue 1,638.4 1,636.5 0.1% 2.1%
Professional Services revenue(2) 778.3 711.2 9.4% 11.9%
Managed Services revenue(2) 860.1 925.3 -7.0% -5.3%
Total revenue 6,964.8 6,922.8 0.6% 2.9%
Gross profit 1,035.0 1,044.0 -0.9% 1.2%
Adjusted total administrative expenses (788.3) (772.5) 2.0% 4.0%
Adjusted operating profit 246.7 271.5 -9.1% -6.8%
Net adjusted finance income / (costs) 7.3 6.5 12.3% 12.3%
Adjusted profit before tax 254.0 278.0 -8.6% -6.3%
Adjusted diluted earnings per share (p) 159.9 174.8 -8.5%
Gross profit 1,035.0 1,044.0 -0.9%
Total administrative expenses (798.9) (783.3) 2.0%
Other income related to acquisition of subsidiary - 5.3
Gain related to acquisition of a subsidiary 1.8 2.8 -35.7%
Operating profit 237.9 268.8 -11.5%
Net finance income / (costs) 6.7 3.3 103.0%
Profit before tax 244.6 272.1 -10.1%
Diluted earnings per share (p) 152.9 173.2 -11.7%
( )
(2) At our Half Year results we reallocated certain Services revenues between
Professional Services and Managed Services to better reflect the type of
services provided to customers. There is no change to Total Services revenue.
Technology Sourcing
Group Technology Sourcing gross invoiced income increased by 0.1% in constant
currency. After a 12.2% decline in the first half in constant currency, driven
by the anticipated normalisation of Technology Sourcing activity, we delivered
a much stronger second half, achieving 13.2% growth in constant currency,
10.6% on a reported basis, recouping all of the first-half decline. Gross
margin decreased by 31 basis points, mainly due to the growth in North
America.
Our committed product order backlog has grown significantly across the year,
driven by notable Technology Sourcing wins in North America, and is
significantly higher than the prior-year equivalent and the position at 30
June 2024. Our product order backlog measures the total value of committed
outstanding purchase orders placed with our technology vendors against
non-cancellable sales orders for delivery within 12 months. As at 31 December
2024, the product order backlog was £2,414.9m on a gross invoiced income
basis, a 115.9% increase since 31 December 2023 (£1,118.9m) and a 34.7%
increase since 30 June 2024 (£1,793.1m) in constant currency. The Technology
Sourcing backlog, alongside the Managed Services contract base and the
Professional Services forward order book, provide visibility of future
revenues.
Our Circular Services business, which supports our customers' environmental
goals, grew strongly. This year we remarketed, redeployed or recycled over
895,000 devices, representing an increase of 15%.
Services
Total Services revenue increased by 2.1% in constant currency during the year.
Services gross margin increased by 11 basis points, driven by a strong
performance in Professional Services which offset the impact of two
underperforming Managed Services contracts in Germany and the UK, as well as
onboarding costs for contracts won towards the end of 2023.
Professional Services revenue grew by 11.9% in constant currency and accounted
for 48% of total Services revenue. We delivered growth across all our larger
geographies with Germany, our largest source of Professional Services revenue,
continuing its strong performance and growing by 6.2% in constant currency,
the UK increasing by 19.4% and North America by 30.2% in constant currency.
Through our Group-wide approach in Professional Services we are starting to
drive greater consistency across our geographies, which will help us continue
to build scale, gain market share and drive efficiency across the portfolio.
Managed Services revenue declined by 5.3% in constant currency and accounted
for 52% of total Services revenue. The revenue decline was primarily driven by
the loss of low-margin contracts in France and exiting of non-core activities
in the UK and Germany. We managed our margin well across our Managed Services
portfolio, with the exception of the two underperforming contracts noted
above, which we do not expect to repeat at the same level in 2025. During the
year we renewed several large and strategically important contracts and
invested in our sales development. As a result, we have grown our Managed
Services pipeline substantially, with notable opportunities for our Device
Lifecycle Management proposition, where we are responsible for the complete
lifecycle of devices, from procurement to disposal. Our focus in 2025 is to
convert the pipeline and improve our win rate to underpin growth further out,
while continuing to improve our efficiency by leveraging our systems
investments.
Trading reviews by geography
United Kingdom
Results 2024 2023 Change
£m £m
Technology Sourcing gross invoiced income 1,758.6 1,938.1 -9.3%
Services revenue 452.8 441.9 2.5%
Total gross invoiced income 2,211.4 2,380.0 -7.1%
Technology Sourcing revenue 705.3 771.8 -8.6%
Services revenue 452.8 441.9 2.5%
Professional Services revenue(2) 158.2 132.5 19.4%
Managed Services revenue(2) 294.6 309.4 -4.8%
Total revenue 1,158.1 1,213.7 -4.6%
Gross profit 230.8 250.8 -8.0%
Adjusted administrative expenses (190.1) (192.0) -1.0%
Adjusted operating profit 40.7 58.8 -30.8%
The UK delivered a weaker result in a market that was softer than expected at
the start of the year, especially for hardware. Total gross invoiced income
decreased by 7.1%, driven by a 9.3% decline in Technology Sourcing and 2.5%
growth in Services revenue. Total revenue decreased by 4.6%. Gross profit
decreased by 8.0%, with gross margin decreasing by 73 basis points, driven
largely by an underperforming Managed Services contract. Administrative
expenses decreased by 1.0% due to lower commissions and good cost control,
resulting in adjusted operating profit decreasing by 30.8%. The second half of
the year delivered a better result than the first half, with total gross
invoiced income and revenue ahead of the prior period and gross profit broadly
flat.
Customers exercised greater caution across the year, with purchasing decisions
taking longer to conclude. This behaviour was compounded by the general
election in July. As a result of the more challenging backdrop, the
competitive environment sharpened. We are however encouraged by the better
momentum we demonstrated in the second half. We added six major customers,
bringing the total to 54 at year end, matching the number achieved in 2021.
During the year, we were also pleased to renew some very substantial
contracts, including a six-year agreement worth approximately £1bn with a
large UK customer covering all three Service Lines. We also grew our public
sector business in 2024 and are optimistic about the technology transformation
opportunities in this sector. We won large new customers to deliver
high-performance AI-related infrastructure, based on our ability to deliver
complex logistics and deployment solutions at pace.
Technology Sourcing
Technology Sourcing gross invoiced income decreased by 9.3%, with gross margin
on a revenue basis, increasing by 35 basis points, largely reflecting a higher
mix of software. Demand for workplace hardware remained relatively weak
despite the ageing installed base of PCs following significant investment
during the pandemic. The continuing adoption of Windows 11 and the end of
support for Windows 10 in October 2025 is expected to provide an impetus for a
device refresh in 2025. We ended the year more strongly, as we fulfilled parts
of the AI data center projects noted above.
The product order backlog at 31 December 2024 was £426.7m, representing a
17.1% increase since 31 December 2023 (£364.3m).
Services
Services revenue increased by 2.5%, driven by excellent growth in Professional
Services, up 19.4%, partly offset by a 4.8% decline in Managed Services. Gross
margin decreased by 267 basis points driven by Managed Services, reflecting
the onboarding of a large customer, which is now substantially complete, and
the impact of an underperforming contract. Excluding the underperforming
contract, Services gross margin increased year-on-year.
Professional Services had an excellent year after a challenging 2023. This was
driven by good demand in networking, Windows 11-related consultancy projects
and a large public sector customer. There is good demand for our skills and
the pipeline for Professional Services is healthy.
In Managed Services, the onboarding of a large public sector contract, secured
at the end of 2023, was extended and is expected to contribute more materially
in 2025. We have taken remedial action to address an underperforming contract
which we do not expect to repeat at the same level in 2025. We are seeing
strong interest in our Device Lifecycle Management proposition, as evidenced
by the six-year contract renewal referenced above.
Germany
Results 2024 2023 Change Change in constant currency
£m £m
Technology Sourcing gross invoiced income 1,909.4 2,111.5 -9.6% -7.0%
Services revenue 752.1 765.7 -1.8% 0.9%
Total gross invoiced income 2,661.5 2,877.2 -7.5% -4.9%
Technology Sourcing revenue 1,234.6 1,261.8 -2.2% 0.6%
Services revenue 752.1 765.7 -1.8% 0.9%
Professional Services revenue(2) 407.5 394.4 3.3% 6.2%
Managed Services revenue(2) 344.6 371.3 -7.2% -4.6%
Total revenue 1,986.7 2,027.5 -2.0% 0.7%
Gross profit 366.2 374.5 -2.2% 0.5%
Adjusted administrative expenses (209.3) (211.5) -1.0% 1.7%
Adjusted operating profit 156.9 163.0 -3.7% -1.0%
Germany delivered a very solid performance for the year against a strong
comparative, helped by a stronger second-half performance. Total gross
invoiced income decreased by 4.9% in constant currency, driven by a reduction
in Technology Sourcing, and modest growth in Services revenue. Gross profit
increased by 0.5% in constant currency with gross margin decreasing by four
basis points, with a good margin performance in Technology Sourcing offset by
a softer performance in Services. Good cost control led to administrative
expenses increasing by 1.7% in constant currency, resulting in a decline in
adjusted operating profit of 1.0% in constant currency. Adjusted operating
profit in the second half increased by 11.8% in constant currency, 8.6% on a
reported basis.
In the context of a challenging overall economic backdrop in Germany, we
continue to benefit from the breadth and depth of our portfolio, our
capabilities and the strength of our relationships with both public and
corporate sector customers. As a result, we continued to broaden our portfolio
with existing customers and expanded our customer base. At year end we had
increased the number of major customers by three to 65. Looking ahead into
2025, we are mindful of the uncertain macro and political environment
following recent elections.
Technology Sourcing
Technology Sourcing gross invoiced income decreased by 7.0% in constant
currency against an exceptionally strong comparative, which included a large
networking contract. We delivered solid growth in data center, security and
workplace. Technology Sourcing gross margin increased by 20 basis points due
to strong execution and product mix.
In addition to strong software demand, we continue to see a trend towards
bundling procurements in bigger framework contracts, especially for global
requirements of large international customers and infrastructure demand from
our major public sector clients. Demand for security solutions remains
buoyant, supported by new mandatory EU legislation aimed at enhancing
cybersecurity and operational resilience across a number of sectors. We are
also starting to see increasing demand for AI-related infrastructure. In
particular, the pipeline is growing for on-premise data center infrastructure
for data training purposes.
The demand for innovative and flexible workplace solutions with asset
management, deployment and maintenance services and an increasingly
international scope remains high. Following the successful implementation of
the Device Lifecycle Management solution at a global customer in the financial
sector, we have won further large and exciting projects in the industrial,
retail and travel sectors.
The product order backlog at 31 December 2024 was £270.4m, a 17.5% increase
in constant currency since 31 December 2023 (£230.1m).
Services
Services revenue increased by 0.9% in constant currency, with 6.2% growth in
Professional Services outweighing a 4.6% decline in Managed Services. Services
gross margin declined by 44 basis points, largely reflecting one
underperforming Managed Services contract which we do not expect to repeat at
the same level in 2025. Excluding the impact of this contract, Services gross
margin increased. As anticipated, our Services performance improved in the
second half of the year.
Professional Services saw continued strong demand from public sector customers
for support, engineering and consultancy services. We also see continuing
demand for project support and skills from our corporate customers, especially
in networking and security, data center consolidation and cloud management, as
well as for expanding modern workplace infrastructures. In addition, we are
increasingly seeing a need for comprehensive advice on the use of AI in
general and AI-related infrastructure.
In Managed Services, in the context of a large portfolio of contracts that
performed as expected, it was disappointing that one contract impacted our
performance for the year. We managed our margin well during the second half
and onboarded a number of wins, including a long-term workplace contract with
a global customer in the healthcare and agriculture sectors. Looking ahead, we
have a strong pipeline particularly in workplace and networking, where we are
very well-positioned.
Western Europe
Results 2024 2023 Change Change in constant currency
£m £m
Technology Sourcing gross invoiced income 971.7 929.7 4.5% 7.4%
Services revenue 228.6 261.6 -12.6% -10.4%
Total gross invoiced income 1,200.3 1,191.3 0.8% 3.5%
Technology Sourcing revenue 590.7 639.7 -7.7% -5.2%
Services revenue 228.6 261.6 -12.6% -10.4%
Professional Services revenue(2) 62.2 65.6 -5.2% -2.7%
Managed Services revenue(2) 166.4 196.0 -15.1% -12.9%
Total revenue 819.3 901.3 -9.1% -6.7%
Gross profit 118.5 118.7 -0.2% 2.6%
Adjusted administrative expenses (104.8) (103.8) 1.0% 3.7%
Adjusted operating profit 13.7 14.9 -8.1% -4.9%
Western Europe is a new reporting Segment, adopted at our half year results.
It combines France, which we previously reported separately, with Belgium,
Netherlands and Switzerland, which we have transferred from the previously
reported International Segment. The International Segment aggregated selling
entities with a number of purely operational support entities that provide
Services to the Group's global customers. The change makes a clearer
distinction between the countries in which we sell to customers and the other
countries in which we operate directly to support those customers.
Total gross invoiced income increased by 3.5% in constant currency, with good
growth in Technology Sourcing partly offset by a decline in Services revenue.
Gross profit increased by 2.6% in constant currency, with gross margin
increasing 129 basis points. Technology Sourcing gross margin increased by 177
basis points and Services gross margin was down 12 basis points.
Administrative expenses increased by 3.7% in constant currency, resulting in
adjusted operating profit declining by 4.9% in constant currency.
France delivered increased gross invoiced income driven by good growth in
Technology Sourcing, partly offset by a decline in Services revenue, largely
reflecting the termination of low-margin Managed Services contracts.
Technology Sourcing growth was driven by an increase in sales of lower-margin
workplace hardware and software. We onboarded several new Managed Services
contracts in the public and private sectors during 2024, which we expect to
deliver benefits in the coming years. In the second half of the year we were
also pleased to win a multilingual service desk and managed network services
contract for a large multi-national fintech business. We continue to build on
our enhanced market position with combined strength in workplace, networking
and data center. Looking forward, while our pipeline of opportunities in
France is encouraging, we are also mindful of the increase in macroeconomic
and political uncertainty.
Belgium delivered another strong performance, driven by growth in both
Technology Sourcing and Managed Services. After the first full year targeting
the public sector, we secured multi-year technology frameworks with the
federal government and in the defence sector. We onboarded a multi-year
outsourcing contract with a global customer in the financial settlement
services industry and have a full Managed Services pipeline.
The Netherlands performed in line with our expectations, with the result
significantly impacted by the loss of one of the largest public sector
Technology Sourcing contracts in the second half of 2023. Excluding this,
performance was stable year-on-year.
As of the beginning of 2025, Belgium and the Netherlands are operating as a
single structure, fully integrated into the Computacenter operating model. We
see benefits from creating a larger entity to better engage with our vendor
partners and to provide customers with better access to Computacenter's Group
capabilities.
Switzerland delivered an improved performance against a weak comparative,
driven by growth in Technology Sourcing and Services. Volumes increased for
our main Services contracts and we secured a five-year contract extension with
a key customer. Technology Sourcing volumes increased following new customer
wins with international corporate customers and the public sector. We have
also taken the decision to integrate our Swiss business into our German
business, to help us make progress in acquiring target customers that are
headquartered in Switzerland, as well as accelerate some prioritised vendor
certifications.
