2. Key metRiCs
Revenue Adjusted diluted earnings per share
£
2.50bn 27.7p
Adjusted profit before tax total dividend per share
£
54.2m 11.0p
Who we are
Computacenter is a leading it infrastructure services
provider. We add value to our customers by advising
on it strategy, deploying appropriate technologies,
and managing elements of their infrastructures on
their behalf.
Our mission
to deliver it services and solutions that enable our
customers to achieve their goals.
Our strategy
Our strategy is to achieve long-term earnings growth.
to help measure our success, we have five key strategic
initiatives against which to benchmark our performance.
see over page for performance against strategic objectives.
3. PerFOrmance hiGhliGhts
Overview
Revenue £bn Adjusted* operating profit £m 02 International operations at a glance
04 Chairman’s statement
2006 2.26 2006 33.3
2007 2.38 2007 41.7
2008 2.56 2008 42.1
2009 2.50 2009 53.9
-2.2% +27.9%
Overview
Business review
Adjusted* diluted earnings per share p Total dividend per share p 05 Operating review
17 Market overview
2006 13.8 2006 7.5 18 Finance Director’s review
22 Risk management
2007 8.0
24 Corporate sustainable development
2007 18.5
2008 21.0 2008 8.2
2009 27.7 2009 11.0
Business review
+31.9% +34.1%
Financial performance Governance
28 Board of Directors
• Group revenues decreased 2.2 per cent to £2.50 billion (2008: £2.56 billion) 29 Corporate governance statement
34 Directors’ remuneration report
• Adjusted* profit before tax increased 25.8 per cent to £54.2 million 40 Directors’ report
(2008: £43.1 million)
• Adjusted* diluted earnings per share increased 31.9 per cent to 27.7 pence
(2008: 21.0 pence)
• Additional interim dividend of 8.0 pence, in lieu of final dividend, bringing
the total dividend for the year to 11.0 pence (2008: 8.2 pence)
• Net cash prior to customer specific financing (CSF) was £86.4 million
Governance
(2008: £4.6 million)
statutory performance
• Profit before tax increased 22.4 per cent to £48.4 million (2008: £39.5 million)
• Diluted EPS increased 2.9 per cent to 24.9 pence (2008: 24.2 pence)
• Net funds after CSF was £37.3 million (2008: net debt of £84.6 million)
Operating highlights Financial statements
45 Independent auditors’ report
• Group annual services contract base grew over 9 per cent to £503.6 million, 46 Consolidated income statement
at constant currency 47 Consolidated statement of
• Contract wins and extensions included Produban (Santander Group IT Business), comprehensive income
48 Consolidated balance sheet
Threadneedle, BP, Schroders and Severn Trent Water 49 Consolidated statement of changes
• Operating expenses reduced by over £30 million, in constant currency in equity
Financial statements
• Successful exit of trade distribution business which freed circa £20 million 50 Consolidated cash flow statement
51 Notes to the consolidated financial
of working capital statements
• Two acquisitions made during the year; Thesaurus Computer Services in UK 87 Statement of Directors’ responsibilities
88 Independent auditors’ report
and becom in Germany 89 Company balance sheet
• Group-wide ERP project remains on track 90 Notes to the Company
financial statements
94 Group five year financial review
94 Group summary balance sheet
95 Financial calendar
* Adjusted for exceptional items and amortisation of acquired intangibles. Adjusted operating profit is also stated after 96 Corporate information
charging finance costs on CSF, and prior to the transfer of internal ERP implementation costs between segments.
Computacenter plc Annual Report and Accounts 2009 1
4. stRAtegy And peRfORmAnCe
2009 strategic Accelerating improving the
objectives the growth of efficiency of our
our contractual service operations
services
businesses
progress against In 2009 our Group contract base
grew by 9 per cent in constant currency;
Our investment in common solutions
and approaches continues to help us
2009 strategic in a difficult economic environment,
customers continued to turn to
improve service efficiency and lower costs
for customers. In the UK, the Shared
objectives Computacenter for contracted services. Services Factory (SSF) helped us further
standardise customer engagement in
2009 and ensure we deliver value to
our customers beyond simply meeting
defined service levels. Progress is being
made with similar shared resource
initiatives across the Group.
In addition, we are making investments
in our off-shore delivery capability to take
advantage of lower costs available, such
as in South Africa.
Key performance Increase contract base
in constant currency £m
Increase services revenue
per service head (£’000/head)
indicators 2006 347 2006 534.7 84
2007 418 2007 605.0 87
2008 462 2008 684.3 88
2009 504 2009 740.087
+9.0% -1.2%
2010 strategic Accelerating Reducing cost
objectives the growth of through increased
our contractual efficiency and
services industrialisation
businesses of our services
operations
5. maximising the extending our Reducing the
return on working presence in cost of sale in
capital and freeing markets that offer our supply chain
working capital greatest growth activities
where not opportunity
optimally used
In 2009, following the partial exit of trade Following the decision to refocus our In light of the challenges presented
distribution in the UK in late 2008, we efforts on the sale of our full service by the economic environment, we
took the decision to complete our exit proposition and higher end product sales increased our focus on overlay cost
from the trade distribution activity with the to organisations of more than 500 seats, reduction across our geographies,
sale of the remaining server and storage we have seen a revenue reduction of 2.2 particularly in the UK where SG&A
CCD business. This is expected to per cent, against a challenging economic reduced by £22 million (13.3 per cent).
generate cash of circa £20 million, backdrop. However this is ahead of the This was achieved through: the exit from
which can be invested in the Group’s overall market position; the total IT market CCD; the withdrawal from our focus on
core business. for Western Europe declined by 4% in product sales to mid-market customers;
constant currency.* streamlining of the UK management
During the year we’ve placed significant structure and de-layering process.
focus on all the key areas of working
capital management which collectively We also continued to benefit from
across the Group have resulted, prior previous e-commerce investments in
to CSF, in a net cash improvement from our supply chain activities to reduce
£4.6 million to net cash of £86.4 million. the unit cost of processing product
sales transactions.
