2. 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.
What we offer
Managed and Support Services
We can take contractual responsibility for the management of
our customers’ IT infrastructures, to reduce their costs and
improve service levels. We also provide support services such
as installation and maintenance of desktops, datacentres and
networks, user help-desk support and disaster recovery.
Consulting and Integration
We provide professional services, including integration and
project management expertise, and expert advice across a
range of platforms and technologies. We cover all key areas
of the IT infrastructure, from desktop to datacentre.
Supply Chain Services
We source, configure and deploy hardware and software
from a wide portfolio of leading vendors. We also provide
procurement consulting, software licence management,
technology disposal and asset management services.
3. Highlights 01
Group revenues up Adjusted profit before tax up
Corporate overview
Group revenue by business type2
+7.6 % +1.0 % 5 1
Adjusted diluted earnings Dividend per share up 4 2
per share up
+13.5 +2.5
3
% % 1
2
3
28%
27%
13%
Personal systems
Network, server and storage
Software
4 27% Services
5 4% Third party services
Computacenter plc Annual report and accounts 2008
Financial highlights Group revenue by country
••Group revenues increased 7.6% to £2.56 billion (2007: £2.38 billion)
4 1
••Adjusted1 profit before tax increased 1.0% to £43.1 million 3
(2007: £42.7 million)
••Adjusted1 diluted earnings per share increased 13.5% to 21.0p
(2007: 18.5p)
••Final dividend of 5.5p per share, total dividend 8.2p (2007: 8.0p)
••Net cash before customer-specific financing (‘CSF’) of £4.6 million
2
(2007: net debt of £16.2 million)
1 54% UK
Statutory performance 2 32%
3 12%
Germany
France
••Profit before tax decreased 6.0% to £39.5 million 4 1% Benelux
(2007: £42.1 million)
••Diluted EPS increased 33.0% to 24.2p (2007: 18.2p)
••Net debt after CSF of £84.6 million (2007: net debt of £79.8 million)
Operating highlights
••Group annual services contract base grew over 10% to £498 million,
based on constant currency
••Major UK change programme launched in Q4 2008 to accelerate
transition to higher margin services and solutions business and
improve capital return
••UK contract base grew 7.5% to £217 million, with new wins and
extensions expected to add a further £23 million by end Q1 2009
••Substantial improvement in German profitability driven by improved
services margin and an increased focus on networking and
datacentre solutions
••Continued steady improvement in French performance and
improved services mix
Contents
01 Highlights 38 Consolidated income statement 1 Adjusted profit before tax, income tax expense and EPS are stated
prior to amortisation of acquired intangibles and exceptional impairment
02 Our strategy and performance 39 Consolidated balance sheet charges. Adjusted operating profit is also stated after charging finance
www.computacenter.com
04 International operations 40 Consolidated statement of changes costs on CSF.
06 Chairman’s statement in equity
2 Definitions
08 Operating review 41 Consolidated cash flow statement Personal systems
14 Finance Director’s review 42 Notes to the consolidated financial Desktop, laptop, monitor, printers, peripherals, consumables.
19 Risk management statements Network, server, storage
20 Corporate sustainable development 71 Statement of Directors’ responsibilities Intel and Unix servers, storage, networking and security
23 Board of Directors 72 Company balance sheet Services
24 Corporate governance statement 73 Notes to the Company financial statements Professional, support and managed services.
28 Directors’ remuneration report 77 Group five year financial review Third party services
Third party resold services.
33 Report of the Directors 77 Group summary balance sheet
37 Independent auditor’s report to the 78 Group financial calendar
members of Computacenter plc 79 Corporate information
4. 02
Our strategy and performance
In 2008, Computacenter made further
Corporate overview
progress in each of the following
strategic initiatives aimed at ensuring
long-term earnings growth.
Our strategy
Computacenter plc Annual report and accounts 2008
1 2 3 4 5
Accelerating Improving the Broadening the Extending Reducing the
the growth of efficiency of range and depth our presence cost of sale in
our contractual our service of our services in markets our supply chain
services operations activities that offer activities
businesses greatest growth
opportunity
In 2008 our Group Our investment in common We continued to enhance Following a disappointing Our decision to stop
contract base grew over solutions and approaches our capability in areas, return on investment the trade distribution of
10%, as a difficult continues to help us such as networking and from sales to our smaller personal computers and
economic environment improve service efficiency datacentre, that command customer base, we took printers via CCD in the
led customers to turn and lower costs for higher margins and where the decision at the second half of the year, led
to Computacenter for customers. In the UK, specialist expertise is in beginning of 2009 to to a reduction in operating
contractual services the Shared Services high demand. Following refocus our efforts on costs and a significantly
to help them reduce IT Factory (SSF) helped us the completed merger with sales of our full service improved Group cash
operational costs and standardise customer Digica, our new capability proposition and position due to the lower
compete in a difficult engagement in 2008 and in datacentre, applications higher-end product sales stockholding requirement.
