Computacenter nineteenth year of growth, good progress in Q3 to date

Computacenter plc (LON:CCC), a leading independent technology partner trusted by large corporate and public sector organisations, today announced its results, based on unaudited financial information, for the six month period ended 30 June 2023.

Operational Highlights:

·    On track for the nineteenth consecutive year of adjusted¹ diluted earnings per share growth.

·    Continued significant programme of strategic initiative expenditure to underpin our long-term resilience, competitiveness and growth with an additional expected spend of circa £13 million in FY23 compared to FY22.

·    Cash has improved as inventory levels have reduced towards normal levels. Inventory is down by £217.2 million since the highpoint in Q3 2022.

·    Revenue across the Group has grown by 26.8 per cent in H1 2023 vs H1 2022 with broad growth across our diversified geographic markets and service lines.

Mike Norris, Chief Executive of Computacenter plc, commented:

Our performance in the first half sets us on course for our nineteenth year of uninterrupted full-year adjusted¹ diluted earnings per share growth. Coupled with this first half performance, we have seen good progress in Q3 to date. Due to the industry returning to normal supply conditions we have seen a significant generation of cash as our inventory has reduced in the first half of 2023. We expect this to continue in the second half which will leave Computacenter with a strong balance sheet by the end of the year.

We are pleased with our progress towards both our short-term financial objectives and our long-term aspirations. The investments we are making, predominantly through our profit and loss account to make Computacenter a more secure and competitive organisation, are progressing well and continue at pace.

We are as excited and optimistic about the future as we have ever been.

Following a recently approved interpretation of the revenue accounting standard by the International Accounting Standards Board, we, and a number of our peer value-added resellers, have changed the way we recognise revenues for standalone software and resold third-party services contracts and revised our accounting policies to reflect this change. Accordingly, we have restated our prior-period revenues down from 2021 onwards, as we have now determined that we are an agent for these transactions and will recognise revenue on a net basis, with only the gross profit on these types of deals, being the gross invoiced income less the costs of the resold software or third-party services, showing as revenue, with nothing recorded in cost of goods sold. This change has been applied from 2022 and, retrospectively, we have restated our prior-year 2021 revenues. The equivalent adjustment is not available for years prior to 2021 as it is not practicable to calculate. Further information on this change, including the retrospective restatement of the financial statements, and the revised accounting policy, is available in note 3 to the 2022 Consolidated Financial Statements. The result for the period benefited from £85.5 million of revenue (H1 2022: £0.4 million), and £2.4 million of adjusted¹ profit before tax (H1 2022: nil), resulting from all acquisitions made since 1 January 2022. All figures reported throughout this announcement include the results of these acquired entities. The results of these acquisitions are excluded where narrative discussion refers to ‘organic’ growth within this announcement.

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

²We evaluate the long-term performance and trends within our strategic priorities on a constant-currency basis. The performance of the Group and its overseas Segments are also shown, where indicated, in constant currency. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information gives valuable supplemental detail regarding our results of operations, consistent with how we evaluate our performance.

We calculate constant currency percentages by converting our prior-period local currency financial results using the current period average exchange rates and comparing these recalculated amounts to our current period results or by presenting the results in the equivalent local currency amounts. Wherever the performance of the Group, or its overseas Segments, is presented in constant currency, or equivalent local currency amounts, the equivalent prior-period measure is also presented in the reported pound sterling equivalent, using the exchange rates prevailing at the time. 2023 interim highlights, as shown above, are provided in the reported pound sterling equivalent.

³Adjusted net funds or adjusted net debt includes cash and cash equivalents, other short- or long-term borrowings and current asset investments. Following the adoption of IFRS 16, this measure excludes all lease liabilities. A table reconciling this measure, including the impact of lease liabilities, is provided within note 13 to the summary financial information contained within this announcement.

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

The term Group refers to Computacenter plc and its subsidiaries.