Increase adjusted operating Increase services revenue Decrease net operating expenses
cashflow £m in constant currency £m in constant currency £m
2006 24 534.7 2006 534.7 614 2006 298
2007 38 605.0 2007 605.0 693 2007 318
2008 79 684.3 2008 684.3 728 2008 684.3 326
2009 740.0 142 2009 740
740.0 2009 740.0
292
+79.6% +1.7% +10.5%
maximising the growing our profit ensuring the
return on working margin through successful
capital and freeing increased services implementation
working capital and high-end of the group-wide
where not product sales eRp system
optimally used
*Adapted from Gartner IT Market Databook, December 2009 and IT Services Europe Forecast Database, December 2009.
6. internatiOnal OPeratiOns at a Glance
Computacenter operates in 5
Group revenue by business type
the UK, Germany, France, 1 1. Personal systems 23%
Desktop, laptop, monitor,
and the Benelux countries, printers, peripherals, consumables.
as well as providing 4 2. Datacentre & networking 26%
transnational services across Intel and Unix servers, storage,
networking and security.
the globe. Its activities are
3. software product 14%
supported by service centres
4. services 31%
in the UK, Germany, France, 2
Professional, support and managed
Spain, South Africa and 3 services delivered by Computacenter.
Malaysia. 5. third party services 6%
Third party resold services.
United Kingdom % of Group revenue Financial highlights
49%
revenue
£1,226.9m
adjusted* operating profit
£37.8m
Germany % of Group revenue Financial highlights
37%
revenue
£930.7m
adjusted* operating profit
£19.6m
France % of Group revenue Financial highlights
13%
revenue
£319.4m
adjusted* operating loss
-£2.7m
Benelux % of Group revenue Financial highlights
1%
revenue
£26.2m
adjusted* operating loss
-£0.8m
2 Computacenter plc Annual Report and Accounts 2009
7. computacenter
coverage
• computacenter
service centres
Hatfield, UK
Leeds, UK
Manchester, UK
Milton Keynes, UK
Nottingham, UK
Romford, UK
Warrington, UK
Erfurt, Germany
Kerpen, Germany
Overview
Paris, France
Barcelona, Spain
Cape Town, South Africa
Kuala Lumpur, Malaysia
highlights contract wins revenue by business type
• Adjusted* operating profit increased by 27.8 • New managed service contracts with: a retail 5
1. Personal systems 18%
per cent to £37.8 million (2008: £29.6 million) bank; Schroders; Threadneedle; NHS Oldham; 1 2. Datacentre &
• Ongoing revenue fell by 7.3 per cent in 2009 Produban (Santander Group IT business) Networking 30%
3. Software product 17%
to £1.14 billion (2008: £1.23 billion) and BT 4
4. Services 29%
• Long-term contractual revenue grew by • Professional services wins include: a leading 5. Third party services 6%
6 per cent whilst professional services revenue financial services group; a major supermarket 2
declined by 6.8 per cent chain and Severn Trent Water
Business review
• Reduction in operating expenses by £22 million • Product win for: BP 3
• Acquired IBM mainframe specialist, Thesaurus
Computer Services Limited (TCS)
highlights contract wins revenue by business type
• Adjusted* operating profit growth of 21.9 • Managed services contracts with EADS Astrium 5 1. Personal systems 22%
per cent to €22.0 million (2008: €18.0 million) • Onsite services and logistics support for BASF 1 2. Datacentre &
• Managed services contract base grew by IT services Networking 27%
3. Software product 9%
8.4 per cent to €266.8 million • Datacentre optimisation win for a leading 4
4. Services 36%
• Acquired systems provider becom manufacturer of brake parts 5. Third party services 6%
Informationssysteme GmbH (‘becom’)
2
3
highlights contract wins revenue by business type
• Adjusted* operating loss of €3.1 million
(2008: €2.1 million)
• Desktop support contract with Conseil Regional
Midi-Pyrénées
5 1. Personal systems 47%
2. Datacentre & Governance
4
• Revenue declined by 7.6 per cent to • Managed services contract with Electricité Networking 12%
3. Software product 19%
€358.7 million (2008: €388.0 million) Réseau Distribution France
4. Services 18%
• Services revenues grew by 10.2 per cent in local • Datacentre maintenance win for SPEIG
1
5. Third party services 4%
currency, now representing 18.4 per cent of the • Software licensing contract with: Airbus France 3
total business and a Global contract with GDF-SUEZ
• Simplified management structure resulted 2
in an 11.6 per cent reduction in operating
expenses in local currency
highlights contract wins revenue by business type
Financial statements
• Adjusted* operating loss of €851,000 in 2009 • International contract with leading 5 1. Personal systems 34%
(2008: €120,000) biotechnology firm covering the supply 2. Datacentre &
of hardware and software Networking 13%
• Overall revenues declined by 22.1 per cent in 1
3. Software product 11%
local currency 4
4. Services 40%
5. Third party services 2%
2
3
* Adjusted operating profit is stated after charging finance costs on CSF, and prior
to the transfer of internal ERP implementation costs between segments. Computacenter plc Annual Report and Accounts 2009 3
8. chairman’s statement
“at computacenter we provide services to our customers
that save them money and help them be more productive.
in pursuit of this we made good progress in 2009.”