market. ensure we deliver value and network infrastructure to organisations of over In addition, we continued
to our customers beyond services and enhanced 500 seats, where we to implement improved
simply meeting defined offshore operations made enjoyed considerable business controls relating
service levels. Progress a significant contribution to success in 2008. to product purchasing
is being made with similar services growth. and supply in order to
shared resource initiatives streamline the supply
across the Group. business and reduce
operating costs.
www.computacenter.com
5. 03
Corporate overview
Our Key Performance Indicators
Computacenter plc Annual report and accounts 2008
Earnings per share growth Pence
+13.5 %
Adjusted* Diluted EPS improved 13.5% 2008 21.0
from 18.5p to 21.0p as a result of higher
profitability, a reduced number of shares in 2007 18.5
issue and a lower tax rate. This is the third
successive year in which Computacenter 2006 13.8
has delivered strong EPS growth.
* Adjusted for exceptional items and amortisation of 2005 11.8
acquired intangibles.
Operating profit growth £ million
+1.0%
Adjusted* Group Operating profit improved 2008 42.1
1.0%, from £41.7 million to £42.1 million,
driven mainly by improved profit 2007 41.7
performance in Germany and improved
exchange rates. 2006 33.3
* Adjusted for exceptional items and amortisation of
acquired intangibles and stated after charging finance
costs on customer-specific financing.
2005 29.7
Services revenue growth £ million
+13.1%
Services revenue* increased 13.1% from 2008 684.3
£605.0 million to £684.3 million, as
Computacenter continued to target the 2007 605.0
less commoditised end of the market.
* Comprises professional services and support and 2006 534.7
managed services revenues.
2005 514.8
Product revenue growth £ million
+5.7%
Product revenue* grew 5.7% from 2008 1,875.9
£1,774.2 million to £1,875.9 million,
driven largely by network, server and 2007 1,774.2
storage sales.
* Comprises revenue from the resale of all hardware, 2006 1,735.2
software, third party services and logistics services.
2005 1,770.4
www.computacenter.com
Contract base growth £ million
+10.8%
Our Group annual service contract base 2008 498.2
grew 10.8% to £498.2 million*. As a result,
over 45% of the gross profit of the Group 2007 449.6
is now earned from our higher-margin
services business. 2006 363.3
* Based on constant currency at 31 December 2008.
2005 342.0
6. 04
International operations
Computacenter operates in the UK, Germany,
Corporate overview
France, and the Benelux countries, as well as
providing transnational services across the
globe. Its activities are supported by service
facilities in the UK, Germany, Spain, South Africa
and Malaysia.
Computacenter plc Annual report and accounts 2008
United Kingdom
Revenues Adjusted
operating profit
£1,391.2m £27.9m
Highlights
••Revenues increased by 2.5% to
£1.39 billion (2007: £1.36 billion)
••Adjusted operating profit declined
15.6% to £27.9 million (2007:
£33.1 million)
••Contract base grew 7.5% to
£217 million
••UK change programme to deliver
estimated £15 million annualised
reduction in SG&A costs
United Kingdom
5 1
4
2
www.computacenter.com
3
1 29% Personal systems
2 28% Network, server and storage
3 15% Software
4 24% Services
5 4% Third party services
7. 05
Corporate overview
Computacenter
service facilities
• Hatfield, UK
• Leeds, UK UK
• Manchester, UK
• Milton Keynes,
• Nottingham, UK
• Erfurt, Germany
• Kerpen, Germany
• Paris, France
• Barcelona, Spain Africa
• Cape Town, South ■ Computacenter operations and partnerships
• Kuala Lumpur, Malaysia • Computacenter service facilities
Computacenter plc Annual report and accounts 2008
France Benelux Germany
Revenues Adjusted Revenues Adjusted Revenues Adjusted
operating profit operating profit operating profit
£308.2m –£1.0m £30.0m –£0.1m £830.7m £15.3m
Highlights Highlights Highlights
••Revenue increased to £308.2 million ••Revenues increased by 8.9% to ••Revenues increased 1.0% in local
(2007: £285.7 million), despite a £30.0 million (2007: £27.6 million) currency and 17.2% in sterling to
decline of 7.1% in local currency ••Adjusted operating loss increased £830.7 million (2007: £708.6 million)
••Growth in service revenue of to £96,000 (2007: £44,000) ••Adjusted operating profit grew 47.2%
12.2% partially mitigated decline to £15.3 million (2007: £10.4 million)
in product sales ••Operating profit in Belgium offset
••Adjusted operating loss reduced by a loss in Luxembourg ••Sales performance strong in
44.9% to £1.0 million (2007: loss ••Services revenues grew 16.6% networking and datacentre solutions
of £1.8 million) ••Annual contract base for managed
••Services accounted for 15.4% services grew 11.7%
of total revenue (2007: 12.8%)
France Benelux Germany
5 1 5 1 5 1
4 2
www.computacenter.com
3 4
3 4
2 2 3
1 47% Personal systems 1 51% Personal systems 1 19% Personal systems
2 16% Network, server and storage 2 6% Network, server and storage 2 30% Network, server and storage
3 16% Software 3 7% Software 3 10% Software
4 16% Services 4 34% Services 4 36% Services
5 5% Third party services 5 1% Third party services 5 5% Third party services
Defi nitions
Personal systems Network, server, storage Services Third party services
Desktop, laptop, monitor, printers, peripherals, consumables Intel and Unix servers, storage, networking and security Supply chain, professional, support and managed services Third party resold services
8. 06
Chairman’s statement
Our results were better than
Directors’ report
the market expected of us,
but not good enough.
