Computacenter Annual Report 2012

Computacenter plc

What we do and where we do it

We help our customers’ businesses perform better, smarter
and deliver on time and on budget. We are Europe’s leading
vendor-independent IT infrastructure services provider.
Through our cross-selling, knowledge-sharing and our
integrated customer offer, our broad range of services
are making an impact across the world.

2,000+
mobile
engineers

SWIFT
For more information
go to page 16
Cisco
go to page 12

Support of

1 million

end-users
across 250
customers in
165 countries

AstraZeneca
go to page 6

Generating

5 million+

inbound phone
calls and around
1,250,000
inbound emails
per year

Datacenter
Five Tier II to
Tier IV level
datacenters
providing hosting
and continuity
solutions.

Service Desk
11 locations
supporting
1 million
end-users across
165 countries.

Computacenter plc

Tel: +44 (0) 1707 631000
Fax: +44 (0) 1707 639966
E&OE. All trademarks acknowledged.
© 2013 Computacenter.
All rights reserved.
www.computacenter.com

Annual Report and Accounts 2012

Hatfield Avenue
Hatfield
Hertfordshire
AL10 9TW
United Kingdom

Helping our
customers
go further

Overview
01 Chairman’s statement
02 Operating review

Operational
Command
Centre
Live locations
resolving major
incidents and
problems for 65
global Managed
Services customers.

Business review
18 Finance Director’s review
24 Risk management
26 Corporate Sustainable
Development (‘CSD’)
Governance
30 Board of Directors
32 Corporate governance statement
37 Audit Committee report
40 Nomination Committee report
41 Remuneration Committee report
50 Directors’ report

Supply Chain
More than
80,000 m2 of
secure market
leading logistics
facilities in
four locations.

Financial statements
55 Independent auditor’s report
56 Consolidated income statement
57 Consolidated statement
of comprehensive income
58 Consolidated balance sheet
of changes in equity
60 Consolidated cash flow statement
61 Notes to the consolidated
financial statements
99 Statement of Directors’
responsibilities

Solutions
Centre
The Solutions
Centre is a
custom built
technology testing
environment, the
only one of this
scale in the UK.

Partnerships
Delivery of our
services through
approved partners
to customers
in more than
160 countries
worldwide.

101 Company balance sheet
102 Notes to the Company financial
statements
106 Group five-year financial review
106 Group summary balance sheet
106 Financial calendar
107 Corporate information
108 Principal offices

Our business model

2. How we meet customer demand

Our
t

Manage & Transform

t
ge
ar

Complexity

1. What our customers want from us

m
ark
et

Size 2,000 seats

What we do
Providing maintenance, support, transformation
and management of customers’ IT infrastructures
and operations to improve quality and flexibility
of service while significantly reducing costs.

100,000 seats

Please refer to the Risk section on
pages 24 and 25 for more information.

Risk Avoidance
Computacenter works with
customers to help them
manage and mitigate risk
through the use of proven
and ITIL compliant processes.

Growth/Business Change
Computacenter seeks to
support customers with growth
and business change
challenges by providing skills
and technology to assist
with change programmes.

£
Environmentally
Conscious
Computacenter takes
a transformational approach
to ‘Green IT’, driving cost
reduction and power savings
through technology and
infrastructure improvements.

Cost Reduction
Computacenter seeks to work
with customers to reduce cost
through managing costs (more
for less), making capital funds
available and providing flexible
commercial models.
Access to Skilled
Resources
Computacenter provides
customers with access
to skilled resources to
complement their own
staff and deal with peaks
in resource demand.

Consult & Change
What we do
Delivering a set of predictable, proven
solutions that optimise customers’ technology,
enabling effective change and achievement of
business goals.

Continuous Improvement/
Innovation
Computacenter works
with customers to transform
their IT, delivering competitive
advantage, revenue growth and
excellent customer service.

Who we do it for
Small to medium size customers.

Who we do it for
All of our customers.

Source Deploy
What we do
Determining and providing appropriate
products and commercials to address customers’
technology requirements, providing a complete
service and support throughout the lifecycle.

Understanding our customers

Creating advantages for their businesses

We do this by

– Delivering innovation
– Managing cost
– Mitigating risk
– Improving their service

– Smarter technology
– On time and within budget
– Better services
– Greater efficiencies
– Lower cost

– sing processes and tools that help
U
ensure outcomes
C
– ollaborating with customers’ IT departments
– ecuring the best product for the solution
S
through our vendor independence
– eing flexible in our approach
B
– iring and retaining talent
H

Who we do it for
Only larger customers unless smaller
customers use our other offerings.

Printed on Core Offset which is made from
100 per cent recycled fibres sourced only from post
consumer waste. Core Offset is certified according to
the rules for the Forest Stewardship Council.
Designed and produced by Carnegie Orr
+44 (0) 20 7610 6140.
www.carnegieorr.com

Our business model

2. How we meet customer demand

Our
t

Manage Transform

t
ge
ar

Complexity

1. What our customers want from us

m
ark
et

Size 2,000 seats

What we do
Providing maintenance, support, transformation
and management of customers’ IT infrastructures
and operations to improve quality and flexibility
of service while significantly reducing costs.

100,000 seats

Please refer to the Risk section on
pages 24 and 25 for more information.

Risk Avoidance
customers to help them
manage and mitigate risk
through the use of proven
and ITIL compliant processes.

Computacenter seeks to
support customers with growth
and business change
challenges by providing skills
and technology to assist
with change programmes.

£
Environmentally
Conscious
Computacenter takes
a transformational approach
to ‘Green IT’, driving cost
reduction and power savings
through technology and
infrastructure improvements.

Cost Reduction
with customers to reduce cost
through managing costs (more
for less), making capital funds
available and providing flexible
commercial models.
Access to Skilled
Resources
customers with access
to skilled resources to
complement their own
staff and deal with peaks
in resource demand.

Consult Change
What we do
Delivering a set of predictable, proven
solutions that optimise customers’ technology,
enabling effective change and achievement of
business goals.

Innovation
Computacenter works
with customers to transform
their IT, delivering competitive
advantage, revenue growth and
excellent customer service.

Who we do it for
Small to medium size customers.

Who we do it for
All of our customers.

Source Deploy
What we do
Determining and providing appropriate
products and commercials to address customers’
technology requirements, providing a complete
service and support throughout the lifecycle.

Understanding our customers

Creating advantages for their businesses

We do this by

– Delivering innovation
– Managing cost
– Mitigating risk
– Improving their service

– Smarter technology
– On time and within budget
– Better services
– Greater efficiencies
– Lower cost

– sing processes and tools that help
U
ensure outcomes
C
– ollaborating with customers’ IT departments
– ecuring the best product for the solution
S
through our vendor independence
– eing flexible in our approach
B
– iring and retaining talent
H

Who we do it for
Only larger customers unless smaller
customers use our other offerings.

Printed on Core Offset which is made from
100 per cent recycled fibres sourced only from post
consumer waste. Core Offset is certified according to
the rules for the Forest Stewardship Council.
Designed and produced by Carnegie Orr
+44 (0) 20 7610 6140.
www.carnegieorr.com

Delivering
to a mission
critical customer

3. How we generate value

4. ow our management structure ensures consistent
H
delivery of our Services and products across the Group

Reducing cost through
increased efficiency and
industrialisation of our
Services Operations

UK MD
Neil Muller

To grow revenue and
maintain customer
satisfaction in country

Growing our profit
margin through
increased Services
and high-end
Supply Chain sales

Growing EPS
and cash

Maximising the return
on working capital
and freeing working
capital where not
optimally used

COO

Chris Webb

Delivering profitable
returns consistently
across the Group

Group
Legal
Director

Group
HR
Director

France MD
Henri Viard

To grow revenue and
maintain customer

CFO

Tony Conophy

Managing financial
best practices
and cash

CEO

Mike Norris

Responsible for all
customers, employees
and investors

Swiss
MD

Belgium
MD

Ensuring the successful
implementation
of the Group-wide
ERP system

Accelerating the
growth of our
Contractual
Services business

Germany MD
Oliver Tuszik

To grow revenue and
maintain customer

CIO

Mark Slaven

Improving competitive
advantage through
systems

CCO

Mike Rodwell

Country MDs responsible for
customer experience, growth and
PL management. All report to
the Group CEO.

12

Computacenter plc Annual Report and Accounts 2012

Developing commercial
relationships with vendors
and increasing Supply
Chain efficiency

Chairman’s statement

11

12

09

10

71.3

54.2

10

74.2

2,914.2

09

66.1

2,852.3

-4.0%

2,676.5

+2.2%
2,503.2

Adjusted* profit
before tax (£m)

11

12

09

10

12

11.0
11

09

10

15.5

+3.3%
15.0

-3.5%

13.2

Total dividend per share (p)

36.1

Adjusted* diluted
earnings per share (p)

37.4

We are confident that our actions will address our growing pains
of 2012. Our focus remains on improving our Services margins
and revenues faster than our other business lines, and on
managing our working capital and cash.

Revenue (£m)

33.0

As a result, we have decided to accelerate our plans to
structure the Group on a Europe-wide basis. Our UK and
German propositions, bidding and contract management
functions, are now becoming aligned and our support functions
of HR, Finance and Commercial Operations are integrating
across all countries. We are able to move swiftly because of the
successful ERP implementation in Germany and the UK. At the
same time, we shall deliver our ERP system in France during the
first half of 2013, allowing us to expand and complete the new
structure across the whole Group, during 2014.

2012 highlights

27.7

2012 was a year in which we stumbled in Germany, invested
significantly in France and reaped the reward of three years of
building and investing in the UK. We were disappointed with our
underestimations of the resource demands and associated costs
of starting a significant number of contracts simultaneously in
Germany. Taken together with our out-performance in the UK, the
impact upon our potential earnings was approximately £7.5 million.
Our potential earnings reduced by a further circa £2.5 million due
to currency movement. There is however a silver lining to this
cloud. We acted vigorously to ensure that the established
relationships with our customers and the long-term value of the
contracts involved remained protected. In addition, it prompted
a comprehensive review of and alteration to, our bid and sales
processes in Germany and our overall operating model.

11

12

*
Adjusted profit before tax and EPS is stated prior to amortisation of
acquired intangibles and exceptional items.

In this report you will see the details of our performance for
the year, with a splendid result in the UK and overall revenue
growth of 6.5 per cent in constant currency, to just short of
£3 billion. Profit was broadly flat in constant currency and our
cash balance, excluding customer specific financing, improved
by circa 8 per cent.
The Company’s cash generation over a number of years has
resulted in a cash position that will enable us to, over and above
the regular dividend, return up to £75 million to our shareholders
in 2013.
Please read the Directors’ Remuneration Report and judge
for yourselves our determination to ensure that our Executive
Directors are paid commensurate with our disappointing profit
result. As the custodian of governance within Computacenter,
I also urge you to read the Corporate Governance statement,
which summarises our work in this regard.
I thank our employees for their efforts and results, our customers
for their faith in us and our partners for their continued support.
Above all, I thank you, our shareholders, for your endorsement
and support of our actions and strategy. Your Company enters
2013 a little humbler but in good heart.

Greg Lock
Chairman
11 March 2013
Computacenter plc


1

Operating review

Mike Norris
Chief Executive Officer

2012 strategic objectives

Maximising the
return on working
capital and freeing
working capital where
not optimally used

Accelerating the
growth of our
Contractual
Services business

Progress against 2012
strategic objectives

In 2012, our Group contract base
grew by 11.0 per cent in constant
currency. This rate of growth reflects
the continuing fragmentation of the IT
Services market, within which large
customers are selectively outsourcing
their IT Managed Services. The rate of
growth in this area was particularly
strong in the UK and France.

Key performance indicators

Increase contract base in
constant currency (£m)

Adjusted* operating cash flow of
£85 million in 2012 was substantially
ahead of adjusted* profit before tax of
£71.3 million, which was again a pleasing
performance. During the year, working
capital increased on a temporary basis
due to the integration of Top Info and the
warehouse relocation in France, and a
general increase in accrued revenue in
relation to new contract take-ons,
However, given our well-documented
involving transition and transformation.
issues experienced in the on-boarding
However, by the year-end, the integration
process of new Services contracts in
of Top Info and warehouse relocation
Germany, we significantly re-focused
were complete, with related working
our efforts away from winning new
Contractual Services business in Germany capital returning to a lower level and
accrued income reduced to a level
to dealing with the issues that had arisen,
broadly in line with the overall increase
and endeavouring to deliver on existing
contractual commitments. Notwithstanding in Services revenue. There was an
these issues, Contractual Services remain a overall working capital outflow of circa
£12 million, primarily due to lower
major growth area for the Computacenter
volumes at the year-end with a major
Group due to the increased visibility
supplier which continues to provide an
and predictability of the revenues
improvement in credit terms.
that they produce.

2


12

09

10

11

85

96

138

11

615

10

-11.5%
108

09

554

Please see pages 24 and 25
for principal risks.

523

478

+11.0%

Increase adjusted* operating
cash flow (£m)

12

*
Adjusted profit before tax and EPS is stated
prior to amortisation of acquired intangibles
and exceptional items. Adjusted operating
profit and adjusted gross profit is also stated
after charging finance costs on CSF.

Overview
Business review

Reducing cost
through increased
efficiency and
industrialisation
of our Services
operations

We continue to invest in and derive value
from the Shared Services Factory
which helps to standardise customer
engagement, service offerings and
also reduce the cost of service delivery.
This includes investment in our offshore
service delivery capability, to take
advantage of the lower costs available.
These initiatives will enable operational
and cost benefits over the medium
and long term and we expect to deliver
improved Services gross margins over
time. In the UK, considerable value has
been added through our Services
industrialisation process, which has
resulted in improved margins and
increased Services revenue per Service
head. Our Services contract issues in
Germany have necessitated investment
in additional staff to meet customer
service level commitments and
accordingly, have negatively impacted
on Services revenue per Service head
across the Group.

In the UK, total revenue for the year
increased by 8.5 per cent, whilst
adjusted* gross profit increased by 10 per
cent. This higher rate of adjusted* gross
profit in the UK is due to a 15.3 per cent
growth in Services revenue, with strong
execution of our new contract take-ons
in the UK resulting in an improvement in
the overall gross margin achieved in the
Services business. This was partly offset
by an adverse mix in the UK Supply Chain
business with a higher proportion of
workplace products being sold as part
of the Windows 7 roll-out programme.

The Group-wide ERP system is an
extensive IT implementation as well
as a significant business process change.
The system covers virtually all of our
operating activities with entirely new
resource scheduling, call logging and
maintenance systems that are at the
heart of our business. The German
business went live at the end of January
2011 and the UK business went live
at the end of August 2011. France is
scheduled to go live in Q2 2013. We are
imposing a new Group-wide operating
model based on the use of common
processes to extract efficiencies and
deliver our Services consistently to
our increasingly global customers.
We would not have been able to achieve
this without a common ERP platform
across the Group.

Increase revenue per Service head
(£’000/head)

Increase EBIT as a percentage
of net revenue

ERP –
delivery vs implementation plan

6.3

6.9

6.6

-8.8%
6.0

88

93

88

85

-5.4%

Conversely, in constant currency,
Germany adjusted* gross profit reduced
by 6.7 per cent, driven by start-up costs
and resultant operational losses in
excess of €12 million relating to a
number of Services contracts. Operating
expenses increased by 3.6 per cent
resulting in a 55 per cent decrease in
adjusted* operating profit in Germany.

H2
H1
09

10

11

12

09

10

11

12

2011

2012

2013

*
Adjusted operating cash flow is defined in
note 30 of the notes of the consolidated
financial statements.


3

Governance

Ensuring the
successful
implementation
of the Group-wide
ERP system


Growing our profit
margin through
increased Services
and high-end
Supply Chain sales

Operating review continued

Group overview
Group revenue by business type

Group revenue by region (£m)
4.
3.
1.

1. United Kingdom
1,195.6 (41%)
2. Germany 1,193.8 (41%)

1.

6.

3. France 479.3 (16.4%)
4. Belgium 45.5 (1.6%)

2. Datacenter
Networking (27%)
3. Software (11%)
4. Third Party Services (5%)

5.

5. Professional Services (8%)

4.

2.

1. Workplace (25%)

2.

6. Contractual Services (24%)

3.

Overall Group revenue in 2012 increased by 2.2 per cent
to £2.91 billion (2011: £2.85 billion) and in constant currency,
Group revenue increased by 6.5 per cent. It was particularly
pleasing that the revenue growth was largely driven
by our Services business. It includes the impact of our
2011 acquisitions, which was minimal at a Group level.
At a Group level and in absolute terms, our Supply Chain
business revenue declined marginally by 0.5 per cent, but
in constant currency, it grew by 3.9 per cent to £2.01 billion.
The gross margin percentage in our Supply Chain business
reduced, mainly due to a higher mix of lower margin desktop
and laptop products in 2012, driven by the Windows 7 roll-out
programme. Given the impending deadline to complete the
refresh of Windows 7 before the official support termination
date for Windows XP in April 2014, it is likely that the impact
from this mix will continue part-way through 2013, but should
then revert to a more usual mix.
Group Services revenue increased by 8.6 per cent on an
as reported basis and by a strong 12.7 per cent in constant
currency. This significant growth reflects our continued drive
to increase the proportion of our total Group revenue that is
generated from our Contractual Services offerings, thereby
improving the visibility and predictability of that revenue.
This year, above all others, has confirmed the fundamental
importance of successful contract take-on and execution
in generating significant Services margin. The encouraging
increase of approximately 6.3 per cent in gross profit, delivered
by Group Services in constant currency, was largely reflective
of our ability to provide very high levels of Services execution
throughout the year, in the UK.
We are extremely pleased with the performance
and achievements of the UK Services business, which are
significant and have ultimately proved to be the cornerstone
of the Group’s achievements in 2012. While we believe it is
unrealistic to anticipate the same extent of Contractual Services
growth in the UK in 2013, we are fully aware of the need to
maintain these levels of execution and we are confident that
the UK Services margin generated in 2012 is sustainable.

*
acquired intangibles and exceptional items. Adjusted operating profit
is also stated after charging finance costs on CSF.

4

Computacenter plc


We see our larger
customers looking
to us to deliver
our Services on
an expanding, and
even global, scale.

We are particularly pleased with our year-end cash position,
given that further cash growth was achieved despite some
significant capital investments during the year to further drive
business growth. These investments included the delivery of
efficiencies in our French logistics capability, by consolidating all
of the previous facilities in Paris into a single function at Gonesse
and investment into our French Head Office relocation. In addition,
we have increased our investment in the upcoming French ERP
migration, which we expect will occur in May 2013. Our strategic
shift towards the provision of Services and Solutions has
continued apace and we continue to invest materially in further
developing our capabilities in this area. In particular, we are
continuing to invest in additional Service Desk capacity
and industry-leading tools to assist in automating remote
infrastructure management.
The Board has decided to propose a final dividend of 10.5 pence,
bringing the total dividend paid for 2012 to 15.5 pence, representing
a 3.3 per cent increase on the 2011 total dividend paid of 15.0
pence. This regular dividend is consistent with our stated policy of
maintaining dividend cover within our target range of 2 to 2.5 times.
Subject to the approval of shareholders at the Annual General
Meeting on 17 May 2013, the proposed dividend will be paid on
14 June 2013. The dividend record date is set on 17 May 2013
and the dividend will be marked ex-dividend on 15 May 2013.
We made one small acquisition towards the very end of
the year with the addition of a Belgian company, NEWIS SA,
and its subsidiary, Informatic Services IS SA, to the Group.
We focused on consolidating those acquisitions that had been
made in 2011, with Top Info in France now fully integrated into
the French business, allowing us to maximise the opportunity
of cross-selling our Services offerings to an expanded customer
base. We continue to be pleased with the integration of, and
ongoing contribution from, our Swiss business, originally
named Damax, now Computacenter AG.
While acquisitions made by the Group during the past two
years have helped us increase the scale of our offerings, we
continue to focus on ensuring that we are well positioned to
meet the demands of our customers and adjust our offerings
to accommodate any changing demand trends within the IT
market. For some time now, we have seen our larger customers
outsourcing their IT infrastructure needs selectively, across the
different IT disciplines and this continuing trend has helped to
drive Computacenter’s Contractual Services revenue growth.


5

Business review

Overview

Group profitability levels in 2012 were materially affected by
the difficulties we experienced within our German business.
These have been well-documented and were, to a significant
degree, an illustration of what happens when our contractual
terms and conditions, take-on and execution processes do
not adhere to the standards we expect across the Group.
An unusually high rate of contract wins towards the end of
2011 in Germany, stretched contract take-on resources to the
point where processes failed and exposed weaknesses within
our internal governance procedures. As a result, significant
incremental cost was incurred by us in order to endeavour to
achieve appropriate customer satisfaction levels. While we are
very disappointed that this has occurred, we are confident that
the actions we have taken in Germany in response to these
issues, which have included a thorough review and alteration
of our governance processes, were correct to ensure both the
long-term interests of the Group’s customers and shareholders
and to start releasing the earnings potential of these contracts
over the remainder of their lifetime. We are pleased to report
that the early signs of improved Services performance in
Germany were noted in the last quarter of the year and, whilst
there remains much to be done, we anticipate further progress
in the months ahead.

The cash generative nature of Computacenter’s business has
resulted in a net cash balance in excess of our current needs.
While we intend to continue to maintain a robust and prudent
balance sheet, the Board believes that it is now appropriate to
consider a return of capital to shareholders, in addition to the
normal dividend. As soon as practicable in 2013, the Board
intends to return up to £75 million to shareholders and we are
exploring options as to the best mechanism to effect this
return to all shareholders.

Governance

The Group incurred £3.9 million in exceptional items relating
to one off costs of relocations for RDC and in France, as well
as cost reduction initiatives during the final quarter of 2012
in Germany. Therefore, on a statutory basis, taking account
of these exceptional items and amortisation of acquired
intangibles, Group profit before tax decreased by 10.1 per cent
to £64.8 million (2011: £72.1 million) and diluted EPS decreased
by 17.6 per cent to 32.4 pence (2011: 39.3 pence).

Our balance sheet position had strengthened significantly by
the year-end. Net cash prior to customer specific financing
(‘CSF’) at the end of 2012 was £147.3 million (2011: net cash
of £136.8 million). Including CSF, net funds were £128.6 million
(2011: £113.6 million). It should again be noted that these figures
are flattered by approximately £34.0 million (2011: £45.0 million)
from extended credit facility terms provided by one of our major
suppliers. These terms, which have been in place for over three
years, could be withdrawn at short notice.


The Group’s adjusted* profit before tax fell by 4.0 per cent
to £71.3 million (2011: £74.2 million). The impact of currency
exchange rate fluctuations on the Group’s profit levels was
significant and, in constant currency, the Group’s adjusted*
operating profit remained broadly flat on 2011 levels.
The Group’s adjusted* diluted earnings per share (‘EPS’)
fell by 3.5 per cent to 36.1 pence (2011: 37.4 pence). While
we are disappointed that profitability levels have not increased
in 2012, compound EPS growth over the past five years is
still running at 14.3 per cent.

Award-winning
Managed Services
AstraZeneca’s brief
to Computacenter

Access to Skilled Resources
customers with access to skilled
resources to complement their
own staff and deal with peaks
in resource demand.

AstraZeneca
‘ ack in April 2011, when AstraZeneca took
B
the decision to look for new IT partners, many
people doubted that the ambitious timeframes
for a transition on such a large scale could really
be achieved. I am delighted to lead a team of
AstraZeneca and supplier employees to deliver a
really successful programme, delivering significant
improvement for our customers. To have this
recognised by the IT industry, via an award, is a
real credit to everyone involved.’
Alex Small, Programme Director, AstraZeneca

Continuous
Improvement/Innovation
customers to transform their IT,
delivering competitive advantage,
revenue growth and excellent
customer service.

Computacenter seeks to support
customers with growth and
business change challenges, by
providing skills and technology to
assist with change programmes.

6



7

Governance

Business review

Overview


It is important to note that a majority of our Contractual Services
wins in recent times have been second, or greater, generation
outsourcing contracts. This proves that the growth of
Computacenter’s Contractual Services revenue is neither
necessarily related to, nor capped at, that level seen by the
market generally.
In order to drive further Managed Services growth, we continue
to focus on end-user support to our largest customers and
invest in tools and processes that make our Services offerings
both more productive and automated. This will allow us to grow
the level of our Services business across the Group, without
a pro rata increase in headcount, meaning that we are
able to compete more effectively in the market and pass on
greater cost savings and efficiencies to our customers, whilst
retaining margin.
During 2012, we further developed the use of our ERP system,
particularly in the UK, enabling us to adopt a new Group-wide
operating model, implemented in the UK and Germany since the
start of 2013. Given that the system is now fully operational in the
largest components of our overall business, we are confident that
the migration in France, due in May 2013, will be smooth and that
we will see further enhancements to the drive to industrialise our
business take-on processes across the whole Group.
Outlook
The Board expects 2013 to be a year of progress for
Computacenter. It is difficult, at this early stage in the year,
to work out by how much. Last year’s performance in the
UK presents us with a challenging comparison, particularly
given the successful number of business take-ons, which
will not be repeated in 2013. The solid UK Services margin
position is likely to continue, albeit it will grow at a more
modest pace. While the Group financial outcome for 2013 will
be dependent on the in-year performance of Germany and the
speed at which we recover from our problem contracts which
is unpredictable, we are confident that these contracts will
improve. More importantly, winning, contracting and taking
on new contracts successfully, is more fundamental to
the long-term growth of the business and its strategic
development. This will be underpinned by our new Group
operating model, which has taken effect in the UK and
Germany, since the start of 2013.

United Kingdom
Revenue (£m)
1,195.6

Adjusted*
operating profit
1,102.2

1,265.4

We see our larger customers looking to us to deliver our
Services on an expanding, and even global, scale. In order to
respond, we have made noteworthy additions to our Group
Service Desk capacity, expanding our existing facilities in Berlin
and Barcelona and investing into new facilities in Kuala Lumpur,
Malaysia and Dallas, Texas. The last of these is a direct result of
a material increase in the Services we are providing in the US,
as evidenced by a circa 80 per cent increase in volume through
our US business compared to 2011.

Our pipeline for new business in the UK is significant, bringing
growth prospects for 2014 and beyond, whilst the pipeline is
beginning to grow in France and again in Germany. We therefore
look forward with confidence.

1,226.9

We benefit from this segmentation of the market which allows us
to compete, both in terms of size and offerings, in those selected
areas where we confidently believe we have competitive
advantage and can deliver value for our customers.

£52.2m
Contract base

09

10

11

12

£291.0m

Revenue by business type
1. Workplace (22%)

1.

6.

2. Datacenter
Networking (24%)
3. Software (11%)

5.

2.
4.


3.

2012 proved to be a very strong year for the UK business.
Total revenue for the year increased by 8.5 per cent to
£1,195.6 million (2011: £1,102.2 million) and adjusted*
operating profit was up by 40.2 per cent to £52.2 million
(2011: £37.3 million). This significant growth has been
delivered despite the broadly flat performance of the UK
economy during the period and the negative impact that
this has had on IT spend, most notably within the Public
and Investment Banking sectors.
Our performance in 2012 was principally driven by the
increased success of our Services business, which saw
revenue grow by 15.3 per cent to £431.4 million (2011:
£374.1 million) and Services gross profit grow by around
one third. We are extremely pleased that, for the first time in
Computacenter UK’s history, over 50 per cent of total gross
profit generated was delivered by our Services business.
Our aspiration to continue to grow our Services business
is predicated on the fact that revenue resulting from our
Contractual Services offerings generally enjoys greater
visibility and longevity.

The performance of our Supply Chain business, with its reliance
on customer capital expenditure, is less significant to the Group
as a whole than it once was, but for our French business, it
remains critical. As such, a fragile economic environment in
France is a cause for some concern.
*

8


Our continual focus on customer satisfaction is of paramount
importance to us, not only in the commencement of new
contracts, but also over the life of contracts, as is evidenced
by the significant number of Contractual Services extensions
and renewals secured in the year, as well as additional,
repeat engagements of our Professional Services. Our ability
to deliver on customer satisfaction has been rewarded with
the number one ranking within KPMG’s UK Outsourcing
Service Provider Performance and Satisfaction (SPSS) Survey
for 2012. We additionally achieved top place for customer
reference-ability and innovation within the same survey.

Our IT redeployment and recycling subsidiary, RDC,
successfully moved into its new and larger facility at Braintree,
Essex at the start of the year and this has enabled further
opportunities to deliver enhanced services to customers
and improve earnings. Adjusted* operating profit at RDC
grew by 13.9 per cent during the course of the year and
we look forward to continuing this growth.
While our UK performance in 2012 was very encouraging, the
same rate of Contractual Services growth is unlikely to continue
in 2013, but if we continue to provide a high quality of service and
our delivery and execution remain as in 2012, we are confident
that we can sustain these healthy Services margins in 2013.

Business review

Overview

Customers still value their IT independence and prefer
to outsource their IT requirements selectively. Our ability
to advise on, as well as transition and transform, their
IT infrastructure to respond to their business goals and
competitive pressures, is ensuring that we continue to
win a significant number of second, or greater, generation
outsourcing contracts. This allows us not to be solely reliant
on new market growth in this sector. We continue to focus
on sustaining this trend, which mitigates our exposure to a
lack of market growth in this area and ensures that we perform
competitively against our peers. We believe that this is borne
out by the fact that, in a market where Gartner predicted no
more than 2.8 per cent growth in IT services for 2012, our
contract base over the course of the year grew by 18.9 per
cent to £291.0 million (2011: £244.8 million). However, much
of this new contract base has come from contracts won
towards the end of 2011, but which only started to deliver
revenue in 2012.

The Supply Chain business was underpinned by demand
for Windows 7 transformations, particularly within the Retail
Banking industry and Retail sector. These transformations
additionally enabled our Professional Services business to grow
revenues by 18.4 per cent, with significant engagements
delivered into the same sectors.

Governance

We have leveraged our central shared services infrastructure
and delivery model to engage and deploy our capability and
resources efficiently. Three large new contracts, firstly with a
global provider of systems and services to the civil and defence
aerospaces, a global infrastructure and media company, and
AstraZeneca, a global research and pharmaceutical company,
have been successfully implemented in the UK during the course
of the year. The full revenue benefit of these contracts will be
seen throughout 2013 and beyond. However, we are fully aware
that the level of margin that we are able to generate from such
contracts depends, to a large degree, on our ability to sustain
the levels of execution that we managed to deliver in 2012.

Supply Chain revenue was up by 5.0 per cent at £764.2 million
(2011: £728.0 million), illustrating that it was the mix, as opposed
to the volume of product being purchased by our customers
that was the main contributing factor to a reduced profitability
in this business. Our Supply Chain business can be impacted
significantly by the short and medium term buying patterns of
our customers, which are both difficult to forecast and reliant
on external factors.


Over recent years, we have made significant investment in
our contract bidding and associated governance processes.
We go to considerable lengths to scrutinise all aspects that
could prevent the delivery of a high standard of service to
our customers, as soon as practical after business take-on.
Although it has taken us some time to reach the standards
of service delivery to which we have for a long time aspired,
both within the UK and as a Group, we have found that such
standards are not easily achieved and maintained without
appropriate planning, expertise and discipline. In 2012, within
the UK business we reaped the benefit of our past efforts and
investment in this area.

Our ability to deliver on
customer satisfaction has
been rewarded with the
number one ranking within
KPMG’s UK Outsourcing
Service Provider Performance
and Satisfaction (SPSS)
Survey for 2012.

1


9


Germany
1,473.1

1,415.3

1,048.6

1,176.7

Revenue (€m)

Adjusted*
operating profit

�14.4m
Contract base

09

10

11

12

�320.0m

1. Workplace (19%)

1.

6.

2. Datacenter
Networking (31%)
3. Software (12%)

5.
2.

4.


3.