At Computacenter we provide services to Results for the year are pleasing. to please our customers and improve
our customers that save them money and Adjusted* profit before tax increased profitability, maximise the use of working
help them be more productive. In pursuit by 25.8 per cent to £54.2 million. Net capital and fulfil our people’s talent
of this we made good progress in 2009. funds before customer specific financing and ambition.
We set out to enhance our profitability, increased by £81.8 million to £86.4
I thank the people of Computacenter for
optimise the use of working capital and million. The ERP implementation is on
their hard work and commitment to our
improve our cash flow. We invested in our plan and budget. Our customers gave us
Company and our customers for their
people, processes and systems, whilst high and improved satisfaction ratings in
support and, above all, their business.
significantly reducing the overall cost base independent surveys and an increasing
We are pleased with our progress but
within the Group. Our organisation was share of their business. We invested some
not satisfied that we have exploited our
simplified, we exited our trade distribution £20 million in our business in 2009, a
potential to the full.
businesses, and bought Thesaurus in the sum which includes the ERP project and
UK and becom in Germany. Our services at the same time reduced the cost base
contribution saw improvement in all three by more than £30 million on a constant
major geographic markets, focus on our currency basis.
target markets was sharpened and we
We face the future encouraged by this
continued to invest in the implementation
progress and optimistic for our prospects
of our Group-wide ERP system. Greg lock
ahead, in particular with an annualised
chairman
service contract base of over £500
million. We have won a number of major
new contracts and have a solid retention
of existing customers. Competition is
fierce and we must continuously improve
our performance in order to win in the
market place; the economic environment
remains uncertain and our job is to
help our customers address this, while
improving our own business. We are
seeing a continued shift in our market to
‘multi sourcing’ of service offerings and
‘single sourcing’ of product offerings,
independent of the hardware and
software makers. We are well positioned
to address these shifts as we strive
*Adjusted profit before tax is stated prior to amortisation
of acquired intangibles and exceptional items.
4 Computacenter plc Annual Report and Accounts 2009
9. OPeratinG mike norris
review chief executive
Overview
Business review
“we enter 2010 in good shape, with a lower cost base, having
secured our largest project to date. we believe that the
investments we are making in our business, together with
our strong balance sheet, positions the Group well to take
advantage of market opportunities, which means we are well
placed to capture further opportunities and market share.” Governance
Computacenter has delivered a strong Group revenue declined in 2009 by
profit performance in 2009. Group 2.2 per cent to £2.50 billion (2008:
adjusted* profit before tax grew by 25.8 £2.56 billion). Part of this decline was
per cent to £54.2 million (2008: £43.1 as a result of our strategic decision to
million). Excluding the effects of a stronger exit trade distribution; however revenue
Euro, Group adjusted* profit before tax benefited from a strong Euro. Excluding
increased by 22.3 per cent. Primarily these two opposing effects revenue
due to this increased profitability and a declined by 4.9 per cent. As reported,
Financial statements
reduced tax rate, the Group’s adjusted* Group services revenue increased by
diluted earnings per share (EPS) grew 8.1 per cent but particularly pleasing was
31.9 per cent to 27.7 pence (2008: 21.0 the 12.2 per cent increase in long-term
pence). On a statutory basis, taking contractual revenues. The Group annual
into account amortisation of acquired services contract base stood at £503.6
*Adjusted profit before tax, income tax expense and EPS intangibles and exceptional items, Group million at the end of the year, an increase
are stated prior to amortisation of acquired intangibles profit before tax increased 22.4 per cent of 3.9 per cent over 31 December 2008
and exceptional items. Adjusted operating profit is also to £48.4 million (2008: £39.5 million) and or 9.0 per cent in constant currency.
stated after charging finance costs on CSF, and prior
to the transfer of internal ERP implementation costs diluted EPS increased by 2.9 per cent to
between segments. 24.9 pence (2008: 24.2 pence).
Computacenter plc Annual Report and Accounts 2009 5
10. Operating review continued
We reduced operating expenses by over The increase in the Group’s annual
£30 million in constant currency and as services contract base is clear
a result the Group incurred exceptional evidence that customers are turning to
costs as it restructured its workforce and Computacenter to help them reduce
vacated the related property. Additionally, their operating costs. Our offerings
the disposal of our trade distribution continue to gain momentum in the market
division (CCD) in November 2009, as customers choose to selectively
generated an exceptional profit of outsource IT infrastructure support,
£1.9 million, net of goodwill written rather than opting for a comprehensive
off. The net effect of these exceptional IT outsourcing contract or undertake
items is a charge of £5.3 million. the work in-house.
Our balance sheet has strengthened To meet this growing demand for our
considerably. At the end of the year net datacentre and distributed services we
cash prior to customer specific financing have continued to invest in our assets
(CSF) was £86.4 million (2008: net cash and people during 2009. We have
of £4.6 million). Including CSF net funds increased our service desk capacity in
were £37.3 million (2008: net debt of Milton Keynes, Hatfield, Erfurt, Barcelona
£84.6 million). This material improvement and Cape Town as well as establishing
in our cash position was primarily due a new helpdesk facility outside of Paris.
to increased profitability, the sale of our The enhancements we have made to
distribution division, prudent working our customer facing systems and tools,
capital management and is largely which enable better workflow within
sustainable. However, the figures are IT departments, have caused a strong
flattered by approximately £30 million due increase in use by our customers. We
to the extended credit terms of one of our now have as many customer employees
major vendors which have been made using our software tools as our own staff.
available to all of their business partners.
We have successfully transitioned a
These terms are likely to return to normal
number of existing customers to our
in the second half of 2010.
new datacentre facility in Manchester.