Since joining Computacenter on determination will be to do that better
Computacenter plc Annual report and accounts 2008
1 July 2008 I have been pleased and more often than our competition,
with what I have found. The people with a more effective and efficient
of our company are straightforward, ‘engine’ than they have. To that end,
enthusiastic and talented. The we are removing layers of management
management is experienced and and exiting from businesses that use
wholeheartedly committed to our working capital inefficiently. We are
success. Our processes and offerings investing significantly in our future,
are robust and attractive to our not least with a single Group wide
customers. Together, these qualities ERP system, a capital investment
give us significant growth potential in which will make us more effective
those markets we choose to address. and reduce our future expense
burden. The short-term changes
I am pleased, yes, but not satisfied in organisation and focus, which are
that we are properly exploiting that aimed at winning in the market, will
potential. Our profitability is not good have the added benefit of delivering an
enough and our organisation structure annualised reduction in our expense
was cumbersome. Our results for by c. £15 million, which will be fully
2008 were better than the market delivered in 2010 and have a positive
expected of us, but not good enough. impact in 2009.
During the latter half of 2008, led by I am very pleased to be part of
our CEO Mike Norris, we engaged in Computacenter today. For its many
an in-depth review of our capabilities, achievements, and for the strong
organisation, competitive position, services capability it has built since its
profitability and our customers’ view foundation in 1981, it is a fine exemplar
of us. As a result we have made a of the entrepreneurial spirit. We face
number of changes to our use of the future determined to help our
working capital and our organisation customers improve their business
structure. We have sharpened our performance, and in so doing improve
market focus to concentrate on the our own.
customer segments that ascribe most
value to our offerings and our people.
Greg Lock Chairman
The business environment we face
is challenging to be sure, but full of
opportunity for our company. We can,
and do, help businesses reduce costs Greg Lock
and become more competitive. Our Chairman
www.computacenter.com
9. 07
Four principles of employee behaviour
Directors’ report
define the Computacenter attitude and
underpin our customer relationships.
Wherever we work, we strive to be:
Focused
Computacenter plc Annual report and accounts 2008
We recognise and acknowledge our
customers’ priorities and take action
accordingly
Accountable
We take responsibility for our actions
and always deliver on our promises
Clear
We are open and straightforward in our
discussions and our feedback
Enterprising
We think proactively about what else
we can do for our customers
www.computacenter.com
10. 08
Operating review
We launched a UK change
Directors’ report
programme to improve our capital
return and sharpen our focus as a
services and solutions company.
business, the fourth quarter of 2008
Computacenter plc Annual report and accounts 2008
saw the launch of a UK change
programme designed to ensure an
improved capital return and further
sharpen our focus as a services and
solutions company. These changes
will deliver an estimated £15 million
annualised reduction in UK Sales
General and Administration costs, with
a positive impact in 2009. Similar, albeit
much smaller, change programmes are
being implemented in other countries.