In 2012, total revenue for the German segment, in local
currency, increased by 4.1 per cent to €1,473.1 million
(2011: €1,415.3 million). A significant number of large
Contractual Services wins towards the end of 2011 assisted
in driving this growth and indeed, Services revenue in
Germany increased by 8.7 per cent to €484.2 million (2011:
€445.5 million). This growth came despite a strong Services
revenue performance in the comparative year of 2011.
This material increase in Contractual Services wins, largely
concentrated within the same period of late 2011, presented our
German business with a number of challenges. The situation was
exacerbated by the fact that the overall structure and contract
take-on processes proved inadequate and inappropriate for
dealing with such a significant number of Contractual Services
wins at the same time. It became clear that the German business
did not have a sufficient number of experienced staff required to
deal with these challenges. Our efforts to address this issue were
also hampered by a shortage of project, business take-on and
contracting management resource and skills in the overall
German workforce. However, significant incremental direct
investment was made where deemed to be necessary and
appropriate to safeguard our customers.
The direct investment required in overcoming these
challenges has had a material impact on our profitability.
Overall, adjusted* operating profit for the year was reduced
by 55.0 per cent to €14.4 million (2011: €31.9 million).

*

10


While we are disappointed that our Services margins reduced
during 2012, we do believe that we took the correct approach
in protecting our customer relationships, our reputation and
the long-term interests of both the German business and the
Group as a whole. We believe that this is illustrated by the fact
that we have not suffered any customer attrition as a result of
the issues outlined above. We further believe that we will derive
benefit in Germany from the focused and robust review
of our contract approval, take-on and governance processes.
The German contract take-on processes have now been
directly aligned with those currently used in the UK, which have
been developed and refined over many years. If one considers
the UK’s recent track record in this regard, we expect that this
action should bring long-term protection to the business from
the same issues being repeated in the future.
We also believe that the action taken to date has already
brought early signs of stabilisation around the troubled
contracts, as evidenced by improved service levels and
increasing Services gross margins. Additionally, our Services
profit margin for the last quarter in the period increased by
2.0 per cent, compared to the weak performance in the third
quarter of 2012.
We have implemented additional indirect cost saving
activities, which have been ongoing since the middle of
the second quarter of 2012 and have resulted in indirect
headcount reduction by close to 5.0 per cent from the
position at the end of the first half of 2012. This has
resulted in an exceptional charge of €1.8 million in 2012
and we expect that the resulting and ongoing efficiency
gains and cost savings will reduce our cost base further
in 2013, whilst incurring some exceptional charges.
We have reduced our focus on winning new Contractual
Services business in Germany which has meant that we have
been unable to take full advantage of the market opportunity
arising from the growth in selective IT outsourcing. We believe
that the action we have taken towards stabilising the troubled
contracts deserved priority and that the revision of our take-on
processes provides us with a more solid foundation, as well as
the confidence to strengthen our pipeline and respond to
market demand at the appropriate time.
We were pleased with the significant recognition we received
for our Professional Services offerings, both in the areas of
consultancy and implementation. Pierre Audoin Consultants
ranked us as ‘Best in Class’ in the PAC Radar ‘Workplace
Management Transformation’ category, as one of the three
leading Services providers in Germany. Our Professional
Services activities have included supporting a large complex
Infrastructure Transformation Project for KPMG Germany.

Overview

�5.3m
Business review

591.5

551.3

Adjusted*
operating profit

Contract base
09

10

11

12

�64.3m

6.

1. Workplace (47%)

5.
4.
1.

3.

2. Datacenter
Networking (20%)
3. Software (16%)

Governance

2.

We were pleased with the
significant recognition we
received for our Professional
Services offerings, both in
the areas of consultancy
and implementation.

P
ierre Audoin Consultants
ranked us as ‘Best in
Class’ in the PAC Radar
‘Workplace Management
Transformation’ category

In France, our overall revenue growth was 7.3 per cent,
compared to 2011, which included nine months of Top Info,
to €591.5 million (2011: €551.3 million). Supply Chain revenue
grew by 5.4 per cent, to €500.3 million (2011: €474.5 million),
although this was flat on a like-for-like basis.
Including the results for Top Info for the full year of 2012, we
delivered an adjusted* operating profit of €5.3 million (2011:
€6.9 million). Although a weaker performance than last year,
we are encouraged by the acceleration in performance during
the second half of 2012 since, at the half way mark of 2012,
profitability of the business was already trailing €1.1 million
behind the same period in 2011.
We believe there remains a significant opportunity to deploy
Computacenter’s Services offerings to Top Info clients, but
to date, other operational and market challenges have been
our primary focus. We are encouraged that our Services
business revenue grew by 18.7 per cent to €91.2 million
(2011: €76.8 million), which provides a positive outlook for
our Services business during 2013 and beyond.
As our focus can now turn to fully exploring our opportunity
with Top Info customers, we have the prospect of enhancing
our Services revenue mix even further. Overall, we view Top
Info as a successful acquisition for our business in France.
Top Info is now fully integrated, without the loss of any
significant customers or important members of staff and
without the need for material exceptional charges.

*


11


The market in general has been fairly stable, but is not
showing comparable growth rates to those experienced
in 2011. Demand for Windows 7 and any ‘desktop of the
future’ offerings remains high, as it does for all Services and
infrastructure needs to access Cloud services and technology.
In this area, we are pleased with an accolade from the Experton
Group, which ranked us as ‘Cloud Leader’ in the Cloud
Consulting and Cloud Integration arena.

Revenue (€m)

419.4

We are pleased with this performance, given that we are
experiencing a general lack of economic confidence linked to
the overall Eurozone uncertainty. Our Supply Chain business
suffered from this slow-down, particularly during the second
quarter of the year, but regained strength during the second
half, to the extent where our Supply Chain revenue increased
by 6.6 per cent in the second half, over the first half of the year.

France

358.7

Our Supply Chain business grew by 2.0 per cent in
local currency. This was in spite of the particularly strong
comparative performance in 2011.

Delivering
to a mission
critical customer

12


Overview

‘ omputacenter manages, moves
C
and changes at around 140 sites across
40 countries, including two data centres in
Amsterdam that host the company’s website,
and fulfils all cabling moves and changes.
By working with Computacenter, we can be
confident that the business has a robust and
reliable cabling environment.’


Governance

Ian Foddering, Chief Technology Officer and Technical Director,
Sales Channels, Cisco

Business review

Cisco

Cisco’s brief to Computacenter
Risk Avoidance
Computacenter works with customers to help them
manage and mitigate risk through the use of proven and
ITIL compliant processes.

£

Cost Reduction
Computacenter seeks to work with customers to reduce cost
through managing costs (more for less), making capital funds
available and providing flexible commercial models.

Access to Skilled Resources
Computacenter provides customers with access to skilled
resources to complement their own staff and deal with peaks
in resource demand.


13

Our growth and earnings were challenged in the first half
of 2012 by resource demand from the high number of
Contractual Services take-ons from wins during late 2011
and a degree of under-utilisation following the natural end
of very profitable warranty maintenance agreements.
The second half of 2012 saw us complete a relocation of
our Head Office in the north of Paris, with a consolidation of
some other office locations into a single building. This was
followed by the fit-out of a newly designed logistics facility,
into which a variety of other storage facilities were merged.
The logistics consolidation and redesign will significantly
improve the efficiency of our logistic functionality. There were
no customers lost during this significant change period and
even at this early stage, following the warehouse relocation,
some of our larger customers have commented positively on
the service improvement delivered by our configuration and
delivery functions.
These material changes to our offices and logistic facilities,
together with a full 12 months of Top Info costs, were the
primary contributors to the 3.2 per cent increase in SGA
in our business, costs which we view as investment into
the overall efficiency and productivity of the business.

The strong Services revenue growth was driven, as anticipated,
by the healthy Contractual Services base growth in 2011 of
23.9 per cent. We predicted that 2012 would not bring material
expansion to our Contractual Services base, for the reasons
already set out, but also due to the renewal demands we knew
the year would present. We are delighted that our long standing
customer, a world leader in gases for industry, health and
the environment, present in 80 countries and with 46,200
employees, has recently awarded us a renewed three-year
contract, with the option to renew for a further two years.
This contract will not only utilise both our Managed Services
and Supply Chain offerings, but together with the customer,
we aim to further develop and expand our current Service
Desk capability, ultimately benefiting the Group as a whole.
2013 will also bring challenges, the most significant of which
is our migration to the Group ERP system, anticipated to
be completed by the end of the first half of 2013. We expect
that the change programme arising from the migration will be
demanding, as will some large contract renewals due this year.
However, with the major steps we have taken in strengthening
our facilities and our increased credibility in the market, we
are confidently planning Contractual Services growth in the
second half of the year, which should deliver benefit from
2014 and beyond.

A world leader in gases for industry,
health and the environment, has
recently awarded us a renewed
three-year contract, with the option
to renew for a further two years.

14


Overview
56.1

Adjusted*
operating profit

�2.3m

26.0

49.6

49.5

Revenue (€m)

Contract base

09

10

11

12

�15.4m

1. Workplace (36%)

6.

4.

Whilst our improved quality of revenue will assist us in
slowing market conditions, we are very encouraged by our
recent acquisition of NEWIS SA and its subsidiary Informatic
Services IS SA, both based in Louvain-la-Neuve, Belgium.
This acquisition is too recent to have made any contribution
to our 2012 performance, but it bodes well for the future,
with a strong synergy between their customers and those of
Computacenter, as well as bringing fresh Managed Services
offerings to align to our current portfolio.


1.

Governance

5.

2. Datacenter
Networking (27%)
3. Software (9%)

Despite the growth in the year in our Supply Chain business,
this growth trend weakened over the last quarter, largely due
to a challenging comparison from an exceptional performance
in the fourth quarter of 2011. In part, however, and as previously
mentioned, the rate of growth we have experienced over the
last year is not likely to be sustained and our current efforts are
directed at stabilising our revenue base.

Business review

Belgium


3.

2.

Mike Norris
11 March 2013


Our Belgium operation has again delivered a very strong
performance, building further on its outstanding year in 2011,
with adjusted* operating profit increased by 29.8 per cent to
€2.3 million (2011: €1.8 million).
Overall revenue in the year increased by 13.4 per cent to
€56.1 million (2011: €49.5 million), with our Supply Chain
business growing by 9.6 per cent to €42.6 million (2011:
€38.9 million) and the Services business growing by a very
pleasing 27.2 per cent to €13.5 million (2011: €10.6 million).
Although we experienced growth in both our Professional
and Contractual Services businesses, the growth in the
latter business was particularly healthy at 22.8 per cent.
This improves the quality of our revenue significantly, providing
us with longer-term performance visibility. As an example,
Baloise Insurance, part of the Swiss based Baloise Group,
awarded Computacenter Belgium a three-year desktop
Managed Services contract.
We also continue to experience an increasing degree of trust
in our capability to deliver innovation across more diverse
geographies. A global leader in the cosmetics industry has
awarded us a contract to supply, build and support interactive,
in-store, skin health diagnostic kiosks across a large number
of their European retail sites, using Apple equipment.

*


15

Protecting
data

£

SWIFT’s brief to
Computacenter
Computacenter seeks to support
customers with growth and
business change challenges by
providing skills and technology to
assist with change programmes.

16

Innovation
customers to transform their IT,
delivering competitive advantage,
revenue growth and excellent
customer service.


£

Cost Reduction
with customers to reduce
cost through managing costs
(more for less) making capital
funds available and providing
flexible commercial models.

Overview
Business review
Governance

SWIFT

‘ ur service level agreements with
O
Computacenter allow us to provide the
same level of service globally to all of our
internal customers. Using ITIL best practice,
Computacenter has both standardised and
improved the level of service, while a contractual
cost reduction plan is helping SWIFT to reduce
service costs year-on-year.’
Werner Hellinckx, Head of Enterprise Applications
Operation, SWIFT


17

Finance Director’s review

Turnover and profitability
In 2012, Computacenter Group delivered further turnover
growth, although our record of profitability growth was
interrupted by the difficulties we experienced in our
German business.
At a headline level, turnover grew by 2.2 per cent to £2.91 billion,
although on a constant currency basis turnover growth was
6.5 per cent. Adjusted* profit before tax reduced by 4.0 per cent
from £74.2 million to £71.3 million, albeit the impact of exchange
rates accounts for the vast majority of this reduction.

After taking account of exceptional items and increased
amortisation of acquired intangibles following our acquisitions
in the prior year, statutory profit before tax decreased by
10.1 per cent from £72.1 million to £64.8 million.
The Group profitability performance was mixed across our
main geographies. The UK experienced a 40.2 per cent
increase in adjusted* operating profit, which was offset by
a 58.0 per cent reduction in our German business due to
difficulties in business take-on, and a 28.8 per cent reduction
in France, which experienced difficult market conditions,
in particular in the first half of 2012.
Adjusted operating profit
Management measure the Group’s operating performance
using adjusted operating profit, which is stated prior to
amortisation of acquired intangibles, exceptional items, and
after charging finance costs on customer specific financing
(‘CSF’) for which the Group receives regular rental income.
Gross profit is also adjusted to take account of CSF finance
costs. The reconciliation of statutory to adjusted results is
further explained in the segmental reporting note (note 3) to
the financial statements. For the purposes of this statement,
all subsequent references are to adjusted measures.

Tony Conophy
Finance Director

United Kingdom
UK revenues grew in 2012 by 8.5 per cent, increasing
to £1,195.6 million. Supply Chain revenues increased by
5.0 per cent, driven by the demand for workplace and
Windows 7 roll-outs, which in turn generated 18.4 per cent
growth in Professional Services revenues. Contractual Services
revenue growth of 14.4 per cent was achieved following a
number of significant contract wins in Q4 2011 that were
successfully taken on in 2012. Overall, therefore, Services
revenues grew by 15.3 per cent.
Whilst there was a lower margin in the Supply Chain business
from a greater mix of workplace product sales, the improved
service margin mix in the UK resulted in an adjusted* gross
profit increase from 15.2 per cent to 15.4 per cent of sales.
Adjusted operating expenses (‘SGA’) rose by 1.3 per cent,
significantly less than our gross margin improvement.
Overall, this has resulted in a 40.2 per cent increase in
adjusted* operating profit from £37.3 million to £52.2 million.

*
acquired intangibles and exceptional items. Adjusted operating profit and
Adjusted gross profit is also stated after charging finance costs on CSF.

18


Overview

Sustainable revenue growth
Table 1
Group Revenues £m
Half 2

1,387.7
1,487.0
1,491.9
0.3%

Total

2,676.5
2,852.3
2,914.2
2.2%

Table 2
Adjusted* profit before tax £m
Half 1

2010
2011
2012
2012/11

21.2
26.6
24.0
-9.8%

%

1.7
1.9
1.7

Half 2

%

44.9
47.6
47.3
-0.6%

3.2
3.2
3.2

Total

%

66.1
74.2
71.3
-4.0%

2.5
2.6
2.4

Table 3
Revenues by segment £m
2011

2012

Germany∆
The pace of growth in our German business reduced in 2012.
Revenue, as reported, contracted in 2012 by 2.8 per cent to
£1,193.8 million (2011: £1,228.6 million), albeit in local
currency revenue increased by 4.1 per cent.
Following two very strong years of growth, Supply Chain
revenues consolidated in 2012, increasing by a modest
2.0 per cent, with the majority of the growth in German
revenues generated in Services, which grew by 8.7 per cent.
However, during the year, losses in excess of €12 million
were generated during the take-on phase of a number of
contracts. Our main focus during 2012 has been to stabilise
these contracts, and performance has started to improve in
the fourth quarter of 2012 as a result.
∆

Half 2

Half 1

Half 2

578.2
591.0
226.8
26.2
1,422.3

617.4
602.8
252.5
19.2
1,491.9

547.3
580.4
219.7
17.9
1,365.3

554.9
648.2
258.9
25.0
1,487.0

Half 1

UK
Germany
France
Belgium
Total

Business review

1,288.8
1,365.3
1,422.3
4.2%

Governance

Half 1

2010
2011
2012
2012/11

As a consequence, the gross margin return of the business
reduced significantly by 1.3 per cent to 11.5 per cent.
SGA had increased through 2011 and the first quarter
of 2012. However, following a period of stabilisation in the
middle of the year, there was a reduction in SGA headcount
and expenses in the latter part of 2012, and accordingly
a €1.8 million charge for redundancy expenses was incurred,
which has been disclosed as an exceptional item.
Overall, the German segment operating profit reduced by
58.0 per cent from £27.7 million to £11.6 million as reported,
a reduction of 55.0 per cent in local currency.

Unless specifically stated, comments on growth rates in overseas
segments are stated in local/constant currency.


19

Finance Director’s review continued

Table 4
Adjusted* operating profit by country £m
2012
Half 1

UK
Germany
France
Belgium
Total

%

Half 2

%

34.6
6.2
5.1
0.9
46.8

5.6
1.0
2.0
4.7
3.1

17.6
5.4
(0.8)
1.0
23.2

3.0
0.9
(0.3)
3.8
1.6

Half 1

%

Half 2

%

16.7
8.4
0.2
0.3
25.6

3.0
1.4
0.1
2.0
1.9

20.6
19.3
5.8
1.2
46.9

3.7
3.0
2.2
4.8
3.2

2011

UK
Germany
France
Belgium
Total
France∆
The revenue in the French segment increased by 7.3 per cent
in the year. Supply Chain revenue increased by 5.4 per cent,
although the majority of this growth was due to the full year
impact of the acquisition of Top Info SAS in 2011. Following
a series of Contractual Services wins in 2011, Services revenue
grew by 18.7 per cent.
The gross profit return in 2012 has been impacted by the
scale of Contractual Services take-ons and lower margins from
service delivery arrangements supporting customers on behalf
of other parts of the Group, reducing from 10.6 per cent to
9.9 per cent. In absolute terms, gross profit is in line with 2012.
SGA expenses have increased by 3.2 per cent, although
the 2011 comparative includes only three quarters from our
Top Info acquisition, and there are some additional costs from
the projects undertaken to integrate Top Info, relocate the
warehouse and office facilities in Paris, and implement our
Group ERP system in France.
Overall, adjusted* operating profit in France has therefore
reduced by 23.7 per cent in local currency, equating to a
reduction of 28.8 per cent as reported from £6.0 million to
£4.3 million in 2012.
Belgium∆
Reported revenue increased by 5.8 per cent to £45.5 million
(2011: £43.0 million) equating to an increase of 13.4 per cent
in local currency. Whilst Supply Chain revenue increased
by 9.6 per cent, Services revenue growth was a pleasing
27.2 per cent.

∆

Unless specifically stated, comments on growth rates in overseas segments
are stated in local/contrast currency.

*

20


Due to the increasing service mix of the business, gross
profit return on sales for Belgium overall improved from
10.7 per cent to 11.0 per cent. However, SGA increased
by 8.6 per cent, albeit at a lower rate than our overall gross
profit, mainly due to increased commission costs from the
improvement in gross margin.
Therefore, operating profit improved from £1.6 million
in 2011 to £1.9 million in 2012. In addition, on
28 December 2012, Computacenter purchased
NEWIS SA and its subsidiary, Informatic Services
IS SA, both based in Louvain-la-Neuve, Belgium,
albeit this acquisition did not contribute to the result
of the Group in 2012.
Exceptional items
During the year, Computacenter France consolidated
its operations in a new office and began the move to a new
warehouse. In January 2012, RDC relocated to new premises
in Braintree. The one-off costs in relation to the relocation of
these premises of £2.4 million that have been disclosed as
exceptional items relate principally to:
• operating lease rental expense charged on new properties
during the fit-out period and prior to occupation;
• redundancy expenses paid as a result of the integration
and relocation activities; and
• rental expense related to legacy properties after they had
been vacated.

Deferred tax assets of £15.7 million (2011: £15.4 million)
have been recognised in respect of losses carried forward.
In addition, at 31 December 2012, there were unused tax
losses across the Group of £115.5 million (2011: £125.6
million) for which no deferred tax asset has been recognised.
Of these losses, £61.6 million (2011: £68.5 million) arise in
Germany, albeit a significant proportion have been generated
in statutory entities that no longer have significant levels of
trade. The remaining unrecognised tax losses relate to other
loss-making overseas subsidiaries.
Earnings per share and dividend
The adjusted* diluted earnings per share has reduced in line
with profit performance by 3.5 per cent from 37.4 pence in
2011 to 36.1 pence in 2012. Due to the impact of exceptional
charges in 2012, and exceptional tax credit in 2011, the
statutory diluted earnings per share has reduced from
39.3 pence in 2011 to 32.4 pence in 2012.

Cash flow
The Group’s trading net funds position takes account of current
asset investments and factor financing when the Group entered
into such facilities, but excludes CSF. There is an adjusted cash
flow statement provided in note 30 that restates the statutory
cash flow to take account of this definition.
Net funds excluding CSF increased from £136.8 million to
£147.3 million by the end of the year. The Group continued
to deliver strong cash generation from its operations in 2012,
with adjusted operating cash flow of £85.2 million (2011:
£95.5 million). In the year, we spent over £30 million on capital
expenditure, such as the relocation of our French warehouse
and offices in Paris, and further investment in the tools and
systems that support our Services business, and underpin
that growth.

The Board is recommending a final dividend of 10.5 pence per
share, bringing the total dividend for the year to 15.5 pence
(2011: 15.0 pence). Subject to the approval of shareholders
at the Annual General Meeting (AGM) on 17 May 2013, the
proposed dividend will be paid on 14 June 2013. The dividend
record date is set on 17 May 2013 and the dividend will be
marked ex-dividend on 15 May 2013.


21

Business review

Overview

Taxation
The effective adjusted tax rate for 2012 was 23.3 per cent
(2011: 21.7 per cent). The deterioration was due to a lower
mix of overseas earnings in 2012 compared to 2011. However,
the Group’s tax rate continues to benefit from losses utilised
on earnings in Germany and this year in France and further
benefits from the reducing corporation tax rate in the UK.

During the first half of 2011, the Group acquired Top Info SAS
and HSD Consult GmbH and during the second half of 2011,
the Group acquired Damax AG. For each of these acquisitions,
the book and provisional fair values of the net assets acquired
that were disclosed in note 16 of the 31 December 2011
Annual Report and Accounts are now final and are unchanged.

Governance

Finance income and costs
Net finance income of £0.2 million was earned on a statutory
basis in 2012 (2011: net finance income of £0.2 million).
This takes account of finance costs on CSF of £1.1 million
(2011: £1.5 million). On an adjusted basis, prior to the interest
on CSF, net finance income decreased from £1.7 million in
2011 to £1.3 million in 2012.

Acquisitions
On 28 December 2012, the Group acquired 100 per cent of
the voting shares of NEWIS SA and its subsidiary, Informatic
Services IS SA (together ‘IS’) for an initial consideration of
€2.3 million and a contingent consideration of €0.6 million
dependent on future performance. The net book value of the
assets acquired included €0.1 million of net cash and bank
loans. The costs of acquisition amounted to €0.1 million and
are included in the income statement. IS is based in Belgium
and is a provider of infrastructure services including end-user
support and system administration.


In the second half of 2012, Computacenter Germany
undertook a programme to reduce its SGA by approximately
£1.2 million annually. The related redundancy expenses of
£1.5 million, due to their size and nature, have been included
within exceptional items.

Finance Director’s review continued

This warehouse relocation and the integration of Top Info in
France, together with a general increase in accrued income
associated with significant contract take-on activity, resulted in
a working capital deterioration during the year. However, these
issues were resolved by the year-end and as a consequence,
the net funds position at the end of the year was strong.
Whilst the cash position remains robust, the Group continued
to benefit from the extension of an improvement in credit
terms with a significant vendor, equivalent to £34.0 million
at 31 December 2012, a decrease of £11.0 million from
December 2011.
CSF reduced in the year from £23.1 million to £18.7 million
partially due to a decision to restrict this form of financing in the
light of the credit environment and reduced customer demand.
Taking CSF into account, total net cash at the end of the year
was £128.6 million, compared to £113.6 million at the start of
the year.
Return of capital
The cash generative nature of Computacenter’s business has
resulted in a net cash balance in excess of our current needs.
While we intend to continue to maintain a robust and prudent
balance sheet, the Board believes that it is appropriate to
consider a return of capital to shareholders. During the course
of 2013, the Board intends to return up to £75 million to
shareholders and we are exploring options as to the best
mechanism to effect this return for shareholders.
Customer specific financing
In certain circumstances, the Group enters into customer
contracts that are financed by leases or loans. The leases
are secured only on the assets that they finance. Whilst the
outstanding balance of CSF is included within the net funds
for statutory reporting purposes, the Group excludes CSF
when managing the net funds of the business, as this CSF
is matched by contracted future receipts from customers.

Capital management
Details of the Group’s capital management policies are included
within note 26 to the financial statements.
Financial instruments
The Group’s financial instruments comprise borrowings, cash
and liquid resources, and various items that arise directly from
its operations. The Group enters into hedging transactions,
principally forward exchange contracts or currency swaps.
The purpose of these transactions is to manage currency risks
arising from the Group’s operations and its sources of finance.
The Group’s policy remains that no trading in financial
instruments shall be undertaken.
The main risks arising from the Group’s financial instruments
are interest rate, liquidity and foreign currency risks. The overall
financial instruments strategy is to manage these risks in order
to minimise their impact on the financial results of the Group.
The policies for managing each of these risks are set out below.
Further disclosures in line with the requirements of IFRS 7 are
included in the financial statements.
Interest rate risk
The Group finances its operations through a mixture of retained
profits, cash and short-term deposits, bank borrowings and
finance leases and loans for certain customer contracts. The
Group’s bank borrowings, other facilities and deposits are at
floating rates. No interest rate derivative contracts have been
entered into. When long-term borrowings are utilised, the
Group’s policy is to maintain these borrowings at fixed rates
to limit the Group’s exposure to interest rate fluctuations.
Liquidity risk
The Group’s policy is to ensure that it has sufficient funding
and facilities in place to meet any foreseeable peak in borrowing
requirements. The Group’s positive net funds position
was maintained throughout 2012, and at the year-end was
£147.3 million excluding CSF, and £128.6 million including CSF.

Whilst CSF is repaid through future customer receipts,
Computacenter retains the credit risk on these customers
and ensures that credit risk is only taken on customers with
a strong credit rating.

Due to strong cash generation over the past three years,
the Group is currently in a position where it can finance its
requirements from its cash balance, and the Group operates
a cash pooling arrangement for the majority of Group entities.

The committed CSF financing facilities, are thus outside of the
normal working capital requirements of the Group’s product
resale and service activities.

At 31 December 2012, the Group had available uncommitted
overdraft facilities of £20.3 million (2011: £15.9 million).

The Group does not expect a material increase in the level of
CSF financing facilities, partly as the Group applies a higher
cost of finance to these transactions than customers’ marginal
cost of finance. In addition, some of these requirements have
been satisfied through utilising a sale of receivables process.

22


Should it be necessary, the Group will seek to enter into
committed facilities.

Overview

Foreign currency risk
The Group operates primarily in the UK, Germany, France, and
with smaller operations in Belgium, Luxembourg, Switzerland,
Spain and South Africa. The Group uses a cash pooling facility
to ensure that its operations outside of the UK are adequately
funded, where principal receipts and payments are
denominated in Euros. In each country a small proportion of
the sales are made to customers outside those countries. For
those countries within the Eurozone, the level of non-Euro
denominated sales is very small and, if material, the Group’s
policy is to eliminate currency exposure through forward
currency contracts. For the UK, the majority of sales and
purchases are denominated in Sterling and any material trading
exposures are eliminated through forward currency contracts.

There are no significant concentrations of credit risk within
the Group. The Group’s major customer, disclosed in note 3
to the financial statements, consists of entities under the
control of the UK Government. The maximum credit risk
exposure relating to financial assets is represented by
carrying value as at the balance sheet date.
Going concern
As disclosed in the Directors’ Report, the Directors have, after
due consideration and investigation, and having taken account
of the intended cash return, a reasonable expectation that the
Group has sufficient cash resources and available facilities
to meet its financial obligations for the foreseeable future.
Accordingly, they continue to adopt the going concern
basis in preparing the consolidated financial statements.


The value of contracts where service is provided in multiple
countries has increased. The Group aims to minimise this
exposure by invoicing the customer in the same currency in
which the costs are incurred. For certain contracts, the Group’s
committed contract costs are not denominated in the same
currency as its sales. In such circumstances, for example
where contract costs are denominated in South African Rand,
Tony Conophy
the Group eliminates currency exposure for a foreseeable future
Finance Director
period on these future cash flows through forward currency
contracts. In 2012, the Group recognised a gain of £0.5 million 11 March 2013
(2011: charge of £0.5 million) through other comprehensive
income in relation to the changes in fair value of related forward
currency contracts, where the cash flow hedges relating to firm
commitments were assessed to be highly effective.

*


Business review

Customer specific financing facilities are committed.

Credit risk
The Group principally manages credit risk through
management of customer credit limits. The credit limits are
set for each customer based on the creditworthiness of the
customer and the anticipated levels of business activity. These
limits are initially determined when the customer account is first
set up and are regularly monitored thereafter.

Governance

The Group manages its counterparty risk by placing cash on
deposit across a panel of reputable banking institutions, with
no more than £50.0 million deposited at any one time except
for UK Government backed counterparties where the limit is
£70.0 million.

23

Risk management

Risk management framework

Board of Directors

Audit Committee

Strategic Risk
Log (‘SRL’)

Strategic objectives

Group Risk Committee
Group COO; Group CIO; Group CFO;
Group Internal Auditor; MD UK; MD Germany;
MD France; Group Financial Controller,
Head of BCP and Loss Control, Group HR
Director, Group Legal Director

External advice

Business Risk
Assessment (‘BRA’)

Internal Audit

CC Business Leaders

The light blue represents changes to the framework since the last Annual Report.

Strategic objectives
Maximising the
return on working
capital and freeing
working capital
where not
optimally used

Accelerating
the growth of
our Contractual
Services business

Principal risks

•

•

Principal mitigations

•

•

24

Our offerings may transpire to be
uncompetitive within the market or an
unforeseen or sudden technology shift
occurs where the market develops appetite
for different equipment and solutions to those
offered. Conversely, we could be motivated
into investing significantly into an offering
which transpires to amount to no more
than hype.
Our growth aspirations are impacted by
the economic climate and with a certain
level of uncertainty about a full return to
economic stability in the short term there
is the potential for reduced capital
expenditure from customers.

•

F
ollowing significant progress over the
years in reducing working capital through
the disposal of the distribution business,
as well as other working capital optimisation
initiatives, a material increase in working
capital demand could harm further progress
in this regard.

We formally review all lost bids and most
won bids to ensure that we keep abreast of
customer expectation from their IT Services
and Solutions provider. We formally review
our internal service providers against price
points and benchmarked service quality
standards. We tend to invest selectively into
new offerings and only when they will be
complementary to our overall Services
suite of offerings.
We believe that our offerings are targeted
specifically towards being beneficial to our
customers who are looking to reduce costs,
and an uncertain economic climate therefore
tends to favour our Contractual Services
aspirations. We operate within different
economies that are affected differently,
at different times and our balance sheet
remains healthy.

•

There is continued focus on working
capital controls in each country at all levels,
supplemented by a rigorous, target-based
incentivisation system. In future, the ERP
system will facilitate a common approach
to working capital management, across
the Group, through best practice and
other working capital control adoption.


Overview
Reducing cost
through increased
efficiency and
industrialisation
of our Services
operations

•

•

•

•

The agenda of items considered at a GRC meeting also includes:
Health and Safety, Insurance and Liabilities, Business Continuity
and IT Disaster Recovery, Corporate Sustainable Development
and Internal Audit reports.
Some of the risks contained on the SRL are detailed below, aligned
to the strategic objectives they could potentially impact most.

Growing our
profit margin
through
increased Services
and high-end Supply
Chain sales

Failure to utilise established and repeatable
processes, specifically designed for increased
efficiency, can result in poor service delivery
and threaten reputation. Margin erosion and
significant cost increases need to be incurred
to recover stability. The comprehensively
reported contract take-on challenges in
Germany during 2012 was an unfortunate
manifestation of this threat.
Driving culture change from being a
fragmented, country specific focused
organisation to becoming a single Group,
could prove challenging and time consuming
to embed.

•

We have established a task force to stabilise
the challenged contracts in Germany.
Progress of this work is monitored by the
Board at each meeting. At the same time,
a significant level of focus is applied to
ensuring that the same service operation
processes are available and applied, across
the whole Group.
Organisational change where only the sales
and customer facing functions remain in
country and all operational and business
support activities are driven from central
Group functions, should facilitate and
expedite the culture change required.