The combined product order backlog at 31 December 2024 was £151.0m, a 16.2%
increase in constant currency since 31 December 2023 (£130.0m).
North America
Results 2024 2023 Change Change in constant currency
£m £m
Technology Sourcing gross invoiced income 3,632.8 3,454.4 5.2% 8.1%
Services revenue 180.8 146.1 23.8% 27.1%
Total gross invoiced income 3,813.6 3,600.5 5.9% 8.9%
Technology Sourcing revenue 2,790.6 2,602.6 7.2% 10.3%
Services revenue 180.8 146.1 23.8% 27.1%
Professional Services revenue(2) 150.4 118.7 26.7% 30.2%
Managed Services revenue(2) 30.4 27.4 10.9% 13.9%
Total revenue 2,971.4 2,748.7 8.1% 11.2%
Gross profit 280.7 267.5 4.9% 7.8%
Adjusted administrative expenses (208.4) (202.5) 2.9% 5.9%
Adjusted operating profit 72.3 65.0 11.2% 13.9%
North America delivered another record year, supported by several significant
new customer wins. Gross invoiced income increased by 8.9% in constant
currency, driven by a strong performance in Technology Sourcing against a
challenging comparative, as well as excellent Services revenue growth of
27.1%. Gross profit increase by 7.8% in constant currency, with gross margin
decreasing by 29 basis points. Administrative expenses increased by 5.9% in
constant currency, largely reflecting investment in sales capacity and
increased commissions, resulting in adjusted operating profit growth of 13.9%
in constant currency. Adjusted operating profit in the second half increased
by 33.1% in constant currency, 29.4% on a reported basis.
By the end of the year, we added four major customers bringing the total to
51. We were pleased to continue to grow our business across healthcare,
financial services, retail and state government, as well as adding two new
large technology customers. These wins enabled us to more than offset the
anticipated normalisation of volumes with an existing large customer. We
continue to add targeted sales capacity to capitalise on the significant
market opportunity. During the year we successfully migrated BITS and Pivot
Phase 1 onto our Group-wide ERP system.
Technology Sourcing
Technology Sourcing gross invoiced income increased by 8.1% on a constant
currency basis and gross margin in Technology Sourcing decreased by 75 basis
points, largely due to increased hyperscale volumes in the second half of the
year. Our strong track record of delivering IT infrastructure at scale and at
speed is helping us to win new customers and broaden our hyperscale customer
base. We won significant new business with two hyperscale customers,
generating significant Technology Sourcing and Professional Services revenue.
We also grew our volumes with enterprise customers during the year achieving
growth in healthcare, financial services, retail and state government, helped
by a strong focus on selling more to existing customers.
The product order backlog at 31 December 2024 was £1,566.7m, a 297.5%
increase in constant currency since 31 December 2023 (£394.1m), reflecting
the significant business won across the year against the low position at the
end of 2023, following high levels of order completions. Our strong backlog
positions us well for the year ahead and we remain excited by the pipeline of
opportunities with both enterprise and hyperscale customers. In addition, in
2025 we will continue to invest in the business, building a new Integration
Center in Atlanta to support our growth.
Services
Services revenue increased by 27.1% in constant currency, reflecting a 30.2%
increase in Professional Services and a 13.9% increase in Managed Services.
Services gross margin increased by 676 basis points, driven primarily by a
large hyperscale project. We continue to focus on leveraging Group-wide tools,
expertise and systems to deliver long-term Services growth.
Professional Services' excellent revenue growth was boosted by a very large
data center project for a hyperscale customer, where we deployed over 250
engineers to help build the world's largest AI cluster. We also increased our
business with enterprise customers, winning several larger projects. We
continue to focus our efforts on driving efficiency and improving utilisation
across our Professional Services business.
Managed Services revenue grew strongly following new customer wins, including
a large global automotive manufacturer and a healthcare customer. This more
than offset the lower-than-expected activity from two customers, coupled with
the discontinuation of some services previously offered by our Canadian
business.
Financial review
In 2024, the Group delivered a solid overall performance against a challenging
prior year and in the context of a more cautious demand environment. After a
subdued first half, the Group recovered with pleasing execution towards the
end of the year leading to the most profitable six months in Computacenter's
history. During the year, we continued to invest in Group-wide systems to
improve our capabilities, enhance productivity and secure future growth. Our
cash performance was excellent, driven by strong working capital management,
resulting in adjusted net funds of £482.2m at the end of the year, even after
returning £200m to shareholders via the share buyback programme. The year-end
adjusted net funds position benefited from strong collections and
approximately £100m more of early customer payments than in the prior year.
Gross profit
Gross profit fell by 0.9% in the year following the decline in gross invoiced
income and a fall in gross margins. Group gross margin, expressed as gross
profit as a percentage of revenue, decreased by 22 basis points to 14.9%
(2023: 15.1%), with a decrease in Technology Sourcing gross margin outweighing
a slight increase in Services margin.
Operating profit
Operating profit fell by 11.5% to £237.9m (2023: £268.8m). Adjusted
operating profit fell by 9.1% to £246.7m (2023: £271.5m), and by 6.8% in
constant currency.
Administrative expenses increased by 2.0% to £798.9m (2023: £783.3m). During
the year, we increased our spend on strategic corporate initiatives by 31.0%
to £36.8m (2023: £28.1m). Adjusted administrative expenses increased by 2.0%
to £788.3m (2023: £772.5m), and by 4.0% in constant currency.
Group gross profit conversion, expressed as adjusted operating profit as a
percentage of gross profit, fell to 23.8% (2023: 26.0%) partly reflecting the
increase in investment during the year, which is detailed below.
Profit before tax
The Group's profit before tax for the year decreased by 10.1% to £244.6m
(2023: £272.1m). Adjusted profit before tax decreased by 8.6% to £254.0m
(2023: £278.0m) and declined by 6.3% in constant currency.
The difference between profit before tax and adjusted profit before tax
relates to the Group's net costs of £9.4m (2023: £5.9m) from exceptional and
other adjusting items, associated with the acquisition of BITS and the
amortisation of acquired intangibles as a result of this and other North
American acquisitions. Further information on these items can be found below.
Net finance income
Net finance income in the year amounted to £6.7m (2023: £3.3m).
Included within the net finance income were £5.8m of interest charged on
lease liabilities recognised under IFRS 16 (2023: £4.7m) and exceptional
interest costs of £0.6m relating to the unwinding of the discount on the
contingent consideration for the purchase of BITS, which was excluded on an
adjusted basis (2023: £3.2m).
On an adjusted basis, which excludes the £0.6m exceptional interest cost
described above, net finance income was £7.3m (2023: £6.5m).
Taxation
The tax charge was £72.7m (2023: £72.7m unchanged) on profit before tax of
£244.6m (2023: £272.1m). This represented a tax rate of 29.7% (2023: 26.7%).
The Group recorded a tax credit of £1.6m in 2024 related to the amortisation
of acquired intangibles (2023: £4.0m). As we recognise the associated
amortisation charge outside of our adjusted profitability (see exceptional and
other adjusting items below), we also report the tax benefit on the
amortisation outside of our adjusted tax charge.
The adjusted tax charge for the year was £74.3m (2023: £76.7m) on an
adjusted profit before tax for the year of £254.0m (2023: £278.0m). The
effective tax rate (ETR) was therefore 29.3% (2023: 27.6%), on an adjusted
basis.
Overall, the adjusted ETR continues to trend upwards due to an increasing
reweighting of the geographic split of adjusted profit before tax away from
the United Kingdom to Germany and the United States, where tax rates are
higher.
The adjusted ETR is within the full-year range of 28.5% to 30.5% that we
indicated at the time of our 2024 Interim Results. We expect that the full
year ETR in 2025 will increase within a range of 29.5% to 31.5% continuing to
be subject to increasing upwards pressure, due to the changing geographical
mix of profits, as noted above, and as governments across our primary markets
come under fiscal and political pressure to increase corporation tax rates.
The Audit Committee and the Board reviewed and approved the Group Tax Policy
during the year, with no material changes from the prior year. We make every
effort to pay all the tax attributable to profits earned in each jurisdiction
where we operate. We do not artificially inflate or reduce profits in one
jurisdiction to provide a beneficial tax result in another and maintain
approved transfer pricing policies and programmes, to meet local compliance
requirements. Virtually all of the tax charge in 2024 was incurred in either
the United Kingdom, Germany, France or the United States tax jurisdictions, as
it was in 2023.
There are no material tax risks across the Group. Computacenter will recognise
provisions and accruals in respect of tax where there is a degree of
estimation and uncertainty, including where it relates to transfer pricing,
such that a balance cannot fully be determined until accepted by the relevant
tax authorities. For 2024, the Group Transfer Pricing Policy implemented in
2013 resulted in a licence fee of £39.4m (2023: £36.9m), charged by
Computacenter UK to Computacenter Germany, Computacenter France and
Computacenter Belgium. The licence fee is equivalent to 1.2% of revenue and
reflects the value of the best practice and know-how that is owned by
Computacenter UK and used by the Group. It is consistent with the requirements
of the Organisation for Economic Co-operation and Development (OECD) base
erosion and profit shifting guidance. The licence fee is recorded outside the
Segmental results found in note 4 to the summary financial information within
this announcement, which analyses Segmental results down to adjusted operating
profit.
Reconciliation to adjusted measures for the year ended 2024
Adjustments
Reported Principal Amortisation Exceptionals Adjusted
full-year element on of acquired and others full-year
results agency intangibles £m results
£m contracts £m £m
£m
Revenue 6,964.8 2,951.7 - - 9,916.5
Cost of sales (5,929.8) (2,951.7) - - (8,881.5)
Gross profit 1,035.0 - - - 1,035.0
Administrative expenses (798.9) - 10.6 - (788.3)
Gain related to acquisition of subsidiary 1.8 - - (1.8) -
Operating profit 237.9 - 10.6 (1.8) 246.7
Finance income 14.5 - - - 14.5
Finance costs (7.8) - - 0.6 (7.2)
Profit before tax 244.6 - 10.6 (1.2) 254.0
Income tax expense (72.7) - (1.6) - (74.3)
Profit for the year 171.9 - 9.0 (1.2) 179.7
Reconciliation to adjusted measures for the year ended 2023
Adjustments
Reported Principal Amortisation Exceptionals Adjusted
full-year element on of acquired and others full-year
results agency intangibles £m results
£m contracts £m £m
£m
Revenue 6,922.8 3,158.6 - - 10,081.4
Cost of sales (5,878.8) (3,158.6) - - (9,037.4)
Gross profit 1,044.0 - - - 1,044.0
Administrative expenses (783.3) - 10.8 - (772.5)
Other income related to acquisition of subsidiary 5.3 - - (5.3) -
Gain related to acquisition of subsidiary 2.8 - - (2.8) -
Operating profit 268.8 - 10.8 (8.1) 271.5
Finance income 13.8 - - - 13.8
Finance costs (10.5) - - 3.2 (7.3)
Profit before tax 272.1 - 10.8 (4.9) 278.0
Income tax expense (72.7) - (4.0) - (76.7)
Profit for the year 199.4 - 6.8 (4.9) 201.3
The table below reconciles the tax charge to the adjusted tax charge for the
years ended 31 December 2024 and 31 December 2023.
2024 2023
£m £m
Tax charge 72.7 72.7
Items to exclude from adjusted tax:
Tax credit on amortisation of acquired intangibles 1.6 4.0
Adjusted tax charge 74.3 76.7
Effective tax rate 29.7% 26.7%
Adjusted effective tax rate 29.3% 27.6%
Profit for the year
The profit for the year decreased by 13.8% to £171.9m (2023: £199.4m). The
adjusted profit for the year decreased by 10.7% to £179.7m (2023: £201.3m)
and by 8.4% in constant currency.
Exceptional and other adjusting items
The net loss from exceptional and other adjusting items in the year was £7.8m
(2023: loss of £1.9m). Excluding the £1.6m gain from the tax items noted
above (2023: gain of £4.0m), the profit before tax impact was a net loss of
£9.4m (2023: loss of £5.9m).
On the acquisition of BITS, the Group agreed contingent consideration which
required it to pay BITS' former owners two earn-out payments, based on BITS'
2022, 2023 and H1 2024 earnings before interest, taxation, depreciation and
amortisation (EBITDA) and indebtedness. The Group has now made the final
payments to the vendors leading to a release of contingent consideration to
the Consolidated Income Statement during the year of £2.2m (2023: £2.8m),
net of £0.4m (2023: nil) of costs incurred as per the share purchase
agreement. These related to the acquisition, are non-operational in nature and
have therefore been classified as an exceptional item, consistent with the
prior year.
The Group recorded exceptional interest costs of £0.6m (2023: £3.2m), as
described under net finance income above.
In calculating our adjusted results we have continued to exclude the
amortisation of acquired intangible assets as an 'other adjusting item'. This
charge distorts the understanding of our Group and Segmental operating
results, as it is non-cash, does not relate to operational performance, and is
significantly affected by the timing and size of our acquisitions.
The amortisation of acquired intangible assets was £10.6m (2023: £10.8m),
primarily relating to the amortisation of the intangibles acquired as part of
the recent North American acquisitions.
Earnings per share
Diluted EPS decreased by 11.7% to 152.9p per share (2023: 173.2p per share).
Adjusted diluted EPS decreased by 8.5% to 159.9p per share (2023: 174.8p per
share).
2024 2023
Basic weighted average number of shares (excluding own shares held) (m) 110.6 112.9
Effect of dilution:
Share options 1.1 1.2
Diluted weighted average number of shares 111.7 114.1
Profit for the year attributable to equity holders of the Parent (£m) 170.8 197.6
Basic earnings per share (p) 154.4 175.0
Diluted earnings per share (p) 152.9 173.2
Adjusted profit for the year attributable to equity holders of the Parent 178.6 199.5
(£m)
Adjusted basic earnings per share (p) 161.5 176.7
Adjusted diluted earnings per share (p) 159.9 174.8
Dividend
The Board recognises the importance of dividends to shareholders and the Group
has a long track record of paying dividends and other special cash returns.
The Group has already returned over £1.2bn since flotation through a
combination of dividends and share buybacks, with no additional investment
required from shareholders over that time.
We are committed to managing the cash position for shareholders. Our approach
to capital management is to ensure that the Group has a robust capital base
and maintains a strong credit rating, whilst aiming to maximise shareholder
value. The Group is highly cash generative, enabling organic and inorganic
investment in recent years to be funded from cash reserves.
Dividends are paid from the standalone balance sheet of the Parent Company
and, as at 31 December 2024, the distributable reserves were £319.8m (31
December 2023: £474.1m).
The Board has consistently applied the Company's dividend policy, which states
that the interim dividend will be approximately one third of the previous
year's total dividend and that the total dividend paid will result in a
dividend cover of two to 2.5 times based on adjusted diluted EPS.
The Board is therefore pleased to propose a final dividend for 2024 of 47.4p
per share (2023: 47.4p per share). Together with the interim dividend, this
brings the total ordinary dividend for 2024 to 70.7p per share, representing a
1.0% increase on the 2023 total dividend per share of 70.0p.