The major components of the change
programme are as follows:
Mike Norris Chief Executive Officer 1) Exit from businesses that use
working capital inefficiently
In November 2008 we ended the sale
Group Summary Group revenues grew a further 7.6% of PCs, laptops and printers through
Computacenter delivered a strong in 2008 to £2,560.1 million (2007: CCD, our trade distribution arm.
performance for 2008 and laid the £2,379.1 million), aided by the effects Volume distribution of these products
foundations for an encouraging future. of a stronger euro and continuing is highly price-competitive and gives
The Group delivered a 1.0% increase services revenue growth. By year-end us insufficient return. CCD will instead
in adjusted* profit before tax to £43.1 our Group annual services contract sharpen its focus on the higher-margin
million (2007: £42.7 million), largely base stood at £498 million, representing server, storage and networking
due to improved profit performance a growth in excess of 10% over business. We expect this to result in a
in Germany and aided by exchange 31 December 2007, based on reduction in 2009 revenues in the order
rates. Group adjusted* operating profit constant currency. of £70 million without any reduction in
increased 1.1% to £42.1 million. As a profit, while freeing approximately
result of higher profitability, a reduced Our balance sheet remains strong. At £15 million of working capital.
number of shares in issue and a lower year-end, net cash prior to customer-
tax rate, adjusted* diluted earnings per specific financing (CSF) was £4.6 In addition, following a disappointing
share (adjusted* EPS) grew 13.5% to million (2007: net debt £16.2 million). return on investment from product
21.0p (2007: 18.5p). Including CSF, net debt was £84.6 sales to our smaller customer base,
million (2007: £79.8 million). The Board we took the decision to refocus our
On a statutory basis, taking into is pleased to recommend a final UK sales efforts more sharply on our
account amortisation of acquired dividend of 5.5p per share, bringing higher margin services and solutions
intangibles and exceptional the total dividend for the year to 8.2p business, where we see the greatest
impairments of intangible assets, (2007: 8.0p). The increased dividend growth opportunity.
Group profit before tax declined 6.0% is consistent with our stated policy of
to £39.5 million (2007: £42.1 million). maintaining the level of dividend cover 2) Restructure to reduce costs
Exceptional impairment charges within the target range of 2 to 2.5 and encourage higher-margin
consist of Group ERP charges that times. Subject to shareholder sales growth
can be directly attributed to France, approval, the dividend will be paid on At the beginning of 2009 we
www.computacenter.com
and the non-cash impairment of the 11 June 2009 to shareholders on the implemented a new UK structure,
acquired Digica trademark, following register as at 15 May 2009. aimed at increasing our customer
the cessation of its use. With the focus and growing our more profitable
benefit of an exceptional income tax The main contributors to profit growth services and solutions business. The
credit, Group profit after tax increased were again our European operations restructure reduces organisational
by 29.2% to £37.3 million (2007: £28.9 particularly our German business, with duplication and complexity, with
million) and diluted earnings per share a lacklustre performance in the UK. fewer management layers and
grew 33.0% to 24.2p (2007: 18.2p). Following an in-depth review of our wider accountability.
* Adjusted profit before tax, income tax expense and EPS are stated prior to amortisation of acquired intangibles and exceptional impairment charges. Adjusted operating profit
is also stated after charging finance costs on CSF.
11. 09
Channel 4 boosts
Directors’ report
business agility with
IT outsourcing
3) Leverage scale via Group-wide
Computacenter plc Annual report and accounts 2008
IT capital investment Channel 4
In 2008 we embarked on a £25 million To help Channel 4 improve business
capital investment in IT systems that agility, reduce costs and improve service
will, over the next three years, enable levels, Computacenter was given
us to standardise financial reporting responsibility for the broadcaster’s
and management tools across the network, server and desktop infrastructure
Group. Adopting a common, Group and the provision of a service desk.
Enterprise Resource Planning (ERP)
system will enable more effective Computacenter’s Service Support Centre
financial planning and skills and handles around 2,500 contacts a month
resource management, helping from Channel 4’s permanent staff and
us reduce our costs and leverage large freelance community. The
our scale for competitive advantage. broadcaster also uses Computacenter’s
Approximately £8 million of this Services Operation Centre for remote
capital investment was paid by management of its 170 corporate servers,
enabling the on-site team to focus on
the end of 2008. projects and strategic development.
Continuous improvement is a key driver
UK as the five-year partnership between the
UK revenues grew by 2.5% to £1.39 two companies evolves.
billion (2007: £1.36 billion) for the year
as a whole, largely as a result of strong
sales growth in datacentre services, Business challenge
consulting/integration activities and in
sales to the medium-sized business Ensure IT systems and services can keep
sector. Adjusted operating profit up with business change, while reducing
declined 15.6% to £27.9 million (2007: costs and improving user service levels.