•

•

•

Business review

Ownership of the risks within the SRL is shared amongst the GRC
members and mitigation of those risks is monitored at the quarterly
meetings. A Key Risk Indicator ‘dashboard’ is in the process of
development with the aim of being able to provide ‘at a glance’
information on the effectiveness of both mitigation measures and
any variation in risk size. The SRL also serves as a material driver
in determining the priority allotted within the Internal Audit Plan.
The Group Internal Auditor provides the Group Audit Committee
with feedback on the risk control measures being monitored and
confirmation that the assessment of risk is made at a senior level.

Governance

The GRC is responsible for compiling, monitoring and developing
the Strategic Risk Log (‘SRL’). In this regard, the Committee receives
guidance from external advisers and the results of the annual Business
Risk Assessment (‘BRA’), which is executed by all the business
leaders across the Group.

Going forward, the Board has agreed to scrutinise the management
of the risks contained on the SRL, by engaging in discussion on five
specific risks on the log, per Board meeting from May 2013 onwards.
Such scrutiny will assist the executive team in prioritising the various
risk mitigation strategies. To date, the Board has actively participated in
assessing risks and suggesting suitable mitigation for implementation
by the executive team. For example, the Board has dedicated much
effort into overseeing the implementation of enhanced succession and
talent development plans over the last two years, as it has recognised
that a lack of management reserve with ability would be detrimental to
the continuity of the organisation’s growth aspirations.

Ensuring the
successful
implementation of
the Group-wide
ERP system


Our Group Risk Committee (‘GRC’) convenes quarterly, and within
the revised structure, will be chaired by the new Group Chief
Operating Officer. The GRC is a sub-committee of the Group
Executive Committee and the minutes of all of the GRC meetings
are included within the information packs distributed to the Group
Audit Committee members.

R
esource demands could arise when
transitioning multiple new service business
opportunities at or around the same time.
Conversely, resource surplus could result
where a contract reaches end of term and
is not renewed.
O
ur vendor partners compete in the
high-end sales environment and approach
our customers directly. A challenged
economy does tend to impact Supply
Chain activity adversely.

•

W
ith a project of this scale there is the
potential that during early transition
operational issues could occur which
impact on customer service levels and
ultimately, overall financial performance
of the Company.

W
e have an established transition and
transformation activity programme with
access to additional resources as necessary
utilising our Master Vendor relationship
which caters for bridging any capability and
capacity concerns that may arise. End of
contract term exposures are reviewed well in
advance and planning for the redeployment
of resource is prioritised.
Senior management work very closely with
our leading partners and customers in order
to continually promote and protect the value
we bring to the customer. Computacenter’s
customers demand optimisation of their IT
infrastructures and to this end, vendor
independent solutions are imperative.

•

The transition of the various systems has
been phased over a period of circa three
years, with the other countries providing
back-up support to the transitioning country.
Lessons learnt from 2011 transitions in
Germany and the UK will be deployed in
future countries.


25

Corporate Sustainable
Our commitment
Computacenter recognises that our people and the societies and
environment within which we operate are integral contributors to
delivering value and supporting our key strategic aspirations.

Responsible growth

Whilst we pride ourselves on the provision of technologically
advanced information solutions, we recognise that our
business occurs within a wider community including
employees, shareholders, customers, suppliers, business
partners and the natural environment as a whole.
Since 2007, the Group has been committed to the 10 core
principles of the United Nations Global Compact (‘UNGC’),
aimed at demonstrating ethical, environmental and social
responsibility towards our own workforce and in our business
interaction within each community and country in which we
operate. In 2009, the Group published its first Communication
on Progress (‘CoP’) on the UNGC website, followed by our
second, third and fourth CoPs in April 2010, 2011 and 2012.
Additionally, the Group retains its membership of the
FTSE4Good Index Series. The Group’s CSD Policy is annually
reviewed by the highest governance structure, the Group
Board, and the policy is executed and monitored through the
facilitation of the Group CSD Committee, constituted out of
representatives from across the Group as a whole.
Integral to our commitment, we strive to incorporate the UNGC
and its principles into our strategy, culture and day-to-day
operations. We do this through the development, communication
and implementation of relevant policies to manage and monitor
our progress towards these principles. Since our commitment to
the core principles, we have adopted and revised a number of
policies and procedures across the Group.
We support public accountability and will publish, as part of
our annual Business Review, a Report on Progress. We are
also communicating our sustainability efforts and achievements
with all our shareholders in the Annual Report and Accounts,
as well as on our Company website. We believe that what is
not measured is not effectively managed and in line with this,
we are endeavouring to identify at least one standard indicator
(‘SI’), as recognised by the Global Reporting Initiative (‘GRI’),
per core principle. In this regard, we recognise that suitable GRI
data for capturing across the Group will only be available once
we have fully embedded our SAP ERP system, Group-wide.
Much work remains to be done over the coming years, in
relation to the measurement indicators we elect to demonstrate
our progress. We actively seek to collaborate with and
encourage our suppliers, contractors and customers to
operate in a similar socially responsible manner, as guided
by the UNGC 10 principles. We have already secured
support from the majority of our suppliers and contractors,
but we acknowledge that this is an ongoing task.

Mike Norris
11 March 2013
26


East Kent Hospitals University
East Kent Hospitals University NHS Foundation Trust serves a
wide geographical area. With its main hospital sites some miles
apart, the trust’s clinicians frequently had to travel to attend
meetings and conduct training sessions. The trust recognised
travelling was not an efficient use of clinicians’ time. In addition
to the impact on productivity, the trust was also keen to reduce
travel expenditure and its impact on the environment.
The trust partnered with Computacenter to design, implement
and support a sophisticated video-conferencing solution.
The solution includes high-definition displays to enable
clinicians to share images from the hospital’s Picture Archiving
and Communications System, such as x-rays and scans.
The quality of the images is crucial for accurate diagnosis.
‘The video-conferencing project has demonstrated how
investment in technology can help reduce costs, increase
efficiency and improve patient care. This was a groundbreaking
project for us, which has proved to be a great success thanks
to the collaboration and hard work of all involved.’
Tracey Miles,
Head of Supplies Procurement,
East Kent Hospitals University, NHS Foundation Trust

Overview

‘Principles of Employee Behaviour’ information is available
on all intranets across the Group

1(a). Support and respect the internationally
proclaimed human rights – Human Rights

2013 objectives
• Maintain human rights awareness through the Company’s
‘Principles of Employee Behaviour’
• Enhance focus through a Sustainable Development
Principles week in April 2013, in France
• Further extend the LEO (Lebensereignisorientierte
Mitarbeiterentwicklung) programme in Germany,
with a roll-out of a ‘Healthy Leadership’ module

1(b). Support and respect the internationally
proclaimed human rights – Health and Safety

75 per cent of French management attended the Stress
Prevention awareness workshop
• Establish an e-learning platform in Germany to facilitate
the availability to all of a variety of health and safety
presentation awareness modules
e-learning platform not yet finalised and remains subject
to further discussions with the Works Council

2012 objectives and achievements – SIs = AIR and AFR*
• Maintain the Accident Incident Rate (‘AIR’) at below
2.5 and the Accident Frequency Rate (‘AFR’) below 1.0
In the UK, the average AIR reduced to 0.79 (2011: 0.95)
and the average AFR declined to 0.44 (2011: 0.52)
In Germany, the average AIR reduced to 0.99 (2011: 1.35)
In France, the average AIR increased to 1.41 (2011: 1.36)
• 100 per cent of French management to attend the Stress
Prevention awareness workshop

2. Ensure that the Group is not complicit in human
rights abuses
2012 objective and achievements – SI not formalised
• Continue to maintain key and new vendor assessments
through the vendor conformance questionnaire and
monitor the returns
The Supplier Assessment questionnaires returned are
all reviewed for bribery exposure and this information is
shared between the various companies in the Group


2012 objectives and achievements – SI not formalised
• Maintain human rights awareness through the Company’s
‘Principles of Employee Behaviour’
In Germany, 16 workshops were attended by the
management team where Human Rights and Leadership
issues were highlighted
In France, more than 500 members of staff were trained
on sustainable development principles

2013 objectives
• Maintain the AIR at below 2.5 and the AFR at below 1.0
• Establish an e-learning platform in Germany to facilitate
the availability to all of a variety of health and safety
presentation awareness modules
*

AIR – Number of accidents per 1,000 employees.
AFR – Number of accidents per 100,000 working hours.

Revised questionnaires have been drafted in Germany.
In France a new questionnaire was circulated to vendors.
2013 objective
• Continue to maintain key and new vendor assessments
through the questionnaire and monitoring of the returns

Labour standards
3. Uphold employees’ freedom of association
• Maintain current status and reassess vendor conformance,
through the review of questionnaire responses
• Initiate new Works Council activities and processes

Positive interaction with a Works Council and an agreement
on Stress in The Workplace concluded in France
2013 objective
through the review of questionnaire responses and maintain
positive interaction with all Works Councils


Business review

Human rights

Governance

General overview of 2012
During the whole of 2011 and 2012, Computacenter was actively involved in designing and implementing a Group-wide SAP ERP
system. Both our UK and Germany operations have migrated onto this single platform, with our France operation due to migrate
over the course of the first half of 2013. Much resource and time was, and continues to be, dedicated to this project and we are
pleased, in light of these demands, to have managed to maintain our CSD standards and not allowed them to deteriorate.
Our longer-term aspirations are to improve our CSD standards.

27

Corporate Sustainable Development (‘CSD’) continued

Labour standards continued
4. Eliminate all forms of forced and compulsory labour
5. Abolish all forms of child labour
• Continue to develop young careers
In the UK, the graduate development programme was
repeated with a further intake of six graduates. The
Handelsblatt fund Junge Carriere’s seal of a Fair Company
was retained at Computacenter Germany and the Exploras
programme, which regulates the conditions for working
students at Computacenter Germany, was continued
6. Support equality in respect of employment and
occupation and eliminate all discrimination
2012 objectives and achievements – SI = Increase in staff
utilisation of the UK Benefits@Computacenter website
• Re-evaluate the benefits plan in the UK for
competitiveness from suppliers
All benefit suppliers were reviewed and enhanced offerings
incorporated onto the ‘Benefits Choice’ platform
• Consider a programme in the UK to focus on ‘work-life’
balance
Work-life balance awareness week arranged and
corporate fitness club rates promoted
• Increase awareness about the availability of the Employee
Assistance Scheme (‘EAP’) in the UK
Awareness programme launched on UK Company
Intranet explaining the availability of the EAP to staff
• Prepare the UK pension scheme for the automatic
enrolment process

2013 objective

2013 objective
• Continue to develop young careers and seek assurance
from all key vendors that no child labour is deployed, on
behalf of the Group, in non-European geographies

The UK pension scheme is ‘automatic enrolment ready’
for the April 2013 ‘go-live’
• Progress the gender equality agreement reached with the
employee representatives in France
Agreement reached
• Sign up to the French government initiative, Parenthood
Charter and commence initial actions aligned to the
charter’s principles
Signed up to the Charter and implementation of the
principles underway
2013 objectives
• In France, reinforce awareness during the Sustainable
Development week and concluded a mandatory
negotiation on the gender equality agreement
• Continue the Family Service offering in Germany

Environment
7. Apply precaution to activities which can impair
the environment
• Continue to monitor the energy consumption levels at the
Group Head Office and the CO2 emissions of the UK and
Germany vehicles, with the aim of improving further
Energy consumption, per head, at the Group Head Office
reduced marginally over 2012, but encouragingly, an
estimated 64 million kwh Green Climate Change Exempt
electricity was purchased for all the UK locations, including
the data centres
The average CO2 emitted per UK fleet vehicle reduced further.
In Germany, the ‘Green Fleet’ programme was expanded.

28


• Achieve certification to ISO 14001 level 2 of the 1, 2, 3
Environmental Standards in France
Certification to ISO 14001 level 2 achieved
• Relocate French Head Office and warehouse to ‘friendlier’
environment facilities
Relocation completed
2013 objectives
• ontinue to monitor the energy consumption levels at the
C
Group Head Office and the CO2 emissions of the UK and
Germany vehicles, with the aim of improving further
• chieve certification to ISO 14001 level 3 of the 1, 2, 3
A
Environmental Standards in France

Overview

9. Encourage the development of environmentally
friendly technologies
2012 objectives and achievements – SI = Proportion of
customer contract wins where ‘Green IT’ was part of the
contract scope
• Continue to track customer demand for ‘Green IT’ offerings
In 2012, 12.53 per cent (2011: 16.10 per cent) of new
contract wins included a ‘Green IT’ brief
• Computacenter France will expand on its ‘Green IT’
Advisory Services for customers, with the addition of audit
and consulting services

2013 objectives
• im to improve on the current level of charity
A
fundraising activity
• Continue to track and monitor charity fundraising activities

Green IT Advisory services in France extended to recycling
and WEEE compliance offerings and innovative work
station virtualisation projects
2013 objective
• Continue to track customer demand for ‘Green IT’ offerings

Anti-corruption
10. Impede corruption in all its forms, including
extortion and bribery
• Maintain an awareness of anti-bribery and the prohibition
of improper business practices and comprehensively
investigate all reported instances of suspected improper
practices. Awareness sessions across the Group to
ensure alignment to the Code of Conduct
Awareness training sessions, both in-person and
online were delivered to all staff across the Group.
The majority of sales staff have acknowledged their
understanding of the Anti-bribery Code of Conduct.
Additionally, Computacenter’s Anti-bribery Code of
Conduct has been communicated with the majority
of all suppliers and vendors across the Group

Governance

2012 objectives and achievements – SI = Track and monitor
charity fundraising activities
• Exceed the current level of charity fundraising activity
Employees in the UK raised nearly £73,612 (2011:
£83,000) during 2012, for the chosen charity partners.
Support for the Hertfordshire Fire and Rescue dogs
continued as well as support as a founding member of
Herts 100
Computacenter France continued its support to NGO
Aide et Action
• Continue to track and monitor charity fundraising activities
and awards of note

Group subsidiary and re-use and recycling specialists,
RDC, joined a select band of organisations to have won
all three Queens Awards, following the most recent grant
of the prestigious Queens Award for Enterprise for
International Trade in 2012


8. Undertake initiatives to promote greater
involvement in the community

Business review

Environment continued

• Maintain a register of gifts and hospitality and review the
register at appropriate intervals
Registers of gifts and hospitality are maintained within
various departments across the Group
2013 objective
• Invite an external review into the adequacy of the Group’s
Anti-bribery policy and procedures and implement plans
following the review’s findings

Stephen Benadé
Company Secretary
11 March 2013

29

Board of Directors

1

2

3

4

1. Greg Lock

3. Tony Conophy

Title:

Title:
Finance Director
Tony has been a member of the Institute of Chartered
Management Accountants since 1982. He qualified with
Semperit (Ireland) Ltd and then worked for five years at
Cape Industries plc. He joined Computacenter in 1987
as Financial Controller, rising in 1991 to General Manager of
Finance. In 1996 he was appointed Finance and Commercial
Director of Computacenter (UK) Limited with responsibility for
all financial, purchasing and vendor relations activities. In March
1998 he was appointed Group Finance Director. Age 55.

Non-Executive Chairman and
Chairman of the Nomination
Committee
Committee membership: N, R
Greg is the Chairman of Kofax plc and a Non-Executive
Director of United Business Media. He has more than 38 years
experience in the software and computer services industry,
including four years as Chairman of SurfControl plc and from
1998 to 2000, as General Manager of IBM’s Global Industrial
sector. Greg also served as a member of IBM’s Worldwide
Management Council and as a governor of the IBM Academy
of Technology. Age 65.
2. Mike Norris
Chief Executive
Title:
Mike Norris graduated with a degree in Computer Science
and Mathematics from East Anglia University in 1983. He
joined Computacenter in 1984 as a salesman in the City office.
In 1986 he was Computacenter’s top account manager.
Following appointments as Regional Manager for London
Operations in 1988 and General Manager of the Systems
Division in 1992 with full sales and marketing responsibilities,
he became Chief Executive in December 1994 with responsibility
for all day-to-day activities and reporting channels across
Computacenter. Mike also led the Company through flotation
on the London Stock Exchange in 1998. Mike was awarded
an Honorary Doctorate of Science from the University of
Hertfordshire in 2010. Age 51.

30


4. Peter Ogden
Non-Executive Director
Title:
Peter founded Computacenter with Philip Hulme in 1981 and
was Chairman of the Company until 1998, when he became a
Non-Executive Director. He is Chairman of Dealogic (Holdings)
plc and prior to founding Computacenter, he was a Managing
Director of Morgan Stanley and Co. Age 65.

Overview
6

7

8

Business review

5

Title:
Philip founded Computacenter with Peter Ogden in 1981 and
worked for the Company on a full-time basis until stepping
down as Executive Chairman in 2001. He is a Director of
Dealogic (Holdings) plc and was previously a Vice President
and Director of the Boston Consulting Group. Age 64.

Title:

6. John Ormerod
Non-Executive Director and
Chairman of the Audit
Committee
Committee membership: A, N, R
John is a Non-Executive Director and Chairman of the Audit
Committee of Gemalto NV, a Non-Executive Director and
Chairman of the Audit Committee of ITV plc and Chairman
of Tribal Group plc. John is a chartered accountant and has
held senior positions with Arthur Andersen and with Deloitte.
His former non-executive board appointments include
Transport for London and Misys plc. Age 64.
Title:

Non-Executive Director,
Senior Independent Director and
Chairman of the Remuneration
Committee
Brian is the Chairman of ASOS plc and Non-Executive Director
on the Board of the BBC. He is a member of the Advisory
Board of Huawei UK, as well as a member of the
UK Government’s Digital Advisory Board, established in
April 2012 to help steer the digital delivery of Government
services to citizens in the UK. Brian is also a member of the
Court (Governing Body) of the University of Glasgow and
Senior Adviser at Scottish Equity Partners.
Brian is the former Managing Director of Amazon.co.uk.
He began his career with Xerox and subsequently worked in
senior roles at IBM, Crosfield Electronics Ltd, Madge Networks,
Dell Computers and as Managing Director of T-Mobile (UK).
Age 57.

7. Ian Lewis
Title:
Ian is Director of the University Computing Service at the
University of Cambridge. During his career he has held a
number of senior positions, including First Vice President and
Global Chief Technology Officer of Merrill Lynch’s Investment
Banking and Sales division and Global CTO at Dresdner
Kleinwort Wasserstein Investment Banking. Age 52.

Board member attendance
1. Greg Lock

12/12

2. Mike Norris

12/12

3. Tony Conophy

12/12

4. Peter Ogden

9/12

5. Philip Hulme

10/12

6. John Ormerod

12/12

7. Ian Lewis

12/12

8. Brian McBride

11/12

Key:
A – Audit Committee
N – Nomination Committee
R – Remuneration Committee


31

Governance

8. Brian McBride


5. Philip Hulme

Corporate governance statement

Board Committees
Board

Audit
Committee

Remuneration
Committee

Nomination
Committee

Our commitment to compliance
The Board is committed to the principles of good governance
and supports the best practice guidelines contained within
the UK Corporate Governance Code (‘the Code’), which
can be found on the Financial Reporting Council’s website
(www.frc.org.uk/corporate/ukcgcode.cfm). This statement
explains the Company’s governance policies and practices
and sets out how the principles of the Code have been
applied during the year ended 31 December 2012 (the ‘year’).
The Board notes the amendments to the Code in September
2012 and is aware that these amendments will be effective for
disclosures in the statements relating to the 2013 financial year
and beyond. The Board confirms that, save as where indicated
and explained below, the Company has complied with the
Code throughout the year.
Board of Directors
The membership of the Board as at 31 December 2012 is
as set out on pages 30 and 31. The Board comprises two
Executive Directors, five Non-Executive Directors and the
Chairman. The Chairman, Greg Lock, was considered by
the Board to be independent on appointment and Ian Lewis,
John Ormerod and Brian McBride are all considered to be
independent. Brian McBride is the Senior Independent Director,
following his appointment to the Board on 10 January 2011.

Greg Lock
Chairman of the Board

The Board acknowledges that the Company is not in compliance
with paragraph B.1.2 of the Code, which requires at least half
of the Board, excluding the Chairman, to be independent
Non-Executive Directors. The founders of the Company,
Philip Hulme and Peter Ogden, are Non-Executive Directors,
but are not considered independent, due to their long tenure,
substantial shareholding in the Company and their previously
held executive positions in the Company. As part of the Board
evaluation process in 2012, the Board considered this matter
specifically and, notwithstanding the guidelines outlined in the
Code, it is clear that the contribution these two Directors make
to the Board is highly valued by its other members.
Roles and responsibilities of the Board
The Board is responsible for the management and performance
of the Group. To this effect, the Board plays a key role in
setting the Company’s strategic objectives and ensuring
that sufficient resources are available to meet these aims.
The Board reviews the performance of senior management
against the targets set for the delivery of agreed objectives.
Additionally, to further support the suitability of the drive for
achievement, a framework of appropriate controls exists to
ensure that risks are properly identified, effectively assessed
and prudently managed. Alongside formulating strategic
objectives, monitoring performance and reviewing risk,
the Board defines those values and standards which ensure
that the obligations of the Company to shareholders and
other stakeholders are understood, their expectations are
met and that transparent and honest dialogue with investors
is maintained.

32


It was further agreed that the Nomination Committee
will actively seek candidates from the widest talent pool
possible and will, in addition to taking into account the skills
and experience desired for an appointment, also have regard
for the benefits of wider diversity, including gender. However,
a search for additional members of the Board will only be
launched when the Nomination Committee recommends this,
following a review of the Board’s composition, and therefore
it was not considered appropriate to set any targets on
diversity at this time.
Board effectiveness
Upon joining the Board, all Directors receive a comprehensive
induction programme, tailored to their specific requirements.
New Directors receive an induction pack which contains
information on the Group’s business, its structure and operations,
Board procedures, corporate governance related matters and
details regarding Directors’ duties and responsibilities. All new
Directors are introduced to the Group’s senior management team
and major shareholders are invited to meet them as well.

The Board recognises that the UK Corporate Governance
Code requires that an externally facilitated evaluation on its
effectiveness be undertaken at least once every third year
and in this regard the Company is currently in compliance
with the Code. The Board continues to believe that its internal
evaluation process is both robust and thorough, and therefore
decided not to have an externally facilitated evaluation in 2012.
The Board will keep the matter under review and an external
evaluation of the Board will be reconsidered for 2013.
The performance of the Chairman is assessed by the
Non-Executive Directors, led by the Senior Independent
Director. All of the Directors provided positive feedback to
the Senior Independent Director on the performance of
the Chairman. The Chairman additionally met with the
Non-Executive Directors a number of times during 2012,
without the Executive Directors being present.


33

Business review

Overview

Diversity
The Board recognises the benefit that diverse skills, experience
and points of view can bring to an organisation and how it may
assist the decision-making ability of the Board. In this regard,
the Board has considered the recommendations made in the
Davies Report, ‘Women on Boards’, published in February
2011, as well as the continuing debate on the matter and
whilst the Board recognises the principles involved,
appointments will primarily remain based on merit.

The Board and its Committees are subject to annual
performance reviews, which are led by the Chairman in
the case of the Board, and the relevant chairman for each
Committee. Each chairman, assisted by advice from the
Company Secretary, decides the scope and format for the
review. This year, the Board evaluation was initiated with the
completion and return by each Director of an assessment
questionnaire. An analysis by the Chairman of the returned
questionnaires gave an indication of areas to be discussed
further during individual meetings between each of the
Directors and the Chairman, which subsequently took
place. The information obtained from the questionnaire and
subsequent meetings was summarised and together with
recommendations for improvement, included in a report for
discussion and consideration by the Board as a whole.
Whilst the Board was confident that it fulfilled its role effectively,
recommendations for improvement related primarily to
clarifying the strategic goals of the Company and engaging
more directly with the Risk Assessment process. Plans to
incorporate these suggested improvements are underway.

Governance

There is a documented schedule of matters which are reserved
for the Board and these matters include, amongst others,
the agreement of the primary strategy and budgets, as well
as the approval of acquisitions and major capital expenditure.
This schedule is reviewed at least annually or more frequently
where required and during the year, was updated once.

All Directors receive appropriate documentation in advance
of each Board and Committee meeting, including detailed
briefings on all matters, in order to enable them to discharge
their duties effectively in considering a matter and reaching a
decision on it. In addition, the Directors receive regular reports
on the Group’s performance and matters of importance.
Senior management regularly present the results and strategies
of their respective business units to the Board and all Directors
are encouraged to meet with the senior management team,
thereby enabling the Board to remain familiar with the
business, current activities and management of the Group.


The roles of Chairman and Chief Executive are separate
and their responsibilities are clearly defined in writing,
reviewed annually and approved by the Board. In summary,
the Chairman’s role is to lead and manage the Board.
The Chairman actively encourages contribution from all
Directors and is responsible for ensuring that constructive
interaction is ongoing between the individual members of
the Board. The Chief Executive, in turn, is responsible for the
day-to-day management of the Group’s operational activities
and for the proper execution of the strategy, as set by the
Board. There is no dominant individual or group of individuals
on the Board influencing its collective decision-making
ability and the Board is comfortable that each of the
Directors makes a valuable contribution to the Board.
The Board believes that it oversees the Group effectively
and maintains a proactive approach.

Corporate governance statement continued

Board support
The Company Secretary is responsible for advising the Board
on all corporate governance matters and for ensuring that all
Board procedures are followed, applicable rules and regulations
are complied with and the Board is continually updated on
regulatory and governance matters. All Directors have access
to the advice and services of the Company Secretary.
A procedure is in place to enable individual Directors to
obtain independent professional advice, at the Company’s
expense, where they believe it is important to the furtherance
of their duties.
Board meetings
Details of the Directors’ attendance at Board and Committee
meetings are provided on pages 31, 37, 40 and 41.
Directors
The Company arranges insurance cover in respect of legal
action against the Directors and to the extent allowed by
legislation, the Company has issued an indemnity to each
Director against claims brought by third parties.
Whilst the Company’s Articles of Association require a Director
to be subject to election at the first AGM following his or her
appointment and thereafter every third year, the Board has
decided that, in accordance with the UK Corporate Governance
Code, all Directors should be subject to re-election at the next
AGM on 17 May 2013 and at each AGM thereafter.
Board Committees
The Board has delegated certain governance responsibilities
to three principal Board Committees: Audit Committee,
Remuneration Committee and Nomination Committee. The
Terms of Reference for each Committee can be obtained from
the Company’s website www.computacenter.com/investors or
from the Company Secretary, by request. The composition of
each Committee appears on pages 37, 40 and 41 and directly
following this report, are reports from the chairman of each
Committee setting out the main responsibilities of their
respective Committees and their main activities during
the year. These reports may be found from pages 37 to 49.
Relations with shareholders
The Board recognises and values the importance of
meeting the Company’s shareholders to obtain their views
and has established a programme to communicate with
the shareholders, based on the financial reporting calendar.

34


The Board is informed of any substantial changes in the
ownership of the Company’s shares and the Company’s
corporate brokers provide monthly reports on the ownership
of the Company’s shares. In addition, meetings are held with
major shareholders following both the full-year and half-year
results. Normally, these meetings are with the Chief Executive
and Finance Director. The whole Board is briefed on
the outcome of these meetings and any issues raised
are discussed.
In addition, once a year, the Company’s top 15 shareholders
are invited to individually meet with the Chairman and the
Company Secretary to provide feedback on the Company’s
management and raise other comments. Specifically, at these
meetings, the Company Secretary discusses the Company’s
corporate governance arrangements and invites feedback on
any areas of particular interest from the relevant shareholder.
The information received is then used as part of the evaluation
of the Board’s effectiveness.
The Chairman and the Senior Independent Director are
contactable at the Company’s registered office to answer any
queries that both institutional and individual shareholders may
have. All of the Directors aim to attend the AGM and value the
opportunity of welcoming individual shareholders and other
investors to communicate directly and address their questions.
In addition to mandatory information, a full, fair and balanced
explanation of the business of all general meetings is sent in
advance to shareholders. Resolutions at the Company’s
general meetings have been passed on a show of hands and
proxies for and against each resolution (together with any
abstentions) are announced at such meetings, noted in the
minutes, available on the Company’s website and notified to
the market.
Internal controls
The Board has overall responsibility for maintaining and
reviewing the Group’s systems of internal control and ensuring
that the controls are robust and effective in enabling risks to be
appropriately assessed and managed. The Group’s systems
and controls are designed to manage risks, safeguard the
Group’s assets and ensure the reliability of information used
both within the business and for publication. Systems are
designed to govern, rather than eliminate, the risk of failure to
achieve business objectives and can provide reasonable, but
not absolute, assurance against material misstatement or loss.

Overview

Control environment
The Group operates defined authorisation and approval
processes throughout all of its operations. Access controls
exist where processes have been automated to ensure the
security of data. Management information systems have been
developed to identify risks and to enable assessment of the
effectiveness of the systems of internal control. Accountability
is reinforced and further scrutiny of costs and revenues
encouraged, by the linking of staff incentives to customer
satisfaction and profitability.
Planning and reporting processes
A three-year strategic plan is prepared or updated by
Senior Management annually and reviewed by the Board.
A comprehensive budgetary process is completed annually
and is subject to the approval of the Board. Performance
is monitored through a rigorous and detailed financial and
management reporting system, by which monthly results are
reviewed against budgets and agreed targets for the period
which, additionally, are compared to historic data as deemed
appropriate, such as for the previous year. The results and
explanations for variances are regularly reported to the Board.
Appropriate action is taken where variances arise.

Risk management
The Group Risk and Insurance Department monitors
developments and oversees compliance with relevant
legislative and regulatory requirements. A comprehensive
risk management programme is developed and monitored
by the Group Risk Committee, the members of which include
senior operational managers across the Group, the Finance
Director, the Group Risk Manager and the Group Internal
Auditor. The Group Risk Committee is chaired by the Group’s
Chief Executive. Further information on the Company’s risks
can be found within the Risk report on pages 24 and 25.
Through a programme of assessment, appropriate measures
and systems of control are maintained. Detailed business
interruption contingency plans are in place for all key sites
and these are regularly tested, in accordance with an
agreed schedule.
Capital expenditure and investments
Procedures exist and authority levels are documented to
ensure that proposals for capital expenditure are properly
reviewed and authorised. Cases for all investment projects
are reviewed and approved at divisional level. Major investment
projects are subject to approval by the Board, and Board input
and approval is sought for all merger and acquisition proposals.
Centralised treasury function
The Board has established and reviews regularly key
treasury policies over matters such as counterparty exposure,
borrowing arrangements, and foreign exchange exposure
management. All cash payments and receipts are managed by
centralised finance functions within each of the Group operating
companies. Weekly reporting of cash balances to the Group
Finance Department ensures that the position of the Group, as
a whole, is properly controlled. The management of liquidity and
borrowing facilities for customer specific requirements, ongoing
capital expenditure and working capital of the business are all
undertaken by the Group Finance Director, with regular reporting
to the Board.


35

Business review

Responsibilities and authority structure
The Board has overall responsibility for making strategic
decisions and there is a written schedule of matters reserved
for the Board. The Group Executive Committee meets on
a quarterly basis to discuss day-to-day operational matters,
in addition to the separate Executive Committees which have
been established for each of the Group’s operations in the
UK, France and Germany, and which also meet quarterly.
The Executive Directors therefore discuss operational matters
with the senior management teams at a minimum of four
separate meetings per quarter. A flat reporting structure is
maintained across the Group, with clearly defined
responsibilities for operational and financial management.

Governance

All systems of internal control are designed to identify, evaluate
and manage significant risks faced by the Group continuously.
The key elements of the Group’s controls are as follows:

Management and specialists within the Finance Department
are responsible for ensuring the appropriate maintenance
of financial records and processes that ensure financial
information is relevant, reliable, in accordance with the
applicable laws and regulations and distributed both internally
and externally in a timely manner. A review of the consolidation
and financial statements is completed by management to
ensure that the financial position and results of the Group
are appropriately reflected. All financial information published
by the Group is subject to review by the Audit Committee.


The Board conducts an annual review of the effectiveness of
the systems of internal control including financial, operational
and compliance controls and risk management systems.
Where weaknesses have been identified, safeguards are
implemented and monitored.