Subject to the approval of shareholders at our Annual General Meeting on 15
May 2025, the proposed dividend will be paid on Friday 4 July 2025. The
dividend record date is set as Friday 6 June 2025 and the shares will be
marked ex-dividend on Thursday 5 June 2025.
Share buyback
Given the Group's strong positive adjusted net funds position, Computacenter
announced on 26 July 2024 that it would return up to £200m to shareholders
via a share buyback programme, as detailed below. This is in line with our
capital allocation policy to invest organically, make targeted acquisitions
and distribute surplus capital while retaining a strong balance sheet.
On 26 July 2024, Computacenter plc commenced a share buyback programme to
repurchase up to 11,414,110 of its ordinary shares. The maximum amount
allocated to the programme was £200m. The sole purpose of the programme was
to reduce the Company's share capital.
The programme completed on 30 October 2024, with a total of 7,897,178 shares
purchased for a consideration of £198.7m. The programme incurred directly
associated trading expenses of £1.3m and a further £0.2m of other associated
expenses. The shares were initially purchased into treasury, with subsequent
cancellations of 5,000,000 shares leading to a 6.9% reduction in total voting
rights.
Central corporate costs
Central corporate costs primarily include the costs of the Board, related
public company costs, Group Executive members not aligned to a specific
geographic trading entity, and the cost of centrally-funded strategic
initiatives that benefit the whole Group. Accordingly, these expenses are
disclosed separately as central corporate costs, within the Segmental note.
These costs are borne within the Computacenter (UK) Limited legal entity and
have been removed for Segmental reporting and performance analysis but form
part of the overall Group adjusted administrative expenses.
Total central corporate costs have increased by 16.2% to £50.9m (2023:
£43.8m).
Within this:
· Board expenses, related public company costs, and costs
associated with Group Executive members not aligned to a specific geographic
trading entity, increased to £13.1m (2023: £12.8m);
· share-based payment charges associated with Group Executive
members as identified above, including the Group Executive Directors,
decreased to £1.0m in 2024 (2023: £2.8m); and
· strategic corporate initiatives (as described below) totalled
£36.8m, up 31.0% over 2023 (£28.1m).
Investments
Customers choose Computacenter because of the quality of our people and
service. To deliver high-quality service to our customers, we need to invest
consistently in our systems and tools, Integration Centers and support
operations, to provide us with competitive advantage and derive benefits from
our Group scale, while ensuring consistency of service and agility.
In 2024, we spent £36.8m on strategic corporate initiatives, as we continued
our investment in new systems, toolsets and cyber resilience. This compared to
£28.1m in 2023, which in turn was almost double the spend in 2022.
Our spend in 2024 was spread across projects that will improve our
capabilities and productivity and underpin our systems of the future.
Our systems need to be robust, secure and able to handle large volumes. They
must also be simple to use and adaptable to most customer eventualities. We
prioritise our plans for systems development, and other investments in time
and capital, in response to the ever-changing environment in which we operate.
We have therefore continued to refine our systems investment roadmap through
to the end of 2027, with a programme to replace legacy systems that enable our
Technology Sourcing and Services businesses. Investing in best-of-breed tools
will lower cost to serve, improve the quality of our offerings, and enhance
our relevance to customers in the marketplace.
Cash flow
The Group delivered a net cash inflow from operating activities of £417.1m
(2023: £410.6m). In the first half of 2024, we saw operating cash outflows as
our working capital returned closer to our historical norms. Typically, the
Group sees modest to neutral operating cash inflows in the first half of the
year with substantial net operating cash inflows in the second half of the
year.
During 2024, net operating cash inflows from working capital, including
inventories, trade and other receivables, and trade and other payables, were
£151.0m (2023: £136.7m).
The Group had £307.2m of inventory as at 31 December 2024, an increase of
42.2% on the balance as at 31 December 2023 of £216.0m. This temporary
increase is due primarily to the timing of large projects in North America.
The closing balance was materially lower than the high point of £532.6m at 30
September 2022, which was the height of the industry-wide supply chain issues
experienced at the time. We expect that the stabilised levels of inventory
will continue to remain well-managed, with highs and lows remaining within
historical operational norms during 2025.
The year end adjusted net funds position benefited from strong collections and
approximately £100m more of early customer payments than in the prior year.
After interest, tax and gross capital expenditure cashflows, our free cash
inflow was £348.6m in the year (2023: £339.9m).
Capital expenditure in the year was £31.5m (2023: £35.1m) primarily
representing investments in IT equipment and software tools, to enable us to
deliver improved service to our customers.
The Group's Employee Benefit Trust (EBT) made market purchases of the
Company's ordinary shares of £23.1m (2023: £38.0m) to satisfy maturing PSP
awards and Sharesave schemes and to reprovision the EBT in advance of future
maturities. During the year, the Company received savings from employees of
£6.0m to purchase options within the Sharesave schemes (2023: £9.2m).
The Group made further payments on 2024 of £18.7m (2023: £17.4m) related to
the previous BITS acquisition, in accordance with the share purchase
agreement.
31 December 2024 31 December 2023
£m £m
Adjusted operating profit 246.7 271.5
Adjusting items (8.8) (2.7)
Operating profit 237.9 268.8
Other non-cash items and adjustments 49.6 47.3
Change in working capital 151.0 136.7
Change in pensions and provisions (1.3) (0.8)
Depreciation of right-of-use assets 41.0 41.4
Cash generated from operations 478.2 493.4
Interest and payments related to lease liabilities (47.4) (46.1)
Adjusted operating cash flow 430.8 447.3
Net interest received 10.4 10.5
Tax paid (61.1) (82.8)
Gross capital expenditure (31.5) (35.1)
Free cash flow 348.6 339.9
Dividends paid (78.9) (77.3)
Share buyback including expenses (200.2) -
Purchase of own shares net of proceeds (17.1) (28.8)
Acquisition of subsidiaries (18.7) (19.3)
Disposal of assets 0.3 -
Net cash flow 34.0 214.5
Net debt repayment (4.5) (6.9)
Increase in cash and cash equivalents 29.5 207.6
Effect of exchange rates on cash and cash equivalents (11.1) (0.8)
Cash and cash equivalents at the beginning of the year 471.2 264.4
Cash and cash equivalents at the year end 489.6 471.2
Opening net funds 343.6 117.2
Increase in cash and cash equivalents including impact of exchange rates 18.4 206.8
Movements in borrowings 4.8 7.9
Movements in lease liabilities (14.1) 11.7
Closing net funds 352.7 343.6
Opening adjusted net funds 459.0 244.3
Increase in cash and cash equivalents including impact of exchange rates 18.4 206.8
Movements in borrowings 4.8 7.9
Closing adjusted net funds 482.2 459.0
We reduced loans during the year by a net £4.5m (2023: £6.9m). We made
regular repayments towards the loan related to the construction of our German
headquarters in Kerpen and the customer financing facility in Pivot.
The Group continued to manage its cash and working capital positions
appropriately, using standard mechanisms, to ensure that cash levels remained
within expectations throughout the year. From time-to-time, some customers
request credit terms longer than our typical period of 30-60 days. In certain
instances, we will arrange for the sale of the receivables on a true sale
basis to a finance institution. We typically receive funds on 45-day terms
from the finance institution, which will then recover payment from the
customer on terms agreed with them. The cost of such an arrangement is borne
by the customer, either directly or indirectly, enabling us to receive the
full amount of payment in line with our standard terms.
The benefit to the cash and cash equivalents position of such arrangements as
at 31 December 2024 was £44.6m (31 December 2023: £33.8m).
During 2024, we engaged in a limited invoice financing programme of trade
receivables across the Group. The arrangements are on a non-recourse basis and
are intended to manage working capital demands of specific customer projects
or engagements. As at the year end, the amount outstanding was £2.5m.
Cash and cash equivalents and net funds
Cash and cash equivalents as at 31 December 2024 were £489.6m, compared to
£471.2m at 31 December 2023. Net funds as at 31 December 2024 were £352.7m
(31 December 2023: £343.6m).
Adjusted net funds as at 31 December 2024 were £482.2m (31 December 2023:
£459.0m). Adjusted net funds is a non-GAAP measure and excludes lease
liabilities of £129.5m as at 31 December 2024 (31 December 2023: £115.4m).
This provides an alternative view of the Group's overall liquidity position,
excluding the effect of the lease liabilities required to be capitalised under
the IFRS 16 accounting standard.
Net funds as at 31 December 2024 and 31 December 2023 were as follows:
31 December 2024 31 December 2023
£m £m
Cash and short-term deposits 489.6 471.2
Bank overdraft - -
Cash and cash equivalents 489.6 471.2
Bank loans - Pivot customer-specific facility (2.1) (4.5)
Bank loans - Kerpen building facility (5.3) (7.7)
Total bank loans (7.4) (12.2)
Adjusted net funds (excluding lease liabilities) 482.2 459.0
Lease liabilities (129.5) (115.4)
Net funds 352.7 343.6
For a full reconciliation of net funds and adjusted net funds, see note 9 to
the summary financial information within this announcement.
The Group had five specific credit facilities in place during the year and no
other material borrowings. There were no interest-bearing trade payables as at
31 December 2024 (31 December 2023: nil).
The Group's adjusted net funds position contains no current asset investments
(31 December 2023: nil).
This Strategic Report was approved by the Board on 17 March 2025 and was
signed on its behalf by:
MJ Norris
Chief Executive Officer
Consolidated Income Statement
For the year ended 31 December 2024
Note 2024 2023
£m £m
Revenue 4,5 6,964.8 6,922.8
Cost of sales 4 (5,929.8) (5,878.8)
Gross profit 4 1,035.0 1,044.0
Administrative expenses (798.9) (783.3)
Other income related to acquisition of a subsidiary - 5.3
Gain related to acquisition of a subsidiary 1.8 2.8
Operating profit 237.9 268.8
Finance income 14.5 13.8
Finance costs (7.8) (10.5)
Profit before tax 244.6 272.1
Income tax expense 7 (72.7) (72.7)
Profit for the year 171.9 199.4
Attributable to:
Equity holders of the Parent 170.8 197.6
Non-controlling interests 1.1 1.8
Profit for the year 171.9 199.4
Earnings per share:
- basic 8 154.4p 175.0p
- diluted 8 152.9p 173.2p
All of the activities of the Group relate to continuing operations.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2024
Note 2024 2023
£m £m
Profit for the year 171.9 199.4
Items that may be reclassified to the Consolidated Income Statement:
(Loss)/gain arising on cash flow hedge (0.2) 2.8
Income tax effect 7d (0.1) (0.9)
(0.3) 1.9
Exchange differences on translation of foreign operations (17.2) (25.8)
(17.5) (23.9)
Items not to be reclassified to the Consolidated Income Statement:
Remeasurement of retirement benefit obligation 4.5 (2.8)
Other comprehensive expense for the year, net of tax (13.0) (26.7)
Total comprehensive income for the year 158.9 172.7
Attributable to:
Equity holders of the Parent 157.8 171.3
Non-controlling interests 1.1 1.4
Total comprehensive income for the year 158.9 172.7
Consolidated Balance Sheet
As at 31 December 2024
Note 2024 2023
£m £m
Non-current assets
Property, plant and equipment 90.7 96.1
Right-of-use assets 119.0 104.5
Intangible assets 317.5 322.4
Investment in associate 0.1 0.1
Deferred income tax assets 7d 6.3 11.6
Trade and other receivables 32.7 21.1
Prepayments 5 7.7 10.3
574.0 566.1
Current assets
Inventories 307.2 216.0
Trade and other receivables 1,656.8 1,498.1
Income tax receivable 20.4 12.5
Prepayments 5 172.3 139.7
Accrued income 5 137.5 151.9
Derivative financial instruments 8.2 2.5
Cash and short-term deposits 9 489.6 471.2
2,792.0 2,491.9
Total assets 3,366.0 3,058.0
Current liabilities
Trade and other payables 2,054.3 1,674.5
Deferred income 5 285.7 234.6
Borrowings 4.1 4.8
Lease liabilities 36.3 37.3
Derivative financial instruments 3.4 6.3
Income tax payable 21.0 16.9
Provisions 4.9 2.2
2,409.7 1,976.6
Non-current liabilities
Borrowings 3.3 7.4
Lease liabilities 93.2 78.1
Retirement benefit obligation 22.3 26.2
Provisions 7.8 6.9
Deferred income tax liabilities 7d 10.7 13.4
137.3 132.0
Total liabilities 2,547.0 2,108.6
Net assets 819.0 949.4
Capital and reserves
Issued share capital 8.9 9.3
Share premium 4.0 4.0
Capital redemption reserve 0.4 -
Own shares held (246.5) (140.4)
Translation and hedging reserve 9.7 27.2
Retained earnings 1,033.7 1,041.6
Shareholders' equity 810.2 941.7
Non-controlling interests 8.8 7.7
Total equity 819.0 949.4
Approved by the Board on 17 March 2025.