The Board has decided to pay an We received the award for Datacentre
additional interim dividend of 8 pence Team of the Year after migrating more
in lieu of a final dividend, bringing the than 1,000 devices without any business
total dividend for the year to 11 pence interruption, resulting in 100 per cent
(2008: 8.2 pence). The increase in positive customer feedback. Additionally,
dividend is broadly consistent with our in the datacentre area we have made a
stated policy of maintaining dividend significant enhancement to the Group’s
cover within our target range of 2 to offering by investing in a new facility in
2.5 times. The dividend will be paid Romford in the UK, which opened in
on 1 April 2010 to shareholders on the early 2010. This is the first datacentre
register as at 19 March 2010. outsourcing facility in Europe that will be
certified to the highest level of security
and reliability, Tier IV.
6 Computacenter plc Annual Report and Accounts 2009
11. Overview
Business review
Governance
“Business expansion had left us with a disparate telephone system
that was inefficient and expensive. computacenter helped us
deploy an iP-based unified communications solution that enhanced
business agility, staff collaboration and the customer experience.
Financial statements
By consolidating our communications systems and support with
computacenter, we will also be able to save at least £1 million over
the next 10 years.”
Martin Schofield, Retail Operations Manager, Harvey Nichols
Computacenter plc Annual Report and Accounts 2009 7
12. Operating review continued
We announced a year ago that the The sale of CCD to Ingram Micro was
Group had embarked on a major ERP finalised in November, completing our
implementation project. The project exit from the trade distribution market.
remains on track and within the capex This disposal frees up approximately
budget of £32 million of which £22 £20 million of working capital of which
million had been spent by the end of £15 million was realised in 2009. It will
2009. We are scheduled to roll out the have a negative impact on the Company’s
new system in Germany in the second profitability of approximately £1.0 million
half of 2010 and in the UK in the first in 2010.
half of 2011 with other Group countries
following closely behind. There will be United Kingdom
a net cost to the profit and loss in the
second half of 2010 and the first half of Revenue
£1,226.9m
2011 as the cost savings that we expect
to achieve from the new implementation,
will only be available to us once our
two major countries have gone live. In Adjusted* operating profit
addition to the cost saving benefits, we
believe the new system will enable us
to create greater efficiencies in many of
the Group’s activities and improve our
competitiveness.
£37.8m
Excluding the effects of the exit from trade
distribution, UK revenues fell by 7.3 per
The Group made two acquisitions in cent in 2009 to £1.14 billion (2008: £1.23
the year, both in late November, which billion). This fall was driven by product
therefore had minimal impact on our 2009 revenue declines as the condition of the
performance. In the UK we acquired UK economy caused our customers
Thesaurus Computer Services Limited to reduce capital expenditure where
(TCS). TCS gives Computacenter access possible. The fourth quarter showed
to IBM mainframe specialist skills and a small revenue increase of 2 per cent.
builds on our long-term relationship with Whilst this is encouraging, the VAT rate
IBM. With this acquisition Computacenter increase at the end of the period may
will become the most significant have caused the increase in demand.
independent System Z provider of
products and services in the UK outside Adjusted* operating profit in the UK
of IBM. In Germany we acquired systems increased by 27.8 per cent to £37.8
provider becom Informationsysteme million (2008: £29.6 million). This profit
GmbH (becom). This acquisition also growth could not have been achieved
strengthens our relationship with IBM without the major cost reduction
and positions Computacenter as their programme we entered into at the
largest business partner in Europe. We beginning of the year. In 2009 the UK’s
believe the acquisition will increase our overhead costs have been reduced by
annual revenue in Germany by around approximately £22 million compared
10 per cent in 2010. Whilst there will be to 2008.
some one-off integration costs post the
Services revenue grew by 2.2 per cent
acquisitions, we expect a positive net
to £334.0 million (2008: £326.8 million).
operating profit in the year ahead.
However, more importantly long-term
contractual revenue grew by 6.0 per
cent whilst professional services revenue,
which is more closely linked to product
and shorter term projects, declined by
6.8 per cent. The decline in professional
services revenue was caused by the lack
of new infrastructure projects throughout
2009, the pipeline for which has improved
steadily towards the end of the period.
8 Computacenter plc Annual Report and Accounts 2009
13. Overview
Business review
Governance
“Guaranteeing it availability requires a high level of service quality,
which can be difficult and expensive to maintain. By partnering with
computacenter, we have been able to draw on its skilled resources
for both non-core aspects of it management and transformation
Financial statements
projects, such as a datacentre consolidation. the partnership has
already enabled annual savings of £1.5 million and will help safeguard
the continuity and quality of our investment services.”
Mark Prior, IT Director, Threadneedle
Computacenter plc Annual Report and Accounts 2009 9
14. Operating review continued
As we have stated before our Although there have been fewer
propositions, particularly in managed significant infrastructure projects than in
services, have gained traction in the previous years, we managed to secure a
market over the last few years as we number of major successes. Wins include
focus on reducing the operating costs the £45 million contract to supply and
of our customers’ IT infrastructure. We install the network infrastructure at two
are pleased to announce a number of new datacentres for a leading financial
significant new wins in our long-term services group and a major business
contractual services business. transformation including datacentre and
network implementations for a major
We have won a ten-year managed supermarket chain, within its distribution
services contract with global asset network.
management firm Threadneedle. This
contract, which is now fully operational, We are encouraged by the number of
is an £11 million agreement where customers evaluating and committing
Computacenter will host and manage to transformation programmes involving
the firm’s datacentre infrastructure. This the migration to Microsoft Windows 7,
has facilitated Threadneedle making which we see as a key driver for growth
savings in excess of the contract value. in the coming years. An example of this is
NHS Oldham has signed a four-year where Severn Trent Water has engaged
contract that will see Computacenter Computacenter as part of a £3.5
provide management and support of million project, which will underpin new
its IT infrastructure to reduce costs and flexible working practices, increase staff
improve service. productivity and reduce costs.