£33.1 million). This was mainly due to
the poor start to the year, continued
significant investment in our services The solution
capability and the resourcing of our Selectively outsource key IT infrastructure
sales operation targeting product sales support services.
to organisations of fewer than 500
seats. Operating profit was also
impacted by £1.8 million costs of Results
internal effort related to the ERP
upgrade programme that has been Estimated savings of 15%
charged to the UK, principally from Access to new skills
the German business. Simplified supplier management
Staff freed up for strategic enablement
As previously reported, the merging
of our Managed Services and Digica
operations, together with a number
of smaller cost-cutting initiatives, also Services
www.computacenter.com
resulted in a restructuring cost to the Service desk
UK business, adversely affecting Desktop support
operating profit in the first half of the
year by some £1.0 million. Request management
Infrastructure support
Supply chain services
Asset management
continued
12. 10 Operating review continued
In the UK, we secured a number of
Directors’ report
long-term services contracts, which
we expect to positively impact
performance in 2009.
Services revenues overall grew by sector. Our new three-year contract as a safe pair of hands for customers
Computacenter plc Annual report and accounts 2008
4.3% over 2007, as the economic with Rok Plc is for the outsourcing of concerned over environmental
downturn drove customers to seek to the company’s entire IT infrastructure, disposal, recycling and data security
improve the cost-effectiveness of their covering its ‘Wintel’ and UNIX server for their end-of-life equipment.
infrastructures. This helped grow the estate, storage management and the
UK contract base a further 7.5% to delivery of a hosted datacentre service. Germany
£217 million. However this does not The scope of our datacentre hosted Computacenter Germany again made
include a number of significant services contract with Crest Nicholson good progress in 2008. After achieving
long-term services contracts, secured was also extended to cover desktop 8.2% full year sales growth in 2007,
in the second half of the year, which services for 650 users and management revenue growth levelled off in 2008 as
did not make any contribution to of 100 sites across the UK, leveraging the German economy was hit by the
revenue in 2008 but are expected to Computacenter’s capabilities in both severe economic downturn. However,
have a positive impact on our 2009 South Africa and the UK. while revenues increased just 1.0%
performance. These successes in local currency and 17.2% in sterling
include new five-year managed Our consulting and integration to £830.7 million (2007: £708.6 million),
services contracts with Nationwide, activities again recorded revenue adjusted* operating profit grew 47.2%
for the end-to-end management of its growth in 2008, with an increasing to £15.3 million (2007: £10.4 million),
desktop and related IT infrastructure number of project wins utilising our driven mainly by further improvements
services and with Hays, for the full capability. in service margins and the recovery
provision of all datacentre and desktop of costs of £1.4 million recharged
services in the UK. We anticipate that The trend for integration or to the UK in relation to the ERP
these and other contracts will result in transformation projects to include upgrade programme.
a UK contract base of approximately hardware and software sales also
£240 million by the end of Q1 2009. continued, reflecting our customers’ Services revenues grew by 4.3% in
increased dependence on highly local currency. This continuing growth
Other important wins during 2008 resilient and flexible datacentre, came largely from our networking and
include a major five-year contract with storage and network infrastructures. datacentre solutions business, which
Unipart, worth more than £18 million, Profit margins on this infrastructure is benefiting from our strategic focus
through which we will provide end- remain materially higher than our on higher-margin services and our
user, datacentre and network transactional business due to the ongoing investment in IT solutions and
managed services. Marks & Spencer additional value that customers place outsourcing. Sales performance was
(M&S) also expanded its IT managed on end-to-end solutions. particularly strong in networking,
services agreement, with where double-digit growth rates have
Computacenter, which now has Overall UK product sales grew by helped double networking volumes
end-to-end accountability for the 2.0%. However, outside of trade since 2005. We also saw strong sales
delivery of IT services to M&S’s six distribution, sales grew a more growth from our energy efficiency
office sites, servicing approximately satisfactory 5.4%, driven by strong related consulting services and from
4,000 end-users. sales of storage, virtualisation and our security solutions.
audio-visual technology in particular.
The completed merger of Digica This was offset by a 14.2% reduction The improved services profitability is
into our core operations made an in revenues from CCD, our trade the result of management initiatives
important contribution to our win distribution arm. The rise in product launched in 2007 that yielded, in 2008,
and renewal success, our improved revenues was also in part attributable a three percentage point margin
datacentre capability enhancing our to the weakness of sterling, which led improvement over the previous year,
www.computacenter.com
historical strengths in the desktop to some small price rises in certain most of which came from our
and networking areas. product areas. networking and datacentre business.