MJ Norris
Chief Executive Officer
Consolidated Statement of Changes in Equity
For the year ended 31 December 2024
Attributable to equity holders of the Parent
Issued share capital Share Capital Own Transla-tion and hedging Retained earnings Share-holders' equity Non-controlling interests Total
£m premium Redemp-tion shares reserves £m £m £m equity
£m reserve held £m £m
£m £m
At 1 January 2024 9.3 4.0 - (140.4) 27.2 1,041.6 941.7 7.7 949.4
Profit for the year - - - - - 170.8 170.8 1.1 171.9
Other comprehensive (expense)/income - - - - (17.5) 4.5 (13.0) - (13.0)
Total comprehensive (expense)/income - - - - (17.5) 175.3 157.8 1.1 158.9
Reclassification - - - 8.5 - (8.5) - - -
Transactions with owners:
- Cost of share-based payments - - - - - 7.1 7.1 - 7.1
- Tax on share-based payments - - - - - (0.2) (0.2) - (0.2)
- Share buyback programme - - - (198.7) - - (198.7) - (198.7)
- Expenses relating to share buyback programme - - - - - (1.5) (1.5) - (1.5)
- Cancellation of shares (0.4) - 0.4 84.2 - (84.2) - - -
- Exercise of options - - - 23.0 - (17.0) 6.0 - 6.0
- Purchase of own shares - - - (23.1) - - (23.1) - (23.1)
- Equity dividends - - - - - (78.9) (78.9) - (78.9)
Total (0.4) - 0.4 (114.6) - (174.7) (289.3) - (289.3)
At 31 December 2024 8.9 4.0 0.4 (246.5) 9.7 1,033.7 810.2 8.8 819.0
At 1 January 2023 9.3 4.0 75.0 (127.7) 50.7 854.4 865.7 6.3 872.0
Profit for the year - - - - - 197.6 197.6 1.8 199.4
Other comprehensive (expense) - - - - (23.5) (2.8) (26.3) (0.4) (26.7)
Total comprehensive (expense)/income - - - - (23.5) 194.8 171.3 1.4 172.7
Transactions with owners:
- Cost of share-based payments - - - - - 7.7 7.7 - 7.7
- Tax on share-based payments - - - - - 3.1 3.1 - 3.1
- Capital reduction - - (75.0) - - 75.0 - - -
- Exercise of options - - - 25.3 - (16.1) 9.2 - 9.2
- Purchase of own shares - - - (38.0) - - (38.0) - (38.0)
- Equity dividends - - - - - (77.3) (77.3) - (77.3)
Total - - (75.0) (12.7) - (7.6) (95.3) - (95.3)
At 31 December 2023 9.3 4.0 - (140.4) 27.2 1,041.6 941.7 7.7 949.4
Consolidated Cash Flow Statement
For the year ended 31 December 2024
Note 2024 2023
£m £m
Operating activities
Profit before taxation 244.6 272.1
Net finance income (6.7) (3.3)
Depreciation of property, plant and equipment 21.5 20.4
Depreciation of right-of-use assets 41.0 41.4
Amortisation of intangible assets 18.8 18.9
Gain related to acquisition of a subsidiary* 6 1.8 -
Share-based payments 7.1 7.7
Loss on disposal of property, plant and equipment 0.3 0.2
Net cash flow from inventories (92.8) 189.2
Net cash flow from trade and other receivables (225.7) 107.7
(including contract assets)
Net cash flow from trade and other payables 469.5 (160.2)
(including contract liabilities)*
Net cash flow from provisions and retirement benefit obligation (1.3) (0.8)
Other adjustments 0.1 0.1
Cash generated from operations 478.2 493.4
Income taxes paid (61.1) (82.8)
Net cash flow from operating activities 417.1 410.6
Investing activities
Interest received 11.7 13.1
Contingent consideration (18.7) (17.4)
Purchases of property, plant and equipment (19.0) (21.9)
Purchases of intangible assets (12.5) (13.2)
Proceeds from disposal of property, plant and equipment 0.3 -
Net cash flow from investing activities (38.2) (39.4)
Financing activities
Interest paid (1.3) (2.6)
Interest paid on lease liabilities (5.8) (4.7)
Purchase of non-controlling interest - (1.9)
Dividends paid to equity shareholders of the Parent (78.9) (77.3)
Share buyback programme (198.7) -
Expenses relating to share buyback programme (1.5) -
Proceeds from exercise of share options 6.0 9.2
Purchase of own shares (23.1) (38.0)
Repayment of borrowings (44.5) (69.8)
Payment of capital element of lease liabilities (41.6) (41.4)
Drawdown of borrowings 40.0 62.9
Net cash flow from financing activities (349.4) (163.6)
Increase in cash and cash equivalents 29.5 207.6
Effect of exchange rates on cash and cash equivalents (11.1) (0.8)
Cash and cash equivalents at the beginning of the year 9 471.2 264.4
Cash and cash equivalents at the year end 9 489.6 471.2
* The gain related to acquisition of a subsidiary was £2.8m in 2023 and was
reported within 'net cash flow from trade and other payables (including
contract liabilities)'. The prior year comparative has not been reclassified
as it is immaterial and not significant to the understanding of the
Consolidated Cash Flow Statement.
1 General information
Computacenter plc is a limited company incorporated and domiciled in England,
whose shares are publicly traded. Its
registered address is Hatfield Business Park, Hatfield Avenue, Hatfield, AL10
9TW.
2 Summary of material accounting policies
The accounting policies adopted are consistent with those of the previous
financial year, as applied in the 2023 Annual Report and Accounts.
New or revised standards or interpretations
Some accounting pronouncements which have become effective from 1 January 2024
and have therefore been adopted do not have a significant impact on the
Group's financial results or position, other than certain disclosure changes
which are discussed below.
The Group has considered the impact of adoption of the amendments to IAS 7 and
IFRS 7 on its industry-standard supply chain arrangements (SCAs) where
suppliers have sold their debts due from the Group and which form part of
doing business as a customer of those suppliers. The Group has assessed that
as the SCAs do not have a material effect on the Group's payment terms and
liquidity risk, enhanced disclosures under IFRS 7 are not required.
At its July 2024 meeting, the International Accounting Standards Board (IASB)
agreed to publish the IFRS Interpretations Committee's (Committee) agenda
decision clarifying certain requirements for segment disclosures. In light of
the Committee's agenda decision and to further enhance the disclosure of
segment information, the Group has included some additional expense lines in
note 4, which are part of the Segment performance measures provided to the
Group's Chief Operating Decision Maker but not reported separately. The
additional lines disclosed for the current and prior year are: 'cost of
sales', 'costs of inventories recognised as an expense' and 'staff costs'.
IFRS 18 'Presentation and Disclosure in Financial Statements' will replace IAS
1 'Presentation of Financial Statements', effective for annual periods
beginning on or after 1 January 2027. The Group is currently assessing the
impact on its consolidated financial statements. From a high-level preliminary
assessment performed, adoption of IFRS 18 is unlikely to have a material
effect on net profit. However, the grouping of income and expense items into
new categories will change how operating profit is reported within the
Consolidated Income Statement. The Group intends to adopt IFRS 18 from its
effective date of 1 January 2027.
Other new standards, interpretations or amendments not yet effective have not
been early adopted and have not been disclosed, as they are not expected to
have a material effect on the Group's consolidated financial statements. The
Group anticipates that all relevant pronouncements will be adopted for the
first period beginning on or after the effective date of the pronouncement.
2.1 Basis of preparation
The summary financial information set out above does not constitute the
Group's Statutory Consolidated Financial Statements for the years ended 31
December 2024 or 2023. The summary financial information set out above is
derived from the Statutory Consolidated Financial Statements for the Group for
the year ended 31 December 2023, prepared in accordance with adopted IFRS,
which have been delivered to the Registrar of Companies and those for 2024
will be delivered in due course. The auditor has reported on those accounts;
their report was (i) unqualified, (ii) did not include a reference to any
matters to which the auditors drew attention by way of any emphasis without
qualifying their opinion and (iii) did not contain a statement under Section
498 (2) or (3) of the Companies Act 2006.
This preliminary announcement does not constitute the Group's full financial
statements for 2024 within the meaning of Section 434 of the United Kingdom
Companies Act 2006.
The Group's consolidated financial statements are prepared on the historical
cost basis, other than derivative financial instruments and contingent
consideration, which are stated at fair value.
The Group's consolidated financial statements are presented in pound sterling
(£) and all values are rounded to the nearest hundred thousand, except when
otherwise indicated.
In determining whether it is appropriate to prepare the financial statements
on a going concern basis, the Group prepares a three-year Plan (the Plan)
annually by aggregating top-down expectations of business performance across
the Group in the second and third year of the Plan with a detailed 12-month
bottom-up budget for the first year, which was approved by the Board. The Plan
is subject to rigorous downside sensitivity analysis which involves flexing a
number of the main assumptions underlying the forecasts within the Plan. The
forecast cash flows from the Plan are aggregated with the current position, to
provide a total three-year cash position against which the impact of potential
risks and uncertainties can be assessed. In the absence of significant
external debt, the analysis also considers access to available committed and
uncommitted finance facilities, the ability to raise new finance in most
foreseeable market conditions and the ability to restrict dividend payments.
The Directors have identified a period of not less than 12 months through to
17 March 2026, as the appropriate period for the going concern assessment and
have based their assessment on the relevant forecasts from the Plan for that
period. No events or conditions beyond the assessment period that may cast
significant doubt on the Group's ability to continue as a going concern have
been identified.
The potential impact of the principal risks and uncertainties is then applied
to the Plan. This assessment includes only those risks and uncertainties that,
individually or in plausible combination, would threaten the Group's business
model, future performance, solvency or liquidity over the assessment period
and which are considered to be severe but reasonable scenarios. It also takes
into account an assessment of how the risks are managed and the effectiveness
of any mitigating actions.
For the current period, the combined effect of the potential occurrence of
several of the most impactful risks and uncertainties in the downside
sensitivity scenario relates to a modelled, but not predicted, continuing
market downturn scenario, with slower-than-predicted recovery estimates,
beginning in 2025. This scenario simulates a continued impact for some of our
customers from a reduction in customer demand due to the current economic
crisis, and ongoing impact on the Group's revenues from this instability in
the global macroeconomic environment.
The supporting models of the Plan are subject to rigorous downside sensitivity
analysis that involves flexing a number of the main assumptions underlying the
forecasts within the Plan. The modelling resulted in a significant downturn in
Group revenues and margins, leading to a substantial loss-making position over
the assessment period.
This analysis results in a large risk impact adjustment to the cashflows over
the assessment period, which is then compared to the cash position generated
by the Plan, throughout the assessment period, to model whether the business
will be able to continue in operation. Included within this sensitivity
scenario is the modelled lack of access to our committed facility.
Under the sensitivity scenario, the business demonstrates modelled solvency
and liquidity over the assessment period.
Our cash and borrowing capacity provides sufficient funds to meet the
foreseeable needs of the Parent and Group. At 31 December 2024, the Group had
cash and short-term deposits of £489.6m and bank debt, primarily related to
the recently built headquarters in Germany and operations in North America, of
£7.4m. On 9 December 2022, the Group entered into an unsecured multi-currency
revolving loan facility of £200.0m. The facility had a term of five years,
which has been extended to seven years by exercising two one-year extension
options available on the first and second anniversary of the facility.
The Group has a resilient balance sheet position, with net assets of £819.0m
as at 31 December 2024. The Group made a profit after tax of £171.9m, and
delivered net cash flows from operating activities of £417.1m, for the year
ended 31 December 2024.
As the analysis continues to show a strong forecast cash position, even under
the severe economic conditions modelled in the sensitivity scenarios, the
Directors continue to consider that the Parent and Group are well placed to
manage business and financial risks in the current economic environment. Based
on this assessment, the Directors confirm that they have a reasonable
expectation that the Parent and Group will be able to continue in operation
and meet their liabilities as they fall due over the period of not less than
12 months from the date of signing the consolidated financial statements and
therefore have prepared the consolidated financial statements on a going
concern basis.
2.2 Basis of consolidation
The Group's consolidated financial statements comprise the financial
statements of the Parent Company and its subsidiaries as at 31 December each
year. The financial 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 for differences that may
exist between the respective local GAAPs and IFRS.
All intra-group balances, transactions, income and expenses and profit 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 profit or
loss and net assets in subsidiaries that is not held by the Group and is
presented separately from Parent shareholders' equity in the Consolidated
Balance Sheet.
2.2.1 Foreign currency translation
Each entity in the Group determines its own functional currency and items
included in the financial 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, or where relevant, the rate of a specific forward exchange
contract. Monetary assets and liabilities denominated in foreign currencies
are retranslated at the functional currency rate of exchange ruling at the
Consolidated Balance Sheet date. All differences are taken to the Consolidated
Income Statement, except foreign currency differences arising from the
translation of qualifying cash flow hedges, which are recognised in the
Consolidated Statement of Comprehensive Income, to the extent that the hedges
are effective.
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 main overseas subsidiaries are euro (€) and
US dollar ($). The Group's presentation currency is pound sterling (£). As at
the reporting date, the assets and liabilities of overseas subsidiaries are
translated into the presentation currency of the Group at the rate of exchange
ruling at the Consolidated 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
Consolidated Income Statement.
2.3 Revenue
Revenue is recognised when the Group's performance obligations are fulfilled,
to the extent of the amount which is expected to be received from customers as
consideration for the transfer of goods and services to the customer.
In multi-element contracts with customers where more than one good (Technology
Sourcing) or service (Professional Services and Managed Services) is provided
to the customer, analysis is performed to determine whether the separate
promises are distinct performance obligations within the context of the
contract. To the extent that this is the case, the transaction price is
allocated between the distinct performance obligations based upon relative
standalone selling prices. The revenue is then assessed for recognition
purposes based upon the nature of the activity and the terms and conditions of
the associated customer contract relating to that specific distinct
performance obligation.
The following specific recognition criteria must also be met before revenue is
recognised:
2.3.1 Technology Sourcing
The Group supplies hardware, software and resold third-party services
(together as 'goods') to customers that are sourced from and delivered by a
number of suppliers.
Technology Sourcing revenue is recognised when the Group's performance
obligations are fulfilled at a point in time when control of the goods has
been transferred to the customer. Typically, customers obtain control of the
goods when they are delivered to and have been accepted at their premises,
depending on individual customer arrangements. Invoices are routinely
generated at despatch from our Integration Centers or, in the case of direct
delivery by supplier, upon receipt at customer locations. At each reporting
date, a process is undertaken to ensure revenue is not recognised for goods
that have not been received by customers at that reporting date. Payment for
the goods is generally received on, or before, industry-standard payment
terms, ordinarily 30-60 days. Refer to note 3.2.1 for 'bill and hold'
transactions.
Revenue is recorded at the price specified in sales invoices which is based on
the customer contracts, net of any agreed discounts and rebates, and exclusive
of value added tax on goods or services supplied to customers during the year.
In limited instances, the Group provides early-payment discounts or rebates to
its customers, which create variability in the transaction price. In
determining the variable consideration to be recognised, these discounts and
rebates are estimated based on the terms of contractually agreed arrangements
and the amount of consideration to which the Group will be entitled in
exchange for supplying the goods or services. The level of estimation involved
in assessing the variable consideration is minimal given the arrangements are
generally prospective in nature and therefore deductions from revenue and
trade receivables are appropriately accounted for at the point revenue is
recognised.
Revenue is recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not
occur.
Technology Sourcing principal versus agent recognition
Management assesses the classification of certain revenue contracts for
Technology Sourcing revenue recognition on either an agent or principal basis.
Because the identification of the principal in a contract is not always clear,
Management makes a determination by evaluating the nature of our promise to
our customer as to whether it is a performance obligation to pass control of
the specified goods or services ourselves, in which case we are the principal,
or to arrange for those goods or services to be provided by the other party,
where we are the agent. We determine whether we are a principal or an agent
for each specified good or service promised to the customer, by evaluating the
nature of our promise to the customer and if we control each specified good or
service before it is delivered to the customer. We perform this evaluation by
assessing the fact pattern of the arrangement against a non-exhaustive list of
indicators that a performance obligation could involve an agency relationship:
· the vendor retains primary responsibility for fulfilling the
sale;
· we take no inventory risk before or after the goods have been
ordered, during shipping or on return;
· we do not have discretion to establish pricing for the vendor's
goods, limiting the benefit we can receive from the sale of those goods; and
· our consideration is in the form of a, usually predetermined,
commission.
2.3.2 Professional Services
The Group provides skilled professionals to customers either operating within
a project framework or on a 'resource on demand' basis.
For contracts operating within a project framework, revenue is recognised
based on the transaction price, with reference to the costs incurred as a
proportion of the total estimated costs (percentage of completion basis) of
the contract.
For those contracts which are 'resource on demand', where highly skilled
employees work for a customer on projects and engagements managed by the
customer, revenue is billed on a timesheet basis. The Group elects to use the
practical expedient in IFRS 15.B16, as we have a right to consideration from
our 'resource on demand' Professional Services customers in an amount that
corresponds directly with the value to our customer of the Group's performance
completed to date. The practical expedient applied permits the Group to
recognise these 'resource on demand' Professional Services revenues in the
amount to which the entity has a right to invoice. Professional Services
revenue is therefore recognised throughout the term of the contract, as
services are delivered, with amounts recognised based on monthly invoiced
amounts, as this corresponds to the service delivered to the customer and the
satisfaction of the Group's performance obligations.