At the beginning of 2010 we signed our We have also had success in the product
largest services contract to date, with a supply side of our business where we
retail bank to out-task desktop services as have seen customers consolidating
part of a five-year agreement covering the suppliers and using the indirect channel
bank’s 140,000 users and 16,000 servers to help them reduce their costs. A
over its entire estate including 3,000 good example of this is our recent
branches. We also signed a new five-year win with BP, which has consolidated
full infrastructure managed services deal hardware and software procurement
worth in excess of £40 million with global with Computacenter in Europe and
asset management firm Schroders. Both CompuCom, our partner in the US.
of these contracts will not start to add BP expects to see a 15 per cent
significantly to our services revenue until reduction in capital expenditure as
the second half of 2010. part of this programme.
Whilst the number of new contracts won
is extremely satisfying, we are even more
pleased with our retention rate, where we
frequently not only retain the customer
but also increase the contract in scope
and duration. Testament to this is the new
six-year desktop services contract signed
with BT Group in 2009. In retail banking
we have signed a new contract with
Produban (Santander Group IT business)
where we have agreed a five-year
extension, which supports its 31,000
UK employees.
10 Computacenter plc Annual Report and Accounts 2009
15. Overview
Business review
Governance
“to help reduce costs and enhance efficiency, we outsourced
the management of our european network infrastructure to
computacenter. via a single network control centre, computacenter
manages more than 130,000 network ports and associated
Financial statements
components. By taking advantage of a shared services model,
we have been able to make financial savings while also increasing
the stability of our it infrastructure.”
Dr. Hartwig Faber, Daimler AG
Computacenter plc Annual Report and Accounts 2009 11
16. Operating review continued
With the ongoing focus on environmental 2009 can be characterised as a year
issues, 2009 proved a great year for RDC, of lots of small improvements. Services
our IT equipment disposal, remarketing margin was up a little, operating expenses
and redeployment subsidiary. The were down a little and there was some
Company achieved record annual results improvement towards higher-end
as part of the Computacenter Group, products and services, all of which
with overall revenue up by 20 per cent improved the profit performance.
to nearly £30 million, while profits grew
Our managed services contract base
by 46 per cent.
grew by 8.4 per cent to €266.8 million
In June, RDC was delighted to invite compared to the previous period. We
the new Chairman of the Environment signed a number of notable outsourcing
Agency, Lord Chris Smith, to open a contracts, including a three-year
new recycling area, and to celebrate its agreement with aerospace company
second Queen’s Award. The accolade for EADS Astrium. BASF IT services has
Enterprise for Sustainable Development engaged Computacenter to provide
is one of only ten awarded in the whole on-site services and logistics support
of the UK. for more than 50,000 desktops and
laptops for the BASF Group in Europe.
Germany
The market for professional services
Revenue has been challenging. However, our
£930.7m
networking solutions business saw good
results; initiatives aimed at increasing
networking services sales yielded
strong growth, notably in security and
Adjusted* operating profit unified communications. Margins grew
£19.6m
considerably in 2009 and played an
important role in the operating results.
Significant wins included a networking
managed services contract with
In Germany we saw another year of
EADS Astrium. This contract and the
encouraging adjusted* operating profit
desktop agreement are worth a total
growth of 21.9 per cent to €22.0 million
of €5.0 million.
(2008: €18.0 million). This was achieved
despite a decline in revenues of 1.4 per Our datacentre product business
cent in local currency to €1.03 billion, performed poorly, with revenue and
excluding the acquisition of becom in margins for low-end servers below
late November. As with elsewhere in our expectations. Future growth in the
Europe there was a slowdown in product datacentre business will be assisted by
sales and continued margin pressure the becom acquisition.
throughout the year, particularly for
low-end servers and PCs. The opportunity created by customer
concerns around energy and operational
efficiency also led to a number of new
business wins in 2009, including a
datacentre optimisation project for a
leading manufacturer of brake parts. We
are helping the manufacturer identify ways
to enhance its energy efficiency as part of
the contract. While at Immoblienscout24,
we are assisting the online property
portal company with the implementation
of a new datacentre and also providing
ongoing support.
12 Computacenter plc Annual Report and Accounts 2009
17. Overview
Business review
Governance
“nhs Oldham wants to ensure that information technology is an
enabler to improved health services and delivers value for money.
By outsourcing the majority of our ict to computacenter, we
have greater certainty and control over both service levels and
Statements
Financial statements
costs. this will enable us to save money and time, which is key
to improving patient care.”
Steve Sutcliffe, NHS Oldham, Director of Finance
Computacenter plc Annual Report and Accounts 2009 13
18. Operating review continued
France Datacentre solutions and services,
especially consolidation and virtualisation,
Revenue will play a key role in the development of
£319.4m
Adjusted* operating loss
the French business. For example, we
won a four-year contract with SPEIG, a
subsidiary of COLAS (the French building
construction and public works leader) for
-£2.7m
maintaining its datacentres across
40 countries.