We are confident that this services
Our ability to assist organisations to Our remarketing and recycling arm, margin improvement can be sustained
reduce operational expenditure and RDC, continued to perform well, and built upon.
compete in a difficult market helped recording nearly 17.5% revenue growth
us win new business in the construction overall. RDC is seen increasingly
13. 11
Michael Page controls
Directors’ report
costs through scalable
licensing
Growing market recognition of our
Computacenter plc Annual report and accounts 2008
capabilities helped grow our annual Michael Page
contract base for managed services International
a further 11.7% in 2008. While this Michael Page International needed to
growth is somewhat less than in ensure its software licensing arrangements
previous years, this was attributable for key Microsoft software were both
largely to our strategic focus on cost-effective and scalable. With tight
improving the profitability of a number timescales to close the negotiations,
of large outsourced datacentre Michael Page turned to Computacenter
contracts, which had a significant to ensure it selected the right agreement
positive impact on our overall for its business needs.
performance but required substantial
management attention. Following a benchmarking exercise
across the company’s multiple Microsoft
Important managed services wins platforms, Computacenter helped to
include a 58-month international negotiate a three-year global Enterprise
desktop services and service desk Agreement for 6,000 users. The new
agreement provides licences for more
contract with BMW Group, covering users than the deal Michael Page was
70,000 users in Germany, Austria and originally offered – and at a lower per
the UK, and a 10-year contract with unit cost. The agreement will also help
NRW.Bank, the development bank to enhance licensing compliance, free
of North Rhine-Westphalia, for the up internal resources and increase
management of its office and business agility.
datacentre infrastructure.
An increasingly competitive market, Business challenge
especially in the Intel server area,
adversely affected the product To help minimise cost and business risk,
ensure software licensing is cost-effective,
business, where sales declined 0.8% scalable and compliant.
in local currency. This was largely
driven by a fall in ‘Wintel’ server sales
in two of our largest customers.
However, sales of large enterprise The solution
servers and storage products Benchmark licence usage and negotiate
remained strong. a new three-year global Enterprise
agreement.
Initiatives aimed at increasing
networking product sales, launched
in 2007, yielded strong growth in 2008, Results
notably in the areas of security and
unified communications. As a result Provided additional resources to ensure
of US Dollar to Euro exchange rate the best negotiation strategy
fluctuations, networking product Reduced business risk from non-
margins decreased slightly, driving compliance
www.computacenter.com
down product margin percentage Achieved significant savings and improved
levels overall. Customer demand cost control
for next generation client/server
architecture also helped grow sales
of software 10.6%. Services
Software licensing consultancy
continued
Benchmarking
14. 12 Operating review continued
In Germany operating
Directors’ report
profit grew 47.2% driven
by further improvements
in service margins.
Our overall business mix is largely As with 2007, we saw margin laptops and screens, and a significant
Computacenter plc Annual report and accounts 2008
unchanged, with services accounting improvement across both products roll-out for 5,000 users for a customer
for 36% of total revenue. More than and services. In products, this was in the retail sector.
60% of our business is now from the due to our more commercially
sale of networking and datacentre selective approach to the provisioning We are aware that much remains
solutions, demonstrating that our effort of hardware and an increased focus to be done to deliver a long-term,
to focus our business mix on the on regional business, together with acceptable level of profit. To that end,
less-commoditised end of the market more effective sales incentives. changes to the French management
is yielding results. Services margins also improved team, and additional sales investment,
thanks to volume increase, better were made in early 2009 to help
We are pleased to welcome Oliver management of resources, and tight accelerate the trend in performance
Tuszik, who has held a number of management of costs. improvement. Our strategic focus is on
management positions within the improving sales efficiency, developing
Company, to the German Board as Computacenter France also delivered our services offerings, increasing the
CEO of Computacenter Germany. an improved financial situation, thanks use of standardised tools and best
We offer him our best wishes in his to improved debt collection, a better practice, increasing quality as a
new role. control of inventories and a tighter market differentiator, and tighter
management of cash. Despite average management of overall resources,
France interest rates increasing in 2008, efficiency and costs.
We continued to see a steady finance costs reduced by 12.3%
improvement in the performance over 2007 in local currency. Henri Viard, formerly our French
of our French business in terms of operation’s Finance Director, has
operating performance, financial We saw some pleasing contract recently been appointed CEO of
structure and commercial wins. successes in 2008. The second half Computacenter France. We offer
saw us renew and extend our major him our best wishes in his new role.