Corporate governance statement continued

Quality and integrity of staff
Rigorous recruitment procedures are in place to ensure
that new employees are of a suitable calibre. Management
continuously monitors training requirements and ongoing
appraisal procedures are in place to ensure that required
standards are maintained across the Group. Resource
requirements are identified by managers and reviewed by
the relevant national Executive Committee.
Business ethics
The Company has a comprehensive Business Ethics Policy
in place and should an employee be found in breach of that
policy, appropriate disciplinary action is applied. Part of this
policy is the Company’s ‘whistleblowing’ procedure where
concerns of wrongdoing can be reported to the Group Internal
Auditor or the Chairman of the Audit Committee. Following the
effective date of the new UK Bribery Act in 2011, the Company
has further developed its policy and procedures to actively
prevent bribery within the Company’s business, in addition
to establishing a separate and specific Anti-bribery Code
of Conduct, across the Group.

Internal audit
The Group has an internal audit function led by the
Group Internal Auditor who reports to the Chairman
of the Audit Committee.
The Board, acting through the Audit Committee, has
directed the work of the Internal Audit Department towards
those areas of the business that are considered to be of the
highest risk. The Audit Committee approves a rolling audit
programme, ensuring that all significant areas of the business
are independently reviewed over approximately a three-year
period. The programme and the findings of the reviews are
continually assessed to ensure they take account of the latest
information and in particular, the results of the annual review of
internal control and any shifts in the focus areas of the various
businesses. The effectiveness of the Internal Audit Department
and the Group’s risk management programme are reviewed
annually by the Audit Committee.
Compliance with DTR
The information that is required by DTR 7.2.6, information
relating to the share capital of the Company, can be found
within the Directors’ report from page 50.
By order of the Board

Stephen Benadé
Company Secretary
11 March 2013

36


Overview

Audit Committee report


8/8

2. Ian Lewis


8/8

3. Brian McBride


7/8

• Review the annual and half-year financial statements
and any other formal announcements relating to the
Company’s financial performance.
• Oversee the Company’s relationship with Ernst Young,
our external auditor.
• Oversee the effectiveness of the Company’s risk
management procedures and systems of internal
control, including those relating to the prevention
and detection of bribery and fraud.
• Oversee the effectiveness of the Company’s internal
audit function, including approval of the annual internal
audit plan.
• Monitor the process by which the staff of the
Company may, in confidence, raise concerns about
possible improprieties in relation to financial reporting
or other matters.

Business review

Role

1. ohn Ormerod
J
(Chairman)

The Audit Committee reports regularly to the Board on how
it has discharged its responsibilities.
The full terms of reference for the Audit Committee are available
on our website, www.computacenter.com/investors.

John Ormerod
Audit Committee
Chairman

Membership and meetings
All members of the Audit Committee are Independent
Non-Executive Directors and are considered by the Board
to be appropriately experienced for the Committee to perform
effectively. The Board considers the Chairman of the Audit
Committee to have recent and relevant financial experience.
Details of the members of the Audit Committee and their
attendance at the Committee meetings during the year
are provided above.
The Chief Executive and Group Finance Director, as well as
the Group Internal Audit Manager, Group Financial Controller
and the external auditor routinely attend meetings of the
Committee, at the Committee’s invitation.
The Committee also meets privately, at least annually, with the
external auditor and the Group Internal Audit Manager and in
2012 private meetings were convened twice with the external
auditor and once with the Group Internal Audit Manager.
In addition to the formal meetings, the Chairman of the
Committee has regular informal discussions with the Finance
Director, Head of Internal Audit and the external auditor.
He also receives directly the reports of internal audit as they
are issued. In addition, he receives feedback on the preparation
and audit of the accounts as work progresses and as any
significant judgements arise.
The Company Secretary is the secretary to the Committee.


37

Governance

Member

Responsibilities of the Audit Committee
The key responsibilities of the Audit Committee are to:


Attendance
record

Audit Committee report ontinued
c

Main activities of the Committee during 2012
The Audit Committee met eight times during 2012 and its
work included:
• Reviewing the financial statements for both the 2011
full-year and the 2012 half-year, as well as the interim
management statements. The Committee considered
reports from our external auditor as appropriate. The
Committee reviewed the key judgements made in preparing
the financial information, including adjustments to provisions
and the application of our revenue recognition policies for
multi-year Managed Services contracts. The Committee
gave particular focus to the accounting for new Managed
Services contracts in Germany, the combined effect of
which was to reduce the 2012 profit expectation.
• Monitoring the Group’s risk management and internal
control procedures. Detailed enquiries were made with
reports directly to the entire Board on the root causes
and remediation actions necessary following the contract
take-on problems in Germany. The Committee continues
to monitor implementation of these actions and has
refocused internal audit efforts to consider in more detail
controls across the Group in relation to new Managed
Services contracts. The Committee monitored the impact
made by the newly implemented ERP system on the
financial reporting capability of Computacenter within the
UK. The Committee received reports on the development
and implementation of the Group’s policy and procedures
to prevent bribery and corruption, its Business Ethics Policy
and the procedures in place for reporting and investigating
allegations of inappropriate behaviour. The Committee
reviewed controls in selected areas including treasury,
foreign exchange and counterparty risk, as well as tax
compliance and tax risk. Drawing on the work of internal
audit, the Committee assisted the Board with a review
of the effectiveness of internal controls.

38


• Reviewing the relationship with the external auditor.
The Committee reviewed the independence and
effectiveness of the external auditor. This was achieved
through a review of the published report of the Audit
Inspection Unit on Ernst Young, receiving feedback from
Committee members and relevant management on the
work of the auditors in the form of responses to a written
questionnaire, the results of which were then discussed at
a subsequent Committee meeting, and further by receiving
reports from the auditors on their quality controls and
independence policies. Noting its policy on the provision of
non-audit work provided by the external auditor, a summary
of which is set out on page 39, the Committee monitored
compliance with this policy by approving the audit fee and
monitoring the level of non-audit work provided by the
external auditor. As a result, the Committee recommended
to the Board, the reappointment of Ernst Young in 2012.
The Committee has noted recent changes to the Code
and the support by institutional shareholders and
their representative bodies for periodic audit tenders.
The Company intends to implement the revision to the
Code in respect of audit tendering but will follow the
transitional guidance to do this in a year which best fits
the workload and risk profile of the business.
• Overseeing the internal audit function, including a review
of the department’s resources, the internal audit reports
and management’s response. The Committee particularly
focused on ensuring that the internal audit resource was
most suitably applied given the most material risks being
faced by the Company. In light of the Committee’s review,
it was decided that significant internal audit resource be
redirected towards the monitoring, testing and reporting
of Services contract approval and take-on procedures
across the Group. The Committee has directed internal
audit to undertake the regular and thorough reporting of
its findings to the Committee and, ultimately, to the Board.
• The Committee met with the financial management and
external audit teams of the Group’s German operations
and also R.D. Trading Limited, a subsidiary company
of which Ernst Young are not the statutory auditors.
These meetings assisted the Committee to understand
better the financial management and controls in these
entities and the judgements involved in preparing their
financial reports.

Overview
Business review

• Receiving training on updated regulation and legislation
which may affect the functioning, responsibilities and
scope of work of the Committee, such as the expansion
of its role arising from updates to the UK Corporate
Governance Code and the accompanying Guidance
on Audit Committees (both published by the Financial
Reporting Council in September 2012). Additionally, the
Company Secretary facilitates attendance by Committee
members at external seminars on topics such as financial
reporting, risk management and corporate governance
where deemed appropriate.

Governance

Summary of policy for engagement of auditors to
undertake non-audit work
The external auditor is appointed primarily to report on
the annual and interim financial statements. The Committee
places a high priority on ensuring that this independent role of
reporting to shareholders is not compromised. The Committee
recognises, however, that there are occasions when the auditors
are best placed to undertake other accounting, advisory and
consultancy work in view of their knowledge of the Company’s
business, confidentiality and cost considerations. The Committee
has therefore established procedures to ensure that any
non-audit work is only undertaken by the auditors where
there is no risk of compromise to their independence.


To this end, the Committee has formally defined areas of work
for which the auditors will be prohibited from engagement and
areas where, subject to following the stipulated processes of
authorisation and, where appropriate, competitive tendering,
the auditors may be engaged. The former areas of work
include the preparation of accounting records and financial
statements which will ultimately be subject to audit. The latter
areas of potential engagement may include acquisition due
diligence and tax compliance and advice. In all cases significant
non-audit engagements are subject to prior approval by the
Audit Committee or if approval is required between meetings,
by the Chairman of the Audit Committee. Other than in
exceptional circumstances, the Committee does not expect
the value of non-audit services to exceed the aggregate value
of audit and audit related services in any financial year.

John Ormerod
Chairman of the Audit Committee
11 March 2013


39

Nomination Committee report

Attendance
record

Member

Role

1. reg Lock
G
(Chairman)

Chairman

3/3

2. Ian Lewis


3/3

3. rian McBride
B


3/3

4. John Ormerod


3/3

Responsibilities of the Nomination Committee
The key responsibilities of the Nomination Committee are to
assist the Board with:
• The search and selection process for the appointment of
both Executive and Non-Executive Directors to the Board.
• Reviewing whether to recommend a Director for re-election
at the AGM.

Greg Lock
Nomination Committee
Chairman

• Determining whether the Board’s composition remains
appropriate, specifically considering whether the Board’s
balance of skills, knowledge, experience and diversity
(including that of gender) enables it to discharge its duties
and responsibilities effectively.
• Ensuring that there is a formal, thorough and transparent
procedure in place for the appointment of any new
Directors to the Board, and that any such appointments
made are based on merit against objective criteria (as
required by the UK Corporate Governance Code). Any
procedure undertaken to appoint a Director to the Board
shall ensure that all applicants will be treated equally and
not discriminated against on the grounds of age, gender,
disability, philosophical or religious belief, race or
sexual orientation.
• Succession planning of the Board and the induction,
training and development of the Directors.
The full terms of reference for the Nomination Committee are
available on our website, www.computacenter.com/investors.
Membership and attendance
The members of the Nomination Committee are the three
Independent Non-Executive Directors and the Chairman of
the Board. However, input from all the Directors is sought by
the Committee and the Committee involves the Board as a
whole when performing its key responsibilities. Details of the
membership and attendance at Committee meetings during
the year are provided above.
The Nomination Committee met on three occasions during
2012 and its work included:
• Reviewing the individual performance of the Directors who
stood for re-election at the 2012 AGM and recommending
their re-election.
• Reviewing, in my absence, my performance and the
renewal of my appointment as Chairman of the Board.
• Considering the composition of the Board through a review
of the skills, knowledge and experience of the individual
members and concluding on the appropriateness of the
Board’s combined ability to adequately challenge and
support the Company’s aspirations. The Committee
engaged recruitment consultants to ensure smooth
succession, should the need arise, as well as to explore
the skills which the Board could potentially gain through
appointing a new member to the Board. Further details
are also provided in the Corporate governance statement.

Greg Lock
Chairman of the Nomination Committee
11 March 2013

40


Overview

Remuneration Committee report

Remuneration policy

Page 42

Fixed salary and annual bonus

Page 45

Directors’ interests in Share Plans

Page 46

Performance framework and targets

Page 48

Responsibilities of the Remuneration Committee
The key responsibilities of the Remuneration Committee are
to determine on behalf of the Board:
• The Company’s general policy on executive remuneration.
• The specific remuneration packages of the Executive
Directors, the Chairman of the Board and Senior Executives
of the Company, including, but not limited to, base salary,
annual performance-related bonuses and long-term share
incentive awards.
The fees of the Non-Executive Directors are determined by the
Chairman and the Executive Directors. All Directors are subject
to the overriding principle that no person shall be involved in
the process of determining his or her own remuneration.

Business review

Key information

The full terms of reference for the Remuneration Committee are
available on our website, www.computacenter.com/investors.

Governance

Membership and attendance
The Remuneration Committee is made up of three
Independent Non-Executive Directors and the Chairman
of the Board, who was considered by the Board to be
independent on appointment. Details of the membership
of the Committee, and attendance of the members at
Committee meetings during the year is provided below.
Attendance
record

1. rian McBride
B
(Chairman)

Senior Independent
Director

4/4

2. Ian Lewis
Brian McBride
Remuneration Committee
Chairman

Role


4/4

3. Greg Lock


4/4

4. John Ormerod


4/4

The principal adviser to the Committee is Mercer Limited,
which provides no other services to, and is independent of,
the Company. In addition, both Stephen Benadé (Company
Secretary) and Barry Hoffman (Group HR Director) provided
advice to the Committee during the year.
The Committee considers comparative practice in
the European technology sector, FTSE techMARK
100 companies and FTSE 250 companies.


41


Member

Remuneration Committee report ontinued
c

The Remuneration Committee met four times during 2012
and its work included:
• Determining whether performance conditions had been
met for the vesting of the 2009 (for the UK and Germany)
and 2010 (for France) grants under the Performance
Share Plan.
• Approving the 2011 performance-related bonus awards
and the 2012 bonus scheme for Executive Directors
and Senior Executives.
• Scrutinising the link between remuneration and
performance and considering the most appropriate
executive remuneration structure to ensure the alignment
of senior executive and shareholder interests, whilst
avoiding increased remuneration complexity that might
restrict shareholder understanding and engagement in
the area of remuneration.
• Reviewing the grants under the long-term incentive
plans to the Executive Directors and Senior Executives.
• Responding to questions raised by shareholders
on remuneration.
• Reviewing the 2013 salary increases of the Executive
Directors and Senior Executives, including the bonus
framework and objectives.
• Recommending the Chairman’s fee.
• Undertaking an evaluation of the Committee and reviewing
and updating the Committee’s terms of reference.
• Following an evaluation of its performance in 2012,
the Committee concluded that it was largely effective
in performing its functions, but considered it should make
improvements to ensure that it had sufficient oversight
of remuneration principles and structures applied within
the wider management group of the Company, including
those applied by the Group’s overseas subsidiaries.

Remuneration policy – Overview

The Company’s remuneration policy is designed to attract,
retain and reward Executive Directors with remuneration
arrangements that are competitive, but not excessive and
support the achievement of its strategic objectives. Additionally,
our policy is designed to ensure that a substantial proportion of
total potential remuneration is linked to both the short-term and
long-term performance of the Company, in order to align the
interests of executives, senior management and shareholders
over both of these time horizons.

42


The annual performance-related bonus scheme is in place in
order to provide a link between remuneration and short-term
performance. Performance over the longer term is linked by
way of our long-term incentive plans in place, most notably
our Performance Share Plan, the vesting of which is linked
to the Company’s earnings growth over a three-year period.
The Committee has been working continuously, noting
regulatory and best practice developments in this area, to
explore whether the current remuneration structure in place
is appropriate to assist in facilitating the achievement of the
Company’s objectives. This work has included the analysis
of alternative remuneration structures and the review of
associated Company policies.
As a direct result of this work, the Committee has left
the current remuneration structure unchanged, but has
implemented a change to the terms of the Company’s
Minimum Shareholding Policy, to take effect from 1 April 2013.
Pursuant to the terms of the original policy, Executive Directors
and selected members of senior management were required
to hold a minimum number of the Company’s shares. The level
of shareholding required was linked to the annual base salary
of an individual. The Committee has now reduced the period
which individuals deemed subject to the policy have to comply
with it from five to three years, in order to ensure that the
alignment this creates between Executive Directors, senior
management and shareholders is achieved more quickly.
The Committee is satisfied that the remuneration policy ensures
a significant proportion of total remuneration is commensurate
with the Group’s financial performance over the fiscal year,
as well as over extended periods and, further, that the
remuneration policy is aligned to the Group’s risk profile.
The Committee considers, when reviewing the remuneration
of the Executive Directors and Senior Executives, both the
external market and wider remuneration levels of all employees
of the Group. The Committee reviews the average base
salary increases applied across the Group when base salary
increases of the Executive Directors and Senior Executives are
considered. The audited tables and related notes are identified
within the report, with the A key. A resolution to approve
this report will be proposed at the Company’s forthcoming
Annual General Meeting on 17 May 2013.

Overview

Fixed remuneration policy

The Executive Directors receive benefits in line with those offered to employees throughout the Group, including the provision of
a car allowance, life insurance, personal accident insurance and the opportunity to participate in the Group’s Save As You Earn
scheme (‘SAYE’), as well as participation in the flexible benefits scheme (‘MyBenefits’).
The Executive Directors participate in the Computacenter Pension Scheme, a defined contribution salary sacrifice scheme,
under which a maximum annual Company contribution of £6,077 per employee is payable. For 2012, the Chief Executive and
Finance Director each received the maximum annual Company contribution of £6,077. The scheme is open to all UK employees
and allows employees to make additional salary sacrifices, which the Company may contribute to the scheme, on their behalf.

Business review

Base salary and benefits
At the Remuneration Committee meeting in December of each year, base salaries and benefits for Executive Directors and Senior
Executives are considered. Any changes made by the Committee to these will reflect any changes to the role being performed by
the relevant individual and the availability of relevant skills in the external market for that role.

A

Executive Director

Accelerating
the growth of
% of potential bonus
our Contractual
payout linked to objective
Services business
achievement
Mike
Tony
Norris
Conophy

Group profitability

45%

10%

Group cash position

10%

10%

Personal objectives

20%

Ensuring the
successful
implementation

of the
Group-wide
ERP system

45%

Service contribution growth 15%
Group cost savings
10%

Growing our
Maximising the
Reducing cost
profit margin
through increased return on working
capital and through increased
efficiency and
Services and
freeing working
industrialisation
of Services capital where not high-end Supply
Chain sales
optimally used
Operations

20%

Executive remuneration annual
bonus incentive measures

15%

Each December, the Remuneration Committee meets to set not only the base salary for the Executive Directors, but to determine
the performance targets for their bonuses in respect of the forthcoming year. The Executive Directors are then notified of these
targets in January. However, once set, the Committee continually reviews these targets throughout the year to ensure that they
remain appropriate and importantly, regardless of the achievement of financial targets, ultimately has discretion over the paying
out (or otherwise) of any annual performance-related bonus.
Long-term incentive plans
Long-term incentive plans are considered to be an important part of the Executive remuneration policy, designed to support
management retention and motivation, whilst aligning senior management’s interests with those of shareholders. The details
of the historical grants made to the Executive Directors and associated performance conditions are set out in the table of
Directors’ Interests in Share Plans on page 46.


43


Performance-related bonus scheme
As detailed above, the Remuneration Committee believes it is important that the Executive Directors are incentivised in a way
that is aligned with the Company’s strategy and the interests of the Company’s shareholders. A performance-related bonus
scheme currently exists for the Executive Directors which was structured in 2012 in order to achieve the Company’s strategic
objectives in the manner outlined below.

Governance

Variable remuneration policy

c

Performance Share Plan
The Performance Share Plan 2005 (‘PSP’) is the Company’s
primary long-term incentive plan for Executive Directors and
Senior Executives and has been operating since 2006.
The Remuneration Committee approves grants under this
scheme. Under the PSP, awards (‘PSP Awards’) may be made
to Executive Directors and Senior Executives in the form of
either a conditional right to acquire shares in the Company or
the grant of a nil-cost option to acquire shares. The vesting of
awards is subject to the satisfaction over a three-year period
of performance conditions determined by the Remuneration
Committee at the time the awards are made. Included within
the PSP Rules, which were last amended at the Company’s
2011 AGM, are the following terms:
(1) any one year, the market value of shares in respect of
in
which awards can be made to an Executive can now be up
to two times base salary and, in exceptional circumstances,
the multiple can now be four times base salary; and
awards under the plan may be made as nil-priced options
(2)
rather than performance shares and options granted are
now capable of being exercised for a seven-year period
following vesting; and
the
(3) performance measure for awards is absolute
EPS growth.
Share options
The Company also operates the Computacenter Employee
Share Option Scheme 2007 (the ‘Option Scheme’). As the
PSP is the primary long-term incentive scheme, the
Remuneration Committee intends that the Option Scheme
be used only in exceptional circumstances and, as such, no
grants have been made to employees or Directors, under this
scheme during the course of 2011 or 2012. The Executive
Directors have historically been awarded share options under
the Company’s previous share option plans and details of
these grants can be found in the table of Directors’ Interests
in Share Plans on page 46.
The maximum number of options that can be awarded
under the Option Scheme is three times base salary, although
this can be exceeded in exceptional circumstances. If a grant
is to be made to an Executive Director, it is current policy to
limit this to a maximum of 1.25 times base salary.

44


Should grants be made under the Option Scheme in 2013, any
applicable performance conditions will be subject to review
by the Remuneration Committee, taking account of prevailing
market conditions and Group strategic objectives. There is
currently no intention to make grants under the Option
Scheme during the course of 2013.
Dilution limits
The Company uses a mixture of both new issue and market
purchase shares to satisfy awards under the Option, PSP and
Share Save Plans. In line with best practice, the use of new
issue or treasury shares to satisfy awards made under all share
schemes, is restricted to 10 per cent in any 10-year rolling
period, with a further restriction for discretionary schemes of
5 per cent in the same period. As at the year-end, the potential
dilution from awards under all share plans during that 10-year
period was approximately 3.22 per cent and the potential
dilution from awards under the discretionary schemes was
approximately 0.77 per cent.
Minimum Shareholding Policy
In February 2011, the Remuneration Committee approved
the Minimum Shareholding Policy which requires the Executive
Directors and Senior Executives to build up and retain a
shareholding in the Company over a five-year period. The
minimum holding for each year is set with reference to the
share price at 31 December in the preceding year using the
below mentioned multiples for the Executive concerned:
Group 1

Chief Executive

Group 2

Finance Director

Group 3

Executives within the remit of the
Remuneration Committee
Executives within the Group
Executive Committee
Senior Country, Functional or
Other Executives

2 x Base
Salary

1 x Base

Salary

0.5 x Base
Salary

As at 31 December 2012, both the Chief Executive and the
Finance Director were compliant with this policy.
As previously described in this report, the terms of the
Company’s Minimum Shareholding Policy are to be altered
with effect from 1 April 2013.

Overview

Executive remuneration

Fixed salary and annual bonus
The main elements of Executive Directors’ remuneration for 2011 and for 2012 are shown below, together with what was paid
in 2010 for comparative purposes.

Mike Norris

Tony Conophy

£7,125
£467,875
Variable

£661,000

£74.2m

£71.3m

£199,650
£350,350

£500,000

£525,025
£525,025

£427,674
£427,674

£74.2m
£74.2m

£71.3m
£71.3m

£439,000

£161,000
£475,000

Total remuneration
paid remuneration£536,430
Total
£536,430
paid
Group adjusted∆
∆
profit before tax
£66.1m
Group adjusted
£66.1m
profit before tax

£500,000

Fixed

Variable
Variable

£3,370
£3,370
£221,630
£221,630

£97,440
£97,440
£192,560
£192,560
£332,465
£332,465

2011
2011

£314,800
£314,800

£207,000
£207,000
£93,000
£334,674
£93,000
£334,674

2012
2012

Governance

£66.1m

£850,350

Fixed
Fixed
2010

2012

2011

Fixed base salary and fees
Variable actual bonus

2010
2010
Fixed base salary and fees
Fixed base salary and
Variable actual bonus fees
Variable actual not paid
Variable bonus bonus
Variable bonus not paid

Variable bonus not paid

A
2013

Executive

Mike Norris
Tony Conophy

2012

2011

Total

2012
Maximum
bonus
2012
potential Actual bonus

2011
Actual bonus

2012
Total
remuneration

2011
Total
remuneration

£500,000 £600,000 £500,000 £600,000 £161,000*
£325,000 £300,000 £334,674 £300,000 £93,000*

£350,350
£192,560

£661,000
£427,674

£850,350
£525,025

2013
Base salary

2013
Maximum
bonus
potential

2012
Base salary
and fees

* The comparatively low percentage of total potential bonus award actually paid out to the Executive Directors in 2012 (26.8 per
cent for Mike Norris and 31 per cent for Tony Conophy) against bonus awards paid in 2010 and 2011 is a result of the fact that,
as detailed in the Company’s trading update of June 2012, the profit generated by the Computacenter Group during the year
was materially and adversely affected by the Contractual Services issues experienced by our German business. The Board
believes that the Executive Director bonus payments for 2012 reflect both its disappointment that the issues in our German
business arose and its view that the response of the Group Executive Management to these issues was both appropriate
and decisive.
Share Plan Incentives
The Directors’ Interests in the Company’s share plans are detailed below. 230,947 PSPs were issued to Mike Norris and
127,309 PSPs were issued to Tony Conophy in 2012, pursuant to the Company Performance Share Plan. Details of the
performance criteria relating to the vesting of these grants is found in note 9 at the bottom of page 46. No Director of the
Company was granted any other share incentives by the Company during the course of the year.
Adjusted profit before tax is stated prior to amortisation of acquired intangibles and exceptional items.

∆


45


Total remuneration
£942,875
paid
Group adjusted∆
profit before tax

Business review

A

c

Directors’ Interests in Share Plans
Granted
during
the year

Exercised
during
the year

Scheme

Note

Exercise/
share price

Lapsed

At 31
December
2012

Options
Sharesave
PSP
PSP
PSP
PSP –
Enhanced
PSP –
Enhanced

3
2
5
6
7

322.0p
320.0p
N/A
N/A
N/A

10/04/05–09/04/12
01/12/14–31/05/15
13/03/12–12/09/12
20/03/12–19/09/12
15/03/13–15/09/13

122,670
4,859
208,102
390,000
150,316

– 122,670
–
–
–
–
– 208,102
–
–
– 390,000
–
–
–

–
4,859
–
–
150,316

8

N/A

17/03/14–16/03/21

224,586

–

–

–

224,586

9

N/A

23/03/15–22/03/22

– 230,947

–

–

230,947

1, 4
3
2
5
6
7

322.0p
322.0p
178.0p
N/A
N/A
N/A

10/04/05–09/04/12
10/04/05–09/04/12
01/12/12–31/05/13
13/03/12–12/09/12
20/03/12–19/09/12
15/03/13–15/09/13

9,316
66,770
9,438
131,433
240,000
94,937

–
9,316
–
– 66,770
–
–
9,438
–
– 131,433
–
–
– 240,000
–
–
–

–
–
–
–
–
94,937

8

N/A

17/03/14–16/03/21

124,113

–

–

–

124,113

9

N/A

23/03/15–22/03/22

– 127,309

–

–

127,309

A
Mike Norris

Tony Conophy

Options
Options
Sharesave
PSP
PSP
PSP
PSP –
Enhanced
PSP –
Enhanced

Exercise period/
Vesting period

At 1
January
2012

1. Issued under the terms of the Computacenter Employee Share Option Scheme 1998.
2. Issued under the terms of the Computacenter Sharesave Plus Scheme, which is available to employees and full-time Executive Directors of the
Computacenter Group.
3. Issued under the terms of the Computacenter Performance Related Share Option Scheme 1998. The options become exercisable if the average annual
compound growth in the Group’s earnings per share (on a post-investment in the Biomni joint venture, diluted basis) compared to the base year of 2001,
is at least equal to RPI plus 5 per cent in any of the three-, four- or five-year periods up to and including 2004, 2005 or 2006 respectively.
4. Exercisable on the condition that the average annual compound growth in the Group’s earnings per share (on a post-investment in the Biomni joint venture,
diluted basis) compared to the base year of 2001, is at least equal to RPI plus 5 per cent in any of the three-, four- or five-year periods up to and including
2004, 2005 or 2006 respectively.
5. Issued under the terms of the Computacenter Performance Share Plan 2005. One quarter of the shares will vest if the average annual compound growth in
the Group’s earnings per share is at least equal to RPI plus 3 per cent over the three consecutive financial years starting on 1 January 2009 and ended
on 31 December 2011, compared to the base year of 2008. Awards will vest in full if the Group’s cumulative annual growth is at or above RPI plus 7.5 per
cent. If the Group’s earnings per share growth over the period is between 3 per cent and 7.5 per cent above RPI, awards will vest on a straight-line basis.
6. If in 2011, profit before tax reaches £90 million, 25 per cent of the awards will vest, if the profit before tax is £100 million or more, 100 per cent of the awards
will vest. Awards will vest on a straight-line basis between those limits.
7. Issued under the terms of the Computacenter Performance Share Plan 2005. One quarter of the shares will vest if cumulative annual EPS growth equals RPI
plus 3 per cent per annum over the three consecutive financial years, starting on 1 January 2010 and ended on 31 December 2012, compared to the base
year. Awarded shares will vest in full if cumulative annual EPS growth equals or exceeds RPI plus 7.5 per cent per annum. If cumulative annual growth in EPS
is between 3 per cent and 7.5 per cent per annum above RPI, shares awarded will vest on a straight-line basis.
8. Issued under the terms of the Computacenter Performance Share Plan 2005 as amended at the AGM held on 13 May 2011. One-quarter of the shares
will vest if the compound annual EPS growth over the performance period from 1 January 2011 to 31 December 2013 (the ‘Performance Period’) equals
7.5 per cent per annum. One-half of the shares will vest if the compound annual EPS growth over the Performance Period equals 10 per cent per annum.
If the compound annual EPS growth rate over the Performance Period is between 7.5 per cent and 10 per cent over the Performance Period, shares
awarded will vest on a straight-line basis up to one-half. Awarded shares will vest in full if the compound annual EPS growth equals or exceeds 20 per cent
or more over the Performance Period.
9. Issued under the terms of the Computacenter Performance Share Plan 2005, as amended at the AGM held on 13 May 2011. One-quarter of the shares will vest
if the compound annual EPS growth over the performance period from 1 January 2012 to 31 December 2014 (the ‘Performance Period’) equals 7.5 per cent per
annum. One-half of the shares will vest if the compound annual EPS growth over the Performance Period equals 10 per cent per annum. If the compound annual
EPS growth rate over the Performance Period is between 7.5 per cent and 10 per cent over the Performance Period, shares awarded will vest on a straight-line
basis up to one-half. Awarded shares will vest in full if the compound annual EPS growth equals or exceeds 20 per cent or more over the Performance Period.

46


Overview

A
Director Gains
Gains made from Executive Share Plans exercised during the year by the Directors were:
Options
Mike Norris

Tony Conophy

Scheme

Number of shares

Exercise price

Market value
at exercise

Gain on
exercise

122,670

322.0p

407.1p

£104,392

66,770

322.0p

407.1p

£56,821

9,316

322.0p

407.1p

£7,927

Computacenter
PerformanceRelated
Employee Share
Option Scheme
05/04/2012
1998
Computacenter
PerformanceRelated
Employee Share
Option Scheme
05/04/2012
1998
Computacenter
Approved
Employee Share
Option Scheme
05/04/2012
1998

Business review

Date of exercise

Governance

Director

Performance Share Plan
Scheme

Number of shares

Exercise price

Market value
at exercise

Gain on exercise

Mike Norris
Tony Conophy
300

Date of vesting

23/03/2012
23/03/2012

PSP
PSP

208,102
131,433

N/A
N/A

431.9p
431.9p

£898,962
£567,766


Director

The closing market price of the ordinary shares at 31 December 2012 (being the last trading day of 2012) was 422 pence.
The highest price during the year was 461.9 pence and the lowest was 292.4 pence.
Performance of the Company
Computacenter’s shares are quoted on the London Stock Exchange and the Remuneration Committee has deemed
the FTSE Software and Computer Services share index as the appropriate comparator, against which to assess
Total Shareholder Return performance.
The performance of the Group over the last five financial years, in relation to other relevant UK-quoted shares, is shown in the
graph below:
A
Total Shareholder Return performance
Computacenter versus FTSE Software and Computer Services sector
300
250
200
150
100
50
0
Dec 07

Dec 08

Dec 09

Dec 10

Dec 11

Dec 12

Computacenter
FTSE All Share – S/W and Computer Services


47

c

Bonus potential
Performance framework and targets
The bonus arrangements for the Executive Directors for 2013 are set out below:
A

Mike Norris

Tony Conophy

2013

2013
4.

1.

3.

1. Profit – Group profit before tax
(Up to 50%)
2. Services contribution growth
(Up to 15%)
3. Cash balance (Up to 15%)

5.

1.

4.

1. Profit – Group profit before tax
(Up to 50%)
2. Services contribution growth
(Up to 10%)
3. Cost savings (Up to 10%)
4. Cash balance (Up to 10%)

4. Personal objectives (Up to 20%)

5. Personal objectives (Up to 20%)

3.
2.