Computacenter France’s product revenue
Whilst overall performance for declined by 10.8 per cent in local currency
Computacenter France declined slightly compared to 2008. The most significant
last year to an adjusted* operating loss of factor in this revenue decline was due
€3.1 million (2008: €2.1 million) it was still to our largest customer in France going
materially ahead of our internal, as well through a hiatus in spend, due to the fact
as external, expectations at the beginning that their contract with us had come to
of the year. an end. We are pleased to announce that
we have secured a new contract with
In line with the market, revenue declined this customer with a slightly wider scope
by 7.6 per cent to €358.7 million (2008: for another four years. Excluding this
€388.0 million). However, encouragingly customer, product revenue grew by 1 per
services revenues grew by 10.2 per cent cent which we believe is materially ahead
in local currency, now representing of the market as a whole.
18.4 per cent of the total business.
The software licensing market is a key
Computacenter France continued development area for Computacenter
to demonstrate improvements in its France, supported by a new specialist
operating controls and processes, sales team. Among our software
with greater governance of forecasting successes during 2009 was a win with
and financial structure. The simplified Airbus France, which involves the supply
management structure implemented and the implementation of an anti-virus
at the beginning of 2009 resulted in package for 560 users.
an 11.6 per cent reduction in operating
costs, in local currency. We also won a global software licensing
contract worth €9 million with energy
To further support services growth in company GDF-SUEZ. The contract
France, we opened a new helpdesk includes distribution to 51 countries and
in Roissy. This facility will be key to will help GDF-SUEZ remove cost and
supporting and growing our desktop complexity from its operations.
support business, which benefited from
a number of key wins in 2009. For Computacenter France has made real
example, the Conseil Regional Midi- progress in 2009. The local management
Pyrénées, a public administrative authority team have made a step change in 2009
in the south of France, has engaged as is evidenced by our services growth.
Computacenter France to provide We feel confident that the business will
support services to 1,300 end-users, make financial progress in 2010.
as part of a three-year contract.
A full managed services contract with
Electricité Réseau Distribution France
was another of our outsourcing success
stories in 2009. Worth €4.8 million, the
contract includes support for 1,800
desktops as well as the electricity
Company’s network and datacentres.
14 Computacenter plc Annual Report and Accounts 2009
19. Overview
Business review
Governance
“computacenter has a long-term relationship with nationwide
and has played a key role in allowing us to optimise and
support our it infrastructure – from implementing new cabling
for our administration centre locations to simplifying software
Financial statements
licensing and delivering key infrastructure projects. in april 2009,
we signed a five-year it managed services contract with
computacenter that will improve cost control, business agility
and it service levels.”
Peter Stafford, IT Director, Nationwide
Computacenter plc Annual Report and Accounts 2009 15
20. Operating review continued
Benelux Outlook
The outlook for our long-term contractual
Revenue services business, where we save our
£26.2m
customers money, remains encouraging
and we predict revenue growth,
particularly in the UK, in 2010 where
Adjusted* operating loss contracts have already been secured. We
-£0.8m
also expect some improvement in gross
profit compared to 2009 due to improved
business take on and economies of scale.
Our Benelux operation showed an Our professional services, coupled
adjusted* operating loss of €851,000 with our product supply, which is reliant
in 2009 (2008: €120,000), with overall on capital expenditure, is more difficult
revenues dropping by 22.1 per cent. to predict.
This was due to a major decline of The encouraging signs we saw in the
29 per cent in product revenues. The fourth quarter in the UK have continued
product business had a difficult year in into the first quarter of 2010. Germany
a tough market, particularly within the has seen a challenging start to the year
corporate sector. when compared with the first quarter of
In the first half of 2009, we embarked 2009. As is always the case, it is not until
on several initiatives to control the cost we have gone through the end of the first
base. We suspended product supply quarter, that we can draw any meaningful
activities in Luxembourg and undertook conclusions about the performance of the
a restructuring project in Belgium. Group, for the year as a whole.
Despite the decline in revenue, we saw In the longer-term we believe the
a number of key managed services and investments we are making in our
project wins during 2009. Techspace business, together with our strong
Aero, part of the Safran Group, has balance sheet, positions the Group well
engaged Computacenter Benelux to to take advantage of market opportunities.
deploy a new storage infrastructure. While the economic outlook remains
The project, worth €550,000 will help uncertain, customers will continue to
the company improve data management focus on reducing their operating costs
and reduce costs. We are also helping and focusing on core activities.
Truvo Netherlands upgrade its
telecommunication systems after
a project win worth €110,000.
The Group’s global procurement
capabilities also secured new business
for Computacenter Benelux during 2009
in the form of an international contract mike norris
with a leading biotechnology firm. The Group chief executive Officer
agreement covers the supply of hardware
and software.
“in the longer-term we believe the
investments we are making in our business,
together with our strong balance sheet,
positions the Group well to take advantage
of market opportunities.”
Mike Norris, Chief Executive Officer
16 Computacenter plc Annual Report and Accounts 2009
21. marKet Overview
“we remain confident about steady growth in the selective
outsource market in 2010 and take some encouragement
from market forecasts that there will be a return to growth,
albeit small, in capital expenditure.”
Computacenter operates across Companies are increasingly looking to For many years, operating system
Overview
Western Europe primarily serving the take back control of their strategic IT with upgrades have had little real impact
Corporate and Public Sector markets, a combination of selective outsourcing on the investment in new technology.
providing IT infrastructure services, and in-house delivery. We are well However, Microsoft Windows 7 is
including: infrastructure outsourcing; positioned to benefit from the trend of generating significant customer interest,
infrastructure design; implementation selectively outsourcing as opposed to as a result of its ability to improve reliability
and product supply. large end-to-end outsourcing by the and cost of management of the PC
major outsourcers, as we are specialists infrastructure. As a stable, secure and
In 2009, mainly due to the recessionary more user friendly operating system, this
in this area.
environment, the impact on the particular upgrade may help to drive new
infrastructure outsourcing and new Conversely, in 2009 business investment infrastructure projects.