After a difficult first quarter, operating services contracts with EDF and Air
performance gradually improved over Liquide, and renew our software Benelux
the course of the year, resulting in an licensing contract with the French Our Belgium and Netherlands
adjusted operating loss reduction public purchasing agency, UGAP. We business showed an operational profit
of 44.9% to £1.0 million (2007: loss won a new global solutions three-year of £137,000 (2007: £125,000), with a
of £1.8 million). contract with Eiffage, including profit in Belgium offset by a small loss
e-procurement, supply chain services, in Luxembourg. Revenues increased
A product market that remains highly installations, moves and changes, by 8.9% to £30.0 million (2007: £27.6
challenging contributed to an overall maintenance and product recycling. We million), which equates to a reduction
revenue decline of 7.1% in local also won a significant deal with Société of 6.2% in local currency, with services
currency. However, due to beneficial Générale covering supply chain growth of 16.6% offset by a 14.9%
currency movements, reported solutions, a roll-out project with Conseil reduction in product sales.
revenue increased to £308.2 million Régional d’Ile de France (Paris region),
(2007: £285.7 million). The decline and a four-year managed services Key Benelux wins include a five-
in product revenues hides a strong contract with Chambre de Commerce year renewal of the SWIFT desktop
increase in services revenues of 12.2% et d’Industrie des Bouches du Rhône. managed services outsourcing
(2007: 8.0%) in local currency helped contract, European procurement
by the consolidation of our short-term 2009 looks very challenging for our contracts at UCB and Artenius
professional services contract base French business, with performance PetPackaging, an Exchange migration
www.computacenter.com
into managed services business, contingent to some extent on our and encryption project at Millicom,
where revenues grew 24.5%. success in securing the renewal and a Cisco Unified Communications
of our contract with the French Army, project at McDonalds Belgium.
This strong services growth, which was our largest French customer, which
well ahead of the market, demonstrates expires at the end of Q1 2009.
further progress in our efforts to Amongst early successes in 2009, we
increase the services mix of the won the right to bid with Ministère de
business. Services account now for l’Economie et des Finances for all
15.4% of total revenue (2007: 12.8%). ultraportable and portable desktops,
15. 13
Wolfsburg City Council
Directors’ report
focuses on service with
new phone system
Outlook
Computacenter plc Annual report and accounts 2008
As we state every year in our results Wolfsburg City Council
announcement, it is impossible to To help it improve services to 122,000
draw any meaningful conclusion about local residents and ensure privacy of
the current year until we have information, Wolfsburg City Council
completed the first quarter. needed a high-availability telephone
system that would also offer integrated
The current economic conditions are security features such as call encryption.
undoubtedly affecting the markets in Following a successful pilot,
which we operate. Our customers’ Computacenter was commissioned
to replace the Council’s outdated
desire to reduce their operating costs telephone system with an advanced
makes our managed services offerings Voice over IP solution.
more compelling, as our recent
contract base growth illustrates.
We expect this growth to continue The customer’s IT department can
at a similar pace throughout the year, administer the system themselves, thereby
optimising operating and maintenance
though our product revenues are costs. The solution is also highly scalable,
under pressure. We enter 2009 with allowing the customer to easily extend the
a strong balance sheet, which means system, with the option of integrating
we are well placed to capture further additional functions in future.
opportunities and market share.
Our appreciation and thanks go to the Business challenge
employees of Computacenter for their
outstanding commitment, energy and Improve Council services and ensure
hard work. privacy of information by replacing
outdated legacy phone system.
The solution
Migrate to a Voice over IP solution
including two backup call servers to
provide the required level of availability.
Mike Norris
Group Chief Executive Officer Results
A high performance, high availability
IP telephony solution that is easy to
extend and offers considerable cost
and security benefits.
Services
www.computacenter.com
Project design
Product evaluation
Product delivery
Migration services
16. 14
Finance Director’s review
Growth in services was achieved
Directors’ report
in all countries, with lower margin
product revenues reducing in
Germany and France.
Adjusted profit before tax improved Adjusted operating expenses
Computacenter plc Annual report and accounts 2008
by 1.0% from £41.7 million to £42.1 increased by 2.6%, reflecting the
million. After taking account of growth in 2008 of investment in sales
exceptional impairments and to our smaller customer base, and
amortisation of acquired intangibles, redundancy costs c. £1.0 million higher
statutory profit before tax reduced by than in previous years. However,
6.0% from £42.1 million to £39.5 million. due to a disappointing return on
investment, our UK sales efforts
Adjusted operating profit will in future be re-focused towards
Statutory operating profit reduced from our higher margin solutions and
£43.1 million to £42.6 million. However, services business. This action forms
management measure the Group’s part of the UK change programme,
operating performance using adjusted for which no significant costs were
operating profit, which is stated prior to incurred in 2008.
amortisation of acquired intangibles
and exceptional items, and after Also included in the expense base in
charging finance costs on customer- 2008 was £1.8 million of internal effort
specific financing (CSF), for which the related to the ERP upgrade programme
Group receives regular rental income. that has been charged to the UK,
Gross profit is also adjusted to take principally from the German business.
account of CSF finance costs.