Under either basis, Professional Services revenue is recognised over time. The
majority of the Group's Professional Services revenue is constituted by
'resource on demand' arrangements, is recognised in this manner and represents
the primary area of growth in this business line. As the majority of
Professional Services revenue is recognised as 'resource on demand', the
overall balance of risks to recognition for this business is decreased
compared to the scenario where the majority of Professional Services revenue
would be recognised on a percentage of completion basis. This is due to the
monthly timesheet nature of the billing which is agreed regularly with the
customer as the service is delivered.
Payment for the Services, which are invoiced monthly, is generally on industry
standard payment terms.
For contracts operating within a project framework, 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 and where the
Group has an enforceable right to payment as work is being performed. A
provision for forecast excess costs over forecasted revenue is made as soon as
a loss is foreseen (see note 2.16 for further detail).
2.3.3 Managed Services
The Group sells maintenance, support and management of customers' IT
infrastructures and operations.
The specific performance obligations and invoicing conditions in our Managed
Services contracts are typically related to the number of calls, interventions
or users that we manage and therefore the customer simultaneously receives and
consumes the benefits of the services as they are performed. The Group elects
to use the practical expedient in IFRS 15.B16, as we have a right to
consideration from our Managed Services customers in an amount that
corresponds directly with the value to our customer of the Group's performance
completed to date. The practical expedient applied permits the Group to
recognise Managed Services revenue in the amount to which the entity has a
right to invoice. Managed Services revenue is therefore recognised throughout
the term of the contract, as services are delivered, with amounts recognised
based on monthly invoiced amounts, as this corresponds to the service
delivered to the customer and the satisfaction of the Group's performance
obligations.
Invoice payment is generally on industry standard payment terms.
On occasion, the Group may have a limited number of Managed Services contracts
where revenue is recognised on a percentage of completion basis, which is
determined by reference to the costs incurred as a proportion of the total
estimated costs of the contract. If the total costs and revenues of a contract
cannot be reliably estimated, revenue is recognised only to the extent that
costs have been incurred and where the Group has an enforceable right to
payment as work is being performed. A provision for forecast excess costs over
forecasted revenue is made as soon as a loss is foreseen (see note 2.16 for
further detail).
2.3.4 Contract assets and liabilities
A contract asset is recognised when the Group has a right to consideration for
goods or services which have been transferred to the customer but have not
been billed, therefore excluding receivable balances. Contract assets
typically relate to longer-term Professional and Managed Services contracts
where work has been performed but has not been invoiced to the customer, and
are included within accrued income on the Consolidated Balance Sheet.
A contract liability is recognised when a customer pays the Group, or the
Group has a right to consideration that is unconditional, before the transfer
of the goods or services to which it relates. Contract liabilities typically
relate to longer-term Professional and Managed Services contracts where
consideration has been received under agreed billing timelines for which work
has yet to be performed, and are included within deferred income on the
Consolidated Balance Sheet.
Costs of obtaining and fulfilling revenue contracts
The Group operates in a highly competitive environment and is frequently
involved in contract bids with multiple competitors, with the outcome usually
unknown until the contract is awarded and signed.
When accounting for costs associated with obtaining and fulfilling customer
contracts, the Group first considers whether these costs fit within a specific
IFRS standard or policy. Any costs associated with obtaining or fulfilling
revenue contracts which do not fall into the scope of other IFRS standards or
policies are considered under IFRS 15. All such costs are expensed as
incurred, other than the two types of costs noted below:
1. Win fees - The Group pays 'win fees' to certain employees as
bonuses for successfully obtaining customer contracts. As these are
incremental costs of obtaining a customer contract, they are deferred along
with any associated payroll tax expense to the extent they are expected to be
recovered. These balances are presented within prepayments in the Consolidated
Balance Sheet. The win fee balance that will be realised after more than 12
months is disclosed as non-current.
2. Fulfilment costs - The Group often incurs costs upfront relating to
the initial set-up phase of an outsourcing contract, which the Group refers to
as 'Entry Into Service'. These costs do not relate to a distinct performance
obligation in the contract, but rather are accounted for as fulfilment costs
under IFRS 15 as they are directly related to the future performance on the
contract. They are therefore capitalised to the extent that they are expected
to be recovered. These balances are presented within prepayments in the
Consolidated Balance Sheet.
Both types of assets resulting from capitalised win fees and Entry Into
Service costs are amortised on a systematic basis that is consistent with the
transfer to the customer of the goods and services to which the asset relates
over the contract term. The amortisation charges on win fees and Entry Into
Service costs are recognised in the Consolidated Income Statement within
administrative expenses and cost of sales, respectively.
Any bid costs incurred by the Group's Central Bid Management Engines are not
capitalised or charged to the contract, but instead directly charged to
administrative expenses as they are incurred. These costs associated with bids
are not separately identifiable nor can they be measured reliably, as the
Group's internal bid teams work across multiple bids at any one time.
2.3.5 Finance income
Income is recognised as interest accrues.
2.4 Exceptional items
The Group presents those items of income and expense as exceptional items
which, because of the nature and expected infrequency of the events giving
rise to them, merit separate presentation to allow shareholders to understand
the elements of financial performance in the year, so as to facilitate
comparison with prior years and to assess trends in financial performance.
2.5 Adjusted measures
The Group uses a number of non-Generally Accepted Accounting Practice
(non-GAAP) financial measures in addition to those reported in accordance with
IFRS. The Directors believe that these non-GAAP measures, set out below,
assist in providing additional useful information on the underlying trends,
performance and position of the Group. The non-GAAP measures are also used to
enhance the comparability of information between reporting periods by
adjusting for non-recurring or uncontrollable factors which affect IFRS
measures, to aid the user in understanding the Group's performance.
Consequently, non-GAAP measures are used by the Directors and Management for
performance analysis, planning, reporting and incentive-setting purposes.
Adjusted measures have remained consistent with the prior year. However, as
with all non-GAAP alternative performance measures, these adjusted measures
present some natural limitations in their usage to understand the Group's
performance. These limitations include the lack of comparability with non-GAAP
and GAAP measures used by other companies and the fact that the results may,
from time-to-time, contain the benefit of acquisitions made but exclude the
significant costs associated with that acquisition or the amortisation of
acquired intangibles. It is therefore not a complete record of the Group's
financial performance as compared to its GAAP results. The exclusion of other
adjusting items may result in adjusted earnings being materially higher or
lower than reported earnings. In particular, when significant acquisition
related charges are excluded, adjusted earnings will be higher than reported
GAAP-compliant earnings.
These non-GAAP measures comprise: gross invoiced income, adjusted
administrative expenses, adjusted operating profit or loss, adjusted profit or
loss before tax, adjusted tax, adjusted profit or loss for the year, adjusted
earnings per share, and adjusted diluted earnings per share. They are, as
appropriate, each stated before: exceptional and other adjusting items
including gain or loss on acquisitions, expenses related to material
acquisitions, 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.
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
Balance Sheet and Consolidated Cash Flow Statement. This measure allows an
alternative view of growth in adjusted gross profit, based on the product mix
differences and the accounting treatment thereon. Gross invoiced income
includes all items recognised on an agency basis within revenue, on a gross
income billed to customers basis, as adjusted for deferred and accrued
revenue.
A reconciliation to adjusted measures is provided in the Financial review,
which details the impact of exceptional and other adjusting items when
comparing to the non-GAAP financial measures, in addition to those reported in
accordance with IFRS. Further detail is also provided within note 4, Segment
information.
2.6 Impairment of assets
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
flows, the recoverable amount is assessed for the cash-generating unit (CGU)
to which it belongs. These assets are tested across an aggregation of CGUs
that utilise the asset. The recoverable amount is the higher of the fair value
less costs to sell and the value-in-use of the asset or CGU. 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 flows are discounted to
their present value using a post-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset. Impairment losses of continuing operations are recognised in the
Consolidated 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 asset's or CGU'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 Consolidated
Income Statement.
2.7 Property, plant and equipment
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 buildings: 25-50 years
· short leasehold improvements: shorter of seven years and period
to expiry of lease
· fixtures and fittings:
· head office: 5-15 years
· other: shorter of seven years or period to expiry of lease
· office machinery and computer hardware: 2-15 years
· motor vehicles: three years
Freehold land is not depreciated. An item of property, plant and equipment is
derecognised upon disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gain or loss arising on
derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the item) is included in the
Consolidated Income Statement in the year the item is derecognised.
2.8 Leases
2.8.1 Group as lessee
Recognition of a lease
The contracts are assessed by the Group, to determine whether a contract is,
or contains, a lease. In general, arrangements are a lease when all of the
following apply:
· it conveys the right to control the use of an identified asset
for a certain period, in exchange for consideration;
· the Group obtains substantially all economic benefits from the
use of the asset; and
· the Group can direct the use of the identified asset.
· The Group elects to separate the non-lease components.
Measurement of a right-of-use asset and lease liability
Right-of-use asset
The Group measures the right-of-use asset at cost, which includes the
following:
· the initial amount of the lease liability, adjusted for any lease
payments made at or before the lease commencement date;
· any lease incentives received; and
· any initial direct costs incurred by the Group, as well as an
estimate of costs to be incurred by the Group in dismantling and removing the
underlying asset, restoring the site on which it is located or restoring the
underlying asset to the condition required by the lease contract. Cost for
dismantling, removing or restoring the site on which it is located and/or the
underlying asset is only recognised when the Group incurs an obligation to do
so.
The right-of-use asset is depreciated over the lease term, using the
straight-line method.
Lease liability
The lease liability is initially measured at the present value of the unpaid
lease payments, discounted using the interest rate implicit in the lease, or
if the rate cannot be readily determined, the Group's incremental borrowing
rate. Lease payments included in the measurement comprise fixed payments,
variable lease payments that depend on an index or a rate, amounts to be paid
under a residual value guarantee and lease payments in an optional renewal
period, if the Group is reasonably certain to exercise an extension option, as
well as penalties for early termination of a lease, if the Group is reasonably
certain to terminate early. If there is a purchase option present, this will
be included if the Group is reasonably certain to exercise the option.
Leases of low-value assets and short term
Leases of low-value assets (< £5,000) and short-term leases with a term of
12 months or less are not required to be recognised on the Consolidated
Balance Sheet and payments made in relation to these leases are recognised on
a straight-line basis in the Consolidated Income Statement.
2.8.2 Group as a lessor
The Group has entered into lease agreements as a lessor on certain items of IT
equipment and software. Leases for which the Group is a lessor are classified
as either operating or finance leases. The Group assesses whether it transfers
substantially all the risks and rewards of ownership. Those leases that do not
transfer substantially all the risks and rewards are classified as operating
leases. Rental income arising from operating leases is accounted for on a
straight-line basis over the lease term.
If an arrangement contains lease and non-lease components, then the Group
applies IFRS 15 to allocate the consideration of the contract.
The Group applies the derecognition and impairment requirements in IFRS 9 to
the net investment in the lease, as applicable.
In cases where the Group acts as an intermediate lessor, it accounts for its
interests in both the head-lease and the sub-lease.
2.9 Intangible assets
2.9.1 Software and software licences
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 a straight-line basis over the estimated useful life of the
asset. Currently software is amortised over four 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.
2.9.2 Software under development
Costs that are incurred and that can be specifically attributed to the
development phase of management information systems for internal use are
capitalised only if the expenditure can be measured reliably, the management
information system is technically and commercially feasible, future economic
benefits are probable, and the Group intends to and has sufficient resources
to complete development and to use the system.
Research expenditure and development expenditure that do not meet the criteria
above are recognised as an expense as incurred. Development costs previously
recognised as an expense are not recognised as an asset in a subsequent
period.
Directly attributable costs that are capitalised typically include
professional fees and cost of material/services consumed.
Capitalised development costs are recorded as intangible assets and amortised
over their useful life from the point at which the management information
system is ready for use.
Costs associated with maintaining in-use software programs are recognised as
an expense as incurred.
2.9.3 Other intangible assets
Intangible assets acquired as part of a business combination are carried
initially at fair value. Following initial recognition, intangible assets are
carried at cost less accumulated amortisation and any impairment in value.
Intangible assets with a finite 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 relationships: 10-15 years
· tools and technology: seven years
· order backlog: within three months
The carrying value of intangible assets is reviewed for impairment whenever
events or changes in circumstances indicate the carrying value may not be
recoverable. Expected useful lives are reviewed on a yearly basis.
2.9.4 Goodwill
Business combinations are accounted for under IFRS 3 Business Combinations
using the acquisition method. Any excess of the cost of the business
combination over the Group's interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities is recognised in
the Consolidated Balance Sheet as goodwill and is not amortised. Any goodwill
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
CGU monitored by Management, usually at business Segment level or statutory
Company level as the case may be. Where the recoverable amount of the CGU is
less than its carrying amount, including goodwill, an impairment loss is
recognised in the Consolidated Income Statement.
2.10 Inventories
Inventories held for specific non-cancellable customer orders or projects are
carried at the lower of cost and net realisable value, after making allowance
for any obsolete or slow-moving items. Cost is determined using the specific
identification of cost method.
Items held in inventory that are not specifically identified for a particular
customer order or project are carried at the lower of weighted average cost
and net realisable value, net of any allowance for obsolete or slow-moving
items. Costs include those incurred in bringing each product to its present
location and condition, on a first-in, first-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.
2.11 Financial assets
Financial assets, other than trade receivables, are recognised at their fair
value, which initially equates to the sum of the consideration given and the
directly attributable transaction costs. Subsequently, the financial assets
are measured at either amortised cost or fair value, depending on their
classification under IFRS 9. The classification depends on the Group's
business model for managing the financial assets and the contractual terms of
the cash flows.
2.11.1 Trade receivables
Trade receivables, which generally have 30- to 60-day credit terms, are
initially recognised and carried at their original invoice amount less an
allowance for any uncollectable amounts. The business model for trade
receivables is that they are held for the collection of contractual cash
flows, therefore they are subsequently measured at amortised cost. The trade
receivables are derecognised on receipt of cash from the customer.
Trade receivables sold to a third party, including factoring, are derecognised
when the criteria for derecognition under IFRS 9 are met. This involves
evaluating the specific terms of the transaction to determine if the Group has
substantially transferred associated risks and rewards, has relinquished
control of, and has no material continuing involvement with the receivables.
Upon derecognition, the difference between the carrying amount and the
consideration received (net of transaction costs) is recognised in the
Consolidated Income Statement as follows:
· within cost of sales , where the Group sells receivables as an
integral part of delivering goods or services; or
· within administrative expenses, where the Group sells receivables
for its cash flow management and this is not directly tied to revenue
generation.
If derecognition criteria are not met or only partially met, the Group
continues to recognise the trade receivables or the portion relating to its
retained interest or residual involvement. A financial liability is recognised
for the consideration received from the factoring party, measured initially at
fair value and subsequently at amortised cost.
Given the short lives of the trade receivables, there are generally no
material fair value movements between initial recognition and the
derecognition of the receivable.
The Group assesses for doubtful debts (impairment) using the expected credit
losses model, as required by IFRS 9. For trade receivables, the Group applies
the simplified approach, which requires expected lifetime losses to be
recognised from the initial recognition of the receivables. Material or
high-risk balances are reviewed and provided for individually, based on a
number of factors including:
· the financial strength of the customer;
· the level of default that the Group has suffered in the past;
· the age of the receivable outstanding; and
· the Group's trading experience with that customer.