infrastructure projects was markedly in new IT infrastructure and therefore
different. design and deployment services was No discussion of the current market
weak, with hardware sales to the would be complete without a mention
Customers were and remain primarily of cloud computing. As with any ‘new’
business market across Europe down by
focused on cost reduction; demand for technology, there has been significant
12 per cent**. Computacenter’s product
Business review
selective outsourcing elements of the IT discussion and marketing of the
sales to end-users were impacted by this
infrastructure for customers continued cloud concept, with many observers
trend but to a lesser extent, with overall
to be robust, as we reduce cost for our proclaiming cloud to be the answer to the
product sales for ongoing business down
customers and they move away from total future of IT. For our part, we’ve embraced
by 7.5 per cent. Gartner** predicts a small
outsourcing to a single vendor. Market the potential of cloud and have integrated
growth in business product sales across
figures show that in Western Europe it into our offerings – in fact many of our
Europe in 2010 of 3 per cent.
in 2009, IT infrastructure outsourcing customers have already implemented
increased by 3 per cent* and is expected Consistent with these predictions, as the ‘cloud’ concept in some form; for
to increase by 4 per cent* in 2010. European economies slowly emerge example hosted IT services or shared
Computacenter’s Group contracted from recession, we’re seeing a measured infrastructure services. Our existing
services revenues grew by 5.4 per cent but steady development in the nature service and hosting offerings already span
in 2009 in constant currency. of IT infrastructure projects. However, the cloud concept and we are able to
the market may be impacted by market this effectively to our customers.
lower Government spending on new We’ve found that offering a balanced
infrastructure as governments withdraw approach in this area rather than a one-
stimuli measures to reduce budget deficits. size-fits-all service resonates better with
Against the challenging broader our clients and prospects.
market facts and figures economic backdrop, server and desktop In conclusion, we remain confident
consolidation and virtualisation have
Governance
about steady growth in the selective
western europe it continued to be two of the few areas outsource market in 2010 and take some
infrastructure outsourcing of clear growth in the IT professional encouragement from market forecasts
increased by 3 per cent in 2009* services market in 2009 (overall that there will be a return to growth, albeit
3%
professional services market decline small, in capital expenditure. However,
of 2 per cent†). Such projects generally customers remain cautious and this
deliver measurable cost savings and capital expenditure growth is by no
efficiency gains in a relatively short means certain.
computacenter’s Group space of time and as such have been
contracted services revenues favoured over large scale infrastructure
grew by 5.4 per cent in 2009 deployments, as customers seek
5.4%
a quicker return on investment.
We are also beginning to see a gradual
change in customer focus from primarily
Financial statements
cost reduction towards a focus on
Predicated growth for it cautious business investment for
infrastructure outsourcing growth, as the European economies * Gartner IT Outsourcing Europe Forecast
in western europe of 4 per cent slowly improve. Database, December 2009.
in 2010* ** Adapted into constant currency growth from
4%
Gartner IT Market Databook, December 2005.
†
Adapted into constant currency growth from
Gartner IT Services Europe Forecast Database,
December 2009. Computacenter excludes
IT management from Gartner’s professional
services figure.
Computacenter plc Annual Report and Accounts 2009 17
22. Finance DirectOr’s review
“the net funds (excluding csF) improved from £4.6 million
to £86.4 million by the end of the year.”
turnover and profitability The reconciliation of statutory to adjusted Gross profit percentage for Germany as
After two consecutive years of growth, results is further explained in the a whole decreased from 13.7 per cent
Group revenues reduced in 2009 by segmental reporting note (note 3) to 13.4 per cent of sales, mainly due to
2.2 per cent. The exit from the trade to the financial statements. an increasing proportion of sales of lower
distribution of PCs, laptops and printers margin PCs within product revenue.
UK
at the end of 2008, and subsequent
UK revenues declined in 2009 by 11.8 SG&A reduced by 5.9 per cent in
completion of the sale of the remaining
per cent overall but declined by 7.3 per constant currency mainly due to a tight
trade distribution (CCD) business on
cent when the impact of the staged focus on control of all variable SG&A
27 November 2009 resulted in a
withdrawal from trade distribution is costs. The net outcome of the above
reduction of revenues in that business
removed. Ongoing product sales declined factors was an improvement in adjusted
to £84.7 million (2008: £158.8 million).
10.8 per cent whilst Services revenues operating profit from £14.3 million to
Excluding CCD, Group revenues
increased by 2.2 per cent, driven by a 6.0 £19.6 million. Included within the adjusted
increased by 0.7 per cent, with product
per cent growth in contractual services, operating profit is £0.3 million from becom
revenues declining by 2.3 per cent to
offset by a reduction in Professional since acquisition.
£1.68 billion. This reduction was partially
Services revenues linked to the downturn
offset by an increase in services revenues France
in spending on capital projects.
of 8.1 per cent to £740.0 million, with Revenue increased by 3.6 per cent to
Managed Services growth offsetting The decline in product sales resulted in an £319.4 million (2008: £308.2 million)
a contraction in Professional Services. improved gross profit mix, with adjusted whilst revenue in constant currency
The Professional Services and product gross profit increasing from 14.0 per cent reduced by 7.6 per cent. Constant
revenue decline is mainly due to the lack to 14.8 per cent. This is despite margin currency product revenue reduced by
of large infrastructure projects as a result challenges on the start-up of certain new 10.8 per cent whilst service revenue
of the recessionary environment. The Managed Service contracts and the more increased by 10.2 per cent. Within
growth in service revenues across the difficult Professional Services market. this, Professional Services reduced by
Group improves the forward visibility 15.8 per cent whilst Managed Services
of gross margin generation and Adjusted operating expenses decreased revenue increased by 27.9 per cent.