Germany
Table 1, on page 16, shows the Overall revenue in constant currency
reconciliation between statutory and increased by 1.0%, with services
adjusted gross profit and operating revenues growing by 4.3%, offset by
profit by geographical segment for a contraction in product revenues of
2008 and 2007. 0.8%. Product revenues reductions
were principally in supply of lower
UK margin product. When translated into
Tony Conophy Finance Director The UK business again delivered sterling, German revenues increased
revenue growth in 2008, despite a in 2008 by 17.2% to £830.7 million.
14.2% reduction in trade distribution
Turnover and profitability sales. Excluding this reduction, UK The key element of profitability
Following on from the growth in 2007, product sales increased by 5.4%, improvement in Germany was the
Group revenues increased by 7.6% to which taken together with an improvement in margins, principally
£2.60 billion. Whilst the increase was improvement in services revenues within services. Much of this
substantially attributable to currency of 4.3% resulted in overall growth of improvement was due to a number
movements, Group revenues at 5.1% in end user sales. The services of management initiatives launched
constant currency increased by 0.6%. revenue performance does not include during 2007, which led to a three
Growth in the UK business was offset the impact of a number of long-term percentage point increase in services
by a 14.2% reduction in trade contract wins during the second margins, which in turn led to an
distribution sales. Growth in services half of 2008 which commence billing increase in the gross profit percentage
was achieved in all countries, with lower in 2009. for Germany as a whole from 13.2% to
margin product revenues reducing in 13.7% of sales.
www.computacenter.com
Germany and France. The growth in Adjusted gross profit reduced from
service revenues across the Group has 14.4% to 14%. This drop was driven Net operating expenses continue to
contributed to a position where over by a reduction in product margins be well controlled increasing by 2.0%
45% of the gross profit of the Group is due to reduced profitability in trade in local currency. The outcome was
now earned from services, which distribution, a business which was an improvement in adjusted operating
improves the forward visibility of gross partially exited in late 2008, along with profit from £10.4 million to £15.3 million
margin generation and earnings growth in lower margin product sales in 2008. This result benefits from the
resilience. to our smaller customer base. operating costs that have been
17. 15
EDF targets systems
Directors’ report
performance in leading
Vista deployment
recharged to the UK related to the
Computacenter plc Annual report and accounts 2008
ERP upgrade programme. EDF Group
EDF Energy
EDF Group needed to improve service
France levels to its IT users and ensure IT
The French business continued maintainability through the deployment
to reduce its loss in 2008, with a of an upgraded and standardised
combination of a more selective infrastructure. The company decided to
approach in a challenging product roll out its chosen Microsoft technology
market and additional services suite of Windows Vista, Windows Server
revenue growth. In local currency, 2008, together with System Centre
Configuration Manager (SCCM) 2007.
product revenues reduced by 9.9%, Computacenter provides consulting and
whereas services revenue grew by project management services in order
12.2%. When translated into sterling to ensure successful completion of the
this led to a growth in revenues of principal Vista implementation in Europe,
7.9% in 2008 to £308.2 million. covering over 75,000 users across 1,045
locations in just two years. Computacenter
Gross profit return increased from was chosen for its past experience,
11.0% of sales to 12.6% of revenues particularly its project management
due to the change in services mix advisory services and IT infrastructure
knowledge.
and improved margins in products,
together with higher margins in
services largely as a result of
improved utilisation. Business challenge
Define and apply the optimised
Other operating expenses increased deployment solutions for this standard
by 3.0% in local currency, remaining software portfolio while controlling costs,
under control despite the increased avoiding delays and minimising risks.
commission costs resulting from the
improved margin performance. This
translates into a 19.6% increase when The solution
reported in sterling.
Provide project management advisory
As a result of these improvements the services on each main project activity,
from technical architecture building to
operating loss, prior to an exceptional deployment governance through risks
impairment, reduced to £1.0 million assessment and project communication.
(2007: £1.8 million).
Benelux
Results
Revenues in the Benelux region
reduced in local currency in 2008, with The project was still in progress as we
a 16.6% increase in services revenues went to press.
offset by a 14.9% fall in product
revenues. Whilst this change in mix
resulted in an improved gross profit Services
www.computacenter.com
return, the operating loss of the
business increased to £96,000 (2007: Project management consulting
£44,000). The increased loss was Risk assessment
generated in Luxembourg, with the Deployment planning and design
business in Belgium generating a Communication expertise
small operating profit. Training sessions planning
Global support to field operation teams
continued
Support for methods and solutions
appropriation