2.11.2 Cash and cash equivalents
Cash and short-term deposits in the Consolidated 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 Flow Statement, cash and cash
equivalents consist of cash and short-term deposits as defined above, net of
outstanding bank overdrafts which form an integral part of the Group's cash
management.
2.12 Financial liabilities
Financial liabilities are initially recognised at their fair value and, in the
case of borrowings (including credit facility), net of directly attributable
transaction costs.
The subsequent measurement of financial liabilities is at amortised cost,
unless otherwise described.
2.13 Derecognition of financial assets and liabilities
2.13.1 Financial assets
A financial asset or, where applicable, a part of a financial asset or part of
a group of similar financial assets, is derecognised where:
· the rights to receive cash flows from the asset have expired; or
· the Group retains the right to receive cash flows from the asset,
but has assumed an obligation to pay them in full without material delay to a
third party under a pass-through arrangement; or
· the Group has transferred its rights to receive cash flows from
the asset and either (a) has transferred substantially all the risks and
rewards of the asset, or (b) has neither transferred nor retained
substantially all the risks and rewards of the asset but has transferred
control of the asset.
2.13.2 Financial liabilities
A financial liability is derecognised when the obligation under the liability
is discharged, cancelled or expired.
2.14 Derivative financial instruments and hedge accounting
The Group uses foreign currency forward contracts to hedge its foreign
currency risks associated with foreign currency fluctuations affecting cash
flows from forecast transactions and unrecognised firm commitments.
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 identification of both the hedging
instrument and the hedged item or transaction and then the economic
relationship between the two, including whether the hedging instrument is
expected to offset changes in cash flow of the hedged item. Such hedges are
expected to be highly effective in achieving offsetting changes in cash flows.
The Group designates the full change in the fair value of the forward contract
(including forward points) as the hedging instrument.
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 profiles. 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 classified as cash flow
hedges when hedging the exposure to variability in cash flows that is either
attributable to a particular risk associated with a recognised asset or
liability, a highly probable forecast transaction, or the foreign currency
risk in an unrecognised firm commitment.
Cash flow hedges that meet the 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 cash
flow hedge reserve, while any ineffective portion is recognised immediately in
the Consolidated Income Statement in administrative expenses.
Amounts recognised within the Consolidated Statement of Comprehensive Income
are transferred to the Consolidated Income Statement, within administrative
expenses, when the hedged transaction affects the Consolidated Income
Statement, such as when the hedged financial expense is recognised.
If the forecast transaction or firm commitment is no longer expected to occur,
the cumulative gain or loss previously recognised in equity is transferred to
the Consolidated Income Statement within administrative expenses. If the
hedging instrument matures or is sold, terminated or exercised without
replacement or rollover, any cumulative gain or loss previously recognised
within the Consolidated Statement of Comprehensive Income remains within the
Consolidated Statement of Comprehensive Income until after the forecast
transaction or firm commitment affects the Consolidated Income Statement.
Any other gains or losses arising from changes in fair value on forward
contracts are taken directly to administrative expenses in the Consolidated
Income Statement.
2.15 Fair value measurement
The Group measures certain financial instruments at fair value at each balance
sheet date.
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date.
The fair value of an asset or a liability is measured using the assumptions
that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data is available to measure fair value, maximising
the use of relevant observable inputs and minimising the use of unobservable
inputs.
2.16 Provisions (excluding restructuring provision)
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 outflow of
resources embodying economic benefits 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 flows at a pre-tax rate
that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability. Where discounting is used,
the increase in the provision due to the passage of time is recognised as a
borrowing cost.
Customer contract provisions
Management continually monitors the financial performance of contracts, and
where there are indicators that a contract could result in a negative margin,
the future financial performance of that contract will be reviewed in detail.
If, after further financial analysis, the full financial consequence of the
contract can be reliably estimated, and it is determined that the contract is
potentially loss-making, then the best estimate of the losses expected to be
incurred until the end of the contract will be provided for.
In establishing if future costs are forecast to exceed the future revenue,
Management will take into account the anticipated inflationary impact on the
cost base, offset by any rights to increase pricing under Cost of Living
Adjustment (COLA) clauses that have been incorporated in the customer
contract.
The Group applies IAS 37 - 'Provisions, Contingent Liabilities and Contingent
Assets' in its assessment of whether contracts are considered onerous and in
subsequently estimating the provision. The Group's approach is to apply the
full cost approach, which considers total estimated costs (i.e. directly
attributable variable costs and fixed allocated costs) in the assessment of
whether the contract is onerous or not and in the measurement of the
provision.
A provision for onerous contracts is made as soon as a loss is foreseen and is
measured at the present value of the lower of the expected cost of terminating
the contract and the expected net cost of continuing with the contract, which
is determined based on incremental costs necessary to fulfil the obligation
under the contract. Before a provision is established, the Group recognises
any impairment loss on the assets associated with that contract.
2.17 Pensions and other post-employment benefits
The Group operates a defined contribution pension scheme available to all UK
employees and similar schemes are operating, as appropriate for the
jurisdiction, for North America and Germany. Contributions are recognised as
an expense in the Consolidated Income Statement as they become payable in
accordance with the rules of the scheme. There are no material pension schemes
within the Group's overseas operations.
The Group has an obligation to make a one-off payment to French employees upon
retirement, the Indemnités de Fin de Carrière (IFC).
French employment law requires that a company pays employees a one-time
contribution when, and only when, the employee leaves the company on
retirement at the mandatory age. This is a legal requirement for all
businesses which incur the obligation upon departure, due to retirement, of an
employee.
Typically, the retirement benefit is based on length of service of the
employee and his or her salary at retirement. The amount is set via a legal
minimum, but the retirement premiums can be improved by the collective
agreement or employment contract in some cases. For Computacenter's French
employees, the payment is based on accrued service and ranges from one month
of salary after five years of service to 9.4 months of salary after 47 years
of service.
If the employee leaves voluntarily at any point before retirement, all
liability is extinguished, and any accrued service is not transferred to any
new employment.
Management continues to account for this obligation according to IAS 19
(revised).
2.18 Taxation
2.18.1 Current tax
Current tax assets and liabilities for the current and prior years 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.
2.18.2 Deferred income tax
Deferred income tax is recognised on all temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the
summary financial information within this announcement, with the following
exceptions:
· where the temporary difference arises from the initial
recognition of goodwill or from an asset or liability in a transaction that is
not a business combination, that at the time of the transaction affects
neither accounting nor taxable profit or loss and does not give rise to equal
taxable and deductible temporary differences;
· in respect of taxable temporary differences associated with
investments in subsidiaries, associates and joint ventures, where the timing
of the reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the foreseeable
future; and
· deferred income tax assets are recognised only to the extent that
it is probable that taxable profit will be available in the future against
which the deductible temporary differences, carried forward tax credits or tax
losses can be utilised.
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 Consolidated Statement of
Comprehensive Income if it relates to items that are credited or charged to
the Consolidated Statement of Comprehensive Income. Otherwise, income tax is
recognised in the Consolidated Income Statement.
2.19 Share-based payment transactions
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 awards at the date at which they are
granted. The fair value is determined by utilising an appropriate valuation
model. In valuing equity-settled transactions, no account is taken of any
performance conditions, as none of the conditions set are market related.
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 fulfilled, 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, reflects 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 Consolidated 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.
Movements in the estimated employer's National Insurance liability related to
the awards, carried on the Consolidated Balance Sheet, are recognised in the
Consolidated Income Statement.
The dilutive effect of outstanding options is reflected as additional share
dilution in the computation of earnings per share (see note 8).
The Group has an employee share trust for the granting of non-transferable
options to Executive Directors and senior Management. 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.
2.20 Own shares held
Computacenter plc shares held by the Group are classified 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 reserves.
No gain or loss is recognised in the performance statements on the purchase,
sale, issue or cancellation of equity shares. These shares are held in the
Computacenter Employee Benefit Trust, which is called 'Employee Share
Ownership Plan' (ESOP). Computacenter being the sponsoring entity has control
over the ESOP under IFRS 10, as Computacenter makes the decisions on how the
ESOP operates per the following criteria:
· Computacenter has power over the relevant activities of the ESOP
· Computacenter has exposure, or rights, to variable returns from
its involvement with the ESOP
· Computacenter has the ability to use its power over the ESOP to
affect the amount of the ESOP returns
As the IFRS 10 criteria are satisfied, the ESOP is accounted for under IFRS 10
and is consolidated on the basis that the parent (Computacenter plc) has
control, thus the assets and liabilities of the ESOP are included on the
Company's Balance Sheet and the Group's Consolidated Balance Sheet. The shares
held by the ESOP are presented as a deduction from equity within the
Consolidated Statement of Changes in Equity, in the 'own shares held' column.
3 Critical accounting estimates and judgements
The preparation of the Group's consolidated financial statements requires
Management to exercise judgement in applying the Group's accounting policies.
It also requires the use of estimates and assumptions that affect the reported
amounts of assets, liabilities, income and expenses.
Due to the inherent uncertainty in making these critical judgements and
estimates, actual outcomes could be different.
During the year, Management reassessed the critical accounting estimates and
judgements for the Group. This process included reviewing the last reporting
period's disclosures, the key judgements required on the implementation of
forthcoming standards and the current period's challenging accounting issues.
Where Management deemed there is a change for an area of accounting to be
considered a critical estimate or judgement, an explanation for this decision
is provided in note 3.3.
3.1 Critical estimates
Estimates and underlying assumptions are reviewed on an ongoing basis, with
revisions recognised in the year in which the estimates are revised and in any
future years affected. There are no areas involving significant risk resulting
in a material adjustment to the carrying amounts of assets and liabilities
within the next financial year.
3.2 Critical judgements
Judgements made by Management in the process of applying the Group's
accounting policies, which have the most significant effect on the amounts
recognised in the Group's consolidated financial statements, are as follows:
3.2.1 Bill and hold
The Group generates some of its revenue through its bill and hold arrangements
with its customers. These arise when the customer is invoiced but the product
is not shipped to the customer until a later date, in accordance with the
customer's request in a written agreement. In order to determine the
appropriate timing of revenue recognition, it is assessed whether control has
transferred to the customer.
A bill and hold arrangement is only put in place when a customer lacks the
physical space to store the product or the product previously ordered is not
yet needed in accordance with the customer's schedule and the customer wants
to guarantee supply of the product. In order to determine whether an
arrangement is bill and hold and control has been transferred to the customer,
a customer request must have been approved and all of the below criteria must
have been met:
a) the reason for the bill and hold arrangement must be substantive
(for example, the customer has requested the arrangement);
b) the product must be identified separately as belonging to the
customer;
c) the product currently must be ready for physical transfer to the
customer; and
d) the Group cannot have the ability to use the product or to direct
it to another customer.
Judgement is required to determine if all of the criteria (a) to (d) have been
met, to recognise a bill and hold sale. This is determined by segregation and
readiness of inventory and the review and approval of all customer requests,
in order to assess whether the accounting policy had been correctly applied to
recognise a bill and hold sale.
A total of £435.5m of product sold was held by the Group for bill and hold
transactions where the Group retained the physical custody of the inventory as
at 31 December 2024 (2023: £407.6m).
3.3 Change in critical estimates and critical judgements
The critical accounting estimates and judgements reported in the Group's 2023
Annual Report and Accounts are unchanged.
4 Segment information
The Segment information is reported to the Board and the Chief Executive
Officer. The Chief Executive Officer is the Group's Chief Operating Decision
Maker (CODM).
As disclosed in the 2023 Annual Report and Accounts, the Group had six
operating and four reportable Segments: UK, Germany, France, North America,
which were also the reportable Segments, along with the International Segment
and Central Corporate Costs. During the first half of the year, Management
reviewed the way it reported Segmental performance to the Board and the CODM.
In accordance with IFRS 8, changes to the operating Segments were made to
better reflect recent changes in management responsibility and how the Board
and CODM will review information about the Group. These operating Segment
changes are explained below:
· The entities within Belgium, the Netherlands and Switzerland have
been transferred from the previously reported International Segment and into
the France Segment which has been renamed 'Western Europe'. This change
removes these entities that actively sell to local customers (selling
entities) from the International Segment, placing them in a segment that is a
purely selling entity segment.
The previously reported International Segment aggregated selling entities with
a number of purely operational support entities that provide Services to the
Group's global customers. The change makes a clearer distinction between the
countries in which we sell to customers and the other countries in which we
operate directly to support those customers. The change anticipates further
alignment of operations between teams within Belgium, the Netherlands and
France.
As a result, we now have four operating Segments describing the countries in
which we actively sell i.e. our markets: the United Kingdom, Germany, Western
Europe (France, Belgium, the Netherlands and Switzerland) and North America
(the US and Canada). These are also our reportable Segments.
· The revised International operating segment now consolidates the
other countries in which we operate in support of our global customers.
· Finally, we have retained the Central Corporate Cost Segment,
which continues to be disclosed in a separate column.
In addition to the above Segmental changes, the Group also performed an
analysis of business activities included within the Services business. As a
result of this analysis, from 1 January 2024 the Group has reallocated revenue
of certain business activities from Managed Services to Professional Services.
This reflects better where the customer relationship and operational
responsibility lies and where the benefits should accrue. This change has no
impact on the reported Group or total Services revenue. We have also revised
comparative periods following the same analysis and reallocation criteria.
This has resulted in 2023 Professional Services revenue increasing, and
Managed Services decreasing, by £32.4m, primarily in the Germany segment.
The above changes in reporting of Segments and business activities within the
Services business have no impact on reported Group results. To enable
comparisons with prior-period performance, comparative information for the
year ended 31 December 2023 has been restated in accordance with the revised
Segmental and business reporting structure.
The Group has the same operating Segments and reporting Segments. The new
Segmental reporting structure is the basis on which internal reports are now
provided to the Chief Executive Officer, as the CODM, for assessing
performance and determining the allocation of resources within the Group, in
accordance with IFRS 8.25. Segmental performance is measured based on external
revenues, gross profit, adjusted operating profit and adjusted profit before
tax. Central Corporate Costs continue to be disclosed as a separate column
within the Segmental note.
As disclosed in note 2, the Group has included in the Segment information
below, additional expense lines of 'cost of sales', 'costs of inventories
recognised as an expense' and 'staff costs'. This has no impact on the
financial results or position of the Segments or the Group.