2.

2012

2012

Within each performance target element for 2013, the Remuneration Committee has set stepped thresholds which must be
1
Profit Group profit before
Profit – Group profit before tax
achieved in order for a proportion, or for–the whole, of thattax
bonus element to be paid.
5
(Up to 45%)

(Up to 45%)

The personal objective targets are non-financial targets which may 5
only be paid in the event that the Services contribution growth
profit performance target
Services contribution growth
(Up to have
(Up to 15%)
has been achieved and the Remuneration Committee is fully satisfied that the relevant personal objectives15%) been met.
1
Cost savings (Up to 10%)

Cost savings (Up to 10%)

Personal objectives (Up to 20%)

4

Personal objectives (Up to 20%)

Notwithstanding that the performance targets might 10%)
be achieved, 4 order to provide for unforeseen Cash balance (Up to 10%)
in
or exceptional
Cash balance (Up to
circumstances, the payment of any bonus to an Executive Director is at the absolute discretion of the Remuneration Committee.
3

The Committee normally determines in February of each year whether 3 performance targets for the previous year have been
the
2
met, including the personal objectives, and accordingly the amount of bonus to be paid to the Executive Director in relation to
2
that year.

Executive service contracts

A summary of the Executive Directors’ contracts of employment is given in the table below:
Director

Start date

Mike Norris
Tony Conophy

Expiry date

23/04/1998
23/04/1998

n/a
n/a

Unexpired term (months)*

Notice period
(months)

None specified
None specified

12
12

All Executive Directors have a rolling 12-month service contract with the Company, which is subject to 12 months’ notice by
either the Company or the Director.
No contractual arrangements are in place which guarantee additional payments upon termination of employment by the
Company. All service contracts provide for summary termination in the event of gross misconduct.
Executive Directors are permitted to hold outside directorships, subject to approval by the Chairman, and such Executive Director
is permitted to retain any fees paid for such services. During the year, Mike Norris served as a Non-Executive Director
of Triage Holdings Limited and received a fee of £24,000.

48


Overview

Non-Executive Directors’ remuneration
The components of the Non-Executive Directors’ remuneration for 2011, 2012 and 2013 are shown below. The Executive
Directors and Chairman of the Board, together review the base fee payable to the Non-Executive Directors and for their additional
contributions to the Committees, every two years. The Senior Independent Director reviews the fee of the Chairman of the
Board, at the same intervals. These fees were revised and altered with effect from 1 January 2012.

2012 and 2013
Additional fee

2012 and
2013 Total
remuneration

2011
Base fee

2011
Additional fee

2011
Total
remuneration

£42,000
£42,000

£118,000
–

£160,000
£42,000

£39,000
£39,000

£111,000
–

£150,000
£39,000

Ian Lewis

£42,000

£5,500

£47,500

£39,000

£5,500

Brian McBride
Peter Ogden

£42,000
£42,000

£6,000 +
£8,000
–

£56,000
£42,000

£39,000
£39,000

£5,000 +
£7,000
–

John Ormerod

£42,000

£14,000

£56,000

£39,000

£14,000

£44,500
£51,000
(2011 only)
+ £6,500*
£39,000
£53,000

Additional fee as
Chairman of the Board

–
Member of the
Sub-Committee for
the ERP Systems Project
Senior Independent
Director and Chairman
of the Remuneration
Committee

Governance

Greg Lock
Philip Hulme

2012 and 2013
Base fee

–
Chairman of the
Audit Committee

* McBride was appointed as a Non-Executive Director on 10 January 2011. In addition to his total remuneration of
Brian
£51,000 received in 2011, he received a one-off fee in March 2011 of £6,500 for advice and guidance provided to the
Board in the fourth quarter of 2010, prior to his appointment.
The terms and conditions of appointment of the Non-Executive Directors are available for inspection at the Company’s registered
office and at the Annual General Meeting.
The Non-Executive Directors are not invited or permitted to participate in any of the Company’s Employee Share Plans, and their
remuneration is always paid in cash.

Brian McBride
Chairman of the Remuneration Committee
11 March 2013


49


A
Non-Executive
Director

Business review

Non-Executive Directors’ letters of appointment
The Non-Executive Directors have not entered into service contracts with the Company. They each operate under a letter of
appointment which sets out their terms, duties and responsibilities. Non-Executive Directors are appointed for an initial term,
which runs to the conclusion of the third Annual General Meeting following their appointment, which may be renewed at that
point for a further three-year term. The letters of appointment provide that should a Non-Executive Director not be re-elected at
an Annual General Meeting before he is due to retire, then his appointment will terminate. The Board agreed that all the Directors
will be subject to re-election at the Annual General Meeting on 17 May 2013.

Directors’ report

The Directors present their report and the audited financial
Directors and Directors’ authority
statements of Computacenter plc and its subsidiary companies The Directors who served throughout the year ended
(‘the Group’) for the year ended 31 December 2012.
31 December 2012 were Tony Conophy, Philip Hulme,
Ian Lewis, Greg Lock, Brian McBride, Mike Norris,
Principal activities
John Ormerod and Peter Ogden. Biographical details of
The Company is a holding company. The principal activities
each Director, as at the date of this report, are given on
of the Group, of which it is the parent, are the supply,
pages 30 and 31. The Company’s Articles of Association
implementation, support and management of information
require at each AGM that those Directors who were appointed
technology infrastructure.
since the last AGM retire, as well as one-third of the Directors
Business review
who have been the longest serving. The Board has decided,
The Companies Act 2006 requires the Group to prepare a
in accordance with the recently revised UK Corporate
business review, which commences at the start of the Report
Governance Code, that all Directors will retire at each
and Accounts up to page 29. The review includes information
forthcoming AGM and offer themselves for re-election.
about the Group’s operations and the business model, financial The Nomination Committee has considered the re-election
performance throughout the year and likely developments,
of each Director and recommends their re-election. Further
key performance indicators, principal risks and information
details on the Committee’s recommendations for the reregarding the Group’s sustainable development plan.
election of the Directors are set out in the Notice of Annual
General Meeting.
Corporate governance
Under Disclosure and Transparency Rule 7.2, the Company is
The Company’s Articles of Association provide for a Board
required to include a Corporate governance statement within
of Directors consisting of not fewer than three, but not more
the Directors’ report. Information on corporate governance
than 20 Directors, who manage the business and affairs of the
practices can be found in the Corporate governance statement Company. The Directors may appoint additional or replacement
on pages 32 to 36 and the reports of the Audit, Remuneration
Directors, who shall serve until the following AGM of the
and Nomination Committees on pages 37 to 49, which are
Company, at which point they will be required to stand for
incorporated into the Directors’ report by reference.
election by the members. A Director may be removed from
office at a general meeting of the Company, by the passing
Management report
of an Ordinary Resolution (provided special notice has been
This Directors’ report together with the other reports form
given in accordance with the UK Companies Act 2006).
the Management report for the purposes of Disclosure
and Transparency Rule 4.1.8.
Members have previously approved a Resolution to give
the Directors authority to allot shares and a renewal of this
Results and dividends
authority is proposed at the 2013 AGM. This authority allows
The Group’s activities resulted in a profit before tax of
the Directors to allot shares up to the maximum amount
£64.8 million (2011: £72.1 million). The Group profit for the
stated in the Notice of Annual General Meeting (approximately
year, attributable to shareholders, amounted to £49.1 million
one-third of the issued share capital) and this authority would
(2011: £61.0 million). The Directors recommend a final
generally expire at the following AGM. In addition, the Company
dividend of 10.5 pence per share totalling £15.6 million
(2011: £16.2 million). Dividends are recognised in the accounts may not allot shares for cash (unless pursuant to an employee
share scheme) without first making an offer to existing
in the year in which they are paid, or in the case of a final
shareholders in proportion to their existing holdings. This is
dividend, when approved by the shareholders. As such, the
known as rights of pre-emption. A Resolution to allow a limited
amount recognised in the 2012 accounts, as described in
waiver of these rights was passed by the members at last year’s
note 11, is made up of last year’s final dividend (10.5 pence
AGM. It is proposed at the forthcoming AGM that a similar
per share) and the interim dividend (5 pence per share).
waiver should be granted, which will represent approximately
The final ordinary dividend for 2012, if approved at the
5 per cent of the issued share capital. Full details of the
forthcoming AGM, will be paid on 14 June 2013. The dividend
proposed waiver are in the Notice of Annual General Meeting.
record date is set on 17 May 2013, and the dividend will be
The current waiver expires at the conclusion of the 2013 AGM.
marked ex-dividend on 15 May 2013. The Company paid an
Directors’ indemnities
interim dividend of £7.5 million in October 2012.
During the year, the Company executed deeds of indemnity
Articles of Association
with each of the Directors. These deeds contain qualifying third
The Company’s Articles of Association set out the
party indemnity provisions and indemnify the Directors to the
procedures for governing the Company. A copy of the
extent permitted by law and remain in force at the date of this
Articles of Association, which have not been amended
report. The indemnities are uncapped and cover all costs,
during the course of the year 2012, is available on the
charges, losses and liabilities the Directors may incur to third
Company’s website, www.computacenter.com/investors.
parties, in the course of acting as Directors of the Company
or its subsidiaries.

50


Overview

Directors’ interests in shares
The interests of the Directors in the share capital of the Company at the beginning and end of the year are set out below:
As at 31 December 2012
Number of
Number of
ordinary shares ordinary shares
Beneficial Non-Beneficial

–
–

1,385,658
2,175,905

–
–

430,000
17,051,770
45,000
–
35,335,636
25,000

50,984
9,073,921
–
–
979,166
–

410,983
18,051,770
45,000
–
35,335,636
25,000

–
8,073,921
–
–
979,166
–

Between 31 December 2012 and 12 March 2013 there have been no changes to the interests detailed above.
Major interests in shares
The Company did not receive any notification of substantial interests in the Company’s issued ordinary share capital between
1 January 2012 to 31 December 2012, or in the period from 1 January 2013 to 28 February 2013.
Capital structure
As at 12 March 2013, there were 153,915,322 fully paid ordinary shares in issue, all of which have full voting rights and there
were no restrictions on the transfer of shares. Pursuant to the Company’s share schemes, there are two employee trusts which,
as at the year-end, held a total of 4,239,751 ordinary shares of 6 pence each, representing approximately 2.8 per cent of the
issued share capital.
During the year the Trusts purchased a total of 1,783,680 shares in order to ensure that the maturities occurring pursuant to these
share option schemes could be satisfied. In the event that shares are held by these trusts before being transferred to employee
participants pursuant to the Schemes then, in line with good practice, the Trustees do not exercise the voting rights attached to
such shares. In the event that another entity or individual takes control of the Company, the employee share schemes operated
by the Company have change of control provisions contained within them that would be triggered. Participants may, in certain
circumstances, be allowed to exchange their options for options of an equivalent value over shares in the acquiring company.
Alternatively, the options may vest early, in which case, early vesting under the executive schemes will be on a time-apportioned
basis and under the Sharesave scheme, employees will only be able to exercise their options to the extent that their accumulated
savings allow at that time. The Company was granted authority at the 2012 AGM, to make market purchases of up to 15,388,782
ordinary shares of 6 pence each. This authority will expire at the 2013 AGM, where approval from shareholders will be sought to
renew the authority. During the period no shares were purchased for cancellation.


51

Governance

Non-Executive Directors
Greg Lock
Philip Hulme
Ian Lewis
Brian McBride
Peter Ogden
John Ormerod

1,385,658
2,185,221


Executive Directors
Mike Norris
Tony Conophy

As at 1 January 2012 or
date of appointment
Number of
Number of
ordinary shares
ordinary shares
Non-Beneficial
Beneficial

Business review

Directors’ conflicts of interests
The Board has put in place a process whereby the Directors are required to notify the Company Secretary of any situations
(appointments, holdings or otherwise), or any changes to such, which may give rise to an actual or potential conflict of interest
with the Company. These notifications are then reviewed by the Board and recorded in a register maintained by the Company
Secretary and, if appropriate, are considered further by the Directors who are not conflicted in the matter, to (if deemed
appropriate) authorise the situation. The register of notifications and authorisations is reviewed by the Board twice a year.
Where the Board has approved an actual or potential conflict, it has imposed the condition that the conflicted Director
abstains from participating in any discussion or decision affected by the conflicted matter.

Directors’ reportcontinued

Significant agreements and relationships
Details regarding the status of the various borrowing facilities
used by the Group are provided in the Finance Director’s
Review on pages 18 to 23. These agreements each include
a change of control provision, which may result in the facility
being withdrawn or amended upon a change of control of the
Group. It is also not extraordinary within our business sector for
our longer-term Services contracts to contain change of control
clauses that allow a counterparty to terminate the relevant
contract in the event of a change of control of the Company.
In addition to financing arrangements and our larger contracts
with our customers, the Board considers that there are a
number of major product suppliers who are material to
the business, including HP, IBM, Cisco, Microsoft, Oracle
and Lenovo.
Creditors’ payment policy
The Company does not hold any trade creditor balances.
However, it is the policy of the Group that each of the
businesses should agree appropriate terms and conditions
with suppliers (ranging from standard written terms to
individually negotiated contracts) and that payment
should be in accordance with those terms and conditions,
provided that the supplier has also complied with them.
As at 31 December 2012, Group creditor days amounted
to 69 (2011: 50).
Financial instruments
The Group’s financial risk management objectives and policies
are discussed in the Finance Director’s review on pages
18 to 23.
Employee share schemes
The Company operates executive share option schemes
and a performance-related option scheme for the benefit
of employees. During the year, no options were granted
under the executive share option schemes.
At the year-end, the options remaining outstanding under
the Executive option schemes were in respect of a total of
1,033,000 ordinary shares of 6 pence each (2011: 1,964,756
shares). During the year options over 416,756 shares were
exercised and options over 515,000 shares lapsed. The
Company also operates a Performance Share Plan (‘PSP’)
to incentivise employees. During the year, 1,179,689 ordinary
shares of 6 pence each were conditionally awarded (2011:
1,086,024 shares). At the year-end, awards over 3,207,545
shares remained outstanding under this scheme (2011:
4,599,072 shares). During the year, awards over 1,285,860
shares were transferred to participants and awards over
1,285,356 shares lapsed. In addition, the Company operates
a Sharesave scheme for the benefit of employees. At the
year-end 2,971,058 options granted under the Sharesave
scheme remained outstanding (2011: 2,905,644).

52


Corporate sustainable development
The Board recognises that acting in a socially responsible
way benefits the community, our customers, shareholders,
the environment and employees alike. Further information can
be found in the Corporate Sustainable Development report
on pages 26 to 29 and covers matters regarding Health
and Safety, the environment, equal opportunities, employee
involvement, employment of disabled people, employee
development and charitable donations. During the year, the
Group did not make any political donations to any political party
or organisation and it did not incur any political expenditure
within the meaning of Sections 362 to 379 of the Companies
Act 2006.
Equal opportunities
The Group acknowledges the importance of equality and
diversity and is committed to equal opportunities throughout the
workplace. The Group’s policies for recruitment, training, career
development and promotion of employees are based purely
on the suitability of the employee and give those who may be
disabled, equal treatment to their able bodied colleagues. Where
an employee becomes disabled, subsequent to joining the
Group, all efforts are made to enable that employee to continue
in their current job. However, if due to the specific circumstances,
it is not possible for an employee to continue in their current job,
they will be given suitable training for alternative employment
within the Group or elsewhere.
The Group monitors and regularly reviews its policies
and practices to ensure that it meets current legislative
requirements, as well as its own internal standards. The Group
is committed to making full use of the talents and resources
of all its employees and to provide a healthy environment
that encourages productive and mutually respectful working
relationships within the organisation. Policies dealing with equal
opportunities are in place in all parts of the Group, which take
account of the Group’s overall commitment and also address
local regulatory requirements.

Key performance indicators (‘KPIs’)
Performance and operational KPIs can be found within the
Operating review on pages 2 and 3 at the front of the Report
and Accounts. The Board considers employee-driven attrition
rates as a KPI in relation to employee issues. For the year
ended 31 December 2012, this figure was 11.82 per cent
(2011: 9.56 per cent). Utilisation levels across the Group of
the e-FACE career development tool is a specific KPI which
the Board is informed of, and which has improved from 74 per
cent at 31 December 2011 to 85 per cent at 31 December
2012. Further KPIs on employee and environmental matters
can be found within the Corporate Sustainable Development
report on pages 26 to 29.

The Directors have, after due consideration and investigation
and having taken account of the intended cash return,
a reasonable expectation that the Group has sufficient cash
resources and available facilities to meet its financial obligations
for the foreseeable future. Thus, they continue to adopt the
going concern basis of accounting in preparing the annual
Auditor
Ernst Young LLP has expressed its willingness to continue in
office as auditor and a Resolution approving the reappointment
of Ernst Young LLP as the Company’s auditor will be
proposed at the forthcoming AGM.


Business review

Overview

Employee consultative forums exist in each country to consult
staff on major issues affecting employment and matters of policy
and to enable management to seek the views and opinions of
employees on a wide range of business matters. Should there
be cross-jurisdictional issues to discuss, a facility exists to
engage a European forum made up of representatives from
country forums. The Group regularly reviews the performance
of its employees through a formal review process, in order to
identify areas for development. Managers are responsible for
setting and reviewing personal objectives, aligned to corporate
and functional goals. The Board closely oversees and monitors
management skills and the development of talent to meet the
current and future needs of the Group. The Board directly
monitors and reviews closely, succession and plans for
developing the identified key senior managers.

Going concern
Computacenter’s business activities, the business model
and strategic goals are set out in the Overview section, and
its performance is set out within the Operating review on
pages 2 to 15. The financial position of the Company, its
cash flows, liquidity position and borrowing facilities are set
out within the Finance Director’s review on pages 18 to 23. In
addition, notes 25 and 26 to the financial statements include
Computacenter’s objectives, policies and processes for
managing its capital, its financial risk management objectives,
details of its financial instruments and its exposures to credit
and liquidity risk. Computacenter’s balance sheet strength, its
long-term contracts with customers and suppliers, as well as
the different geographies within which it operates, provide the
Directors with confidence that Computacenter is well-placed
to manage its business risks even during a prolonged period
of economic uncertainty.

Governance

The development of employee skills and careers, as well as the
communication of Company goals with employees, are driven
by our e-FACE tools. Annual assessments via our e-FACE tool
are a formal requirement of all managers.

Business ethics
An ethics policy is operated by the Group, which commits
Computacenter employees to the highest standards of ethical
behaviour in respect of customers, suppliers, colleagues and
other stakeholders in the business. The policy includes a
requirement for all employees to report abuses or nonconformance with the policy (‘Whistleblowing’) and sets
out the procedures to be followed. The Group has
additionally adopted a Code of Ethics specifically
aimed at the prevention of bribery.

53


Employee involvement and development
The Group is committed to involving all employees in significant
business issues, especially matters which affect their work
and working environment. A variety of methods are used to
engage with employees, including team briefings, intranet,
email and in-house publications. The Group will use one or
more of these channels to brief the employees on the Group’s
performance and the financial and economic factors affecting
the Group’s performance. In particular, the Group operates a
Save As You Earn share scheme, which is open to eligible
employees, where employees are encouraged to save
a fixed monthly sum for a period of either three or five years.
Upon maturity of the scheme at the end of the relevant saving
period, participants can purchase shares in the Company at
a price set at the commencement of the saving period. The
primary method used to engage and consult with employees
is through team briefings, where managers are tasked with
ensuring that information sharing, discussion and feedback
happen on a regular basis.

Directors’ reportcontinued

Directors’ responsibilities
Statement of Directors’ responsibilities in relation
to the financial statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable
company law and those International Financial Reporting
Standards as adopted by the European Union. Under
Company Law, the Directors must not approve the Group
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and of
the profit or loss of the Group for that period. The Directors
are required to prepare financial statements for each financial
year which present fairly the financial position of the Company
and of the Group and the results and cash flows of the Group
for that period. In preparing the financial statements, the
Directors are required to:
•
•
•
•
•

• to the best of each Director’s knowledge and belief,
there is no information relevant to the preparation of their
report of which the Group’s auditors are unaware; and
• each Director has taken all steps a Director might
reasonably be expected to have taken, to be aware of
relevant audit information and to establish that the
Group’s auditors are aware of that information.

Directors’ responsibility statement
• The financial statements, prepared in accordance with
International Financial Reporting Standards, as adopted
by the European Union, give a true and fair view of the
assets, liabilities, financial position and profit for the
Company and undertakings included in the consolidation
select suitable accounting policies and then apply
taken as a whole; and
them consistently;
• Pursuant to the Disclosure and Transparency Rules the
make judgements and estimates that are reasonable;
Company’s Annual Report and Accounts include a fair
state whether applicable accounting standards have been
review of the development and performance of the
followed, subject to any material departures being disclosed
business and the position of the Company and the
and explained in the accounts;
undertakings included in the consolidation taken as a
prepare the accounts on a going concern basis, unless it
whole, together with a description of the principal risks
is inappropriate to presume that the Group or Company
and uncertainties that they face.
will continue in its business; and
present information, including accounting policies in a
manner that provides relevant, reliable, comparable and
understandable information.

The Directors are responsible for keeping proper accounting
records, which disclose with reasonable accuracy at any time
the financial position of the Group and enable them to ensure
that the accounts comply with the Companies Act 2006 and
Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Group and hence, taking
reasonable steps for the prevention and detection of fraud
and other irregularities.

54

Disclosure of information to auditor
Each of the persons who is a Director at the date of approval
of this report confirms that:


Mike Norris
Chief Executive

Tony Conophy
Finance Director

11 March 2013

11 March 2013

Overview

Independent auditor’s report to the
members of Computacenter plc

Respective responsibilities of Directors and auditor
As explained more fully in the Directors’ Responsibilities Statement set out on page 54, the Directors are responsible for the
preparation of the Group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to
audit and express an opinion on the Group financial statements in accordance with applicable law and International Standards
on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards
for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the Group’s circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall
presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to
identify material inconsistencies with the audited financial statements. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for our report.

Governance

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or
for the opinions we have formed.

Business review

We have audited the Group financial statements of Computacenter plc for the year ended 31 December 2012 which comprise
the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet,
the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement and the related notes 1 to 33. The
financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting
Standards (‘IFRSs’) as adopted by the European Union.


Opinion on financial statements
In our opinion the Group financial statements:
• Give a true and fair view of the state of the Group’s affairs as at 31 December 2012 and of its profit for the year then ended;
• Have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• Have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the Group financial statements are
prepared is consistent with the Group financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• Certain disclosures of Directors’ remuneration specified by law are not made; or
• We have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
• The Directors’ statement, set out on page 53, in relation to going concern; and
• The part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the UK
Corporate Governance Code specified for our review; and
• Certain elements of the report to shareholders by the Board on Directors’ remuneration.
Other matter
We have reported separately on the Parent Company financial statements of Computacenter plc for the year ended
31 December 2012 and on the information in the Directors’ Remuneration Report that is described as having been audited.

Nick Powell (Senior Statutory Auditor)
for and on behalf of Ernst Young LLP, Statutory Auditor
London
11 March 2013


55

Consolidated income statement
For the year ended 31 December 2012

Note

Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit:
Before amortisation of acquired intangibles and exceptional items
Amortisation of acquired intangibles
Exceptional items
Operating profit
Finance income
Finance costs
Profit before tax:
Exceptional items
Profit before tax
Income tax expense:
Tax on amortisation of acquired intangibles
Tax on exceptional items
Exceptional tax items
Income tax expense
Profit for the year
Attributable to:
Equity holders of the parent
Non-controlling interests

Earnings per share
– basic
– diluted

56


3

4

5

7
8

5

5
5
9

10

2012
£’000

2011
£’000

2,914,214
(2,539,955)
374,259

2,852,303
(2,470,932)
381,371

(303,172)

71,087
(2,608)
(3,874)
64,605

(307,377)

73,994
(1,986)
(131)
71,877

1,971
(1,778)

2,361
(2,136)

71,280
(2,608)
(3,874)
64,798

74,219
(1,986)
(131)
72,102

(16,578)
538
362
–
(15,678)
49,120

(16,125)
433
174
4,427
(11,091)
61,011

49,121
(1)
49,120

61,013
(2)
61,011

32.9p
32.4p

41.0p
39.3p

10

Consolidated statement of comprehensive income
Overview


49,120

61,011

494
(120)

(464)
116

374

(348)

Exchange differences on translation of foreign operations
Other comprehensive loss for the year, net of tax

(5,311)
(4,937)

(4,495)
(4,843)

Total comprehensive income for the period

44,183

56,168

44,182
1
44,183

56,166
2
56,168

Profit for the year

Attributable to:
Equity holders of the parent

22


Items that may be reclassified to profit or loss:
Gain/(loss) arising on cash flow hedge
Income tax effect

Business review

2011
£’000

Governance

2012
£’000

Note


57

Consolidated balance sheet

Note

Non-current assets
Property, plant and equipment
Intangible assets
Investment in associate
Deferred income tax asset
Current assets
Inventories
Trade and other receivables
Prepayments
Accrued income
Forward currency contracts
Current asset investment
Cash and short-term deposits

12
13
15
9

17
18

22
19

Total assets
Current liabilities
Trade and other payables
Deferred income
Financial liabilities
Income tax payable
Provisions
Non-current liabilities
Provisions
Other non-current liabilities
Deferred income tax liabilities

20
21
22
24

21
24
9

Total liabilities
Net assets
Capital and reserves
Issued capital
Share premium
Capital redemption reserve
Own shares held
Foreign currency translation reserve
Retained earnings
Shareholders’ equity
Total equity
Approved by the Board on 11 March 2013

MJ Norris FA Conophy
Chief Executive Finance Director

58


27
27
27
27
27

2012
£’000

2011
£’000

100,696
104,612
575
14,385
220,268

98,261
104,242
497
15,928
218,928

67,782
573,661
46,250
58,029
30
10,000
138,149
893,901
1,114,169

97,440
548,968
43,042
47,019
296
10,000
128,437
875,202
1,094,130

527,539
128,540
9,117
584
3,778
4,373
673,931

530,953
115,350
12,247
464
4,700
2,689
666,403

10,406
6,455
–
1,034
17,895
691,826
422,343

12,554
9,059
831
1,536
23,980
690,383
403,747

9,234
3,769
74,957
(13,848)
2,325
345,893
422,330
13
422,343

9,233
3,717
74,957
(10,962)
7,638
319,152
403,735
12
403,747

Consolidated statement of changes in equity
Overview


Total
equity
£’000

At 1 January 2012
Profit for the year
Other comprehensive income
Total comprehensive income
Cost of share-based payments
Tax on share-based payment
transactions
Exercise of options
Purchase of own shares
Equity dividends
At 31 December 2012

9,233
–
–
–
–

3,717
–
–
–
–

74,957
–
–
–
–

(10,962)
–
–
–
–

7,638 319,152 403,735
– 49,121 49,121
(5,313)
374
(4,939)
(5,313) 49,495 44,182
–
2,176
2,176

12 403,747
(1) 49,120
2
(4,937)
1 44,183
–
2,176

–
1
–
–
9,234

–
52
–
–
3,769

–
–
–
–
74,957

–
1,933
(4,819)
–
(13,848)

–
216
216
–
(1,933)
53
–
–
(4,819)
– (23,213) (23,213)
2,325 345,893 422,330

–
216
–
53
–
(4,819)
– (23,213)
13 422,343

At 1 January 2011
Profit for the year
Other comprehensive income
Total comprehensive income
Cost of share-based payments
Tax on share-based payment
transactions
Exercise of options
Equity dividends
At 31 December 2011

9,233
–
–
–
–

3,697
–
–
–
–

74,957
–
–
–
–

(10,146)
–
–
–
–

12,137 279,674 369,552
– 61,013 61,013
(4,499)
(348)
(4,847)
(4,499) 60,665 56,166
–
2,476
2,476

10 369,562
(2) 61,011
4
(4,843)
2 56,168
–
2,476

–
–
–
–
9,233

–
20
–
–
3,717

–
–
–
–
74,957

–
2,790
(3,606)
–
(10,962)

–
296
296
–
(2,790)
20
–
–
(3,606)
– (21,169) (21,169)
7,638 319,152 403,735

–
296
–
20
–
(3,606)
– (21,169)
12 403,747


59

Business review

Total
£’000

Noncontrolling
interests
£’000

Governance

Retained
earnings
£’000


Issued
capital
£’000

Attributable to equity holders of the parent
Foreign
currency
Own
Capital
shares translation
Share redemption
reserve
held
reserve
premium
£’000
£’000
£’000
£’000

Consolidated cash flow statement

Note

Operating activities
Profit before taxation
Net finance income
Depreciation
Amortisation
Impairment reversal
Share-based payments
Loss on disposal of property, plant and equipment
Loss on disposal of intangibles
Decrease/(increase) in inventories
Increase in trade and other receivables
Increase in trade and other payables
Other adjustments
Cash generated from operations
Income taxes paid
Net cash flow from operating activities
Investing activities
Interest received
Increase in current asset investment
Acquisition of subsidiaries, net of cash acquired
Increase investment in associate
Proceeds from sale of property, plant and equipment
Purchases of property, plant and equipment
Purchases of intangible assets
Net cash flow from investing activities
Financing activities
Interest paid
Dividends paid to equity shareholders of the parent
Proceeds from share issues
Repayment of capital element of finance leases
Repayment of loans
New borrowings
Decrease in factor financing
Net cash flow from financing activities
Increase in cash and cash equivalents
Effect of exchange rates on cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the year-end

60


12
13

16
15

11

19
19

2012
£’000

2011
£’000

64,798
(193)
24,337
9,573
–
2,176
363
184
27,477
(49,061)
16,755
74
96,483
(13,111)
83,372

72,102
(225)
27,417
7,844
(398)
2,476
545
33
(13,698)
(67,372)
87,687
(3)
116,408
(14,384)
102,024

1,926
–
(1,754)
(100)
1,074
(22,906)
(8,981)
(30,741)

2,316
(10,000)
(24,840)
(500)
1,449
(24,181)
(10,487)
(66,243)

(1,929)
(23,213)
53
(4,819)
(9,201)
(2,353)
1,577
–
(39,885)

(2,513)
(21,169)
20
(3,606)
(17,415)
(1,971)
–
(16,500)
(63,154)

12,746
(2,059)
126,784
137,471

(27,373)
(1,776)
155,933
126,784

Notes to the consolidated financial statements
Overview


2 Summary of significant accounting policies
Basis of preparation
The consolidated financial statements are presented in Sterling and all values are rounded to the nearest thousand (£’000) except
when otherwise indicated.
Basis of consolidation
The consolidated financial statements comprise the financial statements of Computacenter plc and its subsidiaries as at
31 December each year. The financial statements of subsidiaries are prepared for the same reporting year as the parent
company, using existing GAAP in each country of operation. Adjustments are made on consolidation for differences that may
exist between the respective local GAAPs and IFRS.
All intra-group balances, transactions, income and expenses and profit and losses resulting from intra-group transactions have
been eliminated in full.
Subsidiaries are consolidated from the date on which the Group obtains control and cease to be consolidated from the date on
which the Group no longer retains control.

Governance

The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’),
as adopted by the European Union as they apply to the financial statements of the Group for the year ended 31 December 2012
and applied in accordance with the Companies Act 2006.

Business review

1 Authorisation of financial statements and statement of compliance with IFRS
The consolidated financial statements of Computacenter plc for the year ended 31 December 2012 were authorised for issue in
accordance with a resolution of the Directors on 11 March 2013. The balance sheet was signed on behalf of the Board by
MJ Norris and FA Conophy. Computacenter plc is a limited company incorporated and domiciled in England whose shares are
publicly traded.

Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the previous financial year except as follows:
The Group has adopted the following new and amended IFRS and IFRIC interpretations during the year. Except as noted below,
adoption of these standards did not have any effect on the financial performance or position of the Group. They did however give
rise to additional disclosures. The other pronouncements which came into force during the year were not relevant to the Group:
IAS 12 Income Taxes (Amendment) – Deferred Taxes: Recovery of Underlying Assets
The amendment clarified the determination of deferred tax on investment property measured at fair value and introduces a
rebuttable presumption that deferred tax on investment property measured using the fair value model in IAS 40 should be
determined on the basis that its carrying amount will be recovered through sale. It includes the requirement that deferred tax on
non-depreciable assets that are measured using the revaluation model in IAS 16 should always be measured on a sale basis.
The amendment is effective for annual periods beginning on or after 1 January 2012 and has been no effect on the Group’s
financial position, performance or its disclosures.
IFRS 7 Financial Instruments: Disclosures — Enhanced Derecognition Disclosure Requirements
The amendment requires additional disclosure about financial assets that have been transferred but not derecognised to enable
the user of the Group’s financial statements to understand the relationship with those assets that have not been derecognised
and their associated liabilities. In addition, the amendment requires disclosures about the entity’s continuing involvement in
derecognised assets to enable the users to evaluate the nature of, and risks associated with, such involvement. The amendment
is effective for annual periods beginning on or after 1 July 2011. The Group does not have any assets with these characteristics
so there has been no effect on the presentation of its financial statements.


61


Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries that is not held by the Group and is
presented separately within equity in the consolidated balance sheet, separately from parent shareholders’ equity.

Notes to the consolidated financial statements continued

2 Summary of significant accounting policies continued
Improvements to IFRS
In May 2012 the IASB issued its second omnibus of amendments to its standards, primarily with a view to removing
inconsistencies and clarifying wording. The adoption of the amendments did not have any impact on the financial position or
performance of the Group.
IAS 1 Presentation of Financial Statements
This improvement clarifies the difference between voluntary additional comparative information and the minimum required
comparative information. Generally, the minimum required comparative information is the previous period.
IAS 16 Property, Plant and Equipment
This improvement clarifies that major spare parts and servicing equipment that meet the definition of property, plant and
equipment are not inventory.
IAS 32 Financial Instruments, Presentation
This improvement clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with
IAS 12 Income Taxes.
IAS 34 Interim Financial Reporting
The amendment aligns the disclosure requirements for total segment assets with total segment liabilities in interim financial
statements. This clarification also ensures that interim disclosures are aligned with annual disclosures.
Standards issued but not yet effective
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial
statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.
IAS 1 Presentation of Items of Other Comprehensive Income – Amendments to IAS
IAS 19 Employee Benefits (Revised)
IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)
IAS 32 Offsetting Financial Assets and Financial Liabilities — Amendments to IAS 32
IFRS 7 Disclosures — Offsetting Financial Assets and Financial Liabilities — Amendments to IFRS 7
IFRS 9 Financial Instruments: Classification and Measurement
IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
The adoption of these standards are not expected to have any impact on the financial position or performance of the Group.
Critical judgements and estimates
The preparation of the Group’s financial statements requires management to make judgements on how to apply the Group’s
accounting policies and make estimates about the future. Due to the inherent uncertainty in making these critical judgements and
estimates, actual outcomes could be different.
The more significant judgements and estimates, where a risk exists that a material adjustment to the carrying value of assets and
liabilities in the next financial year could occur, relate to:
• revenue recognition where, on a limited number of support and managed services contracts, an estimate of the total contract
costs is required to determine the stage of completion;
• estimation of residual value of assets owned to support certain contracts;
• impairment of intangible assets and goodwill, which is based upon estimates of future cash flows and discount rates for the
relevant cash-generating units;
• the estimate of the value of the deferred consideration payable on acquisitions where that consideration is based on future
performance or conditions;
• recognition of deferred tax assets in respect of losses carried forward, which are dependent upon estimates of future
profitability of certain Group companies; and
• other estimated tax positions, where the decisions of tax authorities are uncertain.
Further information is provided within this note summarising significant accounting policies, and notes 9 and 14 to the

62


Overview

Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation, down to residual value, is calculated on a straight-line basis over the estimated useful life of the asset as follows:
25–50 years
shorter of 7 years and period to expiry of lease

Business review

Freehold buildings
Short leasehold improvements
Fixtures and fittings
– Head office
– Other
Office machinery, computer hardware
Motor vehicles

5–15 years
shorter of 7 years and period to expiry of lease
2–15 years
3 years

Leases
Assets held under finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of
the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of
the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability
so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly
against income.

Governance

Freehold land is not depreciated. An item of property, plant and equipment is derecognised upon disposal or when no future
economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the
asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the
income statement in the year the item is derecognised.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term.
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases.
Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.

Intangible assets
Software and software licences
Software and software licences include computer software that is not integral to a related item of hardware. These assets are
stated at cost less accumulated amortisation and any impairment in value. Amortisation is calculated on straight-line basis over
the estimated useful life. Currently software is amortised over four years.
The carrying values of software and software licences are reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the
estimated recoverable amount, the assets are written down to their recoverable amount.
Software under development
Costs that are incurred and that can be specifically attributed to the development phase of management information systems for
internal use are capitalised and amortised over their useful life, once the asset becomes available for use.
Other intangible assets
Intangible assets acquired as part of a business are carried initially at fair value. Following initial recognition intangible assets are
carried at cost less accumulated amortisation and accumulated impairment losses. Intangible assets with a finite life have no
residual value and are amortised on a straight-line basis over their expected useful lives with charges included in administrative
expenses as follows:
Existing customer contracts
Existing customer relationships
Tools and technology

5 years
10 years
7 years

The carrying value of intangible assets is reviewed for impairment whenever events or changes in circumstances indicate the
carrying value may not be recoverable.


63


Goodwill
Business combinations are accounted for under IFRS 3 (Revised) using the purchase method. Any excess of the cost of the
business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is
recognised in the balance sheet as goodwill and is not amortised. Goodwill recognised on acquisitions prior to 1 January 2004,
the date of transition to IFRS, is recorded at its amortised cost at transition to IFRS and is no longer amortised. Any goodwill
asset arising on the acquisition of equity accounted entities is included within the cost of those entities.
After initial recognition, goodwill is stated at cost less any accumulated impairment losses, with the carrying value being reviewed
for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may be
impaired.
For the purpose of impairment testing, goodwill is allocated to the related cash-generating units monitored by management,
usually at business segment level or statutory company level as the case may be. Where the recoverable amount of the cashgenerating unit is less than its carrying amount, including goodwill, an impairment loss is recognised in the income statement.
Goodwill arising on acquisitions prior to 31 December 1997 remains set off directly against reserves even if the related investment
becomes impaired or the business is disposed of.
Impairment of assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable
amount. Where an asset does not have independent cash flows, the recoverable amount is assessed for the cash-generating
unit to which it belongs. The recoverable amount is the higher of the fair value less costs to sell and the value in use of the asset
or cash-generating unit. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. Impairment losses of continuing operations are recognised in the income statement in those expense
categories consistent with the function of the impaired asset.
For assets excluding goodwill, an assessment is made at each reporting date whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the
assets or cash-generating unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has been
a change in the assumptions used to determine the asset’s recoverable amount since the last impairment was recognised.
The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying
amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior
years. As the Group has no assets carried at revalued amounts, such reversal is recognised in the income statement.
Investment in associates
The Group’s interests in its associates, being those entities over which it has significant influence and which are neither
subsidiaries nor joint ventures, are accounted for using the equity method.
Under the equity method, the investment in an associate is carried in the balance sheet at cost plus post-acquisition changes in
the Group’s share of net assets of the associate, less distributions received and less any impairment in value of individual
investments. The Group income statement reflects the share of the associate’s results after tax. Where there has been a change
recognised in other comprehensive income of the associate, the Group recognises its share of any such change in the Group
statement of other comprehensive income.
Financial assets
Financial assets are recognised at their fair value which initially equates to the consideration given plus directly attributable
transaction costs associated with the investment.
The subsequent measurement of financial assets depends on their classification as described in each category below.
Inventories
Inventories are carried at the lower of weighted average cost and net realisable value after making allowance for any obsolete or
slow-moving items. Costs include those incurred in bringing each product to its present location and condition, on a first-in,
first-out basis.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make
the sale.

64


Overview

Current asset investments
Current asset investments comprise deposits held for a term of greater than three months from the date of deposit and which is
not available to the Group on demand. Subsequent to initial measurement, current asset investments are measured at fair value.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original
maturity of three months or less.

Business review

Trade receivables, which generally have 30–90 day terms, are recognised and carried at their original invoice amount less an
allowance for any uncollectable amounts. An estimate for doubtful debts is made when collection of the full amount is no longer
probable. Balances are written off when the probability of recovery is assessed as being remote.

For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and short-term deposits as
defined above, net of outstanding bank overdrafts.
Financial liabilities are initially recognised at their fair value and, in the case of loans and borrowings, net of directly attributable
transaction costs.
Governance

The subsequent measurement of financial liabilities depends on their classification as described in each category below.
Interest-bearing borrowings
All borrowings are initially recognised at fair value less directly attributable transaction costs. Borrowing costs are recognised as
an expense when incurred.

Derecognition of financial assets and liabilities
Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised
where:
• the rights to receive cash flows from the asset have expired; or
• the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without
material delay to a third party under a ‘pass-through’ arrangement; or
• the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks
and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Cash flow hedges that meet the strict criteria for hedge accounting are accounted for as follows: the effective portion of the gain
or loss on the hedging instrument is recognised directly in other comprehensive income in the cash flow hedge reserve, while any
ineffective portion is recognised immediately in the income statement in other operating expenses. The Group uses forward
currency contracts as hedges of its exposure to foreign currency risk in forecasted transactions and firm commitments. The
ineffective portion is recognised in other operating income.
Amounts recognised as other comprehensive income are transferred to the income statement when the hedged transaction
affects profit or loss, such as when the hedged financial expense is recognised.


65


After initial recognition, interest-bearing borrowings are subsequently measured at amortised cost using the effective interest
method. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement.


Derivative financial instruments and hedge accounting
The Group uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations.
Forward contracts are initially recognised at fair value on the date that the contract is entered into and are subsequently
remeasured at fair value at each reporting date. The fair value of forward currency contracts is calculated by reference to
current forward exchange rates for contracts with similar maturity profiles. Forward contracts are recorded as assets when
the fair value is positive and as liabilities when the fair value is negative.
For the purposes of hedge accounting, hedges are classified as cash flow hedges when hedging the exposure to variability
in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable
forecast transaction or the foreign currency risk in an unrecognised firm commitment.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which
the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge.
The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk
being hedged and how the entity will assess the effectiveness of changes in the hedging instrument’s fair value in offsetting
the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected
to be highly effective in achieving offsetting changes in cash flows and are addressed on an ongoing basis to determine that they
actually have been highly effective throughout the financial reporting periods for which they are designated.
If the forecast transaction or firm commitment is no longer expected to occur, the cumulative gain or loss previously recognised
in equity is transferred to the income statement. If the hedging instrument expires or is sold, terminated or exercised without
replacement or rollover, or if its designation as a hedge is revoked, any cumulative gain or loss previously recognised in other
comprehensive income remains in other comprehensive income until after the forecast transaction or firm commitment affects
profit or loss.
Any other gains or losses arising from changes in fair value on forward contracts are taken directly to the income statement.
Foreign currency translation
The Group’s presentation currency is Pounds Sterling (£). Each entity in the Group determines its own functional currency
and items included in the financial statements of each entity are measured using that functional currency. Transactions in
foreign currencies are initially recorded in the functional currency at the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange
ruling at the balance sheet date. All differences are taken to the consolidated income statement.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as
at the date of initial transaction.
The functional currencies of the overseas subsidiaries are Euro (€), US dollar (US$), South African rand (ZAR) and Swiss franc
(CHF). As at the reporting date, the assets and liabilities of these overseas subsidiaries are translated into the presentation
currency of the Group at the rate of exchange ruling at the balance sheet date and their income statements are translated
at the average exchange rates for the year. Exchange differences arising on the retranslation are recognised in the
consolidated statement of comprehensive income. On disposal of a foreign entity, the deferred cumulative amount recognised
in the consolidated statement of comprehensive income relating to that particular foreign operation is recognised in the
income statement.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be
made of the amount of the obligation.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.
Taxation
Current tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or
paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively
enacted by the balance sheet date.

66


Overview

• where the temporary difference arises from the initial recognition of goodwill or from an asset or liability in a transaction that is
not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;
• in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, where
the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will
not reverse in the foreseeable future; and
• deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, carried forward tax credits or tax losses, can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply
when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the
balance sheet date.

Business review

Deferred tax
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements, with the following exceptions:

Sales tax
Revenues, expenses and assets are recognised net of the amount of sales tax except:
• where the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case
the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• trade receivables and payables are stated with the amount of sales tax included.

Governance

Income tax is charged or credited directly to the statement of comprehensive income if it relates to items that are credited or
charged to the statement of comprehensive income. Otherwise income tax is recognised in the income statement.

Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts and
rebates given to customers, VAT and other sales tax or duty. The following specific recognition criteria must also be met before
revenue is recognised:
Supply Chain
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on
dispatch of goods.
Professional Services
Revenue is recognised when receivable under a contract following delivery of a service or in line with the stage of work
completed. The stage of completion is determined by reference to the costs incurred as a proportion of the total estimated costs
of the contract and unbilled revenue is recognised within accrued income. If the total estimated costs and revenues of a contract
cannot be reliably estimated, revenue is recognised only to the extent that costs have been incurred. A provision is made as soon
as a loss is foreseen.
Contractual Services
Contractual Services revenue includes revenue from Support Services and Managed Services contracts, and is recognised as
services are delivered. Unrecognised contracted revenue is included as deferred income in the balance sheet. Amounts invoiced
relating to more than one period are deferred and recognised over their relevant life.
On a limited number of Contractual Services contracts revenue is recognised on a percentage of completion basis which is
determined by reference to the costs incurred as a proportion of the total estimated costs of the contract. Unbilled revenue is
recognised within accrued income. If a contract cannot be reliably estimated, revenue is restricted to the extent that costs have
been incurred.
A provision is made as soon as a loss is foreseen.
Where a contract contains several elements, the individual elements are accounted for separately where appropriate and revenue
thereon is measured at the fair value of the consideration received.


67


The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables
in the balance sheet.


Finance income
Income is recognised as interest accrues.
Dividends
Dividend income is recognised when the Group’s right to receive payment is established.
Operating leases
Rental income arising from operating leases is accounted for on a straight-line basis over the lease term.
Pensions and other post-employment benefits
The Group operates a defined contribution scheme available to all UK employees. Contributions are recognised as an expense in
the income statement as they become payable in accordance with the rules of the scheme. There are no material pension
schemes within the Group’s overseas operations.
Exceptional items
The Group presents as exceptional items on the face of the income statement, those material items of income and expense
which, because of the nature and expected infrequency of the events giving rise to them, merit separate presentation to allow
shareholders to understand better elements of financial performance in the year, so as to facilitate comparison with prior periods
and to assess better trends in financial performance.
Share-based payment transactions
Employees (including Executive Directors) of the Group can receive remuneration in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’).
The cost of equity-settled transactions with employees is measured by reference to the fair value of the award at the date at
which they are granted. The fair value is determined by utilising an appropriate valuation model, further details of which are given
in note 28. In valuing equity-settled transactions, no account is taken of any performance conditions as none of the conditions set
are market-related ones.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which
the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled
to the award (‘vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date, until the
vesting date, reflects the extent to which the vesting period has expired and the Directors’ best estimate of the number of equity
instruments that will ultimately vest. The income statement charge or credit for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period. As the schemes do not include any market-related performance
conditions, no expense is recognised for awards that do not ultimately vest.
Where the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any modification, which increases the total fair value of the share-based
payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and
designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a
modification of the original award, as described in the previous paragraph.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share
(see note 10).
The Group has an employee share trust for the granting of non-transferable options to executives and senior employees.
Shares in the Group held by the employee share trust are treated as investment in own shares and are recorded at cost
as a deduction from equity (see note 27).
Own shares held
Computacenter plc shares held by the Group are classified in shareholders’ equity as ‘own shares held’ and are recognised
at cost. Consideration received for the sale of such shares is also recognised in equity, with any difference between the proceeds
from sale and the original cost being taken to revenue reserves. No gain or loss is recognised in the performance statements on
the purchase, sale, issue or cancellation of equity shares.

68


Overview

3 Segmental analysis
For management purposes, the Group is organised into geographical segments, with each segment determined by the location
of the Group’s assets and operations. The Group’s business in each geography is managed separately and held in separate
statutory entities.

Restatement and classification of costs
Following our ERP implementation in the UK and Germany, the Group has been able to further align its structure and therefore
how it classifies departmental costs between cost of sales and administrative expenses. The Group estimates that the net impact
of these changes, principally related to pre-sales costs, has resulted in approximately £2.9 million of costs being reported in cost
of sales in 2012 that were reported in administrative expenses previously. This represents the Group’s best estimate of the impact
of the changes made in the 2012 reported results. The results for 2011 have not been restated to reflect this change.
Segmental performance for the years ended 31 December 2012 and 2011 was as follows:
UK
£’000

Germany
£’000

France
£’000

Belgium
£’000

Total
£’000

1,195,647

1,193,796

479,306

45,465

2,914,214

183,914
(131,686)
52,228

136,992
(125,356)
11,636

47,297
(43,033)
4,264

4,984
(3,097)
1,887

373,187
(303,172)
70,015
1,265
71,280

Other segment information
Capital expenditure:
Goodwill and acquired intangible assets
Software

11,311
–
7,803

6,992
–
1,022

10,622
–
156

12
1,930
–

28,937
1,930
8,981

Depreciation
Amortisation of software

14,258
5,838
481

8,601
1,024
1,183

1,418
103
944

60
–
–

24,337
6,965
2,608

1,613

522

41

–

2,176

Governance

Management monitor the operating results of its geographical segments separately for the purposes of making decisions about
resource allocation and performance assessment. Segment performance is evaluated based on adjusted operating profit or loss
which is measured differently from operating profit or loss in the consolidated financial statements. At a Group level however
management measure performance on adjusted profit before tax. Adjusted operating profit or loss takes account of the interest
paid on customer specific financing (‘CSF’) which management consider to be a cost of sale for management reporting
purposes. Excluded from adjusted operating profit is the amortisation of acquired intangibles and exceptional items as
management do not consider these items when reviewing the underlying performance of a segment.

Business review

No operating segments have been aggregated to form the below reportable operating segments.

Revenue
Results
Adjusted gross profit
Adjusted net operating expenses
Adjusted segment operating profit
Adjusted net interest
Adjusted profit before tax



69




3 Segmental analysis continued
UK
£’000

Germany
£’000

France
£’000

Belgium
£’000

Total
£’000

1,102,184

1,228,574

478,583

42,962

2,852,303

167,305
(130,040)
37,265

157,355
(129,633)
27,722

50,636
(44,651)
5,985

4,610
(3,053)
1,557

379,906
(307,377)
72,529
1,690
74,219

Other segment information
Capital expenditure:
Goodwill and acquired intangible assets
Software

18,403
–
8,951

19,034
10,074
1,428

1,136
14,629
108

136
–
–

38,709
24,703
10,487

Depreciation
Impairment reversal

15,783
2,886
481
–

11,153
2,879
765
–

410
93
740
(398)

71
–
–
–

27,417
5,858
1,986
(398)

1,842

471

163

–

2,476

Revenue
Results
Adjusted gross profit
Adjusted net operating expenses
Adjusted net interest


Reconciliation of adjusted results
Management review adjusted measures of performance as shown in the tables above. Adjusted profit before tax excludes
exceptional items and the amortisation of acquired intangibles as shown below:
2012
£’000

71,280
(2,608)
(3,874)
64,798

Exceptional items
Profit before tax

2011
£’000

74,219
(1,986)
(131)
72,102

Management also review adjusted measures for gross profit, operating expenses, operating profit and net interest, which in
addition takes account of interest costs of CSF within cost of sales (as these are considered to form part of the gross profit
performance of a contract). The reconciliation for adjusted operating profit to operating profit, as disclosed in the Consolidated
Income Statement, is as follows:
UK
£’000

Germany
£’000

France
£’000

Belgium
£’000

Total
£’000

Add back interest on CSF
Exceptional items
Segment operating profit

52,228
226
(481)
(364)
51,609

11,636
846
(1,194)
(1,484)
9,804

4,264
–
(933)
(2,026)
1,305

1,887
–
–
–
1,887

70,015
1,072
(2,608)
(3,874)
64,605

Add back interest on CSF
Exceptional items
Segment operating profit

37,265
585
(481)
(656)
36,713

27,722
880
(764)
(82)
27,756

5,985
–
(741)
607
5,851

1,557
–
–
–
1,557

72,529
1,465
(1,986)
(131)
71,877

70


Overview

Sources of revenue
Total Supply Chain revenue
Services revenue
Professional Services
Contractual Services
Total Services revenue
Total revenue

2011
£’000

2,005,584

2,015,582

220,254
688,377
908,630
2,914,214

216,906
619,815
836,721
2,852,303

Information about major customers
Included in revenues arising from the UK segment are revenues of approximately £251 million (2011: £254 million) which arose
from sales to the Group’s largest customer. For the purposes of this disclosure a single customer is considered to be a group of
entities known to be under common control. This customer consists of entities under control of the UK Government, and
includes the Group’s revenues with central government, local government and certain government controlled banking institutions.
4 Group operating profit
This is stated after charging/(crediting):
2011
£’000

Auditors’ remuneration:
Audit of the financial statements
Audit of subsidiaries
Total audit fees

380
43
423

509
32
541

Audit related assurance services
Taxation compliance services
Taxation advisory services
Corporate finance services (excluding amounts included above)
Total non-audit services
Total fees

40
33
49
–
122
545

–
12
114
69
195
736

24,337
363
184
–
6,965
2,608

27,417
545
33
(398)
5,858
1,986

(114)

539

1,787,006

1,806,390

33,432

42,739

Depreciation of property, plant and equipment
Loss on disposal of property, plant and equipment
Loss on disposal of intangible assets
Impairment reversal
Amortisation of other intangible assets
Net foreign currency differences
Costs of inventories recognised as an expense
Operating lease payments – minimum lease payments


71


2012
£’000

Governance

2012
£’000

Business review

3 Segmental analysis continued
Sources of revenue
Within each geographical segment the Group has three sources of revenue, which are aggregated and shown in the table
below. The sale of goods is recorded within Supply Chain and the rendering of services is split into Professional and
Contractual Services.


5 Exceptional items
2012
£’000

Operating profit
Acquisition-related costs
Costs in relation to relocation of premises
Redundancy costs
Deferred consideration reversed

Income tax
Tax on exceptional items included in operating profit

Exceptional items after taxation

2011
£’000

–
(2,390)
(1,484)
–
(3,874)

(999)
–
–
868
(131)

–
362
362

4,427
174
4,601

(3,512)

4,470

Included within the current year are the following exceptional items:
During the year, Computacenter France consolidated its operations in a new office and began the move to a new warehouse.
In January 2012, RDC relocated to new premises in Braintree. The one-off costs in relation to the relocation of these premises of
£2.4 million that have been disclosed as an exceptional item relate principally to:
• operating lease rental expense charged on new properties during the fit-out period and prior to occupation;
• redundancy costs paid as a result of the relocation; and
• rental expense related to legacy properties once they had been vacated.
In the second half of 2012, Computacenter Germany undertook a programme to reduce its net operating expenses by
approximately £1.2 million annually. The related redundancy expenses of £1.5 million, due to their size and nature, have been
included within exceptional items.
Included within the prior year are:
• cquisition-related costs of £1.0 million, incurred in 2011 for both successful and aborted acquisitions.
a
This cost comprised consultancy, legal and professional and tax fees regarding the acquisitions; and
• ue to circumstances arising after the acquisition date, the performance criteria required to trigger deferred consideration of
d
€1.0 million that were previously expected to be achieved, were not met. As a result, the deferred consideration liability
recognised had been reversed, with the gain in the income statement disclosed as an exceptional item.
The exceptional income tax credit for the year comprised two items which, due to their size are disclosed separately as follows:
• he deferred tax asset in respect of losses in Germany was re-assessed in line with management’s view of the entity’s future
t
performance. Where the reassessment exceeded the losses utilised in the year, the change in the recoverable amount of the
deferred tax asset is shown as an exceptional item; and
• a deferred tax asset in respect of losses in France was recognised for the first time.
The income statement impact of both items has been shown as an exceptional tax item.
6 Staff costs and Directors’ emoluments
2012
£’000

Wages and salaries
Social security costs
Pension costs

2011
£’000

510,349
80,607
2,176
17,548
610,680

458,743
74,956
2,476
14,956
551,131

Share-based payments arise from transactions accounted for as equity-settled share-based payment transactions.

72


Overview

6 Staff costs and Directors’ emoluments continued
The average monthly number of employees during the year was made up as follows:
5,286
5,126
1,752
178
12,342

4,958
4,454
1,440
161
11,013

2012
£’000

2011
£’000

1,504
467
1,971

2,218
143
2,361

2012
£’000

2011
£’000

318
1,072
–
388
1,778

526
1,465
80
65
2,136

2012
£’000

UK
Germany
France
Belgium

2011
No.

2011
£’000

Business review

2012
No.

8 Finance costs

Bank loans and overdrafts
Finance charges payable on customer specific financing
Finance costs on factoring
Other interest

9 Income tax
a) Tax on profit on ordinary activities

Tax charged in the income statement
Current income tax
UK corporation tax
Foreign tax
Adjustments in respect of prior periods
Total current income tax

14,820
3,337
(2,952)
15,205

10,484
5,122
(1,425)
14,181

Deferred tax
Origination and reversal of temporary differences
Exceptional changes in recoverable amounts of deferred tax assets
Adjustments in respect of prior periods
Total deferred tax
Tax charge in the income statement

(1,698)
–
2,171
473
15,678

294
(4,427)
1,043
(3,090)
11,091


73


Bank interest receivable
Income from investments

Governance

7 Finance income


9 Income tax continued
b) Reconciliation of the total tax charge
2012
£’000

2011
£’000

Accounting profit before income tax

64,798

72,102

At the UK standard rate of corporation tax of 24.5 per cent (2011: 26.5 per cent)
Expenses not deductible for tax purposes
Non-deductible element of share-based payment charge
Adjustments in respect of current income tax of previous periods
Higher tax on overseas earnings
Other differences
Effect of changes in tax rate
Utilisation of previously unrecognised deferred tax assets
Exceptional changes in recoverable amounts of deferred tax assets
Overseas tax not based on earnings
At effective income tax rate of 24.2 per cent (2011: 15.4 per cent)

15,876
1,885
211
(1,274)
276
(549)
(140)
(2,098)
–
1,491
15,678

19,107
869
168
(382)
284
677
270
(6,834)
(4,427)
1,359
11,091

c) Tax losses
Deferred tax assets of £15.7 million (2011: £15.4 million) have been recognised in respect of losses carried forward.
In addition, at 31 December 2012, there were unused tax losses across the Group of £115.5 million (2011: £125.6 million) for
which no deferred tax asset has been recognised. Of these losses, £61.6 million (2011: £68.5 million) arise in Germany, albeit a
significant proportion have been generated in statutory entities that no longer have significant levels of trade. The remaining
unrecognised tax losses relate to other loss-making overseas subsidiaries.
d) Deferred tax
Deferred income tax at 31 December relates to the following:
Consolidated balance sheet
2012
2011
£’000
£’000

Deferred income tax liabilities
Accelerated capital allowances
Revaluations of foreign exchange contracts to fair value
Effect of changes in tax rate on opening liability
Amortisation of intangibles
Arising on acquisition
Gross deferred income tax liabilities
Deferred income tax assets
Relief on share option gains
Other temporary differences
Effect of changes in tax rate on opening liability
Revaluations of foreign exchange contracts to fair value
Losses available for offset against future taxable income
Gross deferred income tax assets
Deferred income tax charge
Net deferred income tax asset
Disclosed on the balance sheet
Deferred income tax asset
Deferred income tax liability
Net deferred income tax asset

Consolidated income statement
2012
2011
£’000
£’000

2,486
–
–
2,334
255
5,075

653
74
–
–
2,581
3,308

(680)
–
(219)
(440)
–

(269)
18
(234)
–
(244)

1,100
1,605
–
6
15,715
18,426

1,465
699
–
116
15,420
17,700

(42)
1,911
–
59
(116)

207
1,504
153
–
(4,225)

473

(3,090)

13,351

14,392

14,385
(1,034)
13,351

15,928
(1,536)
14,392

At 31 December 2012, there was no recognised or unrecognised deferred income tax liability (2011: £nil) for taxes that would be
payable on the unremitted earnings of the Group’s subsidiaries as the Group expects that future remittances of earnings from its
overseas subsidiaries will be covered by the UK dividend exemption.

74


Overview

Additional changes to the main rate of UK Corporation Tax are proposed, to reduce the rate by 1 per cent per annum to 23 per
cent by 1 April 2014. These changes had not been substantively enacted at the balance sheet date and consequently are not
included in these financial statements. The effect of these proposed reductions would be to reduce the UK net deferred tax asset
by £0.1 million.
10 Earnings per ordinary share
Earnings per share (‘EPS’) amounts are calculated by dividing profit attributable to ordinary equity holders by the weighted
average number of ordinary shares outstanding during the year (excluding own shares held).

Business review

9 Income tax continued
e) Impact of rate change
The main rate of UK Corporation tax was reduced to 25 per cent from 1 April 2012. Finance Act 2012 further reduced the main rate
of UK Corporation tax to 24 per cent from 1 April 2013. Deferred tax has been restated accordingly in these financial statements.

Diluted earnings per share amounts are calculated by dividing profit attributable to ordinary equity holders by the weighted
average number of ordinary shares outstanding during the year (excluding own shares held) adjusted for the effect of dilutive
options.

Profit attributable to equity holders of the parent
Tax on amortisation of acquired intangibles
Exceptional items within operating profit
Tax on exceptional items included in operating profit
Profit before amortisation of acquired intangibles and exceptional items

2011
£’000

49,121
2,608
(538)
3,874
(362)
–
54,703

61,013
1,986
(433)
131
(174)
(4,427)
58,096

2012
000’s

Basic earnings per share
Diluted earnings per share
Adjusted basic earnings per share
Adjusted diluted earnings per share

149,387

148,793

2,179
151,566

6,639
155,432

2012
pence

Basic weighted average number of shares (excluding own shares held)
Effect of dilution:
Share options
Diluted weighted average number of shares

2011
000’s

2011
pence

32.9
32.4
36.6
36.1

41.0
39.3
39.0
37.4


75


2012
£’000

Governance

Adjusted basic and adjusted diluted EPS are presented to provide more comparable and representative information. Accordingly
the adjusted basic and adjusted diluted EPS figures exclude amortisation of acquired intangibles and exceptional items.


11 Dividends paid and proposed
2012
£’000

15,725
7,488
23,213

Proposed (not recognised as a liability as at 31 December)
Equity dividends on Ordinary Shares:
Final dividend for 2012: 10.5 pence (2011: 10.5 pence)

14,460
6,709
21,169

15,589

Declared and paid during the year:
Equity dividends on Ordinary Shares:
Final dividend for 2011: 10.5 pence (2010: 9.7 pence)
Interim dividend for 2012: 5.0 pence (2011: 4.5 pence)

2011
£’000

16,157

Fixtures, fittings,
equipment and
vehicles
£’000

Total
£’000

12 Property, plant and equipment
Freehold land
and buildings
£’000

Cost
At 1 January 2011
Additions
Acquisition of subsidiary undertaking
Disposals
Foreign currency adjustment
At 31 December 2011
Additions
Acquisition of subsidiary undertaking
Disposals
At 31 December 2012
Accumulated depreciation and impairment
At 1 January 2011
Provided during the year
Impairment reversal
Disposals
At 31 December 2011
Disposals
At 31 December 2012
Net book value
At 31 December 2012
At 31 December 2011
At 1 January 2011

Short leasehold
improvements
£’000

67,391
10,670
–
–
(27)
78,034
–
–
–
(30)
78,004

19,634
3,969
–
(1,861)
(463)
21,279
2,990
2
(351)
(515)
23,405

165,436
24,070
320
(34,339)
(1,424)
154,063
25,947
94
(15,017)
(1,817)
163,270

252,461
38,709
320
(36,200)
(1,914)
253,376
28,937
96
(15,368)
(2,362)
264,679

28,649
2,315
–
–
2
30,966
2,224
–
(3)
33,187

10,362
2,478
–
(1,725)
(420)
10,695
3,017
(327)
(462)
12,923

124,568
22,624
(398)
(32,481)
(859)
113,454
19,096
(13,604)
(1,073)
117,873

163,579
27,417
(398)
(34,206)
(1,277)
155,115
24,337
(13,931)
(1,538)
163,983

44,817
47,068
38,742

10,482
10,584
9,272

45,397
40,609
40,868

100,696
98,261
88,882

The impairment reversal is in relation to certain assets in France, which are in continuing use in the business, that were previously
impaired. The reversal is a result of the improvements in the forecasted results for Computacenter France. The reversal has been
limited to the net book value of the assets had they not been previously impaired.