earnings resilience. by £22.0 million (13.3 per cent), reflecting
the effects of the cost reduction Gross profit decreased from 12.6 per
In both the UK and Germany, product programme which was initiated in 2008. cent to 11.7 per cent of revenues with the
revenues in December were stronger The Selling, General and Administrative favourable mix effect of increased services
than anticipated, partially due in both expenses (SG&A) cost reduction included revenues being more than offset by a
countries to strong year end activity by the cost reduction from the partial exit reduction in margin due to the renewal
customers to utilise existing budgets, from trade distribution, the reduction in of a major product contract.
augmented in the UK by the VAT rate the mid market product sales business
change on 1 January 2010. Exceptional charges of £1.6 million
and a reorganisation aimed at the
were incurred to help reduce operating
simplification of the organisation structure
Adjusted profit before tax improved by expenses, which declined by 11.6 per
including a reduction of the management
25.8 per cent from £43.1 million to cent in constant currency although this
layers. The cost reduction process was
£54.2 million. After taking account is reported as a 0.8 per cent reduction
assisted by the recessionary environment
of exceptional items and amortisation when translated into Sterling.
which resulted in lower staff attrition,
of acquired intangibles, statutory profit
recruitment costs and lower travel and The adjusted operating loss increased to
before tax increased by 22.4 per cent
other costs, in total approximately. £2.0 £2.7 million (2008: £1.7 million), which is
from £39.5 million to £48.4 million.
million. Exceptional charges incurred to a better than expected performance in the
adjusted operating profit achieve these savings were £3.3 million year, taking account of the impact of the
Statutory operating profit increased from in redundancy charges and £1.9 million contract renewal with a large customer.
£42.6 million to £52.0 million. However, of vacant property costs.
management measure the Group’s Benelux
Germany Reported revenue reduced by 12.6 per
operating performance using adjusted
Revenue increased by 12.0 per cent cent to £26.2 million (2008: £30.0 million)
operating profit, which is stated prior
to £930.7 million (2008: £830.7 million) whilst revenue in constant currency
to amortisation of acquired intangibles,
whilst revenue in constant currency reduced by 22.1 per cent. In constant
exceptional items, and the transfer
decreased by 0.1 per cent, however this currency, product revenue reduced by
of internal ERP implementation costs,
included a revenue contribution of £12.1 29.0 per cent whilst service revenue
and after charging finance costs on
million from the acquisition of becom reduced by 8.7 per cent.
customer-specific financing (CSF) for
Informationsysteme Gmbh (‘becom’).
which the Group receives regular rental Exceptional costs of £0.2 million were
Services revenues increased by 0.3 per
income. Gross profit is also adjusted incurred which helped to reduce SG&A
cent and product revenues decreased by
to take account of CSF finance costs. by 7.5 per cent in constant currency.
0.3 per cent in constant currency.
18 Computacenter plc Annual Report and Accounts 2009
23. The net result of the above was an
Overview
increase in the operating loss to £0.8
million (2008: £0.1 million).
acquisitions
On 26 November 2009, the Group
acquired 100 per cent of the voting
shares of becom for a consideration of
€2.3 million inclusive of costs. The becom
business is based in Germany and is a
leading provider of large IBM systems.
The acquisition of becom has resulted
in goodwill arising of £12.1 million.
becom will be integrated fully with
Computacenter Germany during 2010.
Business review
As a result, it is expected that going
forward the cash flows will not be reliably
and separately identifiable and that
the goodwill relating to this acquisition
will be tested for impairment against
the Computacenter Germany cash-
generating unit.
On 27 November 2009 the Group
acquired certain assets and liabilities Table 1
of Thesaurus Computer Services Limited Group revenues £m
from Thesaurus Computer Services half 1 half 2 total
Limited and BDO LLP for a consideration
of £0.9 million inclusive of costs. 2007 1,160.3 1,218.8 2,379.1
Thesaurus is a private company based 2008 1,250.3 1,309.8 2,560.1
in the UK which provides mainframe 2009 1,222.2 1,281.0 2,503.2
service solutions. 2009/08 (2.2%) (2.2%) (2.2%)
The assets of Thesaurus were acquired Table 2
by and the business was immediately adjusted profit before tax £m
Governance
integrated within Computacenter UK.
half 1 % half 2 % total %
The goodwill arising on the acquisition of
£1.5 million has been tested against the 2007 13.1 1.1% 29.6 2.4% 42.7 1.8%
Computacenter UK cash generating unit. 2008 11.3 0.9% 31.8 2.4% 43.1 1.7%
2009 18.2 1.5% 36.0 2.8% 54.2 2.2%
Details of the acquisitions are shown in
note 16 (Business Combinations) and 2009/08 62.1% 13.2% 25.9%
note 14 which describes in more detail
the impairment testing of goodwill and Table 3
other intangible assets. revenues by country £m
2009 2008
Disposals half 1 half 2 half 1 half 2
On 27 November 2009 the Group UK 624.9 602.0 708.1 683.1
disposed of CCD to Ingram Micro.
The Group received consideration of Germany 433.3 497.4 379.8 450.9
Financial statements
£3.0 million in cash. After the disposal France 151.1 168.3 147.2 161.0
of goodwill of £1.0 million and disposal Benelux 12.9 13.3 15.2 14.8
costs of £0.1 million, a profit of total 1,222.2 1,281.0 1,250.3 1,309.8
£1.9 million was realised.
The disposal does not represent
a separate major line of business
or geographical area of operations
and hence is not treated as a
discontinued operation.
Computacenter plc Annual Report and Accounts 2009 19