Segmental performance for the years ended 31 December 2024 and 31 December
2023 was as follows:
Year ended 31 December 2024
UK Germany Western North International Central Total
Europe
£m £m
America* £m Corporate £m
£m
£m Costs
£m
Revenue
Technology Sourcing revenue
Gross invoiced income 1,758.6 1,909.4 971.7 3,632.8 5.6 - 8,278.1
Adjustment to gross invoiced income for income recognised as agent (1,053.3) (674.8) (381.0) (842.2) (0.4) - (2,951.7)
Total Technology Sourcing revenue 705.3 1,234.6 590.7 2,790.6 5.2 - 5,326.4
Services revenue
Professional Services 158.2 407.5 62.2 150.4 - - 778.3
Managed Services 294.6 344.6 166.4 30.4 24.1 - 860.1
Total Services revenue 452.8 752.1 228.6 180.8 24.1 - 1,638.4
Total revenue 1,158.1 1,986.7 819.3 2,971.4 29.3 - 6,964.8
Results
Cost of sales (927.3) (1,620.5) (700.8) (2,690.7) 9.5 - (5,929.8)
Gross profit 230.8 366.2 118.5 280.7 38.8 - 1,035.0
Adjusted administrative expenses (190.1) (209.3) (104.8) (208.4) (24.8) (50.9) (788.3)
Adjusted operating profit/(loss) 40.7 156.9 13.7 72.3 14.0 (50.9) 246.7
Adjusted net interest (0.7) 7.4 - 1.5 (0.9) - 7.3
Adjusted profit/(loss) before tax 40.0 164.3 13.7 73.8 13.1 (50.9) 254.0
Exceptional items:
- unwinding of discount relating to acquisition of a subsidiary (0.6)
- gain relating to acquisition of a subsidiary 1.8
- other income relating to acquisition of a subsidiary -
Total exceptional items 1.2
Amortisation of acquired intangibles (10.6)
Profit before tax 244.6
* Included within the North America Segment total revenue of £2,971.4m is an
amount of £2,901.7m of revenue for the US.
The reconciliation of adjusted operating profit to operating profit as
disclosed in the Consolidated Income Statement is as follows:
Year ended 31 December 2024
Total
£m
Adjusted operating profit 246.7
Amortisation of acquired intangibles (10.6)
Exceptional items 1.8
Operating profit 237.9
Year ended 31 December 2024
UK Germany Western North International Central Total
Europe
£m £m
America* £m Corporate £m
£m
£m Costs
£m
Other Segment information
Property, plant and equipment 29.7 38.8 8.3 7.7 6.2 - 90.7
Right-of-use assets 12.6 47.6 21.0 15.5 22.3 - 119.0
Intangible assets 68.4 16.3 13.4 217.7 1.7 - 317.5
Capital expenditure:
Property, plant and equipment 4.3 7.2 2.9 1.5 3.1 - 19.0
Right-of-use assets 9.4 24.7 9.3 1.9 16.2 - 61.5
Software 11.1 0.3 0.5 0.3 0.3 - 12.5
Costs of inventories recognised as an expense 604.8 1,032.9 504.0 2,444.9 6.3 - 4,592.9
Staff costs 356.8 482.8 187.0 264.9 83.6 - 1,375.1
Depreciation of property, plant and equipment 6.4 7.0 2.2 3.7 2.2 - 21.5
Depreciation of right-of-use assets 5.5 19.0 6.4 5.4 4.7 - 41.0
Amortisation of software 6.0 0.3 0.3 1.3 0.3 - 8.2
Share-based payments recognised in equity 3.6 1.8 0.1 0.5 0.1 1.0 7.1
* Included within the North America Segment Intangible assets of £217.7m is
an amount of £215.0m of intangible assets for the US.
Year ended 31 December 2023
UK Germany Western North International Central Total
(restated)
£m £m Europe America*
Corporate £m
(restated)
£m
£m Costs
£m
£m
Revenue
Technology Sourcing revenue
Gross invoiced income 1,938.1 2,111.5 929.7 3,454.4 11.2 - 8,444.9
Adjustment to gross invoiced income for income recognised as agent (1,166.3) (849.7) (290.0) (851.8) (0.8) - (3,158.6)
Total Technology Sourcing revenue 771.8 1,261.8 639.7 2,602.6 10.4 - 5,286.3
Services revenue
Professional Services (restated) 132.5 394.4 65.6 118.7 - - 711.2
Managed Services (restated) 309.4 371.3 196.0 27.4 21.2 - 925.3
Total Services revenue 441.9 765.7 261.6 146.1 21.2 - 1,636.5
Total revenue 1,213.7 2,027.5 901.3 2,748.7 31.6 - 6,922.8
Results
Cost of sales (962.9) (1,653.0) (782.6) (2,481.2) 0.9 - (5,878.8)
Gross profit 250.8 374.5 118.7 267.5 32.5 - 1,044.0
Adjusted administrative expenses (192.0) (211.5) (103.8) (202.5) (18.9) (43.8) (772.5)
Adjusted operating profit/(loss) 58.8 163.0 14.9 65.0 13.6 (43.8) 271.5
Adjusted net interest 5.5 1.0 (1.0) 1.7 (0.7) - 6.5
Adjusted profit/(loss) before tax 64.3 164.0 13.9 66.7 12.9 (43.8) 278.0
Exceptional items:
- unwinding of discount relating to acquisition of a subsidiary (3.2)
- gain relating to acquisition of a subsidiary 2.8
- other income relating to acquisition of a subsidiary 5.3
Total exceptional items 4.9
Amortisation of acquired intangibles (10.8)
Profit before tax 272.1
* Included within the North America Segment total revenue of £2,748.7m is an
amount of £2,703.4m of revenue for the US.
The reconciliation of adjusted operating profit to operating profit as
disclosed in the Consolidated Income Statement is as follows:
Year ended 31 December 2023
Total
£m
Adjusted operating profit 271.5
Amortisation of acquired intangibles (10.8)
Exceptional items 8.1
Operating profit 268.8
Year ended 31 December 2023
UK Germany Western North International Central Total
£m £m Europe America* (restated) Corporate £m
(restated) £m £m Costs
£m £m
Other Segment information
Property, plant and equipment 31.7 40.7 8.1 9.9 5.7 - 96.1
Right-of-use assets 9.0 45.4 20.3 18.8 11.0 - 104.5
Intangible assets 54.8 17.1 22.6 225.8 2.1 - 322.4
Capital expenditure:
Property, plant and equipment 5.7 7.8 2.3 2.4 3.7 - 21.9
Right-of-use assets 3.5 13.2 9.6 2.8 4.7 - 33.8
Software 12.0 0.3 0.2 0.2 0.5 - 13.2
Costs of inventories recognised as an expense 661.1 1,053.1 579.4 2,272.2 12.8 - 4,578.6
Staff costs 346.5 482.5 186.2 237.4 84.9 - 1,337.5
Depreciation of property, plant and equipment 6.2 6.9 2.2 3.6 1.5 - 20.4
Depreciation of right-of-use assets 4.6 20.5 6.9 5.4 4.0 - 41.4
Amortisation of software 5.7 0.4 0.2 1.4 0.4 - 8.1
Share-based payments recognised in equity 2.7 1.8 0.1 0.3 - 2.8 7.7
* Included within the North America Segment Intangible assets of £225.8m is
an amount of £218.4m of intangible assets for the US.
Charges for the amortisation of acquired intangibles (where initial
recognition was an exceptional item or a fair value adjustment on acquisition)
are excluded from the calculation of adjusted operating profit. This is
because these charges are based on judgements about their value and economic
life, are the result of the application of acquisition accounting rather than
core operations, and whilst revenue recognised in the Consolidated Income
Statement does benefit from the underlying asset that has been acquired, the
amortisation costs bear no relation to the Group's underlying ongoing
operational performance. In addition, amortisation of acquired intangibles is
not included in the analysis of Segment performance used by the CODM.
Information about major customers
Included in revenues arising from the North American Segment are revenues of
approximately £1,095.5m (2023: £1,511.0m) which arose from sales to the
Group's largest customer.
5 Revenue
Revenue recognised in the Consolidated Income Statement is analysed as
follows:
2024 2023
£m £m
Revenue by type
Gross invoiced income 8,278.1 8,444.9
Adjustment to gross invoiced income for income recognised as agent (2,951.7) (3,158.6)
Technology Sourcing revenue(*) 5,326.4 5,286.3
Services revenue
Professional Services 778.3 711.2
Managed Services 860.1 925.3
Total Services revenue 1,638.4 1,636.5
Total revenue 6,964.8 6,922.8
* Included within the amount of Technology Sourcing revenue shown above is
£70.0m (2023: £85.3m) recognised under IFRS 16. All other Technology
Sourcing revenue is recognised at a point in time under IFRS 15 as described
in our accounting policy 2.3.1.
Contract balances
The following table provides the information about contract assets and
contract liabilities from contracts with customers.
31 December 31 December
2024 2023
£m £m
Trade receivables 1,620.2 1,471.8
Contract assets, which are included in prepayments 9.4 19.6
Contract assets, which are included in accrued income 137.5 151.9
Contract liabilities, which are included in deferred income 285.7 234.6
The prepayments balance within the Consolidated Balance Sheet, totalling
£180.0m, comprises £9.4m in contract assets and £170.6m in other
prepayments, including £45.5m for software licences, £23.0m for IT equipment
paid in advance and £53.9m for subcontractor balances. Other prepayments have
been classified as current assets in accordance with the Group's operating
cycle and classification described below.
The Group has implemented an expected credit loss impairment model with
respect to contract assets which are included in accrued income, using the
simplified approach. These contract assets have been grouped on the basis of
their shared risk characteristics and a provision matrix has been developed
and applied to these balances to generate the loss allowance. The majority of
these contract asset balances are with blue chip customers and the incidence
of credit loss is low. There has therefore been no material adjustment to the
loss allowance under IFRS 9. Specific provisions are made against material or
high-risk balances based on trading experience or where doubt exists about the
counterparty's ability to pay. The expected credit losses on contract assets
which are within accrued income are considered to be immaterial.
Significant changes in contract assets and liabilities
Contract assets are balances due from customers under long-term contracts as
work is performed and therefore a contract asset is recognised over the period
in which the performance obligation is fulfilled. This represents the Group's
right to consideration for the services transferred to date. Amounts are
generally reclassified to trade and other receivables when these have been
certified or invoiced to a customer. Refer to note 2.11.1 for credit terms of
trade receivables.
The increase in trade receivables is mainly in the North American Segment and
is driven by the impact of timing of large deals.
Win fees, deferred contract costs and fulfilment costs are included in the
prepayments balance above. The Consolidated Income Statement impact of the win
fees was a recognition of a net gain in 2024 of £1.5m, with a corresponding
charge to income tax of £0.3m for the year. The Consolidated Income Statement
impact of fulfilment costs was a recognition of a net cost in 2024 of £1.4m,
with a corresponding tax credit of £0.5m for the year.
As at 31 December 2024, the win fee balance was £12.0m, the deferred contract
costs balance was £3.7m and the fulfilment costs balance was £6.2m. No
impairment loss was recorded for win fees, deferred contract costs or
fulfilment costs during the year.
Revenue recognised in the reporting period from movement in accrued income
balances was £9.4m, with a credit to foreign exchange of £4.9m. No
impairment loss was recorded for accrued income during the year.
Revenue recognised in the reporting period that was included in the contract
liability balance at the beginning of the period was £152.4m. No revenue was
recognised in the reporting period from performance obligations that were
satisfied or partially satisfied in previous periods.
Remaining performance obligations (work in hand)
Contracts which had remaining performance obligations as at 31 December 2024
and 31 December 2023 are set out in the table below. The table below discloses
the aggregate transaction price relating to those remaining performance
obligations, excluding both (a) amounts relating to contracts for which
revenue is recognised as invoiced and (b) amounts relating to contracts where
the expected duration of the ongoing performance obligation is one year or
less.
Managed Services
Less than One to Two to Three to Four years Total
one year two years three years four years and beyond £m
£m £m £m £m £m
As at 31 December 2024 750.0 554.0 351.0 215.0 224.0 2,094.0
As at 31 December 2023 747.4 528.4 370.3 194.6 152.0 1,992.7
The duration of most contracts is between one and five years. However some
contracts will vary from these typical lengths. Revenue is typically earned
over these varying timeframes.
Operating cycle and classification
In determining the classification of current assets and liabilities, the Group
considers its normal operating cycle, defined as the period over which assets
are acquired, transformed, and ultimately realised as cash, or liabilities are
settled.
The Group operates across distinct business activities with different
operating cycles. The normal operating cycle is defined by the contractual
terms underlying each type of trading activity. All working capital items,
including prepayments and deferred income related to these activities, are
classified as current based on the expected realisation or settlement within
the relevant contractual cycle. The Group's approach ensures that the balance
sheet presentation reflects the timing of cash flows specific to each type of
business activity.
Technology Sourcing
The normal operating cycle is aligned to the contractual terms of the
arrangement, where the core activity of the resale of IT hardware, software,
and related services typically operates on a short working capital cycle of
less than 12 months. Where the sale of IT equipment is structured as a lease
to customers, balances due over 12 months will be considered as non-current as
these are outside the normal operating cycle for the sale of IT equipment. For
the purchase and resale of multi-year agreements for software and resold
services, the normal operating cycle is aligned to the contractual terms of
the arrangement. Typically, these agreements involve prepayments and deferred
income that are realised over multiple years, where the cash has already been
settled.
Professional Services
The normal operating cycle is aligned to the contractual terms of the
arrangement, where the Group provides skilled professionals to customers
either operating within a project framework or on a 'resource on demand'
basis, on a short working capital cycle of less than 12 months.
Managed Services
Service contracts for IT infrastructure and support are typically structured
from three-to five-year periods. The normal operating cycle is aligned to the
contractual terms of the arrangement.
6 Exceptional items
2024 2023
£m £m
Operating profit
Other income related to acquisition of a subsidiary - 5.3
Gain related to acquisition of a subsidiary 1.8 2.8
Exceptional operating profit 1.8 8.1
Interest cost relating to acquisition of a subsidiary (0.6) (3.2)
Profit on exceptional items before and after tax 1.2 4.9
Included within 2024 are the following exceptional items:
· £0.6m relating to the unwinding of the discount on the
contingent payment for the purchase of Business IT Source Holdings, Inc.
(BITS) has been classified as exceptional interest cost. This is consistent
with our prior-year treatment.
· £2.2m relating to a release of contingent consideration in
relation to the BITS acquisition, net of £0.4m of costs incurred as per the
share purchase agreement. As these relate to the acquisition and not
operational activity within BITS and are of a one-off nature, they have been
classified as an exceptional item.
7 Income tax
a) Tax on profit from ordinary activities
2024 2023
£m £m
Current income tax
On profits for the year:
- UK corporation tax 3.4 13.6
- Foreign tax 68.9 64.0
Adjustments in respect of prior years (1.6) 2.1
Total current income tax expense 70.7 79.7
Deferred income tax
- origination and reversal of temporary differences 0.7 0.3
- change in tax rates 0.7 (0.5)
- adjustments in respect of prior years 0.6 (6.8)
Total deferred income tax expense/(benefit) 2.0 (7.0)
Tax charge in the Consolidated Income Statement 72.7 72.7
b) Reconciliation of the total tax charge
2024 2023
£m £m
Profit before income tax 244.6 272.1
At the UK standard rate of corporation tax of 25% (2023: 23.5%) 61.2 63.9
Expenses not deductible for tax purposes 4.6 2.8
Non-deductible element of share-based payment charge 0.4 (0.1)
Adjustments in respect of prior years (1.0) (4.7)
Effect of tax rate differences in foreign jurisdictions 6.4 12.0
Change in tax rate 0.7 (0.5)
Other differences (0.1) (0.1)
Overseas tax not based on earnings 1.5 1.5
Current year losses for which no deferred tax asset can be recognised 0.9 -
Previously unrecognised tax losses used to reduce current tax expense (1.0) (0.9)
Tax effect of income not taxable in determining taxable profit (0.9) (1.2)
At effective income tax rate of 29.7% (2023: 26.7%) 72.7 72.7
Taxation for subsidiaries operating in other jurisdictions is calculated at
the rates prevailing in the respective jurisdictions, these being a blended
rate of 32% in Germany (2023: 31%) and a blended (Federal/State) rate of 28%
in the US (2023: 26%), which mainly drive the 'Effect of tax rate differences
in foreign jurisdictions' above.
c) Tax losses
Deferred income tax assets of £5.3m (2023: £3.7m) have been recognised in
respect of losses carried forward, primarily in France and the US.