76


Overview

12 Property, plant and equipment continued

Cost
At 1 January
Additions
Disposals
At 31 December

78,271
6,031
(8,205)
76,097

84,069
14,528
(20,326)
78,271

Accumulated depreciation and impairment
At 1 January
Charge for year
Disposals
At 31 December
Net book value

57,356
9,526
(6,879)
60,003
16,094

61,461
14,651
(18,756)
57,356
20,915

Governance

Fixtures, fittings, equipment
and vehicles
2012
2011
£’000
£’000

Business review

Included in the figures above are the following amounts relating to leased assets which are used to satisfy specific
customer contracts:

13 Intangible assets

Goodwill
£’000

42,967
14,344
–
–
(1,084)
56,227
1,080
–
–
(532)
56,775

57,888
10,487
–
(3,912)
(245)
64,218
8,981
3
(364)
(334)
72,504

8,565
10,359
82
–
(753)
18,253
850
–
(333)
(326)
18,444

109,420
35,190
82
(3,912)
(2,082)
138,698
10,911
3
(697)
(1,192)
147,723

–
–
–
–
–
–
–
–
–

26,496
5,858
(3,878)
(352)
28,124
6,965
(180)
(326)
34,583

4,393
1,986
–
(47)
6,332
2,608
(333)
(79)
8,528

30,889
7,844
(3,878)
(399)
34,456
9,573
(513)
(405)
43,111

56,775
56,227
42,967

37,921
36,094
31,392

9,916
11,921
4,172

104,612
104,242
78,531

Total
£’000


77


Cost
At 1 January 2011
Additions
Acquired via subsidiary
Disposals
At 31 December 2011
Additions
Acquired via subsidiary
Disposals
At 31 December 2012
Amortisation and impairment
At 1 January 2011
Charged during the year
Disposals
At 31 December 2011
Charged during the year
Disposals
At 31 December 2012
Net book value
At 31 December 2012
At 31 December 2011
At 1 January 2011

Software
£’000

Acquired
intangible
assets
£’000


14 Impairment testing of goodwill and other intangible assets
Goodwill acquired through business combinations have been allocated to the following cash-generating units:
•
•
•
•
•
•

Computacenter (UK) Limited
RD Trading
Computacenter Germany
Computacenter France
Computacenter Switzerland
NEWIS SA and Informatic Services IS SA (together ‘Belgium IS’)

These represent the lowest level within the Group at which goodwill is monitored for internal management purposes.
Movements in goodwill
Computacenter
(UK)
Limited
£’000

1 January 2011
Additions
31 December 2011
Additions
31 December 2012
Market growth rate
Discount rate

RD Trading
£’000

30,429
–
–
30,429
–
–
30,429
2.5%
11.0%

835
–
–
835
–
–
835
2.5%
11.0%

Computacenter
Germany
£’000

11,703
3,738
(495)
14,946
–
(318)
14,628
2.5%
11.0%

Computacenter
France
£’000

–
9,610
(514)
9,096
–
(193)
8,903
1.5%
12.0%

Damax AG
£’000

–
996
(75)
921
–
(21)
900
1.5%
12.0%

Belgium IS
£’000

–
–
–
–
1,080
–
1,080
1.5%
15.0%

Total
£’000

42,967
14,344
(1,084)
56,227
1,080
(532)
56,775

Additions to goodwill in 2012 arose from the acquisition of Belgium IS. Belgium IS is managed and therefore reported as part of
the Belgium segment, however as it retains its own identifiable cash flows, it is considered as a cash-generating unit itself.
Key assumptions used in value in use calculations
The recoverable amounts of all six cash-generating units have been determined based on a value-in-use calculation. To calculate
this, cash flow projections are based on financial budgets approved by senior management covering a three-year period and on
long-term market growth rates of between 1.5 and 2.5 per cent (2011: between 1.5 and 2.5 per cent) thereafter.
Key assumptions used in the value-in-use calculation for all cash-generating units for 31 December 2012 and 31 December 2011 are:
• budgeted revenue, which is based on long-run market growth forecasts;
• budgeted gross margins, which are based on average gross margins achieved in the year immediately before the budgeted
year, adjusted for expected long-run market pricing trends; and
• the discount rate applied to cash flow projections ranges from 11.0 to 15.0 per cent (2011: 11.0 to 12.0 per cent) which
represents the Group’s weighted average cost of capital adjusted for the risk profiles of the individual CGUs.
Except in France, each cash-generating unit generates value substantially in excess of the carrying value of goodwill attributed to
each of them. Management therefore believes that no reasonably possible change in any of the above key assumptions would
cause the carrying value of the unit to materially exceed its recoverable amount. In France, adverse changes in the assumptions,
such as a 0.5 per cent reduction in market growth rate or an increase in the discount rate of 0.5 per cent would cause the
carrying value to exceed its recoverable amount.
No impairment provision on goodwill has been required at either 31 December 2012 or at 31 December 2011.
Other intangible assets
Other intangible assets consist of customer contracts, customer relationships and tools and technology. The expected useful
lives are shown in note 2.

78


Overview

15 Investments
a) Investment in associate
The following table illustrates summarised information of the investment in associates:

Cost
At 1 January
Acquisitions
Increase in investment
Share of associates losses
Exchange rate movement
At 31 December

507
–
100
(21)
(1)
585

57
500
–
(48)
(2)
507

Impairment
At 1 January
Charge for year
At 31 December
Carrying value

(10)
–
(10)
575

(10)
–
(10)
497

Gonicus GmbH
The Group has a 20 per cent (2011: 20 per cent) interest in Gonicus GmbH, whose principal activity is the provision of Open
Source Software. Gonicus is a private entity, incorporated in Germany, that is not listed on any public exchange and therefore
there is no published quotation price for the fair value of this investment. The reporting date of Gonicus is 31 December.

Business review

2011
£’000

Governance

2012
£’000

The Group has a 25 per cent (2011: 25 per cent) interest in ICS Solutions Limited whose principal activity is the delivering of both
on-premise and cloud based services and solutions across the Microsoft technology stack. ICS is a private entity, incorporated
in the United Kingdom, that is not listed on any public exchange and therefore there is no published quotation price for the fair
value of the investment. During the year the Group increased its investment in ICS Solutions Limited. The reporting date of ICS
is 30 June.


79


ICS Solutions Limited (‘ICS’)


15 Investments continued
b) Investment in subsidiaries
The Group’s principal subsidiary undertakings are as follows:
Proportion of voting rights
and shares held
Name

Computacenter (UK) Limited
Computacenter France SAS
Computacenter Holding GmbH
Computacenter GmbH
CC Managed Services GmbH
Computacenter NV/SA
RD Trading Limited
Computacenter PSF SA
Computacenter USA
Computacenter Services (Iberia) SLU
Digica Group Holdings Limited
Computacenter Services and Solutions
(Pty) Ltd
becom Informationssysteme GmbH
Top Info SAS
Computacenter AG
HSD Consult GmbH
NEWIS SA
Informatic Services IS SA
*

Country of
incorporation

Nature of business

England
France
Germany
Germany
Germany
Belgium
England
Luxembourg
USA
Spain
England

IT Infrastructure services
IT Asset Management
International Call Centre Services
IT infrastructure and application services

South Africa
Germany
France
Switzerland
Germany
Belgium
Belgium


Includes indirect holdings of 100 per cent via Computacenter (UK) Limited.

** Includes indirect holdings of 100 per cent via Computacenter Holding GmbH.
*** Includes indirect holdings of 100 per cent via Computacenter France SAS.
**** Includes indirect holdings of 100 per cent via Computacenter NV/SA.

Computacenter plc is the ultimate parent entity of the Group.

80


2012

2011

100%
100%
100%
100%
100%
100%
100%*
100%
100%*
100%*
100%

100%
100%
100%
100%
100%
100%
100%*
100%
100%*
100%*
100%

100%*
100%**
100%***
80%
100%**
100%****
100%****

100%*
100%**
100%***
80%
100%**
–
–

Overview
2012
Book value
£’000

Intangible assets
Comprising:
Existing customer relationships
Software
Total intangible assets
Bank loans
Deferred tax liabilities
Net assets
Goodwill arising on acquisition

2012
Provisional
fair value
to Group
£’000

–
3
3
96
1,299
225
(860)
(144)
–
619

Discharged by:
Cash paid
Deferred consideration

850
3
853
96
1,299
225
(860)
(144)
(255)
1,214
1,080
2,294
1,835
459
2,294

Cash and cash equivalents acquired
Bank loans
Cash outflow on acquisition

(225)
144
2,213

The fair value of the trade receivables amounts to £1,299,000. The gross amount of trade receivables is £1,299,000. None of the
trade receivables have been impaired and it is expected that the full contractual amounts can be collected.
There were no differences between the provisional fair values and the book values at acquisition other than the recognition of
intangible assets at acquisition and the related contingent tax liabilities.
Included in the £1,080,000 of goodwill that arose on acquisition are certain intangible assets that cannot be individually separated
and reliably measured from the acquiree due to their nature. These items include the expected value of an assembled workforce.
None of the goodwill recognised is expected to be deductible for income tax purposes.
From the date of acquisition to 31 December 2012, Belgium IS contributed £nil to the Group’s revenue and £nil to the Group’s profit
after tax.
If the acquisition of Belgium IS had taken place at the beginning of 2012, Group revenues for the period ended 31 December 2012
would have been £2,919,467,418 and profit after tax would have been £50,059,082.
Contingent consideration
This is based on the gross margin performance of the business for the next financial year after acquisition. Management’s
assessment is that it is highly probable that the maximum contingent consideration will become payable and accordingly it has
been included in the provisional fair value to the Group. The range of contingent consideration is between £0 and £459,000.


81

Governance

The book and provisional fair values of the net assets acquired were as follows:


On 28 December 2012 the Group acquired 100 per cent of the voting shares of NEWIS SA and its subsidiary, Informatic Services
IS SA (together ‘Belgium IS’) for an initial consideration of €2.3 million and a contingent consideration of €0.6 million dependent
on future performance. The net book value of the assets acquired included €0.1 million of net cash and bank loans. The costs of
acquisition amounted to €71,000 and are included in the income statement. Belgium IS is based in Belgium and is a provider of
infrastructure services including end-user support and system administration. The acquisition has been accounted for using the
purchase method of accounting. The 2012 consolidated financial statements include the results of Belgium IS for the period from
the acquisition date.

Business review

16 Business combinations
NEWIS SA and Informatic Services IS SA (together ‘Belgium IS’)


16 Business combinations continued
Update on acquisitions made in 2011
During the first half of 2011, the Group acquired Top Info SAS and HSD Consult GmbH and during the second half of 2011, the
Group acquired Damax AG. For each of these acquisitions, the book and provisional fair values of the net assets acquired that
were disclosed in note 16 of the 31 December 2011 Annual Report and Accounts are now final and are unchanged.
17 Inventories
2012
£’000

67,782

97,440

2012
£’000

2011
£’000

569,178
4,483
573,661

544,335
4,633
548,968

2012
£’000

Inventories for re-sale

2011
£’000

2011
£’000

18 Trade and other receivables

Trade receivables
Other receivables
For terms and conditions relating to related party receivables, refer to note 33.
Trade receivables are non-interest bearing and are generally on 30–90 day terms.
Note 25 sets out the Group’s strategy towards credit risk.
The movements in the provision for impairment of receivables were as follows:

13,204
9,896
(4,611)
(4,101)
(312)
14,076

At 1 January
Charge for the year
Utilised
Unused amounts reversed
At 31 December

13,100
6,429
(2,763)
(3,391)
(171)
13,204

As at 31 December, the ageing analysis of trade receivables is as follows:
Past due but not impaired

Total
£’000

2012
2011

82

Neither past
due nor
impaired
£’000

30 days
£’000

30–60 days
£’000

60–90 days
£’000

90–120 days
£’000

120 days
£’000

569,178
544,335

475,011
417,354

61,098
86,669

20,733
22,870

4,636
6,127

2,266
7,258

5,434
4,057


Overview

19 Cash and short-term deposits

109,443
28,706
138,149

Cash at bank and in hand
Short-term deposits

2011
£’000

88,466
39,971
128,437
Business review

2012
£’000

Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made
for varying periods of between one day and three months depending on the immediate cash requirements of the Group,
and earn interest at the respective short-term deposit rates. The fair value of cash and cash equivalents is £138,149,000
(2011: £128,437,000).
Due to strong cash generation over the past three years, the Group is now in a position where it can finance its requirements
from its cash balance. The Group does, however, retain overdraft facilities where required. The uncommitted overdraft facilities
available to the Group is £20.3 million at 31 December 2012 (2011: £15.9 million).
For the purposes of the consolidated cash flow statement, cash and cash equivalents comprise the following at 31 December:
2012
£’000

88,466
39,971
(1,653)
126,784

Governance

109,443
28,706
(678)
137,471

Short-term deposits
Bank overdrafts (note 21)

2011
£’000

20 Trade and other payables
2012
£’000

342,991
184,548
527,539

Trade payables
Other payables

2011
£’000

308,983
221,970
530,953

Terms and conditions of the above financial liabilities:
For terms and conditions relating to related parties, refer to note 33.
Trade payables are non-interest bearing and are normally settled on net monthly terms.
Other payables, which principally relate to other taxes, social security costs and accruals, are non-interest bearing and have
an average term of three months.


83


Cash pooling
The Group operates a notional cash pooling facility whereby Group companies have instant access to a facility into which excess
funds can be deposited or withdrawn to meet funding requirements. Due to the nature of this facility, all balances related to this
arrangement are disclosed within cash at bank and in hand.


21 Financial liabilities
2012
£’000

678
702
79
7,658
9,117

Non-current
Bank loan
Other loans – ‘CSF’
Non-current obligations under finance leases – ‘CSF’ (note 23)

1,653
1,515
–
9,079
12,247

65
–
10,341
10,406

Current
Bank overdrafts
Other loans – ‘CSF’
Bank loan
Current obligations under finance leases – ‘CSF’ (note 23)

2011
£’000

–
9
12,545
12,554

Bank overdrafts
The bank overdrafts are unsecured and are subject to annual review.
Finance leases
The finance leases are only secured on the assets that they finance. These assets are in the main used to satisfy specific
customer contracts. There are a small number of assets that are utilised internally.
Bank loans
The bank loans are unsecured and comprise the following:
Maturity date

Interest rate

2013
2015
2016

£’000

2.04%
3.02%-3.89%
2.23%

31 December 2012
79
45
20
144
(79)
65

Less: current instalments due on other loans
Non-current instalments
Other loans
The other loans are unsecured borrowings to finance equipment sold to customers on specific contracts or for equipment
for own use.
Other loans comprise the following:
Maturity date

Interest rate

£’000

2013

0%-2.76%

702
(702)
–

Maturity date

Interest rate

2012
2013
2014
2015
2016

0%-7.84%
3.95%-4.60%
3.09%-4.25%
2.47%-3.34%
2.33%-2.54%

31 December 2012

£’000

31 December 2011


84


1,515
3
3
2
1
1,524
(1,515)
9

Overview

21 Financial liabilities continued
The table below summarises the maturity profile of these loans:

702
–
702

Not later than one year
After one year but not more than five years

2011
£’000

1,515
9
1,524

The finance lease and loan facilities are committed.
Facilities
At 31 December 2012, the Group had available £20.3 million of uncommitted overdraft facilities (2011: £15.9 million).

Business review

2012
£’000

22 Forward currency contracts

Financial instruments at fair value through other comprehensive income
Cash flow hedges
Foreign exchange forward contracts

296

30
(554)

(464)
(168)

Cash flow hedges
Financial assets and liabilities at fair value through other comprehensive income reflect the change in fair value of foreign
exchange forward contracts, designated as cash flow hedges to hedge the expected contract costs in South African Rand
where sales on those contracts are in Sterling, based on highly probable forecast transactions. Financial assets and liabilities
through profit or loss are those foreign exchange contracts that are not designated in hedge relationships as they are intended to
reduce the level of foreign currency risk for expected sales and purchases.
The Group also enters into other foreign exchange forward contracts with the intention to reduce the foreign exchange risk of
expected sales and purchases. When these other contracts are not designated in hedge relationships they are measured at fair
value through profit and loss.
The foreign exchange forward contract balances vary with the level of expected foreign currency costs and changes in the foreign
exchange forward rates.
The terms of the foreign currency forward contracts have been negotiated for the expected highly probable forecast transactions
to which hedge accounting has been applied. No significant element of hedge ineffectiveness required recognition in the
income statement.
The cash flow hedges of the forecasted costs were assessed to be highly effective and a net unrealised gain of £494,000
(2011: loss of £464,000) with a deferred tax liability of £120,000 (2011: £116,000 deferred tax asset) relating to the hedging
instruments is included in the other comprehensive income. The amounts retained in the other comprehensive income of
£30,000 are expected to mature and affect the income statement in 2013 and 2014.


85

Governance

(584)

Financial instruments at fair value through profit and loss
Foreign exchange forward contracts

2011
£’000


2012
£’000


23 Obligations under leases
a) Finance lease commitments
The Group has finance leases for various items of plant and machinery; these leases have no terms of renewal or purchase
options and escalation clauses. Future minimum lease payments under finance leases together with the present value of the net
minimum lease payments are as follows:
2012
Minimum Present value
of payments
payments
£’000
£’000

Within one year
More than five years
Future finance charges
Present value of finance lease obligation

8,418
10,928
–
19,346
(1,347)
17,999

7,658
10,341
–
17,999

2011
Minimum Present value of
payments
payments
£’000
£’000

10,017
13,078
436
23,531
(1,907)
21,624

9,079
12,116
429
21,624

b) Operating lease commitments where the Group is lessee
The Group has entered into commercial leases on certain properties, motor vehicles and items of small machinery. There are
no restrictions placed upon the Group by entering into these leases.
Future commitments payable under non-cancellable operating leases as at 31 December are as follows:
2012
£’000

Within one year
More than five years

2011
£’000

42,354
71,012
14,243
127,609

44,551
74,513
16,210
135,274

c) Operating lease receivables where the Group is lessor
The Group entered into commercial leases with customers on certain items of machinery. These leases have remaining terms of
between one and five years.
Future amounts receivable by the Group under the non-cancellable operating leases as at 31 December are as follows:
2012
£’000

Within one year
The amounts receivable are directly related to the finance lease obligations detailed in note 23a.

86


2011
£’000

6,435
8,847
15,282

13,336
5,893
19,229

Overview

24 Provisions
Customer
contract
provisions
£’000

Property
provisions
£’000

Total
provisions
£’000

11,748
173
(1,714)
(1,363)
(124)
8,720

11,748
2,281
(1,714)
(1,363)
(124)
10,828

Current 2012
Non-current 2012

2,108
–
2,108

2,265
6,455
8,720

4,373
6,455
10,828

Current 2011
Non-current 2011

–
–
–

2,689
9,059
11,748

2,689
9,059
11,748

Customer contract provisions are based on the Directors’ best estimate of the amount of future losses to completion on certain
contractual services contracts.

Business review

–
2,108
–
–
–
2,108

Governance

At 1 January 2012
Arising during the year
Utilised
Provisions unused reversed
Exchange adjustment
At 31 December 2012

25 Financial instruments
An explanation of the Group’s financial instrument risk management objectives, policies and strategies are set out in the Finance
Director’s Review on pages 18 to 23.
Credit risk
The Group principally manages credit risk through management of customer credit limits. The credit limits are set for each
customer based on the creditworthiness of the customer and the anticipated levels of business activity. These limits are initially
determined when the customer account is first set up and are regularly monitored thereafter. The balance of trade receivables
relates to customers for whom there is no recent history of default. In determining the recoverability of the trade receivables, the
Group considers any change in the credit quality of the trade receivables from the date the credit was initially granted up to the
reporting date. The maximum exposure on trade receivables, as at the reporting date, is their carrying value.
With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, current
asset investment and forward currency contracts, the Group’s exposure to credit risk arises from default of the counterparty, with
a maximum exposure equal to the carrying amount of cash and cash equivalents.
There are no significant concentrations of credit risk within the Group.


87


Assumptions used to calculate the property provisions are based on the market value of the rental charges plus any contractual
dilapidation expenses on empty properties and the Directors’ best estimates of the likely time before the relevant leases can be
reassigned or sublet, which ranges between one and four years. The provisions in relation to the UK properties are discounted at
a rate based upon the Bank of England base rate. Those in respect of the European operations are discounted at a rate based
on Euribor.


25 Financial instruments continued
Interest rate risk
The Group finances its operations through a mixture of retained profits, bank borrowings, cash and short-term deposits, invoice
factoring in the UK and finance leases and loans for certain customer contracts. The Group’s bank borrowings, other facilities and
deposits are at floating rates. No interest rate derivative contracts have been entered into. When long-term borrowings are
utilised, the Group’s policy is to maintain these borrowings at fixed rates to limit the Group’s exposure to interest rate fluctuations.
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held
constant, of the Group’s profit before tax (through the impact on floating rate borrowings). There is no impact on the
Group’s equity.
Change
in basis
points

Effect
on profit
before tax
£’000

2012
Sterling
Euro

+25
+25

203
13

2011
Sterling
Euro

+25
+25

132
104

The impact of a reasonably possible decrease to the same range shown in the table would result in an opposite impact on the
profit before tax of the same magnitude.
Fair values
The carrying value of the Group’s short-term receivables and payables is a reasonable approximation of their fair values.
The fair value of all other financial instruments carried within the Group’s financial statements is not materially different from
their carrying amount.
At 31 December 2012 the Group held foreign exchange contracts as hedges of an inter-company loan and future expected
payments to suppliers. The exchange contracts are being used to reduce the exposure to foreign exchange risk. The terms of
these contracts are detailed below:
31 December 2012
Buy
currency

Germany

Value of
contracts

Maturity
dates

Contract
rates

Euro
Sterling
Sterling
Sterling
US Dollar
Danish Kroner
SA Rand
US Dollar

Sterling
Swiss Franc
Euro
Norwegian Kroner
Sterling
Sterling
Sterling
Euro

€4,506,533
£342,505
£1,707,911
£21,214
$14,360,237
DKK304,922
ZAR148,641,912
$49,625,000

Jan–Mar 13
Apr 13
Jan 13
Jan 13
Jan–Apr 13
Jan 13
Jan 13–Jun 14
Jan–May 13

1.2255–1.2325
1.4598
1.2255–1.2327
9.0034
1.5838–1.6206
9.1066
13.6104–15.1952
1.2623–1.3310

Buy
currency

UK

Sell
currency

Sell
currency

Value of
contracts

Maturity
dates

Contract
rates

Sterling
US Dollar
US Dollar
SA Rand
Dollar

Euro
Sterling
Euro
Sterling
Euro

£500,000
$13,656,870
$1,695,465
ZAR88,992,000
$61,300,000

Jan-12
Jan–Apr 12
Mar-12
Jan–Dec 12
Jan–Jun 12

0.8557
1.5400–1.6098
1.3988
11.4325–12.5270
1.294–1.444

31 December 2011

UK

Germany

The gains or losses arising from changes in the fair value of the above contracts are detailed in note 22.

88


Overview

Other than differences arising from the translation of results of operations outside of the Group’s functional currency, reasonably
foreseeable movements in the exchange rates of +10 per cent or -10 per cent would not have a material impact on the Group’s
profit before tax or equity.
Liquidity risk
The table below summarises the maturity profile of the Group’s financial liabilities as at 31 December based on contractual
undiscounted payments:

Year ended 31 December 2011
Property provisions

1–5 years
£’000

5 years
£’000

Total
£’000

1,135
–
–
1,135

2,676
1,976
527,539
532,191

5,737
2,674
–
8,411

11,033
7,199
–
18,232

–
375
–
375

20,581
12,224
527,539
560,344

3 months
£’000

3–12 months
£’000

1–5 years
£’000

5 years
£’000

Total
£’000

2,141
–
–
2,141

3,005
384
530,953
534,342

8,084
2,347
–
10,431

13,091
8,741
–
21,832

436
746
–
1,182

26,757
12,218
530,953
569,928

Fair value measurements recognised in the consolidated balance sheet
Financial instruments which are recognised at fair value subsequent to initial recognition are grouped into Levels 1 to 3 based
on the degree to which the fair value is observable. The three levels are defined as follows:
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets
or liabilities;
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable inputs).
At 31 December 2012 the Group had a current asset investment, which was measured at Level 2 fair value subsequent to initial
recognition, to the value of £10.0 million (31 December 2011: £10.0 million).
At 31 December 2012 the Group had forward currency contracts, which were measured at Level 2 fair value subsequent to initial
recognition, to the value of a liability of £554,000 (31 December 2011: £168,000).
The realised losses from forward currency contracts in the period to 31 December 2012 of £386,000 (2011: £730,000), are offset
by broadly equivalent realised gains on the related underlying transactions.


89

Governance

3–12 months
£’000

On demand
£’000

Year ended 31 December 2012
Provisions

3 months
£’000


On demand
£’000

Business review

25 Financial instruments continued
Exchange rate sensitivity
The majority of the transactions in each of the Group’s geographical segments are denominated in the functional currency of that
segment. There are, however, a limited number of transactions where foreign currency exchange risk exists. In these instances
the Group enters into forward currency contracts, as shown in the above table, in order to mitigate such risk. At the end of the
year the fair value of the outstanding contracts was a liability of £554,000 (2011: £168,000).


26 Capital management
Computacenter’s approach to capital management is to ensure that the Group has a strong capital base to support the
development of the business and to maintain a strong credit rating, whilst aiming to maximise shareholder value.
Consistent with the Group’s aim to maximise return to shareholders, the dividend policy is to maintain a dividend cover
of between 2–2.5 times. In 2012 the cover was 2.3 times, on a pre-exceptional basis (2011: 2.5 times).
The Group’s capital base is primarily utilised to finance its fixed assets and working capital requirements. The Group seeks to
optimise the use of working capital and improve its cash flow. As a consequence, the UK has sourced an increasing proportion
of its product business via distributors in order to reduce the working capital requirements of the business.
Capital is allocated across the Group in order to minimise the Group’s exposure to exchange rates. Each country finances its
own working capital requirements, typically resulting in borrowings in France with cash on deposit in the UK and Germany.
During 2012, a notional cash pooling arrangement was introduced, which Group companies can access and allows the
Group to pool its funds.
In certain circumstances, the Group enters into customer contracts that are financed by leases, which are secured only on the
assets that they finance, or loans. Whilst the outstanding amounts of this ‘customer specific financing’ (‘CSF’) are included within
net funds for statutory reporting purposes, the Group excludes this ‘customer specific financing’ when managing the net funds
of the business as this outstanding financing is matched by committed future revenues. These financing facilities, which are
committed, are thus outside of the normal working capital requirements of the Group’s product resale and services activities.
In certain circumstances, the Group deposits its funds in short-term investments that do not fulfill the criteria to be classified as
cash and cash equivalents. The Group considers these deposits when managing the net funds of the business, and accordingly
includes these deposits within net funds excluding CSF.
The measures of net funds that the Group monitors are:
2012
£’000

Net funds excluding CSF
Customer specific financing
Net funds

147,237
(18,701)
128,626

2011
£’000

136,784
(23,148)
113,636

The Group continued to benefit from the extension of an improvement in credit terms with a significant vendor, equivalent to
£34 million at 31 December 2012, a reduction of approximately £11 million over the course of the year.
Each operating country manages working capital in line with Group policies. The key components of working capital, i.e. trade
receivables, inventory and trade payables, are managed in accordance with an agreed number of days targeted in the budget
process, in order to ensure efficient capital usage.
An important element of the process of managing capital efficiently is to ensure that each operating country rewards behaviour
at an Account Manager and Account Director level to minimise working capital, at a transactional level. This is achieved by
increasing commission payments for early payment by customers and reduced commission payments for late payment by
customers, which encourages appropriate behaviour.
The Group regularly reviews the adequacy of its facilities against any foreseeable peak borrowing requirement, and as a result
of the strong cash position, has allowed certain bank and factoring facilities to expire during 2012. At 31 December 2012,
the Group had available £20.3 million of uncommitted overdraft facilities (2011: £15.9 million of uncommitted overdraft and
factoring facilities).

90


Overview

27 Issued capital and reserves
Authorised share capital
In accordance with the Companies Act 2006, the Company no longer has an authorised share capital. The Company’s Articles
of Association has been amended to reflect this change.
No. ’000

At 1 January 2011
Ordinary shares issued during the year for cash on exercise of share options
At 31 December 2011
Ordinary shares issued during the year for cash on exercise of share options
At 31 December 2012

£’000

153,880
8
153,888
20
153,908

9,233
–
9,233
1
9,234

Business review

A Ordinary Shares
Issued and fully paid

During the year, the issued share capital was increased by £1,200 by the issue of 20,000 ordinary shares of 6 pence each.
The holders of A Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at the general meetings of the Company. On a winding up of the Company, holders of A Ordinary Shares may be entitled
to the residual assets of the Company.
Governance

The Company has a number of share option schemes under which options to subscribe for the Company’s shares have been
granted to certain executives and senior employees (note 28).
Share premium
The share premium account is used to record the aggregate amount or value of premiums paid when the Company’s shares
are issued/redeemed at a premium.

Own shares held
Own shares held comprise the following:
i) Computacenter Employee Share Ownership Plan
Shares in the parent undertaking comprise 4,072,849 (2011: 4,676,785) 6 pence ordinary shares of Computacenter plc
purchased by the Computacenter Employee Share Ownership Plan (‘the Plan’). The principal purpose of the Plan is to be
funded with shares that will satisfy discretionary executive share plans. The number of shares held represents 3.4 per cent
(2011: 3.0 per cent) of the Company’s issued share capital.
None of these shares were awarded to executives of the Company under the Computacenter (UK) Limited Cash Bonus and
Share Plan. Options previously awarded are to be held on behalf of employees and former employees of Computacenter (UK)
Limited and their dependants, excluding Jersey residents. The distribution of these shares is dependent upon the trustee holding
them on the employees’ behalf for a restrictive period of three years.
Since 31 December 2002 the definition of beneficiaries under the ESOP Trust has been expanded to include employees who
have been awarded options to acquire ordinary shares of 6 pence each in Computacenter plc under the other employee share
plans of the Computacenter Group, namely the Computacenter Services Group plc Approved Executive Share Option Plan,
the Computacenter Employee Share Option Scheme 1998, the Computacenter Services Group plc Unapproved Executive
Share Option Scheme, the Computacenter Performance-Related Share Option Scheme 1998, the Computacenter Sharesave
Plus Scheme and any future similar share ownership schemes.
All costs incurred by the Plan are settled directly by Computacenter (UK) Limited and charged in the accounts as incurred.
The Plan Trustees have waived the dividends receivable in respect of 4,072,849 (2011: 4,676,785) shares that it owns which are
all unallocated shares.


91


The capital redemption reserve is used to maintain the Company’s capital following the purchase and cancellation of its own
shares. During the year the Company repurchased nil of its own shares for cancellation (2011: nil).


27 Issued capital and reserves continued
ii) Computacenter Qualifying Employee Share Trust (‘the Quest’)
The total shares held are 327,489 (2011: 105,121), which represents 0.1 per cent (2011: 0.1 per cent) of the Company’s
issued share capital. All of these shares will continue to be held by the Quest until such time as the Sharesave options granted
against them are exercised. The market value of these shares at 31 December 2012 was £673,450 (2011: £351,735).
The Quest Trustees have waived dividends in respect of all of these shares. During the year the Quest subscribed for
705,000 (2011: 193,213) 6 pence ordinary shares.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries.
28 Share-based payments
Executive share option scheme
During the year, options were exercised with respect to 227,316 (2011: 189,000) 6 pence ordinary shares at a nominal value of
£13,639 (2011: £11,340) at an aggregate premium of £636,119 (2011: £523,530).
Under the Computacenter Employee Share Option Scheme 1998 and the Computacenter Services Group Executive Share
Scheme, options in respect of 515,000 (2011: 9,000) shares lapsed.
The numbers of shares under options outstanding at the year-end comprise:

Date of grant

10/04/2002
10/04/2002
21/03/2003
02/04/2004
24/10/2006
17/04/2007

Exercisable between

Exercise price

10/04/2005–09/04/2012
10/04/2005–09/04/2012
21/03/2006–20/03/2013
02/04/2007–01/04/2014
24/10/2011–23/10/2016
17/04/2012–16/04/2017

322.00p
331.00p
266.50p
424.00p
250.00p
285.00p

2012
Number
outstanding

2011
Number
outstanding

–
–
15,000
30,000
958,000
30,000
1,033,000

112,316
10,000
35,000
30,000
1,362,800
225,200
1,775,316

Please refer to the information given in the Directors’ interest in share incentive schemes table in the Directors’ Remuneration
Report on page 46 for details of the vesting conditions attached to the Executive share options.
The following table illustrates the number (‘No.’) and weighted average exercise prices (‘WAEP’) of share options for the Executive
Share Option Scheme.
2012
No.

2012
WAEP

Executive share option scheme
Outstanding at the beginning of the year1
Forfeited during the year
Exercised during the year2
Outstanding at the end of the year

1,775,316
515,000
227,316
1,033,000

£2.95
£2.65
£2.86
£2.56

1,973,316
(9,000)
(189,000)
1,775,316

£2.65
£4.24
£2.83
£2.95

Exercisable at the end of the year

1,033,000

£2.56

1,775,316

£2.95

2011
No.

2011
WAEP

The weighted average remaining contractual life for the share options outstanding as at 31 December 2012 is 3.70 years
(2011: 4.27 years).
Notes
1
2

92

Included within this balance are options over nil (2011: 122,316) shares that have not been accounted for under IFRS 2 as the options were granted on
or before 7 November 2002. These options have not been subsequently modified and therefore do not need to be accounted for in accordance with IFRS 2.
The weighted average share price at the date of exercise for the options exercised is £4.17 (2011: £4.56).


Overview

28 Share-based payments continued
Computacenter Performance-Related Share Option Scheme
Under the Computacenter Performance-Related Share Option scheme, options granted will be subject to certain performance
conditions as described in the Directors’ Remuneration Report.

At 31 December 2012 the number of shares under outstanding options was as follows:

Date of grant

10/04/2002

Exercisable between

Exercise price

2012
Number
outstanding

10/04/2005–09/04/2012

322.00p

–

2011
Number
outstanding

189,440

Business review

During the year, options were exercised with respect to 189,440 (2011: nil) 6 pence ordinary shares at a nominal value of £11,366
(2011: nil) at an aggregate premium of £598,630 (2011: nil).

The following table illustrates the number (‘No.’) and weighted average exercise prices (‘WAEP’) of share options for the
Performance-Related Share Option Scheme.
2011
WAEP

£3.22
£3.22
–

189,440
–
189,440

£3.22
–
£3.22

–


2011
No.

189,440
(189,440)
–

Computacenter performance-related share option scheme
Outstanding at the beginning of the year
Exercised during the year

2012
WAEP

–

189,440

£3.22

Governance

2012
No.

During the year 1,179,689 (2011: 1,086,024) shares were awarded, 1,285,860 (2011: 1,273,722) were exercised and 1,285,356
(2011: 462,342) lapsed.
At 31 December 2012 the number of shares outstanding was as follows:

Date of grant

13/03/2009
20/03/2009
15/03/2010
17/03/2011
17/03/2011
23/03/2012
23/03/2012

Maturity date

Share price at
date of grant

13/03/2012
20/03/2012
15/03/2013
17/03/2013
17/03/2014
23/03/2014
23/03/2015

126.50p
123.00p
315.80p
423.00p
423.00p
433.00p
433.00p

2012
Number
outstanding

2011
Number
outstanding

–
–
971,169
51,017
1,005,670
70,672
1,109,017
3,207,545

1,173,054
1,260,000
1,093,374
51,017
1,021,627
–
–
4,599,072

The weighted average remaining contractual life for the options outstanding as at 31 December 2012 is 1.3 years
(2011: 1.2 years).


93


Computacenter LTIP Performance Share Plan
Under the Computacenter LTIP Performance Share Plan, shares granted will be subject to certain performance conditions
as described in the Directors’ Remuneration Report.


Computacenter Sharesave Scheme
The Company operates a Sharesave Scheme which is available to all employees and full time Executive Directors of the
Company and its subsidiaries who have worked for a qualifying period. All options granted under this scheme are satisfied
at exercise by way of a transfer of shares from the Computacenter Qualifying Employee Share Trust. During the year 747,775
(2011: 583,927) options were granted with a fair value of £773,142 (2011: £732,838).
Under the scheme the following options have been granted and are outstanding at the year-end:

Date of grant

October-2006
October-2007
October-2009
October-2009
October-2010
October-2010
October-2011
October-2011
October-2012
October-2012

Exercisable between

Share price

01/12/2011-31/05/2012
01/12/2012-31/05/2013
01/12/2012-31/05/2013
01/12/2014-31/05/2015
01/12/2013-31/05/2014
01/12/2015-31/05/2016
01/12/2014-31/05/2015
01/12/2016-31/05/2017
01/12/2015-31/05/2016
01/12/2017-31/05/2018

254.00p
178.00p
320.00p
320.00p
286.00p
258.00p
369.00p
332.00p
381.00p
343.00p

2012
Number
outstanding

2011
Number
outstanding

–
172,820
149,399
114,567
492,650
772,481
239,974
291,624
261,726
475,817
2,971,058

18,156
494,127
322,375
133,026
532,892
822,044
256,405
326,619
–
–
2,905,644

2011
No.

2011
WAEP

The following table illustrates the No. and WAEP of share options for the Sharesave scheme:
2012
No.

Sharesave scheme
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year1

2012
WAEP

2,905,644
747,775
(205,738)
(476,624)
2,971,058

£2.77
£3.56
£2.92
£2.26
£3.04

2,758,808
583,927
(225,893)
(211,198)
2,905,644

£2.55
£3.48
£2.66
£2.00
£2.77

322,219

£2.44

18,156

£2.54

Notes
1


The weighted average remaining contractual life for the options outstanding as at 31 December 2012 is 3.1 years
(2011: 3.2 years).

94


Overview

The fair value of the Executive Share Option Scheme, the Performance-Related Share Option Scheme, the LTIP Performance
Share Plan and Sharesave Scheme plans are estimated as at the date of grant using the Black-Scholes valuation model.
The following tables give the assumptions made during the year ended 31 December 2012 and 31 December 2011:
2012

Vesting conditions
Expected volatility
Expected option life at grant date (years)
Risk-free interest rate
Dividend yield
Fair value per granted instrument determined at grant
date

SAYE
scheme

23/03/2012 23/03/2012 23/03/2012
677,609
438,798
70,672
£nil
£nil
£nil
£4.33
£4.33
£4.33
3
3
2

26/10/12
264,089
£3.81
£3.70
3

26/10/12
483,687
£3.43
£3.70
5
Five-year
service period
and savings
requirement

See note 9
on page 46 in
the Directors’
remuneration
report

See note 1
below

See note 1
below

Three-year
service period
and savings
requirement

n/a
3
n/a
3.5%

n/a
3
n/a
3.5%

n/a
2
n/a
3.5%

39.8%
3
0.83%
4.19%

50.2%
5
0.83%
4.19%

£3.91

£3.91

£4.04

£0.73

£1.20

LTIP
performance
share plan

LTIP
performance
share plan

LTIP
performance
share plan

SAYE
scheme

SAYE
scheme

Business review

SAYE
scheme

LTIP
performance
share plan

Governance

Nature of the arrangement
Date of grant
Number of instruments granted
Exercise price
Share price at date of grant
Contractual life (years)

LTIP
performance
share plan

LTIP
performance
share plan

Nature of the arrangement
Date of grant
Number of instruments granted
Exercise price
Share price at date of grant
Contractual life (years)

Vesting conditions
Expected volatility
Expected option life at grant date (years)
Risk-free interest rate
Dividend yield
Fair value per granted instrument determined at
grant date

17/03/2011 17/03/2011 17/03/2011 28/10/2011 28/10/2011
584,112
446,640
51,017
256,405
327,522
£nil
£nil
£nil
£3.69
£3.32
£4.23
£4.23
£4.23
£3.85
£3.85
3
3
2
3
5
See note 8
on page 46 in
the Directors’
remuneration
report

See note 1
below

n/a
3
n/a
3.12%
£3.85

See note 1
below

Three-year
service period
and savings
requirement

Five-year
service period
and savings
requirement

n/a
3
n/a
3.12%

n/a
2
n/a
3.12%

49.7%
3
1.43%
3.69%

49.0%
5
1.43%
3.69%

£3.85

£3.97

£1.12

£1.36

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur.
The expected volatility reflects the assumption that the recent historical volatility is indicative of future trends, which may also not
necessarily be the actual outcome.
No other features of the options granted were incorporated into the measurement of fair value.
Notes
1

Issued under the terms of the Computacenter Performance Share Plan 2005, as amended at the AGM held on 13 May 2011. One quarter of the shares will
vest if the compound annual EPS growth over the performance period equals 5 per cent per annum. One half of the shares will vest if the compound annual
EPS growth over the performance period equals 7.5 per cent and will vest in full if the compound annual EPS growth over the performance period equals
10 per cent. If the compound annual EPS growth over the performance period is between 5 and 10 per cent, shares awarded will vest on a straight-line basis.
The performance period usually covers a period of three years from 1 January of the year the award is granted. A limited number of PSP awards are granted
with a performance period of two years.


95


2011


29 Analysis of changes in net funds
At 1 January
2012
£’000

Bank overdraft
Bank loans
Net funds excluding customer specific financing
Customer specific finance leases
Customer specific other loans
Total customer specific financing
Net funds

128,437
(1,653)
126,784
10,000
–
136,784
(21,624)
(1,524)
(23,148)
113,636

At 1 January
2011
£’000

Bank overdraft
Factor financing
Net funds excluding customer specific financing
Customer specific finance leases
Customer specific other loans
Total customer specific financing
Net funds

96


159,269
(3,336)
155,933
–
(16,494)
139,439
(24,894)
(3,532)
(28,426)
111,013

Cash flows
in year
£’000

11,806
940
12,746
–
(144)
12,602
9,201
776
9,977
22,579

Cash flows
in year
£’000

(29,014)
1,641
(27,373)
10,000
16,500
(873)
17,415
1,971
19,386
18,513

Non-cash
flow
£’000

–
–
–
–
–
–
(6,031)
–
(6,031)
(6,031)

Non-cash
flow
£’000

–
–
–
–
–
–
(14,528)
–
(14,528)
(14,528)

Exchange
differences
£’000

(2,094)
35
(2,059)
–
–
(2,059)
455
46
501
(1,558)

Exchange
differences
£’000

(1,818)
42
(1,776)
–
(6)
(1,782)
383
37
420
(1,362)

At
31 December
2012
£’000

138,149
(678)
137,471
10,000
(144)
147,327
(17,999)
(702)
(18,701)
128,626
At
31 December
2011
£’000

128,437
(1,653)
126,784
10,000
–
136,784
(21,624)
(1,524)
(23,148)
113,636

Overview

30 Adjusted management cash flow statement
The adjusted management cash flow has been provided to explain how management view the cash performance of the
business. There are two primary differences to this presentation compared to the statutory cash flow statement, as follows:
1)
Factor financing is not included within the statutory definition of cash and cash equivalents, but when the Group has had
factor facilities, operationally they have been managed within the total net funds/borrowings of the businesses; and

a.

b.
Where customer specific assets are financed by finance leases and the liabilities are matched by future amounts
receivable under customer operating lease rentals, the depreciation of leased assets and the repayment of the capital
element of finance leases are offset within net working capital; and

Business review

2) Items relating to customer specific financing are adjusted for as follows:
Interest paid on customer specific financing is reclassified from interest paid to adjusted operating profit; and

c.
Where assets are financed by loans and the liabilities are matched by amounts receivable under customer operating
lease rentals, the movement on loans within financing activities is offset within working capital.

2011
£’000

Adjusted profit before taxation
Net finance income
Depreciation and amortisation
Share-based payment
Working capital movements
Other adjustments
Adjusted operating cash inflow
Net interest received
Income taxes paid
Capital expenditure and disposals
Acquisitions and disposals
Equity dividends paid
Cash inflow before financing
Financing
Proceeds from issue of shares
Increase/(decrease) in net funds excluding CSF in the period

71,280
(1,265)
24,384
2,176
(11,711)
377
85,241
1,118
(13,111)
(30,813)
(1,854)
(23,213)
17,368

74,219
(1,690)
20,596
2,476
281
(358)
95,524
1,268
(14,384)
(33,186)
(25,340)
(21,169)
2,713

53
(4,819)
12,602

20
(3,606)
(873)

Increase/(decrease) in net funds excluding CSF
Effect of exchange rates on net funds excluding CSF
Net funds excluding CSF at beginning of period
Net funds excluding CSF at end of period

12,602
(2,059)
136,784
147,327

(873)
(1,782)
139,439
136,784


97


2012
£’000

Governance

3) funds excluding CSF is stated inclusive of current asset investments. Current asset investments consists of a deposit held
Net
for a term of greater than three months from the date of deposit which is available to the Group with 30 days notice. The fair
value of the current asset investment as at 31 December 2012 is not materially different to the carrying value.


31 Capital commitments
At 31 December 2012 and 31 December 2011 the Group held no significant commitments for capital expenditure.
32 Pensions and other post-employment benefit plans
The Group has a defined contribution pension plan, covering substantially all of its employees in the UK. The amount recognised
as an expense for this plan is detailed in note 6.
33 Related party transactions
During the year the Group entered into transactions, in the ordinary course of business, with related parties. Transactions entered
into are as described below:
Biomni provides the Computacenter e-procurement system used by many of Computacenter’s major customers. An annual
fee has been agreed on a commercial basis for use of the software for each installation. Both PJ Ogden and PW Hulme are
Directors of and have a material interest in Biomni Limited.
The table below provides the total amount of transactions that have been entered into with related parties for the relevant
financial year:
Sales to
related
parties
£’000

Biomni Limited

Purchases
from related
parties
£’000

Amounts
owed by
related parties
£’000

Amounts
owed to
related parties
£’000

18

519

–

5

Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made on terms equivalent to those that prevail in arm’s length transactions.
Outstanding balances at the year-end are unsecured and settlement occurs in cash. There have been no guarantees provided
or received for any related party receivables. The Group has not recognised any provision for doubtful debts relating to amounts
owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related
party and the market in which the related party operates.
Compensation of key management personnel (including Directors)
The Board of Directors is identified as the Group’s key management personnel. Please refer to the information given in the
Directors’ remuneration table in the Directors’ Remuneration Report on page 45 and 49 for details of compensation given to the
Group’s key management personnel. A summary of the compensation of key management personnel is provided below:
2012
£’000

Short-term employee benefits
Social security costs
Pension costs
Total compensation paid to key management personnel

2011
£’000

1,492
445
1,003
12
2,952

1,758
387
1,079
12
3,236

The interest of the key management personnel in the Group’s share incentive schemes are disclosed in the Directors’
Remuneration Report on page 46.

98


Overview

Statement of Directors’ responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law
and United Kingdom Generally Accepted Accounting Practice.
Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the
state of affairs of the Company and of the profit or loss of the Company for that period. In preparing those financial statements,
the Directors are required to:
Business review

• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to any material departures disclosed and
explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.


Governance

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.


99

Independent auditor’s report to the members
of Computacenter plc
We have audited the Parent Company financial statements of Computacenter plc for the year ended 31 December 2012 which
comprise the Company Balance Sheet and the related notes 1 to 12. The financial reporting framework that has been applied
in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted
Accounting Practice).
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or
for the opinions we have formed.
Respective responsibilities of Directors and auditor
As explained more fully in the Directors’ Responsibilities Statement set out on page 99, the Directors are responsible for the
preparation of the Parent Company financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the Parent Company financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices
Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the Parent Company’s circumstances and have been
consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors;
and the overall presentation of the financial statements.
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the
audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the
implications for our report.
Opinion on financial statements
In our opinion the Parent Company financial statements:
• give a true and fair view of the state of the Company’s affairs as at 31 December 2012;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice;
• and have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
• The part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies
Act 2006; and
• The information given in the Directors’ Report for the financial year for which the financial statements are prepared is
consistent with the Parent Company financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in
our opinion:
• Adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• The Parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
• Certain disclosures of Directors’ remuneration specified by law are not made; or
• We have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the Group financial statements of Computacenter plc for the year ended 31 December 2012.

Nick Powell (Senior Statutory Auditor)
for and on behalf of Ernst Young LLP, Statutory Auditor
London
11 March 2013
100


Company balance sheet
Overview


93,221
22,100
171,289
286,610

101,721
23,715
188,235
313,671

Current assets
Debtors

5

90,168
42
90,210

90,126
265
90,391

Creditors: amounts falling due within one year
Net current assets/(liabilities)
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Provisions for liabilities and charges
Total assets less liabilities

6

45,051
45,159
331,769
–
–
331,769

159,638
(69,247)
244,424
18,535
109
225,780

Capital and reserves
Called up share capital
Share premium account
Merger reserve
Own shares held
Profit and loss account
Equity shareholders’ funds

9,234
3,769
74,957
55,990
(11,887)
199,706
331,769

9,233
3,717
74,957
55,990
(9,001)
90,884
225,780

2
3
4

7
8

9
9
9
9
9
9

Approved by the Board on 11 March 2013

MJ Norris FA Conophy
Chief Executive Finance Director


101

Governance

Fixed assets
Intangible assets
Tangible assets
Investments

Business review

2011
£’000


2012
£’000

Note

Notes to the Company financial statements

1 Accounting policies
Basis of preparation
The financial statements of Computacenter plc were approved for issue in accordance with a resolution of the Directors on
11 March 2013. The balance sheet was signed on behalf of the Board by MJ Norris and FA Conophy.
The financial statements are prepared under the historical cost convention and in accordance with the applicable UK
Accounting Standards.
No profit and loss account is presented for the Company as permitted by section 408 of the Companies Act 2006. The profit
after tax for the Company was £131,792,000 (2011: £165,674).
The Company has taken advantage of the exemption in paragraph 2D(b) of FRS 29 Financial Instruments: Disclosure and has
not disclosed information required by that standard, as the Group’s consolidated financial statements, in which the Company
is included, provide equivalent disclosures for the Group under IFRS 7 Financial Instruments: Disclosures.
Intellectual property
Licences purchased in respect of intellectual property are capitalised, classified as an intangible asset on the balance sheet and
amortised on a straight-line basis over the period of the licence, normally 20 years.
Depreciation of fixed assets
Freehold land is not depreciated. Depreciation is provided on all other tangible fixed assets at rates calculated to write off the
cost, less estimated residual value, of each asset evenly over its expected useful life, as follows:
Freehold buildings

25 years

Investments
Fixed asset investments are shown at cost less provision for impairment. In addition, subsequent to the adoption of UITF
Abstract 41, investments in subsidiaries also include the FRS 20 cost of share-based payments.
Impairment of assets
The carrying values of assets are reviewed for impairment when events or changes in circumstances indicate that the carrying
value may not be recoverable.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. All differences are
taken to the profit and loss account.
The expense for share-based payments is recognised in the subsidiary companies employing the relevant employees.
The Company records a corresponding increase in its investments in subsidiaries with a credit to equity which is equivalent
to the FRS 20 cost in the subsidiary undertakings.
Taxation
Corporation tax payable is provided on taxable profits at the current tax rate. Where Group relief is surrendered from other
subsidiaries in the Group, the Company is required to pay to the surrendering company an amount equal to the loss surrendered
multiplied by the current tax rate.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date
where transactions or events that result in an obligation to pay more, or a right to pay less, tax in the future have occurred at the
balance sheet date.
Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in periods in which timing
differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

102


Overview

2 Intangible assets
Intellectual
property
£’000

Cost
At 1 January 2012 and 31 December 2012

68,016
8,500
76,516

Net book value
At 31 December 2012
At 31 December 2011

93,221
101,721

3 Tangible assets
Freehold land
and buildings
£’000

42,350

Depreciation
At 1 January 2012
Charge in the year
At 31 December 2012

18,635
1,615
20,250

Net book value
At 31 December 2012
At 31 December 2011

22,100
23,715

4 Investments
Investments
in subsidiary
undertakings
£’000

Cost
At 1 January 2012
Reclassification
At 31 December 2012
Amounts provided
At 1 January 2012
At 31 December 2012
Net book value
At 31 December 2012
At 31 December 2011

Loans to
subsidiary
undertakings
£’000

257,583
500
2,176
260,259

2,754
–
–
2,754

525
(500)
–
25

260,862
–
2,176
263,038

69,848
19,122
88,970

2,754
–
2,754

25
–
25

72,627
19,122
91,749

171,289
187,735

–
–

–
500

171,289
188,235

Investment
£’000

Total
£’000

Details of the principal investments at 31 December in which the Company holds more than 20 per cent of the nominal value
of ordinary share capital are given in the Group accounts in note 15.


103


Cost
At 1 January 2012 and 31 December 2012

Governance

Amortisation
At 1 January 2012
Charge in the year
At 31 December 2012

Business review

169,737

Notes to the Company financial statements continued

5 Debtors
2012
£’000

90,000
126
42
90,168

90,000
126
–
90,126

2012
£’000

2011
£’000

34,892
1,122
8,735
302
45,051

158,825
702
–
111
159,638

2012
£’000

Amount owed by subsidiary undertaking
Other debtors
Deferred tax

2011
£’000

2011
£’000

–

18,535

6 Creditors: amounts falling due within one year

Amount owed to subsidiary undertaking
Accruals
Deferred income
Corporation tax

7 Creditors: amounts falling due after more than one year

Deferred income

8 Provisions for liabilities and charges
Deferred
taxation
£’000

At 1 January 2012
Capital allowances in advance of depreciation
At 31 December 2012
The deferred tax balance all relates to capital allowances in advance of depreciation.

104


109
(109)
–

Overview

9 Reconciliation of shareholders’ funds and movements on reserves
Own
shares
held
£’000

Total
shareholders’
funds
£’000

Capital
redemption
reserve
£’000

9,233
–

3,697
20

74,957
–

(8,185)
2,790

55,990
–

112,201
(2,790)

247,893
20

–
–

–
–

–
–

–
(3,606)

–
–

166
–

166
(3,606)

–
–
9,233
1

–
–
3,717
52

–
–
74,957
–

–
–
(9,001)
1,933

–
–
55,990
–

2,476
(21,169)
90,884
(1,933)

2,476
(21,169)
225,780
53

–
–

–
–

–
–

–
(4,819)

–
–

131,792
–

131,792
(4,819)

–
–
9,234

–
–
3,769

–
–
74,957

–
–
(11,887)

–
–
55,990

2,176
(23,213)
199,706

2,176
(23,213)
331,769

Merger
reserve
£’000

Profit and
loss account
£’000


10 Contingent liabilities
The Company has given a guarantee in the normal course of business to a supplier of a subsidiary undertaking for an amount
not exceeding £5.1 million (2011: £16.6 million).
The Company has provided cross guarantees in respect of certain bank loans and overdrafts of its subsidiary undertakings.
The amount outstanding at 31 December is £0.6 million (2011: £1.6 million).
11 Related party transactions
The Company has taken the exemption in FRS 8 not to disclose transactions with other wholly owned Group Companies.
The Company has not traded with any of the related parties disclosed in note 33 of the Group accounts.
12 Auditors’ remuneration
All auditors’ remuneration is borne by Computacenter (UK) Ltd, a fully-owned UK subsidiary of the Company.


Business review

At 1 January 2011
Exercise of options
Total recognised gains
and losses in the year
Share options granted to
employees of subsidiary
companies
Equity dividends
At 31 December 2011
Exercise of options
Total recognised gains
and losses in the year
Share options granted to
employees of subsidiary
companies
Equity dividends
At 31 December 2012

Share
premium
£’000

Governance

Share
capital
£’000

105

Group five-year financial review
Year ended 31 December

2008
£m

*

2010
£m

2011
£m

2012
£m

2,560.1
42.1
43.1
37.3
21.0p
4.6
10,220

Revenue
Adjusted* operating profit
Adjusted* profit before tax
Profit for the year
Adjusted* diluted earnings per share
Net cash excluding CSF
Year-end headcount

2009
£m

2,503.2
53.9
54.2
37.7
27.7p
86.4
10,296

2,676.5
64.4
66.1
50.3
33.0p
139.4
10,566

2,852.3
72.5
74.2
61.0
37.4p
136.8
11,626

2,914.2
70.0
71.3
49.1
36.1p
147.3
12,627

Before amortisation of acquired intangibles and exceptional items. Adjusted operating profit is stated after charging finance costs on
customer‑specific financing. In 2008 and 2011 adjusted diluted EPS also excludes the effects of exceptional items within the tax charge for the year.

Group summary balance sheet
Year ended 31 December

2008
£m

2010
£m

2011
£m

123.3
51.6
–
16.7
105.8
529.5
97.7
(0.6)
–
53.4
(602.6)
(53.6)
321.1

Tangible assets
Intangible assets
Investment in associate
Deferred tax asset
Inventories
Prepayments and accrued income
Cash
Current liabilities
Non-current liabilities
Net assets

2009
£m

105.3
73.0
–
16.4
67.1
475.6
85.3
0.7
–
108.0
(557.5)
(35.5)
338.6

88.9
78.5
–
15.5
81.6
471.1
84.2
0.6
–
159.3
(588.2)
(22.0)
369.6

98.3
104.2
0.5
15.9
97.4
549.0
90.1
(0.2)
10.0
128.4
(665.9)
(24.0)
403.7

Financial calendar
Title

Date

Dividend record date
AGM
Dividend payment date
Interim results announcement
Dividend record date
Dividend payment date

17 May 2013
17 May 2013
14 June 2013
30 August 2013
20 September 2013
18 October 2013

106


2012
£m

100.7
104.6
0.6
14.4
67.8
573.7
104.2
(0.6)
10.0
138.1
(673.3)
(17.9)
422.3

Overview

Corporate information

Barclays Bank plc
PO Box 544
54 Lombard Street
London
EC3V 9EX
United Kingdom
Tel: +44 (0) 845 755 5555

Auditors

Ernst Young LLP
One More London Place
London
SE1 2AF
United Kingdom
Tel: +44 (0) 20 7951 2000

Registrar and Transfer Office

Stephen Benadé

Equiniti
Aspect House
Spencer Road
Lancing
BN99 6DA
United Kingdom
Tel: +44 (0) 871 384 2074

Registered Office

Hatfield Avenue
Hatfield
Hertfordshire
AL10 9TW
United Kingdom
Tel: +44 (0) 1707 631000

Stockbrokers and Investment
Bankers

(Calls to this number cost 8p per minute
plus network extras).

Solicitors

Credit Suisse
One Cabot Square
London
E14 4QJ
United Kingdom
Tel: +44 (0) 20 7888 8888

Linklaters
One Silk Street
London
EC2Y 8HQ
United Kingdom
Tel: +44 (0) 20 7456 2000

Investec Investment Banking
2 Gresham Street
London
EC2V 8QP
United Kingdom
Tel: +44 (0) 20 7597 5120

Business review

Principal Bankers

Company Secretary

Company Registration Number
3110569

Governance

Greg Lock (Non-Executive Chairman)
Mike Norris (Chief Executive)
Tony Conophy (Finance Director)
Brian McBride (Senior Independent Director)
Philip Hulme (Non-Executive Director)
Ian Lewis (Non-Executive Director)
Peter Ogden (Non-Executive Director)
John Ormerod (Non-Executive Director)

Internet Address

Computacenter Group


Board of Directors


107

Principal offices

UK and Group Headquarters
Computacenter
Hatfield Avenue
Hatfield
Hertfordshire
AL10 9TW
United Kingdom
Tel: +44 (0) 1707 631000
Fax: +44 (0) 1707 639966

France
Computacenter France SAS
Agence de Roissy
229 rue de la Belle Étoile
ZI Paris Nord II
BP 52387
95943 Roissy CDG Cedex
France
Tel: +33 (0) 1 48 17 41 00
Fax: +33 (0) 1 70 73 42 22

Netherlands
Computacenter N.V.
Beech Avenue 54-80
1119 PW, Schiphol-Rijk
The Netherlands
Tel: +31 (0) 20 658 6800
Fax: +31 (0) 20 658 6111

Spain
Computacenter Services (Iberia) S.L.U.
C/Balmes 236
08006 Barcelona
Spain
Tel: +34 (0) 936 207 000
Fax: +34 (0) 936 207 025

Malaysia
Computacenter Services
(Malaysia) SDN BHD
Level 8, Symphony House
Pusat Dagangan Dana 1
Jalan PJU 1A/46
47301 Petaling Jaya
Selangor Darul Ehsan

108

Germany
Computacenter AG Co. oHG
Europaring 34-40
50170 Kerpen
Germany
Tel: +49 (0) 22 73 / 5 97 0
Fax: +49 (0) 22 73 / 5 97 1300
Luxembourg
Computacenter PSF SA
13-15 Parc d’activités
8308 Capellen
Luxembourg
Tel: +352 (0) 26 29 11
Fax: +352 (0) 26 29 1 815

Belgium
Computacenter NV/SA
Ikaroslaan 31
B-1930 Zaventem
Belgium
Tel: +32 (0) 2 704 9411
Fax: +32 (0) 2 704 9595

South Africa
Computacenter Services
and Solutions (PTY) Ltd
Building 3
Parc du Cap
Mispel Road
Bellville, 7535
South Africa
Tel: +27 (0) 21 957 4900
Fax: +27 (0) 21 948 3135

Switzerland
Computacenter AG
Riedstrasse 14
CH-8953 Dietikon
Switzerland
Tel: +41 (0) 43 322 40 80


Computacenter plc

What we do and where we do it

We help our customers’ businesses perform better, smarter
and deliver on time and on budget. We are Europe’s leading
vendor-independent IT infrastructure services provider.
Through our cross-selling, knowledge-sharing and our
integrated customer offer, our broad range of services
are making an impact across the world.

2,000+
mobile
engineers

SWIFT
go to page 16
Cisco
go to page 12

Support of

1 million

end-users
across 250
customers in
165 countries

AstraZeneca
go to page 6

Generating

5 million+

inbound phone
calls and around
1,250,000
inbound emails
per year

Datacenter
Five Tier II to
Tier IV level
datacenters
providing hosting
and continuity
solutions.

Service Desk
11 locations
supporting
1 million
end-users across
165 countries.

Computacenter plc

Tel: +44 (0) 1707 631000
Fax: +44 (0) 1707 639966
EOE. All trademarks acknowledged.
© 2013 Computacenter.
All rights reserved.


Hatfield Avenue
Hatfield
Hertfordshire
AL10 9TW
United Kingdom

Helping our
customers
go further

Overview
01 Chairman’s statement
02 Operating review

Operational
Command
Centre
Live locations
resolving major
incidents and
problems for 65
global Managed
Services customers.

Business review
18 Finance Director’s review
24 Risk management
26 Corporate Sustainable
Governance
30 Board of Directors
32 Corporate governance statement
37 Audit Committee report
40 Nomination Committee report
41 Remuneration Committee report
50 Directors’ report

Supply Chain
More than
80,000 m2 of
secure market
leading logistics
facilities in
four locations.

56 Consolidated income statement
of comprehensive income
58 Consolidated balance sheet
of changes in equity
60 Consolidated cash flow statement
61 Notes to the consolidated
financial statements
99 Statement of Directors’
responsibilities

Solutions
Centre
The Solutions
Centre is a
custom built
technology testing
environment, the
only one of this
scale in the UK.

Partnerships
Delivery of our
services through
approved partners
to customers
in more than
160 countries
worldwide.

101 Company balance sheet
102 Notes to the Company financial
statements
106 Group five-year financial review
106 Group summary balance sheet
106 Financial calendar
107 Corporate information
108 Principal offices

Computacenter Annual Report 2012

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