In considering the probable utilisation of the carried forward tax losses, and
therefore the likely recoverability of these assets, the Group makes an
assessment based upon a reasonably foreseeable timeframe, being typically up
to three years, taking into account the future expected profit profile and
business model of each relevant company or country. The reasonably foreseeable
timeframe is derived based on the confidence the Group has in the performance
of these companies or countries and therefore the reliability of forecasts
over the timeframe in which the asset would be recovered. If the reasonably
foreseeable timeframe is extended to five years for our French business, an
additional £2.5m (2023: £2.3m) of deferred income tax asset would be
recognised.
As at 31 December 2024, there were further unused tax losses across the Group
of £271.4m (2023: £284.2m) for which no deferred income tax asset has been
recognised. Of these losses, £242.8m (2023: £256.1m) arise in France,
£25.0m (2023: £26.4m) arise in Germany and £3.6m (2023: £1.8m) arise in
the Netherlands. No deferred tax has been recognised on these losses due to
the potential uncertainty around whether future taxable profits would be
available against which these tax losses can be utilised. Following the merger
of CC France SAS and Computacenter NS (CCNS), a request has been made to the
French tax authorities to preserve the historic tax losses of CCNS (£164.3m)
and a decision is pending in this regard. A significant proportion of the
losses arising in Germany have been generated in statutory entities that no
longer have significant levels of trade.
The Group has other temporary differences, primarily in France, of £24.1m
(2023: £30.1m), for which no deferred tax asset has been recognised. These
temporary differences mainly relate to the retirement benefit obligation which
is of a long-term nature. The amount that would be recognised over our
reasonably foreseeable timeframe of up to three years would therefore be
immaterial.
In addition, there were unutilised capital tax losses as at 31 December 2024
of £7.4m (2023: £7.4m) but no deferred tax asset has been recognised as it
is not considered probable that these losses will be utilised in the
foreseeable future.
d) Deferred income tax
Deferred income tax as at 31 December 2024 and 31 December 2023 relates to the
following:
Consolidated Balance Sheet Consolidated Income Statement Consolidated Statement of Comprehensive Income
2024 2023 2024 2023 2024 2023
£m £m £m £m £m £m
Deferred income tax assets/(liabilities)
Property, plant and equipment (5.2) (3.1) (2.1) (2.1) - -
Right-of-use assets (28.6) (26.6) (16.6) 4.2 - -
Intangible assets (18.7) (19.9) 1.6 8.0 - -
Inventories 2.7 2.5 0.2 (2.0) - -
Derivative financial instruments 0.1 0.1 - - (0.1) (0.9)
Lease liabilities 30.9 27.9 17.4 (4.1) - -
Share-based payments 5.2 8.0 (2.4) 0.4 - -
Tax losses carried forward 5.3 3.7 1.7 - - -
Other temporary differences 3.9 5.6 (1.8) 2.6 - -
Deferred income tax (expense)/benefit (2.0) 7.0 (0.1) (0.9)
Net deferred income tax assets/(liabilities) (4.4) (1.8)
Disclosed on the Consolidated Balance Sheet
Deferred income tax assets 6.3 11.6
Deferred income tax liabilities (10.7) (13.4)
Net deferred income tax assets/(liabilities) (4.4) (1.8)
Deferred tax is not recognised in respect of the Group's investments in
subsidiaries where Computacenter is able to control the timing of remittance,
or other realisation, of unremitted earnings and where remittance or
realisation is not probable in the foreseeable future.
e) Factors affecting current and future tax charge
The March 2021 Budget announced that a UK Corporation tax rate of 25% will
apply with effect from 1 April 2023, and this change was substantively enacted
on 11 March 2021. The deferred income tax in the summary financial information
within this announcement reflects this. The main rate of UK Corporation tax up
to 31 March 2023 was 19%, as enacted in the Finance Act 2020.
The Group is within the scope of the Organisation for Economic Cooperation and
Development (OECD) Pillar Two model rules. UK legislation has been enacted
which introduces the OECD's Pillar Two model Income Inclusion Rules into UK
law, where Computacenter plc is incorporated. Finance (No2) Act received Royal
Assent on 11 July 2023 meaning the Income Inclusion Rule (IIR) and the UK's
Domestic Top-up Tax (DTT) came into effect on 1 January 2024. Under the
legislation, the Group is liable to pay a top-up tax for the difference
between the Pillar Two Global anti-Base Erosion (GloBE) effective tax rate per
jurisdiction and the 15% minimum rate.
The Group has estimated that the effective tax rates exceed 15% in all
material jurisdictions in which it operates. For non-material jurisdictions
where the weighted average effective tax rate was lower than 15% for the year
ended 31 December 2024, the Group's assessment indicates that any adjustments
required under the legislation are not material. Therefore, the Group does not
expect to experience a material impact on its overall effective tax rate or on
the income tax expense reported in the Consolidated Income Statement as a
result of the OECD Pillar Two model rules. The Group continues to apply the
exception to recognising and disclosing information about deferred tax assets
and liabilities related to Pillar Two income taxes, as provided in the
amendments to IAS 12 issued in May 2023.
Draft legislation has now been published to introduce the OECD's Undertaxed
Profits Rule (UTPR) to the UK. This is due to be in place for accounting
periods commencing not before 31 December 2024.
f) Uncertain tax positions
The Group operates in numerous jurisdictions and has ongoing tax audits and
open tax matters with certain tax authorities, which mainly relate to
interpretation of how relevant tax legislation applies to the Group's transfer
pricing arrangements. The matters under discussion can be complex and often
take several years to resolve. The Group records a provision against uncertain
tax positions based on Management's estimate of either the most likely amount
or the expected value amount, depending on which method is expected to better
reflect the resolution of the uncertainty.
The potential exposure of the Group to an unfavourable outcome in any
uncertain tax matter is not expected to result in material additional tax
expense or liabilities and therefore the amounts, where already recognised,
are not material and are considered appropriate for the current status of the
matters under review.
8 Earnings per share
Earnings per share amounts are calculated by dividing profit attributable to
ordinary equity holders by the weighted average number of ordinary shares
outstanding during the year (excluding own shares held).
To calculate diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all dilutive
potential shares. Share options granted to employees where the exercise price
is less than the average market price of the Company's ordinary shares during
the year are considered to be dilutive potential shares.
2024 2023
£m £m
Profit attributable to equity holders of the Parent 170.8 197.6
2024 2023
m m
Basic weighted average number of shares (excluding own shares held) 110.6 112.9
Effect of dilution:
Share options 1.1 1.2
Diluted weighted average number of shares 111.7 114.1
2024 2023
p p
Basic earnings per share 154.4 175.0
Diluted earnings per share 152.9 173.2
9 Analysis of changes in net funds
At 1 January Cash flows Non-cash Exchange At 31 December
2024 in year flow differences 2024
£m £m £m £m £m
Cash and short-term deposits 471.2 29.5 - (11.1) 489.6
Cash and cash equivalents 471.2 29.5 - (11.1) 489.6
Bank loans (12.2) 4.5 - 0.3 (7.4)
Adjusted net funds (excluding lease liabilities) 459.0 34.0 - (10.8) 482.2
Lease liabilities (115.4) 47.4 (64.9) 3.4 (129.5)
Net funds 343.6 81.4 (64.9) (7.4) 352.7
At 1 January Cash flows Non-cash Exchange At 31 December
2023 in year flow differences 2023
£m £m £m £m £m
Cash and short-term deposits 264.4 207.6 - (0.8) 471.2
Cash and cash equivalents 264.4 207.6 - (0.8) 471.2
Bank loans (20.1) 6.9 - 1.0 (12.2)
Adjusted net funds (excluding lease liabilities) 244.3 214.5 - 0.2 459.0
Lease liabilities (127.1) 46.1 (30.7) (3.7) (115.4)
Net funds 117.2 260.6 (30.7) (3.5) 343.6
10 Related-party transactions
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 Limited 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 Peter Ogden and Philip Hulme are Directors of and have a material
interest in Biomni Limited. Biomni Limited ceased to be a related party on 22
December 2023.
The table below provides the total amount of transactions that have been
entered into with Biomni Limited for the relevant financial year:
2024 2023
£m £m
Biomni Limited
Sales to related parties - -
Purchase from related parties - 0.9
There was no outstanding balance as at 31 December 2024 (31 December 2023:
nil).
During the year, sales of £13,000 were made to a Director of the Company and
this balance remained unpaid as at 31 December 2024.
In addition to the above, relatives of a Director of the Company are employed
by a subsidiary of the Company under normal terms and conditions and with
remuneration commensurate with the role. Total remuneration for 2024 was
£0.3m (2023: £0.2m).
Terms and conditions of transactions with related parties
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 allowance for expected credit
losses relating to amounts owed by related parties. This assessment is
undertaken each financial year through examining the financial position of the
related party and the market in which the related party operates.
Compensation of key management personnel (including Directors)
The Board of Directors is identified as the Group's key management personnel.
A summary of the compensation of key management personnel is provided below:
2024 2023
£m £m
Short-term employee benefits 2.2 3.7
Social security costs 0.7 0.9
Share-based payments - 1.9
Pension costs 0.1 0.1
Total compensation paid to key management personnel 3.0 6.6
Appendix
Alternative performance measures
Alternative performance measures are used by the Group to understand and
manage performance. These are not defined under International Financial
Reporting Standards (IFRS) or UK-adopted International Accounting Standards
(UK-IFRS) and are not intended to be a substitute for any IFRS or UK-IFRS
measures of performance. They have been included as Management considers them
to be important measures, alongside the comparable Generally Accepted
Accounting Practice (GAAP) financial measures, in assessing underlying
performance. Wherever appropriate and practical, we provide reconciliations to
relevant GAAP measures. The table below sets out the basis of calculation of
the alternative performance measures and the rationale for their use.
Measure Description Rationale
Adjusted net funds and net funds Adjusted net funds or adjusted net debt includes cash and cash equivalents, The Group excludes lease liabilities from its non-GAAP adjusted net funds
other short- or long-term borrowings and current asset investments. Following measure, to allow an alternative view of the Group's overall liquidity
the adoption of IFRS 16, this measure excludes all lease liabilities position excluding the effect of the lease liabilities required to be
recognised under IFRS 16. capitalised under the IFRS 16 accounting standard.
Net funds is adjusted net funds including all lease liabilities recognised A table reconciling this measure, including the impact of lease liabilities,
under IFRS 16. is provided within note 9 to the summary financial information within this
announcement.
Adjusted expense and profit measures Adjusted administrative expense, adjusted operating profit or loss, adjusted Adjusted measures exclude items which in Management's judgement need to be
profit or loss before tax, adjusted tax, adjusted profit or loss, adjusted disclosed separately by virtue of their size, nature or frequency, to aid
earnings per share and adjusted diluted earnings per share are, as understanding of the performance for the year or comparability between
appropriate, each stated before: exceptional and other adjusting items, periods.
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 Adjusted measures allow Management and investors to compare performance
adjusting items. without these recurring or non-recurring items.
Recurring items include purchase price adjustments, including amortisation of Management does not consider these items when reviewing the underlying
acquired intangible assets and adjustments made to reduce deferred income performance of a Segment or the Group as a whole. A reconciliation to adjusted
arising on acquisitions and acquisition-related items. Recurring items are measures is provided within the Financial review, which details the impact of
adjusted each period, irrespective of materiality, to ensure consistent exceptional and other adjusted items when compared to the non-GAAP financial
treatment. measures, in addition to those reported in accordance with IFRS. Further
detail is provided within note 4 to the summary financial information within
this announcement.
Non-recurring items are those that Management judge to be one-off or
non-operational, such as gains and losses on the disposal of assets,
impairment charges and reversals, and restructuring related costs.
Constant currency We evaluate the long-term performance and trends within our strategic KPIs on We believe providing constant currency information gives valuable supplemental
a constant-currency basis. The performance of the Group and its overseas detail regarding our results of operations, consistent with how we evaluate
Segments are also shown, where indicated, in constant currency. The constant our performance.
currency presentation, which is a non-GAAP measure, excludes the impact of
fluctuations in foreign currency exchange rates.
Free cash flow Free cash flow is cash flow from operations minus net interest received, Free cash flow measures the cash generated by the operating activities during
interest and payments related to lease liabilities, income tax paid and gross the period that is available to repay debt, undertake acquisitions or
capital expenditure. distribute to shareholders.
Gross invoiced income and IFRS revenue Gross invoiced income is based on the value of invoices raised to customers, Gross invoiced income reflects the cash movements to assist Management and the
net of the impact of credit notes and excluding VAT and other sales taxes. users of the summary financial information within this announcement in
Gross invoiced income includes all items recognised on an 'agency' basis understanding revenue growth on a 'principal' basis and to assist in their
within revenue, on a gross income billed to customers basis, as adjusted for assessment of working capital movements in the Consolidated Balance Sheet and
deferred and accrued revenue. A reconciliation of revenue to gross invoiced Consolidated Cash Flow Statement. This measure allows an alternative view of
income is provided within note 4 to the summary financial information within growth in adjusted gross profit, based on the product mix differences and the
this announcement. accounting treatment thereon.
IFRS revenue refers to revenue recognised in accordance with International
Financial Reporting Standards, including IFRS 15 'Revenue from Contracts with
Customers' and IFRS 16 'Leases'.
Organic revenue and profit measures In addition to the adjustments made for adjusted measures, organic measures: Organic measures allow Management and investors to understand the
like-for-like revenue and current-period margin performance of the underlying
business.
· exclude the contribution from discontinued operations, disposals and
assets held for sale of standalone businesses in the current and prior period;
There have been no material acquisitions since 1 January 2023. Therefore, the
· exclude the contribution from acquired businesses until the year result for the year did not have any benefit within revenue or adjusted profit
after the first full year following acquisition; and before tax.
· adjust the comparative period to exclude prior-period acquired
businesses if they were acquired part-way through the prior period.
The results of any acquisitions would be excluded where narrative discussion
refers to 'organic' growth in future announcements.
Acquisitions and disposals where the revenue and contribution impact would be
immaterial are not adjusted.
Product order backlog The total value of committed outstanding purchase orders placed with our The Technology Sourcing backlog, alongside the Managed Services contract base
technology vendors against non-cancellable sales orders received from our and the Professional Services forward order book, gives us visibility of
customers for delivery within 12 months, on a gross invoiced income basis. future revenues in these areas.
Return on capital employed (ROCE) ROCE is calculated as adjusted operating profit, divided by capital employed, This is an indicator of the current period financial return on the capital
which is the closing total net assets excluding adjusted net funds. invested in the Group.
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